Managing Innovation in Business

This report explores the topic of managing innovation in business, with a focus on Amazon in the UK. It provides an analysis of the industry, past, present, and future aspects of innovation in Amazon, and its strategic capabilities. The report also discusses the opportunities and challenges in the e-commerce industry.

Managing Innovation in Business

EXECUTIVE SUMMARY
This report is prepared on the topic 'Managing innovation in business' with respect
Amazon in UK. In this report, a complete industry analysis is carried out and also the past,
present and future aspects of innovation in Amazon. According to the report, it was found that
Amazon is known for its innovative ideas which has lead it to success and growth. The key
strategic capabilities of amazon is analysed which includes brand equity, delivery network,
worldwide presence and market capitalization which has helped in achieving sustainable
competitive advantage. Also, the different macro factors helped it in achieving success.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
THE ORGANIZATION AND INDUSTRY OVERVIEW.............................................................4
The organization and its innovation history.................................................................................4
The organizations existing innovation performance and capabilities..........................................5
The industry in 2020....................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Business innovation refers to the process of coming up with new ideas, processes,
products and services to market. The main objective of innovation is to improve the performance
of the business and achieve competitive advantage. In this report, Amazon is taken as an
organization. It is an American multinational technology company in Seattle. It focusses on e-
commerces, digital streaming, AI and cloud computing. It was established in 1994 by Jeff Bezos.
This report presents about the innovation history of Amazon and it also includes the current
capabilities of Amazon and then conducting the industrial analysis to identify the future
prospects.
THE ORGANIZATION AND INDUSTRY OVERVIEW
The organization and its innovation history
The e-commerce market in UK is the third largest market in the world. UK ranks high on
various in indices which includes logistics and ease of doing business. The total projected
revenue was 200 billion euros in 2019 and it contributed 7.94% of GDP.
Amazon is one of the largest e-commerce giant in UK based in Seattle and it was founded
by Jeff Bezos in 1994. Since 2010, it has started investing UK and over 18 billion have been
invested to provide value and convenience to UK consumers (Lacy, Long and Spindler, 2020).
Along with that it has empowered millions of small businesses and content creators. By the end
of 2019, it has employed over 29500 people having wide range of skills and expertise. Amazon
was started in a garage and its first service was selling an online book store. In the first two
months only, it sold to all 50 states and covered over 45 countries.
The four dimensions of innovation space are:
Product innovation: Amazon has changed the way people live. It has provided variety of
services to the customers which are innovative in nature. It includes groceries, electronics,
books, beauty and health care products, clothing, fast shipping with prime membership. It has
also launched Prime now to make the shipping more fast.
Process innovation: Amazon has connected with hundreds of thousand of small businesses to
sell their products on the Amazon's website (Akgun and et.al, 2017). It has also expanded by
providing a wide range of services such as cloud computing, entertainment which includes
Amazon Prime.

Position innovation: Amazon has a wide and global reach. It has acquired Whole foods market
in order to increase the reach of Amazon for US$13.4 billion. Also, in 2018, Bezos announced
that it has surpassed 100 million subscribers worldwide because of its its 2 day delivery service.
Paradigm innovation: Amazon has taken various initiatives to run its business operation
ethically (Akgun and et.al, 2017). It has taken care of its social responsibility, it has set target to
use 100% renewable source of energy for its global infrastructure, leveraging technology to
innovate changes. It has also launched wind farms in Texas.
Innovation history can be better understood using Porter analysis which is discussed
below.
 Bargaining of buyer: Due to the availability of number of competitors buyers have high
bargaining power. Referring the same, company is placing high level of emphasis on
offering quality products or services to the customers. It also emphasizing on providing
customers with suitable and timely information so that desired leve of outcome or success
can be attained.
 Bargaining power of supplier: It can be said to be lower as Amazon built competent
supply chain. Business unit has number of suppliers which is following specific rules and
regulations presented by Amazon. All the suppliers are working ethically in line with the
guidelines of Amazon.
 Competitive rivalry: In the context of online retail sector competitive rivalry can said to
be high. Moreover, there are several other brands which are giving tough competition to
each other regarding market share includes eBay, Alibaba, Flipcart etc.
 Threat from substitutes: Amazon is facing high threat from substitutes available in
market. There are several other retailers which are offering products or services at
discounted prices.
 Threat from new entrants: In order to create online retail store in line with Amazon one
needs lots of time, investment and competent strategic framework. In addition to this,
changes are taking place in online retail sector with the very high pace. Accordingly,
Amazon is facing low threat from new entrants.
Innovation history of Amazon
Year Innovation
2005 AMAZON PRIME. It is a subscription-based service offered to

