In 2005, Jeff Bezos, Amazon’s CEO, introduced the company’s Amazon Prime membership service. For a $79 annual fee, a customer receives “free” (prepays might be more accurate) shipping on every single order the customer places during the year. Bezos acknowledged the Prime service would be "expensive for the company in the short term" but "more convenient for customers." Before introducing this program, you can be sure that the managerial accounting staff at Amazon went through a lot of differential analysis. Put yourself in their shoes and answer the following:
1. What would a differential analysis for adopting the “Amazon Prime” model need to consider?
2. Show an example of a differential analysis for adopting the “Amazon Prime” model.
3. What non-numeric considerations would need to be taken into account?
4. After reviewing the above would you advise Mr. Bezos for or against adopting the Amazon Prime model? Why?
5. Now read your classmates’ posts and discuss them. You may find someone that came up with the same or different numbers, opinions and recommendations. Do you find anything that would change your analysis or viewpoint? Make sure to use plenty of questions in your response posts to foster discussion. Note that you must submit your own initial post before you are able to read or comment on those of your classmates.
Also write a response to other persons' answers - will be given
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