The TwoCents.News Chronicles:
Amazon - The Contest


Amazon, one of the largest businesses in the United States in terms of capitalization
as well as one of the largest employers in the nation, is in the process of a contest.  

The prize?  

An employment base of upwards of 50,000 workers and an investment of upwards of $5 billion.

The reality, though, is this contest has likely been decided in advance.  Why?  Think about it.  Amazon was created because its founder saw a niche not being served as well as possible by existing businesses.  Amazon has grown because of a ruthless focus on providing products and services - the "it" - needed by customers.  When the customers want it.  How the customers want it.  Where the customers want it.

The "it" hasn't mattered. While Amazon began with books in the beginning, its very name signified that its long-term goal would be similar to the Amazon River - the largest river in the world that moves the largest amount of water downstream.

The idea that a business based on detailed research and analysis would leave open the decision of where to place its second headquarters makes no sense.  

A business that runs a contest to place what will likely be its second most important locale, its most important locale, or one of its two most important locales makes no sense.

What does make sense is that Amazon knows exactly where it wants to place its second headquarters - the Prime Locale.

It's also very conceivable that Amazon has two or three locales that are at the top of their list for potential sites of its second headquarters - the two or three Prime Locales.

Amazon has employees internally - and certainly has the ability to hire contractors externally - to provide the information detailed is its request for proposals.

But the idea that just about any major city or region has a reasonable - bold-print, capitalize, and underline "reasonable" - chance to host the second headquarters of Amazon is not likely.

The better way to think about this contest is that its goal is not to find the "best" site for a second headquarters for Amazon, but to determine how much money City "A", Region "B", or State/Province "C" is willing to give Amazon to build in their locale.

With that knowledge, Amazon will then be able to go to the Prime Locale that it has already selected - or to the top two or three Prime Locales already selected - and indicate that it really wants to come to that Prime Locale, but that the Prime Locale has to meet the incentives offered by the competition.

That contest makes sense for Amazon.

After all, Amazon already knows everything else it needs to know about every potential market in the United States, Canada, and likely many other places in the world.

Amazon knows that businesses generally locate their headquarters as well as operations in locales based on one or more key factors, including access to natural resources, access to financing, governmental regulatory policies and enforcement, and personal views of the chief executive officer (or other executive decision makers) and their spouse (or spouses).

In the case of Amazon, the key natural resource is human capital - its employment base today and the anticipated needs for an expanding employment base in future years.

Amazon - because it is Amazon - would likely have few problems attracting employees to any locale chosen for its second headquarters.

But life would be much easier for Amazon - and its executive management - if the locale chosen was one in which they would like to live.

Access to financing - given the size of Amazon - is not likely critical in this site selection.  Those with money to invest will invest in Amazon regardless of the locale chosen for its second headquarters.  While financing offered will, of course, be welcomed by Amazon, the overall investment amounts needed by Amazon in future years would likely far outstrip any financing available through this contest.

Governmental regulatory policies and enforcement - including tax structures and related issues - do matter to Amazon.  But, again, because it is Amazon, this firm has shown to have the ability to negotiate agreements - agreements favorable to Amazon - with the highest levels of governments.  That ability will only be enhanced through this contest.

Amazon knows what the population levels, growth patterns, and overall demographics are in each market.  

Amazon knows what markets have mass transit capable of moving thousands of additional people.

Amazon knows where the centers of power are located within the United States - Washington and its metropolitan area for politics and regulations,  the City of New York and its metropolitan area for finance and international flavor, the San Jose and San Francisco metropolitan areas for technology, and the Los Angeles metropolitan area for entertainment.

Amazon knows the costs of living as well as the trends for the costs of living in every locale in Canada and the United States.

Amazon knows about the quality of life available in each market.  Amazon knows aspects to enhance the quality of life in the Prime Locale can be added by others at little or no cost to Amazon. 

Amazon knows that flights within the United States as well as international flights can be added to almost any major airport if customers want to travel between certain locales.  None of the major airlines today would likely refuse to add flights between Seattle and Prime Locale if customers want to travel between those two communities.

Amazon knows the business climate in every market, in every region, and in every state and province.

Amazon has negotiated in the past with representatives of many governmental entities. The firm knows the personalities, the politics, and the goals of many of these negotiators.

Amazon knows which markets have the ability to offer tax abatements, low or no-cost financing, incentives to hire employees, and a whole host of other goodies offered by governmental entities to entice businesses to locate within their locales.

But Amazon needs to know just how badly each community wants Amazon.

Amazon needs to know how much each market is willing to give to Amazon to entice Amazon to come to their locale.

With that information, the analytics will be complete.

Amazon can then negotiate with Prime Locale or Prime Locales to get the best possible deal for Amazon.

Rest assured, Amazon will site its second headquarters in the locale that makes the most economic sense for Amazon.

© 2017 – Richard McDonough