3. “ Amazon has the unique ability to launch and run entirely
new types of businesses while simultaneously extracting
value from existing businesses. Amazon’s journey forward
will likely be marked by a series of transformations, as it
continues to pursue its vision unafraid of white space,
business model innovation, or renewal.”
10. Competition
Google self-driving car (develop technology, not sell car)
Caterpillar develop autonomous vehicles for mining
UPS “UPS invests more in technology than any other company in the delivery
business, and we’re always planning for the future”
FedEx creating aircraft to carry cargo
12. Solution - Drones
● 5 year plan to increase operating profit
● Continue lobbying at current prices for drone legalization
● Use Nevada and Florida as models
● Break-even point from lobbying reached between 2016 and 2017
13. PEST Drone Analysis
Political - Need more U.S. State AV Regulation (currently only Nevada, Florida, &
Michigan allow AVs)
Economic - Requires heavy investment in Lobbying for AV Regulation ($3.4 billion)
- Increase in R&D expenses ($1.73 billion)
- Increase in Marketing expense
Social - Consumers are wary of this new technology
- Loss of jobs
Technological -Still developing new technology, nothing like this has been done
before
14. Pros
● Cost savings compared to other
methods
● Quicker delivery times
● Less reliance on other companies
for deliveries
● Expected increase in sales
Cons
● Won’t be fully accepted for years
● Limited range
● Costly lobbying
● Increase in marketing costs
15. Implementation Strategy
1. Maintain constant lobbying efforts
2. Use the two states which already
legalized drones as model and test
platform
3. Perfect marketing within these states
4. As more states legalize drones,
produce more drones to go along with
demand
16. Challenges
● Competition delivery companies using drones at a cheaper cost
● Developing improved drones to travel further and hold more weight
● Animals as well as other destructive obstacles
● Future laws further regulating drones
18. Drone Revenues and Expenses Forecasts
Years 2014 2015 2016 2017 2018
Drone Revenue $3,192,320 $17,557,760 $28,730,880 $39,904,000 $52,673,280
Expenses $1,461,685 $8,039,267 $13,155,165 $18,271,062 $24,117,802
Lobbying Expenses $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
Drone Income $730,635 $8,518,493 $14,575,715 $20,632,938 $27,555,478
Total 5 Year Earnings
before Tax $72,013,258
19.
20.
21. Advertising Year 1 Year 2 Year 3 Year 4 Year 5
Internet advertising
campaign #1 $1,250,000 $1,000,000 $600,000 $600,000 $300,000
Outdoor advertising
campaign #1 $550,000 $375,000 250,000 $250,000 $0
Tv advertising campaign
#1 $750,000 $600,000 $500,000 $500,000 $500,000
Newspaper advertising
campaign #1 $50,000 $50,000 $0 $10,000 $10,000
Internet advertising
campaign #2 $1,250,000 $1,000,000 $600,000 $600,000 $300,000
Outdoor advertising
campaign #2 $550,000 $275,000 $150,000 $150,000 $0
Tv advertising campaign
#2 $750,000 $600,000 $500,000 $500,000 $500,000
Newspaper advertising
campaign #2 $50,000 $25,000 $0 $10,000 $10,000
PR activities $350,000 $150,000 $150,000 $150,000 $150,000
Total $5,550,000 $4,075,000 $2,750,000 $2,770,000 $1,770,000
22. Solution - Amazon Web Services(AWS)
● IT Infrastructure Service-Cloud Computing
● Pay as you go model
● Offers Broad Functionality on a Global Scale
● Reliable Data Management
● Emphasis on developers
23. Pros
● Large Industry Growth
● Expand Customer Base
● Available Capital
● Long term profitability is high
● market leader
● Usage of amazon’s existing data
centers
Cons
● Untested market
● Require large investment in fixed
capital asset
● Short term profitability is low due
to large capital investments
25. Data Centers
Expand Data Centers to
Increase Data storage
and throughput
Necessary to keep up with
increasing demand
26. Implementation Strategy
Year 1 Create a basic version of AWS and offer as freeware
Develop and implement the new infrastructure for AWS
Start expanding Data centers
Year 2 Based on demand, invest in expanding data centers
Year 3 Continue to expand data centers
Refine platform offering based on user feedback
Year 4 Continue the expansion of data centers based on demand
If the expansion of AWS is not profitable, consider liquidating data centers to an IT-competitor such as azure
Year 5 Depending on the increasing demand of AWS, continue the expansion of data centers
27. Challenges
● Strong competition in PaaS offerings
● Risk losing large investments in Fixed Capital Assets should demand
not be as expected
● Risk of losing customers with basic needs to the free package of AWS
28. Projection for AWS
AWS Expansion 2013 2014 2015 2016 2017 2018
Rev from AWS $3,108,000,000 $3,418,800,000 $3,760,680,000 $4,136,748,000 $4,550,422,800 $5,005,465,080
Operating
expenses $2,435,000,000 $2,735,040,000 $3,008,544,000 $3,309,398,400 $3,640,338,240 $4,004,372,064
Expansion of Data
centers $0 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000
Earnings Before
Income Tax $673,000,000 $583,760,000 $652,136,000 $727,349,600 $810,084,560 $901,093,016
29.
30. Projected Income Statement
Years Current 2014 2015 2016 2017 2018
Sales Revenue
AWS Revenue
Operations Expense
Operations Profit
Other Income
Interest Expense
Taxes
Long Term Debt
Expense
Net Income
32. Appendix I
Number of total packages shipped 232,000,000
86% of items under 5 pounds 199,520,000
20% of customers within 10 mile
radius 39,904,000
2 trips per package 79,808,000
Number of drones needed 9,138
5 year cost per drone $4,000
Cost of total drones needed 36,550,492
Trips for drones Per Year 79,808,000
Deliveries per drone per year 8,736
Number of drones needed 9,138
Costs Per Drone Number of Drones
34. Appendix III
With Drones Cost of Drones
Total Products Sold 232,000,000 232,000,000
# Packages 199,520,000 199,520,000
86% of items sold (under 5lbs) 20% 20%
% Live within a 10 mile radius of city center 39,904,000 39,904,000
Target Population’s cost $2.00 $0.18
Revenue / Cost of Delivery $79,808,000 $7,182,720
Total Revenue $72,625,280