Amazon is one of the largest companies in the world, but its valuation leaves plenty of room for growth. The stock’s valuation multiples don’t do justice to the growth prospects of this e-commerce giant.
Amazon experiences 27% year-on-year sales growth and this growth profile is simply too good for a company trading at only 3,2-times revenue.
Relatively weak operating margins have long been a roadblock for Amazon. But massive growth in both sales and margins in Amazon Web Services (AWS), as well as the growing dominance of Amazon Prime in the US, mitigate such concerns and make a strong case for undervaluation in the equity.
Amazon’s international segment currently operates at negative operating margins. However, the trend looks set to reverse as Amazon Prime penetrate these markets.
Amazon’s primary top-line growth factors are international expansion and Amazon Web Services. AWS will improve overall margins, but international expansion is still in a negative margin situation. The trends have exacerbated in 2016.
In the full year 2016, North America represented almost 60 percent of total revenue while international and AWS represented roughly 30% and 10%, respectively. There is room for growth here, and it isn’t unreasonable to expect Amazon to be able to replicate North American success in other developed regions of the globe.
As any employer or HR practitioner will know, expensive schooling and impressive certificates are not always a reliable indicator that your candidate has what it takes to do the job you’re hiring them to do. While education is vital, more and more business owners are waking up to the value of apprenticeships as they build and groom their next generation of star employees.
Many business owners, perhaps justifiably, view apprenticeships with a certain amount of suspicion. Taken on for the wrong reasons or managed incorrectly, apprenticeship programmes can indeed be a drain on company resources with little advantage to show for it. In the South African context, we’re seeing a lot of companies establishing government-sponsored apprenticeships. Sadly, many only use their programmes as a way of getting cheap or free labour, with no idea of just how mutually beneficial apprenticeships can be if done right.
Apprenticeships are not cheap labour. In fact, they can be a significant drain on a company’s resources, compared to an experienced hire. Implementing an apprenticeship programme is therefore likely to entail much more work for you and your team, not less. The upside is that if all goes according to plan, you will have taken a common resource and made it into a rare one. Here are ways that implementing an apprenticeship programme can revitalise your business:
Providing a skilled workforce for the future
Apprenticeships help to ensure new recruits develop exactly the skills they need to successfully join the organisation, which can only benefit a business in the long term. Managers can ensure that the competencies being developed are exactly those that the company will need more of in the future – filling in any gaps and allowing the business to source future leaders from within.
Increasing staff loyalty and retention
Employees trained in-house tend to be more highly motivated, committed to their role, and supportive of the company and its objectives. Apprenticeships encourage employees to stay with the company longer by demonstrating its willingness to invest in its new recruits and treat them as a valued and integral part of the workforce.
More efficient recruitment
Apprenticeships can revolutionise the efficiency of your human resources efforts – saving you time and money lost to the recruitment process, as well as helping to make the need to replace employees a far less frequent bother. Apprenticeships are a great way to incubate the talent of your company’s future leaders and test the waters in a safe, insulated environment. You’ll also get to oversee and mould that talent as it develops. What’s more, having an apprentice around is a good insurance policy in case one of your team members should suddenly leave, because they’ll be leaving a trained “understudy” behind who can help pick up the slack.
Freeing up existing staff members’ time
As your business grows, your team will probably find their time being taken up by smaller tasks that tend to derail their main work responsibilities. Delegating these tasks to apprentices not only provides them with the hands-on upskilling they expect, but also frees up the time for your other employees to be more productive and less distracted.
A breath of fresh air
Bringing new, young people on board often translates to a fresh approach and a renewed positive attitude in the workplace, which can have the effect of enhancing workplace morale and cementing team unity. Apprentices inspire existing staff members to be willing to lend a hand in their training, as well as focus on improving their own skills. Apprentices from a variety of backgrounds and with different educational histories also give you fresh insight and out-of-the-box ideas to your business operations, encouraging change and innovation.
Companies considering taking on apprentices should not do so without considerable planning and the willingness to oversee every aspect of their apprentices’ progress. It is vital to be clear about your expectations as well as theirs, and make them a welcomed part of your team. With guidance, encouragement and good communication, you may find a few hidden gems among your new recruits, who may eventually show themselves to be your star employees in the future.
By Pieter Scholtz, leading business and executive coach and SA’s Co-Master Licensee for global franchise company ActionCOACH
Our national brand – that’s Brand South Africa, not Koo or Lucky Star – has lost 12% of its value in the last year.