users which were otherwise not easily available.
2007 KINDLE. It is a series of e-readers which offers users to browse,
buy and read books, newspaper, magazines etc.
2014 AMAZON FIRE PHONE. Amazon introduced first smartphone
which was having unique and innovative features like 24-hour
customer service, dynamic perspective (8 WAYS AMAZON
CHANGED THE WORLD. 2020).
2015 DASH BUTTON. Amazon announced the latest and new dash
button technology in march 2015. It is a physical manifestation of
single click ordering.
2015 FIRE TV. The amazon fire TV was introduced in response to
Apple TV and Google Android Roku and accounted for 30% of
streaming TV box shipments.
The organizations existing innovation performance and capabilities
The organisation growing brick and mortar presence is very valuable as it helps in taking
competitive advantage which can be easily imitated and is not rare because as compared to the
other big giants like Walmart who have a strong presence. As per above the extensive private
product portfolio is valuable as it diversifies its product range and offerings and also helps in
boosting the market which in turn will help in increasing profitability. For example, Amazon
basics a private label that assists it in directly competing against the sellers. But is not rare or
inimitable (Frei, Jack and Krzyzaniak, 2020.). Amazon has an extensive delivery service which
is considered to be rare and valuable as it has entered into partnership with various third-party
service providers. But is not its core competency as it can be developed by other competitors.
Another capability is high brand equity which is very difficult to imitate especially when the
organization has a strong presence in that market. This capability is highly valuable, rare,
inimitable and organised which can bring value and competitive advantage to the organization.
The high market capitalization will help Amazon in achieving sustainable competitive advantage
(Seyedghorban and et.al, 2020). It is valuable as it empowers the organization to invest in
business expansion. Along with that, it is not possible to imitate and Amazon is organised to take
competitive advantage by acquiring Whole Foods Market.

Market share 30% market share in e-commerce market (Basul, 2019).
Profitability Amazon has a total revenue of £10.9 billion in 2019. Its operating
profit grew to £75.4 million.
Patents Amazon has secured 2400 patents in 2019.
Trademark It registers the right owner under the Amazon brand registry and an
automation system that suspects an breach of intellectual property
rights (Amazon Intellectual Property Policy. 2020).
The industry in 2020
E-commerce is an industry in which constant and unique innovation is positively
accepted by the customers. This practice of bringing rapid innovation will continue in future in
order to meet the expectation of the customers. This industry is highly surrounded by the
technology which contributes to the growth of the industry. The most effective trends that will be
seen in 2020 are stated below.
Artificial intelligence and predictive analytics: It is the latest trend as it involves variety of
techniques to analyse the data which will help in predicting the future trends. It provides a great
deal of power in predicting the customer's action (Akinfieva and Oppong, 2018). It helps in
analysing the most effective time of sending marketing messages to customers in order to
increase the conversion rate.
Voice search: It is already in trend with 95% of accuracy rate. The very next step will be to
integrate it in the e-commerce sector and website design. Also, the artificial intelligence with
voice search is the latest emerging trend (Chaffey, Hemphill and Edmundson-Bird, 2019). A
company has created a website which generates content based on the searches either using text or
voice search. Using artificial intelligence, will help e-commerce organizations to provide a
unique experience if done effectively.
Social selling: Basically, all the major players have offered some kind of e-commerce
integration and it is expected that the worldwide users is expected to reach 2.95 billion by 2020.
The major players like Facebook, e-commerce and the paid advertisement are very important for
high level of revenue.
Chatbots and private messaging: It is increasing trend and adopted by various organization.
Businesses follow people when they move to private messaging. It has become very huge with

WhatsApp and Snapchat. All as the customer visits the site a chat starts in order to help
customers in finding their requirement. But it's not the real people assisting the people but is the
artificial intelligence behind it.
Mobile payments: As the mobile has become more secure which has increased the confidence of
consumers because of which it is assumed that the number of purchases made online will rise in
2020. Mobile payment has also increased and still on rise as nowadays, mobile phones are more
optimised which has resulted into the increased usage of mobile payment methods (Goyal, Sergi
and Esposito, 2019). So, making the apps and website mobile friendly will be help e-commerce
companies in grabbing more customers.
Conversion optimization: It is recommended to the e-commerce site owners to put more efforts
on internal pages it is because of the reason that homepage is seen by the customers who are
revisiting the site while on the internal pages new visitors visits frequently. By 2020, it is
estimated that people entering the e-commerce sites, that is, the first time visitors through
different pages are more likely to be higher and it will continue.
Innovation has made Amazon a successful company across the globe. To know the existing
innovation performance SWOT analysis is carried out below.
Strengths
 As a global giant, it has a strong
position in the market along with the
positive brand image.
 It has a huge customer base as it caters
to the everyday needs of the large
customers at an inexpensive prices. It
can be said to be customer-oriented
brand.
 Amazon is known for its creativity and
innovative ideas with respect to the
product and services it is offering to the
customers like Withings Aura Smart
Sleep System which creates a point of
differentiation from its competitors
Weaknesses
 Amazon's business model is quite
common in today's digital world. So,
imitating its business model is very
easy for its competitors like Oyster,
Netflix, eBay etc.
 Some of its major products flop which
includes fire phone's and kindle fire
device. Also, in some markets like
India, it is facing huge losses.
 The tax avoidance in UK and US has
negatively impacted the brand image of
Amazon. It was criticized publicly on
social media.
 Poor treatment of employees and also

