Narrative 1-3 from the Start, Amazon.com Has Been in a Hurry to Hurry

question 123

Multiple Choice

Narrative 1-3
From the start, Amazon.com has been in a hurry to be a success. According to company founder and chief executive officer (CEO) Jeff Bezos, "Our initial strategy was very focused and very unidimensional. It was GBF: Get big fast."
With billions to spend from its initial stock offering (Amazon's stock quickly rose to over $100 per share) , Amazon spent $400 million to build eight high-tech warehouses across the country. Each was capable of shipping 60 million items per year, and Amazon needed to control the entire buying transaction, beginning with online ordering, proceeding to quick warehouse handling and boxing, and ending with timely shipping and delivery.
Unfortunately, Amazon grew so fast that it soon lost control of the basics. Amazon burned money so quickly that it had to issue bonds to raise another $2.2 billion to keep the company running. Still, it had only enough business and cash to run six of those new warehouses. Consequently, the company took a $400 million loss to close two of the warehouses and lay off 1,500 people. Furthermore, the six remaining warehouses were poorly run. Defective products, which should have been returned to manufacturers, sat on the shelves wasting space. Mystery orders kept showing up. Instead of declining the deliveries, workers put whole truckloads of unordered items on the shelves. Amazon had so much unsold inventory in its warehouses that CEO Bezos sent out an e-mail with a point-blank message, "Get the crap out." Amazon's problem was not its sales, which were growing exponentially, but rather in poor management. As a result, its stock, once valued at over $100 per share, dropped to a low of $6. Amazon has lost more than $3 billion since its inception. As for profits, founder Bezos cautioned patience.
In the year that Amazon reported its first quarterly profit, that profit amounted to only $5 million on $1.12 billion in sales in its fourth quarter, and Amazon still lost $45 million for the year. Furthermore, it still has long-term debt of $2.2 billion to pay off at the rate of $120 million per year. Results like these would have cost any other CEO their jobs. If Amazon is ultimately to survive and be profitable, what does it need to do to become a more efficiently run company?
-Refer to the Narrative 1-3.What is Jeff Bezos most responsible for as CEO of Amazon?

• A) developing employee commitment to the company's performance
• B) monitoring and managing the performance of subunits and individual managers who report to him
• C) setting objectives consistent with top management's goals
• D) coordinating and linking groups, departments, and divisions within the company

Determine the effects of stock dividends and stock splits on share price and market value.

Recognize the tax implications related to dividends and stock transactions.

Analyze scenarios involving dividend reinvestment plans and their benefits to investors and companies.

Understand the signaling effects of dividend changes and stock repurchases on stock value and company health.

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