Grado en Administración y Dirección de

Empresas

LOGISTICS

Amazon

Susana Adkinson Costoya

30th September 2022

Tabla de contenido
1. Breve explanation of BSC ................................................................................. 3
2. Different perspectives of BSC............................................................................ 3
2.1. Financial Perspective 3
2.2. Customer Perspective 5
2.3. Internal Business Process 6
2.4. Learning and Growth Perspective 7
3. Balance Scorecard of Amazon .......................................................................... 7
4. Amazon Strategic Map ..................................................................................... 8

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1. Breve explanation of BSC

BSC (Balanced Scorecard) is a term that was developed by Robert Kaplan and David Norton. It

consists of a methodology that, under the gaze of four different perspectives, helps define and

monitor a company's strategy thought the support of KPI (Key Performance Indicators).

In the past, organizations considered only the financial aspect when evaluating business

management, which provided a poor and unrealistic perspective. In those days, only past and

present figures were considered, which did not allow future projections to be made, which

normally caused stagnation.

This is precisely why the Balanced Scorecard is considered so important. This adds three other

perspectives (customer, production and learning and growth). This allows visualizing what

happens in the organization, in terms of strategy. In addition, it links performance measures to

discover and communicate the strategy, track it and, if necessary, take corrective action. It also

helps to focus on the most critical points, avoiding overload.

2. Different perspectives of BSC

2.1. Financial Perspective

“To succeed financially, how should we appear to our shareholders?”

Amazon has customers all over the world. As we already know, we are in a time in which e-

commerce has increased tremendously, especially after the quarantine suffered by COVID-19,

at a time when the population used to buy almost anything they needed online, and compulsive

purchases increased surprisingly given the amount of time we spent in our respective homes.

In any case, electronic commerce is spreading more and more, and Amazon is the leader in its

sector due to its speed, reliability and ease; so, the investment in this same company would be

a resounding yes for the future.

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As Jeff Bezos (Amazon CEO) said once: “One thing I love about customers is that they are

incredibly dissatisfied… People have a voracious appetite for a better way and yesterday's

amazing quickly becomes today's ordinary.”

The volume of annual net sales of Amazon worldwide in 2021 was above 400,000 million

dollars, a figure that shows that this company is leader. Some of the KPI (Key Performance

Indicators) that we can use are to measure Financial Perspective are:

- Profit margin. In this case we would consider it not as investors, but as sellers in

Amazon. Within the products that each of the users have, we could achieve an

established margin between 30-60%, not counting shipping costs due the profit could

be considerably reduced.

- Costs reduction. As we already know, Amazon as such does not have a large warehouse

but several wholesalers who sell their products. For example: a person who buys pens

on Alibaba for $0.5 each and sells them for $5 on Amazon has no storage fees since it

goes directly to the seller.

- Alternative sources of income on Amazon:

o E-commerce: the sale of third-party products through its platform.

o Amazon Prime (AP): subscription service through a platform to watch certain

documentaries, series, movies, etc.

o Amazon Ads: sellers can compete organically and paid on this platform.

o Own-Brands: Amazon is betting heavily on its distribution brand in very diverse

sectors, including Alexa, which is not only considered a "Smart Speaker" but is

gradually becoming a Smart Home solution.

o Amazon Web Services (AWS): Amazon cloud solution.

The three strategic objectives set in financial perspective at the Balanced Scorecard are:

- The objective of increasing sales.

- Increase the profit margin for subscription services.

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 - Increase the annual benefit.

These three objectives have been set in the financial dimension in order to continue with the

positive progression of Amazon in the market and thus maintain itself as a leader in electronic

commerce.

2.2. Customer Perspective

“To achieve our vision, how should we appear to our customers?”

Focusing on enduring customer needs, not just today but tomorrow, enables long-term,

sustainable innovations around what matters most to customers. Amazon's mission is to be the

most customer-focused company on planet Earth, and the first of our 16 leadership principles,

Customer Obsession, states: "Leaders start with the customer and work backward." They work

hard to earn the customer's trust and keep it. Although leaders pay attention to competitors,

they become obsessed with customers.

KPI of Customer Perspective:

- Customer’s satisfaction. Amazon uses returns, refunds, customer service contacts, and

product reviews to track customer feedback.

- Market Share: Specifically, Amazon itself (in general) has 28.7%. From there,

considering that the Amazon marketplace itself accounts for 60% of its total sales, the

eCommerce giant's third-party platform would accumulate around 25% of the total

market. In the case of its retail section, the percentage of participation in total sales is

17%.

- Conversion ratio. It explains the number of customers looking for products on the web

with the number of those customers who finally make the purchase.

The strategic objectives proposed in the customer perspective section are:

- Encourage customer loyalty

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 - Improve shopping experience

2.3. Internal Business Process

“To satisfy our shareholders and customers, what business processes must we excel at?

When thinking of Amazon, the first thing that comes to mind is: speed, ease and utility. If we

want something to arrive at home as soon as possible, we will normally order it through

Amazon. As we previously said, Amazon it’s considered leader at its sector.

KPI’s of Internal Processes Perspective

- Website optimization. Amazon, along with other websites like eBay, Walmart, and

Google rely on the optimization of their listings, the quality of their customer reviews,

and the speed of their shipments to determine when they match an online shopper's

search.

- Algorithms. Amazon's ranking algorithms automatically learn to combine multiple

relevance features. They analyze past search patterns to match what's most important

to customers. According to HubSpot, 75% of users never scroll past the first page of

search results.

- Development of Amazon Web Services. AWS gives amazon a great competitive

advantage over its competitors. AWS allows you to select the operating system,

programming language, web application platform, database, and other services you

need. With AWS, you'll have access to a virtual environment that allows you to upload

the software and services your application needs.

The objectives that I consider most important from the perspective of internal processes are:

- Faster delivery

- Sales personalization

- Leverage Amazon Web Services (AWS)

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2.4. Learning and Growth Perspective

“To achieve our vision, how will we sustain our ability to change and improve?”

As its name suggests, this perspective of learning and growth is responsible for introducing the

new knowledge learned from the constant changes that occur in the business world and in the

entire environment into the company's strategy.

KPI’s on Learning and Growth Perspective: skills of the company's HR, in the optimization of

systems or in the organizational climate.

Within this perspective I have selected four objectives that I consider important, given that it is

a set of HR with Big data:

- Expansion of the use of Artificial Intelligence (AI)

- Optimize search algorithms

- Integrate third party data

3. Balance Scorecard of Amazon

Perspective Objectives Measures Initiatives

Financial - Increasing Sales - Profit margin - Increase in offer

-Increase the profit - Alternative sources - Diversification in
margin for of income other branches of
subscription services - Cost reduction business
- Increase the annual
benefit
Customer - Encourage customer - Customer’s - Satisfy customer
loyalty satisfaction needs they didn't
- Improve shopping - Market share know they had
experience - Conversion ratio - Wide variety of
products at an
affordable price and
with a fast and
convenient sales
process

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Internal Business - Faster delivery - Speed - Reduce the average
- Sales - Algorithms delivery period to less
Process personalization - Website than three days and
- Leverage Amazon optimization come as close as
Web Services possible to two days
- Improve the
customer's shopping
experience by
personalizing it
Learning and - Expansion of the - HR -Increase on the
use of AI - Organizational expenses on I+D
Growth - Optimize search climate
algorithms
- Integrate third party
data

4. Amazon Strategic Map

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