Coopetition-based Business Models
Question:
Using a wide variety of academic literature, in the form of an essay critically analyse whether your project’s chosen business case fulfils the purpose of a project business case as stated by the Association for Project Management.
The essay focuses on a business case on Amazon. The essay highlights the main theme of this business case study and would evaluate the literature of project management. The idea is to gain most information on project management and evaluate how the particular organization is benefitted by the application of a particular business practice. In the Industrial Marketing Management journal namely, Coopetition-based business models: The case of Amazon.com, it has been found that many organizations have undertaken the approach of coopetition-based business model. According to Ritala, Golnam & Wegmann, (2014), coopetition is the collaboration of a number of competitive firms in order to support each other in terms of economic or expertise level. Coopetition occurs at the inter-organizational and intra-organizational levels. The idea is that two or more companies who are competitors in the market would help each other in order to gain higher value and achieve better competitive advantage in the market where it operates.
Project management is the process of initiating, planning, execution, controlling and closing processes of business. With the improvement in the technological sphere and accelerated global changes, the business has leaded to a situation where changes are compulsory. In order to survive in the market among the huge competitors, taking necessary steps whenever required should be the main focus of an organization. This is the aim of the project management. This essay will highlight the business case of Amazon and analysis with the help of project management literature will be done. Based on the analysis, certain recommendations will also be made.
As stated by Schwalbe (2015), it is common that when two or more organizations dealing with the similar business entities are found to operate in the same market or even in different markets, are often found to become competitors of each other. In order to increase the strength of a particular company, two or more companies come together with a business deal and help each other to become more powerful in the market where they operate. Some of the successful business coopetitions can mentioned here. It has been found that for the manufacturing of new cars, Toyota made arrangements to share their components with PSA Peugeot Citroen (Schwalbe 2015). This way, the company had saved a lot of money by sharing costs and at the same time remain fiercely competitive in the market. There was a complimentary technological and resource transfer between the two companies that benefitted from each other and increased its influence in the market. Apart from the benefits like sharing technology or resources, the cost of conducting business is also shared. When the two companies are renowned in the market, the reliability on these companies also increases when they are combined together to work (Nicholas & Steyn 2017).
Project Management and Business Practices
As argued by Kerznder (2013), there exist certain difficulties in the coopetition process as at times it happens that both the companies in contract do not get equal opportunities when they combine together to work. In many cases, one company is much benefitted while the other one does not get the much needed benefits. For example, the coopetition between Samsung and Sony has leaded to the situation where the Samsung phones took the opportunity and made deal with Sony. In such situation, the sound quality of Samsung improved by many folds but Sony could not get much benefits from the deal (Nicholas & Steyn 2017). Thus, there remained the situation where both the companies might not get equal benefits with each other. Moreover, keeping the coopetitive relationship with the companies is also hard. In fact, there are many cases when the companies do not want to remain in a relationship and they want to keep a business deal only that might take place in lieu of money or other facilities.
In the given case study, Amazon, the leading e-commerce company, undertakes the approach of coopetition with some of its local and international competitors. It has been evident that a huge part of the Amazon’s business depends on the coopetitive approach that the organization has undertaken as a part of the evolution of the business. Amazon had started its business journey as a book seller and later grows up to sell anything and everything as an online retailer (Schwalbe 2015). Being in the online business, delivering the products in the shortest possible time happen to be the most important criterion. This is the reason that Amazon thought of collaborating with other companies in order to carry out its business aggressively and in more diverse way. Other than this, Amazon has always wanted to be extremely customer friendly company compared to its existing competitors. The first ‘’third party to be involved in the process of delivering products from the online retailer to the customers directly, Amazon hired ‘prime retail real estate’. This company started launching single page details of the product of the company (Jacobs & Chase, 2013). This provided the opportunity to the consumers to get details of the product and then make the purchasing decision. This definitely leaded to the situation where the consumers would compare the products with other products and then make the final decision. This has definitely reduced the faith and loyalty of consumers on the particular company.
Analysis and Discussion
Secondly, in order to increase the sales of the product, the company took the initiative of involving more numbers of products in the online retail site. Thus, it gave the opportunity where many products can be made available in the site and the chance of increasing the sales of the products increased by many folds. On the other hand, this odd decision of Amazon also leaded to the confusion that the company might lose its actual identity by selling third party products as well (Burke, 2013). There were many times when the company wanted to hold its step but the idea of expanding its business and increasing the base of the customers leaded to take the decision of involving third party in the business as well. It was from that point of time, the business model of Amazon has been declared as the coopetitive business model.
According to Badewi & Shehab (2016), the business best practice strategy is to become competitive in the market where the company operates. This can be achieved only when there will be increase in the sales and there will be chance of developing new markets. In addition to this, it is also important to reduce the overall cost of the business and to become more efficient in work. The workforce also plays an important role in shaping the competitive nature of the business. The workforce needs to be skilled and active in order to work. In order to get all these things available at the same time, it becomes important to consider the role of the third party as well in order to improve the quality of the service. In this respect, Serra & Kunc, (2015) commented that innovative ideas are also supplied when one company is combined with another. In the age of excessive competition, the consumers can be held only with the help of certain innovative approaches. The idea of innovation increases when the companies are combined together and carry out their activities. The idea of best practice is to find the best suitable way that a company can adapt in order to overcome the existing competition in the market (Zwikael, 2016). The business approach made by Amazon as a part of their business model showed its wise idea and ability to deal with the increased competition in the market. Amazon is the largest online retailer in the recent time and there is no doubt that the reason behind the success of the company is the business model of the company.
