CRIN6009 - Amazon's Innovative Operations: Strategies and Analysis

This essay provides an in-depth analysis of Amazon's innovative operations, exploring the relationship between creativity and innovation within the company's business model. It examines Amazon's creative strategies, the complexities of implementing innovation into its existing culture, and the importance of fostering creativity in the workplace. The essay further categorizes different types of innovation, including incremental, disruptive, radical, and architectural, and assesses Amazon's choice of innovative strategies. It also includes a SWOT analysis, STEEPLE analysis, and Porter’s Five Forces analysis to evaluate Amazon's competitive landscape and the factors influencing its operations, highlighting the company's strengths in workforce and logistics, weaknesses in dedicated innovation teams, opportunities for future growth, and threats from competitors.

Running head: AMAZON INNOVATIVE OPERATIONS
AMAZON INNOVATIVE OPERATIONS
Name of the Student
Name of the University
Author Note

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Table of Contents
1. Introduction..................................................................................................................................3
2. Company Overview:....................................................................................................................3
3. Relationship between creativity and innovation..........................................................................3
3.1. Explain the creative strategy process and discuss the creative strategy implemented by
Amazon........................................................................................................................................4
3.2. Critically analyse the complexities of implementing creativity and innovation into an
existing business culture and business structure..........................................................................4
3.3. Critically examine the importance of fostering creativity and innovation within the
workplace by reflecting on a business that has failed because it has failed to adopt a creative
approach in order to innovate......................................................................................................5
3.4.1. Incremental Innovation:.....................................................................................................6
3.1.2. Disruptive innovation:.......................................................................................................6
3.4.3. Radical innovation:............................................................................................................6
3.4.4. Architectural innovation:...................................................................................................6
3.5. Choice of innovative strategy at Amazon:............................................................................7
4. SWOT Analysis...........................................................................................................................7
5. STEEPLE Analysis......................................................................................................................8
Rising income among customers:....................................................................................................8
Technological................................................................................................................................12
Technological advancements:....................................................................................................12

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Advanced logistics:....................................................................................................................13
Economic...................................................................................................................................13
Capital acquisition:....................................................................................................................14
Investments:...............................................................................................................................14
Environmental................................................................................................................................15
Political......................................................................................................................................15
Legal..............................................................................................................................................15
Ethical............................................................................................................................................16
6. Porters’ five forces:....................................................................................................................16
Threats of new entrants:.............................................................................................................16
Threats of substitutes:................................................................................................................17
Bargaining power of customers:................................................................................................18
Bargaining power of suppliers:..................................................................................................19
Competitive rivalry:...................................................................................................................19

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1. Introduction
The study is focused towards understanding how important creativity is for the company
Amazon. The business of the company was started in an innovative manner which meant that
innovation is always valued within the organization as a factor that can lead to its continued
success. The company went from strength to strength to establish itself through the help of
innovation.
2. Company Overview:
Amazon.com Inc commonly referred to as Amazon an American IT multinational
company listed on NASDAQ. The main products of Amazon are ecommerce platforms, cloud
computing, internet platforms and consumer durable products. The company leads the
ecommerce market and operates the under leadership of Jeff Bezos in the capacity of its
chairman, CEO and president. The company sell variety of products in 100s of countries and
generated revenue of U$ 232.887 billion as on 2018. The company as on 2018 employees more
than 650000 employees globally (Aboutamazon.com. 2019).
3. Relationship between creativity and innovation
Innovation as per Gao et al. (2017) can be defined as the process of developing new
ideas, thoughts or features to bring about improvements in the existing products to meet new
requirements of the market. Corazza (2016) defines the term creativity of developing something
entirely new. Thus, innovation refers to generation of a new idea to bring about improvement in
existing products while creativity leads to development of a completely new product.

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Figure 1. Requirement model
(Source: Graessler et al. 2018)
3.1. Explain the creative strategy process and discuss the creative strategy implemented by
Amazon.
Amazon as an organization focuses on creativity and innovation. The innovative
approaches that are chosen by the company are focused towards effectively reaching the
customers. The company is focusing on the use of eco-friendly and waste reductive processes
while serving its customer base (Sarooghi, Libaers and Burkemper 2015). Creativity and
innovation go hand in hand in the organization as the general idea is to create innovative
measures to tackle the challenges faced by the organizations.
3.2. Critically analyse the complexities of implementing creativity and innovation into an
existing business culture and business structure
Amazon integrates innovation and creativity to ensure availability of an immense product
umbrella. The first example of creativity which Amazon applies is, its very official website gives
viewers the competitive advantage which Amazon has over its competitors like Safe & Secure
Payments. The second example of creativity is that Amazon designs its shopping portals

