Company Overview
Choose an organisation in which you have or have had some interest, personal contact, or experience. You may use the same organisation as for Task 1, indeed this has advantages because it allows you to leverage your previous work and directly build on your learning. The task is to collect information relating strategic innovation threats and opportunities for the firm and present an analysis in the form of a 2500 word written report.
Innovation is the process of improving an idea which already exists, there is a difference in between invention and innovation, where invention is developing a new concept, innovation is the process by which an idea can be modified in order to make it better. business organisation have several strategies which help them to grow and expand, so of them incorporate the expansion strategy, on the other hand some incorporate differentiation and product development. Depending on the organisation’s culture values and principles, the goals and objectives of the organisation are set and innovation plays an important role in the process for some of the companies (Roco and Bainbridge 2013). The company that has been chosen to conduct the study is Amazon Inc as innovation plays a significant role in its business model.
Company Overview
Established by Jeff Bezosin the year 1994, Amazon Inc is an American multinational organisation that is listed in NASDAQ as AMZN. In the last financial year the company has recorded revenue of US$4.106 billion (Annualreports.com. 2017).Amazon Inchas most of its business operation based on the internet platform and the services that they provide are based on e-commerce business model. There is a wide array of services that the company has developed in the short time of its operation. Now, the company has shown interest in the physical products business as well by acquiring the Whole Foods chain in 2017 and recently investing in an ambitious project called Amazon Go.Over the years, Amazon with the help of innovation and expanded its business exponentially over the last decade.
Role of innovation in the company
The company hadbegun its operation from the garage of Bezos in 1994 and now the company has set benchmarking standards for the companies operating the same industry. Bezos is known as a visionary transformational leader who encourages innovation in the process of business. The company has broadened the service line with the help of innovation and with the objective of providing the customers with services that cater to their needs and requirements. The management of the company is focused on understanding the growing needs of the customers based on the dynamics of the industry and designs services that improve the quality of work. Amazon started the business by selling books and then slowly moved on to consumer goods and FMGG products as well (Amazon.com 2018). Then the company developed their cloud service followed by the venture in the entertainment industry as well. But retail has always been the central focus, from online retail the company has shifted to offline retail and the latest innovation is in the retail stores called Amazon Go. The company describes it as the future of retail with fully automated services making buying grocery hassle free and easy. The company also manufactures its products for example: Amazon Kindle, Amazon Echo and Amazon fire etc (Amazon.com 2018). Another innovative venture of the company is the Amazon prime subscription which is aligned with the other services that the company have be it the online retail, the physical retail stores or the products that the company come up with. This unique feature of one subscription throughout the line of services help the customers to make full use of the products and services of the company (Amazon.com 2018).
Role of Innovation in the Company
The company is led by the visionary Jeff Bezos and the management decisions are taken under his responsibility. Based on the value of providing the customers with the best possible solutions to the problems, Amazon incorporate innovation not only in the products or services but also in the business process. With the help of determining the dynamics of the industry and the resources and capabilities of the company, the decision of growth and expansion are incorporated.
Industry analysis to identify the need for innovation
The company understands the need for innovation as an important part of their business model as there is intense competition in the market and the industry in which the company operates has target market that needs to be constantly catered with upgraded products and services in order to keep their interest aligned with the supply of the company. Following is a PESTEL analysis which will help in understanding the need for innovation better.
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Political |
The company has to keep up with the norms and regulations of the country they are operating, in order to get full support from the government. Innovation is essential in this sector as the services have to pass the restrictions of the government of the country where they want to extend. |
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Economic |
The economy of the country directly reflects the purchasing power and the income of the people, thus the company decides upon the price of the products and services based on the economic condition of the places of operation. Innovation is important as the company focuses on developing products which can be availed by the target market. |
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Social |
Innovation is important as the products or services that are provided by the company can be used by the people of any culture and any background. The company encourages a diverse culture practice among the employees as well so that innovation and diverse insight can be gathered for product and service development. |
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Technology |
Technology plays the most important role in the process of innovation for Amazon. In the business model that is driven by technology any advancement and any upgrade in IT is welcomed by the company and is incorporated in simple ways to solve complicated problems. |
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Environment |
One of the principles of the company is to build a sustainable future and in order to pursue that principle the company incorporates a number of innovative methods. |
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Legal |
To operate in various countries the company has to abide by the rules and regulations of the country, the trade laws, the labour laws etc are some of the important aspects that have to be considered while developing policies and decisions for operation. Innovation in process is therefore necessary for the company in order to stay aligned with the |
Evaluation of the current growth (innovation) strategy
With the help of the BCG matrix the evaluation of the current growth strategy can be analysed. The BCG matrix will help in analysing the product portfolio and distinguish between cost-effective and unprofitable business units. The products and services in the unprofitable segments require attention. Amazon has a large portfolio of products and services which can be divided in the four segments: Starts, Cash Cows, Question Marks and Dogs. Following diagram lists the products and services of the company in each category.