(Çitilci and Akbalık, 2020).
 Amazon has a wide range of product
mix which attracts online customers to
purchase from it instead of going to
other online retailers.
 Due to more traffic on its site, the large
number of third party sellers have
joined hands with Amazon for selling
their products.
poor workplace conditions has also
impacted Amazon like timed bathroom
breaks, continuous video surveillance
etc. It has affected the market image of
the organization.
Opportunities
 Amazon can grab the opportunity to
expand in other developing nations or
markets.
 It can also expand its physical stores
which will increase its competitiveness
and engage more with the customers.
 It has the opportunity to improve its
organizational policies and can also
improve its technological measure in
order to reduce the counterfeit sales.
 Amazon can do backward integration
by expanding its in-house brands which
will help in differentiating its offerings
and improve profits.
 By acquiring e-commerce companies
will help Amazon in increasing its
market share and effective in facing
competition.
Threats
 The increasing government regulation
in UK and impact of Brexit has
threatened the business in proceeding
further.
 The increasing cyber crime will affect
the security system of the company and
may increase the threat of data loss.
 The increasing competition from other
big retail giants like eBay, Walmart
which is a big threat to it.
 Imitation of the business model of the
Amazon can pose as a big threat to it.

CONCLUSION
It can be concluded from the above analysis is that the e-commerce sector is growing at
the higher pace and it is contributing 7.94% to GDP of the country. After analysing the Amazon
based on its creativity and innovation and using the innovation space model helped in analysing
the organization's history, current market positioning and its different business approaches for
expanding its business. Also, different example were used in the context of Amazon in order to
identify its key capabilities and resources. Thus, it can be summarized that Amazon's
performance and capabilities have a great influence on understanding the innovation.

REFERENCES
Books and journals
Akgun, A. E. and et.al, 2017. WHY COMPANIES GO POSITIVE MARKETING
INNOVATIONS: A NEW THEORETICAL PROTOTYPE FOR 4PS OF
INNOVATION. Journal of Business Economics and Finance. 6(2). pp.70-77.
Akinfieva, Y. V. and Oppong, R., 2018. E-commerce in the Modern World-Electronic
Transactions and Some Challenges and Perspectives: Comparative Analysis of UK,
Egypt and South African Legislation.
Chaffey, D., Hemphill, T. and Edmundson-Bird, D., 2019. Digital business and e-commerce
management. Pearson UK.
Çitilci, T. and Akbalık, M., 2020. The Importance of PESTEL Analysis for Environmental
Scanning Process. In Handbook of Research on Decision-Making Techniques in
Financial Marketing (pp. 336-357). IGI Global.
Frei, R., Jack, L. and Krzyzaniak, S. A., 2020. Sustainable reverse supply chains and circular
economy in multichannel retail returns. Business Strategy and the Environment.
Goyal, S., Sergi, B. S. and Esposito, M., 2019. Literature review of emerging trends and future
directions of e-commerce in global business landscape. World Review of
Entrepreneurship, Management and Sustainable Development. 15(1/2). pp.226-255.
Lacy, P., Long, J. and Spindler, W., 2020. E-Commerce Meets the Circular Economy. In The
Circular Economy Handbook(pp. 197-201). Palgrave Macmillan, London.
Seyedghorban, Z. and et.al, 2020. Supply chain digitalization: past, present and
future. Production Planning & Control. 31(2-3). pp.96-114.
Online
Amazon Intellectual Property Policy. 2020. [Online]. Available Through:<
https://sellercentral.amazon.co.uk/gp/help/external/G201361070?language=en_GB >.
Basul, A., 2019. Amazon dominates 30% of UK ecommerce market in 2019. [Online]. Available
Through:< https://www.uktech.news/need-to-know-2/amazon-dominates-30-of-uk-ecommerce-
market-in-2019-20191213 >.
8 WAYS AMAZON CHANGED THE WORLD. 2020. [Online]. Available Through:<
https://thinkmonsters.com/speakinghuman/media/amazon-game-changing-innovations/ >.
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