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The goal of every business is to increase shareholder’s wealth and one way to realize this is to expand, merge or launch into new markets. At this point of ambition, companies must layout a strategic plan or initiative, and present these ideas to their shareholders. In this paper, the team discusses the relationship between financial planning and strategic planning and a strategic planning initiative that Amazon undertook. Another initiative that was discussed in the organization’s financial report will also be identified. Any initiative a company undertakes will affect the financial planning in terms of cost and sales, and the description of these impacts are given. Risks are also big factors to consider when making plans to expand, and Amazon.com will have to consider the named potential risks.
Amazon’s Strategic Plan
Amazon.com is the Internet giant in online book sales and consumer electronics,
The company is a leader in web logistics, sales and marketing. The 2009 annual report highlights several notable initiatives, like Touchco (a touch screen technology company), but one stands out among the rest, the acquisition of Zappos.com, an online shoe and apparel seller, finalized in November 2009. The rumors of the deal began in June of 2009, with confirmation coming on July 22, 2009. The terms of the deal require Amazon to purchase outstanding shares of Zappos.com for 10 million shares of Amazon common stock, in essence a stock swap, with 40 million in cash as restricted stock, provided for Zappos.com employees.
The reasons behind this acquisition reflect back to the business philosophy of Jeff Bezo, CEO of Amazon.com and his vision to plan strategically for the long term, as proven by this statement in a recent annual report;
“Our financial focus is on long-term, sustainable growth in free cash flow1 per share. Free cash flow is driven primarily by increasing operating income and efficiently managing working capital and capital...