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Stars · Amzon.com · Kindle · Echo · Amazon Fire · Amazon Prime |
Question Marks · Physical retail units · Web services · Amazon Art |
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Cash cows · IMDB · Audio books/audible · Createspace · Amazon EBook |
Dogs · Destinations · Daily Deals · Fulfillment by Amazon · Amazon Local · Fire Phone |
Source: Author’s Creation
The products that are listed in the star category are the ones which provide the company with the position that they are in the market they are the source of revenue and the process of innovation should be incorporate in these products to upgrade the utility and provide the customers with a better service.
The cash cows are items in the list that has low scope of improvement in the future. The products in this lies are profitable and provides the company opportunity to focus on the business units that are not profitable, the company should not focus in these areas to invest in innovation as it is a matured market and has its own people and satisfied customers(Amazon.com 2018).
The segments in the question mark has potential of improvement and thus the product and service portfolio in this list should be the focus of innovation for the product as there is market growth potential in these segments. Amazon can use these items to improve the business.
Strategic Management of Innovation of the Company
In the category of Dogs the products and services list is used to recognize those products that are not generating considerable amount of sales as well as not been able to establish a notable market share. Amazon Inc can choose to invest in the innovation of these products in order to improve the market share. But since the services listed are failed it is most likely that the company will focus on other projects than going back to the ones that are failed (Borison 2015).
The McKinsey GE framework will help in understanding the current growth and innovation strategy of the company better.
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Amazon Prime |
Physical retail units |
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Echo, Amazon Fire tv, Amzon.com |
Web services, Amazon Art |
Daily Deals, Fulfilment by Amazon |
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Kindle |
Amazon Local |
Fire phone, Destinations |
Source: Author’s Creation
It can be concluded from the analysis of both the framework is that the company has got considerable success in some of the product portfolio on the other hand there are some that have been a total failure for the company. The organisation is now focused on improving the status of the market in the retail business. As we have analysed that the physical retail market is in the position of question Mark which suggests that there is opportunity for the company to invest in this segment. Apart from that form the BCG matrix the Amazon Art platform is also seen to share space in the question market segment suggesting as the concept is relatively unique the company has the capability to cater to a niche market. With innovation in the process of promotion and marketing the service the company can gain the competitive advantage and upgrade the service to the Stars segment. The list that is in the high and medium segment of the GE framework suggest that these are the ones that have potential to innovate and also have the potential to generate revenue for the company as they have competitive advantage as well as have opportunities in the market to perform better (Mckinsey.com, 2018). The target market of Amazon changes with their product or service, but the objectives of the company remain the same.
Evaluation of one innovation opportunity the company is currently pursuing
From the evaluation of the recent investment updates of the company it can be concluded that first the company has acquired the chain of whole foods. Secondly, the launch of the revolutionary Amazon Go has helped the company to innovate in the physical retail sector as they understand that some people want to physically pick grocery items rather than depending on that is sent over to them by the delivery person in case of an online purchase (Bessant and Tidd 2007). So the company has chosen to find the difficulties that the customers face while buying grocery items. The company has removed all the barriers in the process of purchase by making the process based on technology. The idea is to pick the items that you want and to walk out of the store without any payment or waiting in the queue (Mckinsey.com, 2018). The company has aligned the Amazon Prime subscription service with the Amazon Go service in order to make the process completely mechanical and hassle free (Youtube.com 2016).
