Innovation and Disruption at Amazon: A Review of Enabling Factors and Stakeholders

This article reviews the enabling factors and stakeholders of innovation and disruption at Amazon. It includes a PESTLE analysis, five forces analysis, and discussion of the entrepreneurial ecosystem. The article also examines the level of disruption and affected stakeholders.

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MANAGEMENT

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Contents
Introduction.................................................................................................................................................2
Level of disruption......................................................................................................................................2
Affected footholds...................................................................................................................................2
Affected stakeholders..............................................................................................................................3
Review of the enabling factors....................................................................................................................4
Pestle analysis..........................................................................................................................................4
Five forces...............................................................................................................................................5
Entrepreneurial ecosystem.......................................................................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................8

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Introduction
The innovation is the process of translating an idea into goods or services so that value can be
created and the customers will be ready to pay for such innovations. Amazon believes in making
smart, fast decisions, stay dexterous, innovate, invent and focus on delighting customers.
Amazon is the world’s leading online retailer and conspicuous provider of the cloud services.
Amazon was primarily a bookseller but it later it extended functions and started to sell consumer
goods and digital media. The company kept on making innovations time by time. Some great
innovations of the Amazon are Prime, Prime now, Prime air, one-click purchases, a dash button,
Alexa, kindle, Amazon go, Amazon wardrobe and cloud computing.
Amazon prime is one of the greatest innovations of the company. Amazon prime provides fast
and free shipping on thousand items to the members. The company also offers fast and free
shipping than other companies. When a person buys something online from Amazon then the
delivery is expected in the two working days (Akcigit and Kerr, 2018). The same day delivery is
also available in the eligible zip codes. It is not only good business but good marketing. It is also
the smart action taken by the company to link streaming video service with the Prime. It offers
added value for the customers along with the incentive of adopting Amazon streaming service.
The streaming videos make available original content which helps in setting the stage for the
future growth of the organization. Amazon prime also includes benefits like free shipping and
prime day discounts and some other precise services. The prime pantry and prime now are also
some of the benefits (Arnett, Goldfinch and Chinta, 2018). The prime pantry offers accessibility
to the low-priced groceries along with the household and pet care items. Such service comprises
unlimited free shipping on pantry orders of $40 and more. In the specific cities, the company
offers one hour delivery on the thousand products from the local stores. Such benefit is provided
through the Prime now.
Level of disruption
Affected footholds
At the low end, the prices have a role in influencing a buyer. The low prices are focused in the
case of Amazon. The company charges low to medium prices. The higher prices are charged
exceptionally for the premium products only. The customers also like to buy the products of

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higher quality at comparative prices. It helps Amazon in creating a well-established image. The
company also practices prime skimming strategy in order to attract low-end market. The
customers like to buy the products at reduced prices or discounted rates. It is helpful to the
company in grabbing maximum profit in the short term period. It results in enhanced sales
(Christensen, Raynor and McDonald, 2015).
In the new market foothold, Amazon can create a market where no company existed. The
company likes to target a whole new category of the customers. The company can even charge
higher prices for innovative products. It is quite helpful in targeting large organizations. It
converts nonconsumers into the consumers. It is considered that the new market does not appeal
to the well-established corporations as strategic efforts are required to grab attention. The
innovations are helpful to the Amazon in reaching out to the new markets and capturing new
audiences.
Affected stakeholders
Amazon has become the sound company after Apple. It is one of the leading companies in
disruptive innovations. The company maintains corporate social responsibility for the affected
stakeholders due to disruption of the technology. The company even designs programs to address
affected stakeholders. A group of the affected stakeholders considered by Amazon is:
Customers: Amazon gives the highest priority to the customers. The customers are mainly
determinant of the e-commerce business success. The customers significantly affect the
revenues. The interest of the customers relies on the fair value, expediency and online security in
the transactions made with the company. Amazon practices advanced evidence and
communication technologies in secured transactions, efficient purchase and delivery options
(Maresh-Fuehrer and Smith, 2016). The employees of the company are also trained to maximize
the advancement of the technologies along with customer convenience. The fair pricing is also
maintained by the company through all the competition.
Employees: The employees of Amazon are being valued as the substantial determinants of the
organizational performance. The employees are interested in competitive compensation along
with career development. The employees are considered as a significant part of the organization
as they sustenance the competitive advantage centered on the company’s organizational culture.
The human resources simplify innovations in order to increase business efficiency. In order to