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exhibiting cultural aspects of the respective target countries (Naranjo-Valencia, Jiménez-
Jiménez, and Sanz-Valle, 2016). This enables the company to relate to the cultural aspects of its
host countries in spite of being of American origin.
3.3. Critically examine the importance of fostering creativity and innovation within the
workplace by reflecting on a business that has failed because it has failed to adopt a
creative approach in order to innovate.
Fostering of innovation and creativity hold immense importance for business
organizations. Innovation is one of the biggest competitive advantages of Amazon which has put
the company ahead of its international competitors. The first example of innovation which the
company carries on is innovation in its product umbrella. The total product line of the company
is divided into ‘departments’. Customers on clicking the tab and the particular products can gain
total information on the products (Caniëls and Rietzschel 2015). The second example of
innovation is that the prices of products are available in the local currencies of the concerned
host countries. It can also be pointed out that businesses which fail to bring about innovation fail
in the market. For example, Microsoft failed to innovate its smart phone products according to
the needs of the customers and thus failed to compete with Android.
3.4. Categories and types of innovation
There are various areas of innovation within the larger framework of the operations
of the organization. The main types of innovation are categorized into sales oriented
innovation, customer service oriented innovation, logistics and packaging oriented
innovation and innovation in sustainability (US About Amazon 2019). The different types of
innovation which are used by companies constitute of incremental innovation, disruptive

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innovation, radical innovation and architectural innovation. The different types of innovation are
defined as under:
3.4.1. Incremental Innovation:
Souto (2015) defines incremental innovations as the process of bring out improvements
in the existing products to add new features in order to create value for customers. The
companies bring about incremental innovation bring about changes within their existing products
to remove weaknesses and limitations by adding new features.
3.1.2. Disruptive innovation:
Disruptive as per King and Baatartogtokh (2015) refers to use of new technology in the
existing markets. Amazon brings about disruptive innovation by adding new products to its
existing product line which it offers in different markets.
3.4.3. Radical innovation:
Wu, Huang and Cai (2016) mentions that radical innovation refers to bringing about
innovations in existing industries by replacing the traditional method the industry concerned used
to function in. For example, the multinational ecommerce companies makes machines and plants
available to companies at lower prices. This strategy of Amazon has brought about revolution in
the manner how companies source their machines from local suppliers.
3.4.4. Architectural innovation:
Architectural innovation as defined by Xie et al.(2016) refers to bring about overall
technology which companies use to operate in the market. Architectural innovation refers to
improvement in technology like payment systems and product viewing systems.

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3.5. Choice of innovative strategy at Amazon:
Amazon uses both radical and disruptive innovation to retain its top positions in the
global ecommerce market. Amazon uses radical innovation to penetrate into new markets by
providing new ways to customers to acquire goods from the market. For example, the
ecommerce companies offer large number of consumer products which retail shops and even
international retail chains fail to provide. The consumers are able to view large variety of
products of different price ranges and order for the most appropriate products which meet their
preferences in terms of quality, quality and price (Obwegeser and Bauer 2016). This innovative
way of marketing consumer goods have radically changed the ways consumer goods industry
operates. Amazon uses disruptive innovation to dominate the global ecommerce industry. The
ecommerce company offer both local and international brands. The company offers more
discounts and more flexible product bundling which traditional retailers do not offer (Robles
2015). This enables the company to generate immense business by creating values to customers.
4. SWOT Analysis
Strength- The strength of the innovative approaches is the workforce of the organization.
Moreover, the company is known for innovative approaches to enhance its logistics functions. In
the recent past amazon has started providing customers with innovative services like the amazon
prime video on demand, the amazon fire TV stick and other important services.
Weakness- Amazons weakness when it comes to innovation is the lack of a dedicated team that
will control the innovative processes that would be implemented by the organization.
Opportunity- The opportunity for growing the innovative aspects towards enhancing business
prospects in the future is great for Amazon as a company. As of now the company is placed in an

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effective position as far as innovation is concerned. In future the company can use it to earn
greater profitability.
Threats- The threats are from the competing companies that are increasingly becoming more
inclined toward innovation. The competitors can implement innovation that can affect the
operational factors of the organization.
5. STEEPLE Analysis
Social:
The following are main social factors which impact the innovations of Amazon in the
global market:
Rising income among customers:
The first factor which boosts the innovation in Amazon is rising income among its
customers. The graphs below show the per capita income in five countries Russo, Riccetti and
Gallegati (2016) point out that the household sectors in different nations determined their desired
levels of consumption on the basis of their disposable income, wealth and previous consumption
experiences. Thus, in the light of this work can be mentioned that higher income encourage the
consumers to spend more amount of money to purchase premium products. It can also be pointed
out that the main markets of Amazon are the developed and emerging economies which account
for the maximum portion of its income. The graphs below show the per capita GDP of the US,
the UK and France which are developed markets. The graphs also show the per capita GDP of
India and China which are emerging markets (Porter and Kramer 2019). An analysis of the
graphs shows that the consumers in these markets owing to their rising per capita income enjoy
higher amount of the disposable income. This means that the consumers residing in these

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markets order more high priced products from Amazon. This means that the company in order to
serve these customers carries on continuous innovation in its products by adding new products to
its product line. Moreover, the company in order maximize customer satisfaction, introduces new
variants of same products which suits the specific needs of the customers (Foster, Haltiwanger
and Syverson 2016). Thus, it is evident from the discussion that increase in customer income
drives innovation in Amazon.
Figure 2. Graph showing per capita income of the USA
(Source: Tradingeconomics.com. 2019)

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Figure 3. Graph showing rising per capita income in the UK
(Source: Tradingeconomics.com. 2019)
Figure 4. Graph showing per capita income in India
(Source: Tradingeconomics.com. 2019)

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Figure 5. Graph showing per capita income in China
(Source: Tradingeconomics.com. 2019)
Figure 6. Graph showing per capita GDP in France
(Source: Tradingeconomics.com. 2019)