Every company either at the start of the business or during their business undertakes certain approaches as a part of their project management plan in order to overcome the competition in the market. According to Dupont & Eskerod, (2016), some of the common measures that the companies adopt can also be discussed here:
- Competitive pricing: It is the commonest means of fighting against the intense competition in the market. The companies come up with the plan of competitive pricing where the prices of the products are set on the basis of other similar products available in the market (Dupont & Eskerod 2016). This way the company can be able to attract more numbers of customers because there is no doubt that the price of the product decides the ultimate purchasing decision criteria of the consumers.
- Product differentiation: The idea of this business method is to offer more numbers of products to the consumers in the market. For the sake of this, the companies usually come up with the plan of product differentiation when new products are developed or changes are made in the existing products to order to offer something new to the consumers. (Marnewicj, 2016) This is a unique criterion that is adopted by many companies.
- Mergers and acquisition: Another business step that is undertaken by many companies in order to increase its power in the market is by making merging or acquiring other firms of its type. It is also a means by which companies increase in its size. However, this business step is usually taken by big companies where they capture the small companies.
- Expansion of business: This is a major step that is undertaken by the organisations where they decide to expand their business in domestic or international fronts. This is when they look for several other options like merger and acquisition or by the mean of franchise (Rodríguez, Nieto & Santamaría, 2017). It depends on the suitability of the company and how the expansion can bring prosperity to the business.
The idea of the various business management practices is to increase the profitability of the company. The different steps adopted by the companies depend on the best suitable ways to that particular company. The decisions are made strategically based on correct assumptions and the aim remains to improve the business activity strategically.
It has been evident that Amazon wants to stick to the online retailing business only and the best practice suitable for this company should remain following their business structure only. The coopetitive approach undertaken by the company is the right decision made by the company but there are other ways as well that could have been adopted. For example, the company should always focus on delivery of products (Suhartanto, 2017). The idea is to deliver the product as quickly as possible and for that the company has taken major step in the later stage of the business but not immediate. Merger and acquisition could be another step easily undertaken by Amazon in order to expand its business and become a leader in the market where it operates. There are many online retailers in domestic and international fronts that can be easily captured by the online retail giant and that could increase the power of the company (Bouncken et al. 2015). However, no such step has been found to undertaken by the company yet.
Conclusion:
A detailed analysis on the best practice of business has been carried on in this essay. The discussion has focused on the business case and business model of Amazon. It has been found that the online retail giant has undertaken many major steps in its business activity in order to improve the business. The steps undertaken by the company has definitely brought the much needed success that the company desired. The success of the company can be easily given to strategic business options that were undertaken at different points of time. In addition to this, some common business practices have also been discussed in the essay. Based on the analysis, certain recommendations have been proposed for the company. It has to be said that the need application of various business strategies depends on the type of business and it varies from one company to the other.
References:
Badewi, A. & Shehab, E., 2016. The impact of organizational project benefits management governance on ERP project success: Neo-institutional theory perspective. International Journal of Project Management, 34(3), pp.412-428.
Bouncken, R.B., Gast, J., Kraus, S. & Bogers, M., 2015. Coopetition: a systematic review, synthesis, and future research directions. Review of Managerial Science, 9(3), pp.577-601.
Burke, R., 2013. Project management: planning and control techniques. New Jersey, USA.
Dupont, D.H. & Eskerod, P., 2016. Enhancing project benefit realization through integration of line managers as project benefit managers. International Journal of Project Management, 34(4), pp.779-788.
Jacobs, R. & Chase, R., 2013. Operations and supply chain management. McGraw-Hill Higher Education.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Marnewick, C., 2016. Benefits of information system projects: The tale of two countries. International Journal of Project Management, 34(4), pp.748-760.
Nicholas, J.M. & Steyn, H., 2017. Project management for engineering, business and technology. Taylor & Francis.
Ritala, P., Golnam, A. & Wegmann, A., 2014. Coopetition-based business models: The case of Amazon. com. Industrial Marketing Management, 43(2), pp.236-249.
Rodríguez, A., Nieto, M.J. & Santamaría, L., 2017, June. On the relationship between coopetition and innovation: Disentangling some influential factors. In Technology & Engineering Management Conference (TEMSCON), 2017 IEEE (pp. 47-48). IEEE.
Schwalbe, K., 2015. Information technology project management. Cengage Learning.
Serra, C.E.M. & Kunc, M., 2015. Benefits realisation management and its influence on project success and on the execution of business strategies. International Journal of Project Management, 33(1), pp.53-66.
Suhartanto, D., 2017. The role of store coopetition and attractiveness on the performance of tourism destination and its retail stores. International Journal of Tourism Policy, 7(2), pp.151-165.
Zwikael, O., 2016. International journal of project management special issue on “project benefit management”.
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