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promote innovations, the company offers high compensation precisely for the IT personnel. Such
personnel is indulged in emerging and preserving technology (Lin, Zhang, and Yu, 2015).
Communities: Communities as a stakeholder are important as these influence the consumer
observation on the Amazon’s goods and services. The interest of the communities comprises
development sustenance like through education, health care, and environmental preservation.
Such interest is addressed by the Amazon through primary community support and Amazon
Smile. Some part of the sales revenues earned by the company is donated to charitable
organizations (Shavarani, Nejad, Rismanchian and Izbirak, 2018).
Review of the enabling factors
Pestle analysis
Singapore has revealed astonishing economic growth. At present, the country is measured a
high-income economy. The development of Singapore is compelled by the various features out
of which some are private ingesting expenditure, local, external demands along with the
investments. On the other side, there is the lowest political risk in the country. The economy of
Singapore is considered as a vivacious free market economy and emerging as free fast speed.
The business sector in Singapore expects higher purchasing power from the customers. There are
e-commerce laws and policies for the cross border countries. The unit such as the ministry of the
environment and anti-pollution works for the environmental factors in the Singapore
(Attarzadeh, Nath and Tiong, 2015).
The decision of industrialization made by Singapore has created prospects for economic growth.
The Singaporean government has initiated economic development program for unemployment.
The trend towards the economic self-sufficiency in countries like Indonesia and Malaysia has
encouraged to focus on finding employment for the highly skilled workforce. Amazon has
technological opportunities in Singapore (Rodríguez Bolívar, 2015). The emphasis is also given
on the labor skills and technology. It is also identified as a source of modern industries. The high
level of participation in the foreign capital provided a significant foundation to the development.
The Singaporean government has also encouraged policies for the capital intensive and
technologically refined industries. The economic development strategy has concentrated on both
the manufacturing and service sectors (Jeon, et al. 2017). It encouraged investment in the
manufacturing sector. The focus was given on the human resources to enhance export

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competitiveness of the country. The creative business program initiated by the Singaporean
government promotes investment in the publishing, entertainment, fashion, textile and design
sectors (Timm, et al. 2015).
Five forces
Amazon is having a strong force of the competitors. It openly competes in contradiction of
Walmart which is a substantial e-commerce website. The bargaining power of the customers is
strong in the case of Amazon. On the other side, there is a moderate force of the bargaining
power of the suppliers. They have an influence on the online retail industry (Han,
Gopalakrishnan, Ji and Lee, 2015). The threat of substitutes is also having a strong force in the
scenario of Amazon. The threat of new entry represented weak force.
The vision and mission statement of the company reflects customer-centric approach for its e-
commerce business. The five forces help to define the influence of the customers on firms and
industry. The factors which assist in the strong strength of the bargaining power of the customers
are high eminence of information, low switching cost and high obtainability of the substitutes.
Generally, the customers have the right to use to the high-quality information concerning
services of online retailers and the products. The factors affecting company can be considered in
terms of the ability of the customers to discover alternatives to the online retail service of the
company (Correll, et al. 2018). On the other side, low switching costs make easy makes easy for
the customers to search out alternatives to transfer from Amazon to other companies like
Walmart. On the other side, the huge availability of the substitutes also authorizes consumers to
move from one company to another. For instance, the customers can visit one of the stores of the
Walmart then making a purchase on the website of the company. The factors in the feature of the
5 force analysis represent that Amazon should deliberate the robust bargaining power of the
buyers as the main feature in facing business encounters in the online retail industry environment
(Dong, 2018).
Entrepreneurial ecosystem
The approaches to defining and measuring entrepreneurial ecosystems vary extensively. The
ecosystem at Amazon web services believes in changing for better. The company confronts a
promising future with the help of a great number of talented entrepreneurs. As per Amazon,
money is not everything for the successful ecosystem as cash tends to follow talent. A lot of

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startups are coming into the ecosystems. The problem for any startup is faced in building a
product, getting that product into the market and get customers to pay for it along with managing
margins (Faqih, 2016). It is the fundamental of any business. The job of the company is to make
the ecosystem better. At the same time, the company also focuses on the things done well in
other countries. It is because keeping a global view helps is important and startups to retain. The
domain is so much comprehensive in nature with the application of modern technology (Koh, et
al. 2015).
Amazon also believes in the low valued invention. It focuses on the ideas and viewpoints of the
prospective customers. The products can be exchanged for the precise contact material. Such
products affect the buying decisions of a company’s basic product. The company sponsors the
various events where the products used are made available on Amazon. The central products of
the company can be acquired for the customers (Kumar, Dass, and Kumar, 2015). Such selected
products are required to double the profits of the company. It has to be wholly varied from the
central products of the company. For instance, if a person orders something on Amazon. The
company should have the ability to sell other services like Amazon prime.
Conclusion
The innovations are an effective way of thinking about the innovation-driven growth. It
addresses the growth of the company. Various strategic approaches are required in the
innovations. The innovations have a role in the market expansion of the company. The
innovations are made possible with both existing and new products. It has recognized the areas
of process and organizational improvement. It has generated a platform for growth and reduced
the competition for the company. It is considered that, as long as Amazon will continue with its
tendency of innovation, it will endure significant growth in the entertainment industry. The
innovations made by the company changed the lives of the people. The level of disruption affects
footholds and stakeholders. The footholds are comprehended in the low end and new market
footholds. The stakeholders of the Amazon take up to the company on the next level. The
identified stakeholders are customers, employees, and communities. The enabling factors have
made disruption of the innovations possible. The enabling factors comprise pestle factors, five
forces, and the entrepreneurial ecosystem. The pestle factors of Singapore are capable enough in
making innovations possible for the company. The five forces decide the factors affecting

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innovations of the company. The products and services can be properly planned with the help of
the five forces. The entrepreneurial ecosystem of Amazon has the potential of taking actions for
the wellbeing and economic growth.

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