Industry Analysis to Identify the Need for Innovation
The launch of the store in early 2018 had made headlines explaining the store format to be revolutionary and a breakthrough in the retail industry. The process of innovation in this criterion can be called as disruptive as the traditional perspective of retail is being challenged with this format (Christensen et al. 2015). Amazon is known for its breakthrough innovations in terms of its services and products. Furthermore it can be argued that the retail industry is established in for a long time but the idea of upgrade with the help of technology has led to an innovation that has been developed in this process is the fact that it is completely digital and fuss free, the customers do not have to stand in queues to bill their items rather they do not even have to pay for the items they have picked up all the process will be handled digital form the moment the customer walks through the door of the store (Neate 2016). The company is always focused on the needs and requirements of the customers in order to design a project or to develop a product line (Souto 2015). The company has invested in retails as this is the industry that has opportunities from the perspective of incorporating technology in the process of the business function. Amazon has always welcomed new ideas, and has invested and taken risk in order to grow in their business. The CEO has stated that the objective of the company is to incorporate ideas which will make the life of the customers easy. The idea of e-commerce was also new at the time the company was established, and the company has set up benchmark for the competition in the e-commerce sector. Similarly, with the physical retail unit the company wants to invest in technologies and ideas that are designed to make the process of buying grocery easy (Amazon.com 2018).
Therefore, from the above analysis on the innovations in Amazon Inc, it can be concluded that the company is one of the most innovative in the specified genre, which is followed by many of its competitors to achieve the kind of success it has achieved. The brand is known for their unconventional planning and strategies with ethics that benefits both the customers as well as the company in the prolonged period. However, like every brand this company has also scopes for improvement both in the sector of customer satisfaction and innovative ideas. The company can work on their customer satisfaction techniques and can come up with ideas that would solve the customer queries and problems with ease. More number of products should be included in the list which will ensure that no type of customers can return back from the website. The utility purpose should be satisfied by each product introduced by the brand at their best price and with discounts that can attract more potential customers to buy from their app or website. Even the company can introduce safety assurance measures that can attract the current non-customers into purchasing from the app and ensure that their products will reach them safely and effectively within a specific time. The other areas in which Amazon can improve is to make the app more user-friendly that can be properly used by the layman and even introduce the use of regional languages in the content of the app. Every product should be described in a proper way and effectively so that even by the description of the product, the customer can have a fair idea about the usage and contents of the products which readily demands a good content team. The employee strength should be increased and should be spread to every city where the service is missing to satisfy the maximum number of people. Therefore, it can be highlighted that Amazon is surely one of the most innovative brands in the market in recent times but they still have a scope of innovation where they can implement their knowledge and skills for delivering quality service to their customers
Reference List:
Amazon.com., 2018. Amazon Go. [online] amazon.com. Available at: https://www.amazon.com/b?ie=UTF8&node=16008589011 [Accessed 17 Mar. 2018].
Amazon.com., 2018. Our Innovations. [online] amazon.com. Available at: https://www.amazon.com/p/feature/tv76jef8gz289rm [Accessed 17 Mar. 2018].
Annualreports.com., 2017. Annual Report 2016. Annualreports.com. Retrieved 25 April 2018, fromhttps://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AMZN_2016.pdf
Bessant, J. and Tidd, J., 2007. Innovation and entrepreneurship. John Wiley & Sons.
Borison, R., 2015. Here are 10 of Amazon’s biggest failures. [online] TheStreet. Available at: https://www.thestreet.com/story/13364106/1/here-are-10-of-amazon-s-biggest-failures.html
Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. What is disruptive innovation. Harvard Business Review, 93(12), pp.44-53.
Gokhberg, L. and Meissner, D., 2013. Innovation: superpowered invention. Nature, 501(7467), p.313.
Mckinsey.com. 2018. Thinking strategically. [online] McKinsey & Company. Available at: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/thinking-strategically
Neate, R., 2016. Amazon Go store lets shoppers pick up goods and walk out. [online] theguardian.com. Available at: https://www.theguardian.com/business/2016/dec/05/amazon-go-store-seattle-checkouts-account.
Roco, M.C. and Bainbridge, W.S., 2013. The new world of discovery, invention, and innovation: convergence of knowledge, technology, and society. Journal of nanoparticle research, 15(9), p.1946.
Souto, J.E., 2015. Business model innovation and business concept innovation as the context of incremental innovation and radical innovation. Tourism Management, 51, pp.142-155.
Youtube.com., 2016. Introducing Amazon Go and the world’s most advanced shopping technology. [online] Youtube.com. Available at: https://www.youtube.com/watch?v=NrmMk1Myrxc.
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