Question

What is Amazon's cost center, profit center, and investment center? Explain.

Answer 1

Hi,

Here is the suggested answer.

Company’s cost centers:

A cost centre is one that incurs expenses and no incomes, Company is an e-commerce platform wherein buyers and sellers are brought together to do business. Company is a multinational technology company based out of Seattle, Washington, United States of America. Its main business is e-commers, cloud computing, digital streaming, and artificial intelligence. It’s an online platform that sells almost every consumer durable be it books to electronic items, garments, furniture, food, Jewellery, software. Billions of Dollars are invested in advertisements, marketing and investment in transport, providing platforms to customers both buyers and sellers using Company’s as an intermediary. Its cost centers include investment in offices, distribution and collection centers, technology, telecommunication, and logistics. Its cost centers include, analytics experts, artificial intelligence, machine learning, and inventory management.

Company’s Profit centers

Company’s profit centers are Company Prime video, Twitch, Audible subsidiaries, Company studio, Company web services, Kindle-e readers, Fire tablets, Fire TV, Echo devises, retail, subscriptions, other channels, Retail and online stores. Company’s profit centers are concentrated in North America, International and AWS (Company Web Services). Company Prime makes most of the money as it delivers guaranteed shipments next day at a premium cost. It airs unlimited streaming of movies, TV shows and many more.

Company’s International segment consists of retail business. Though it had lost in this segment in 2019, it has made profit of $ 345 million operating profit in Q2 2020. Its sales crossed $22.7Billion in 2020 and recorded 38.5% growth and accounts for about 25% of total sales of the company.

Company’s web services provides services to business, academic institutions and government agencies to store and retrieve information on Cloud platform. This segment is most profitable generating a staggering profit of $3.4Billion in Q2 2020 with a sale of $8,4Billion.

Company’s investment centers

Company’s investment centers are in Research and Development, Analytics, Cloud Computing, Investments in developing countries both in retail, and wholesale, offices, franchises, dealers, transportation, video content, online video services, competing against Netflix, and others. It is spending billions of dollars in internet satellites, self-driving cars delivery business and logistics, investment in new headquarters, investments in Medicare, investments in Pill pick partnering with Berkshire Hathaway, JP Morgan chase, Acquisition of Air sky transport, ($1.5Billion) space exploration (Project Kuiper). It plans to set up a network of more than 3000 satellites to expand high speed internet globally which might cost $3 Billion. Is investment centers include food delivery, where it has invested $573 Million in London’s food delivery company Deliveroo. It has a stake in UberEATS too.

Hope this is useful.