A Report on Amazon's Innovation, Strategy, and Entrepreneurial Success

This report provides an in-depth analysis of Amazon's success, focusing on its key drivers of innovation, entrepreneurial vision, and business model. The report begins with an introduction to Amazon, its services, and its position in the technology industry. It then delves into the critical drivers of Amazon's innovation, including talent management, team building, valuing new ideas, leveraging diversity, building a culture of innovation, allowing creativity, and ownership. The report also examines the different strategic approaches Amazon has undertaken, using frameworks like Porter's Five Forces and the BCG Matrix to evaluate its competitive strategies. Furthermore, the report evaluates the statement that Amazon's success can be attributed to the successful application of the Blue Ocean strategy, discussing how Amazon has created new market spaces and made competition irrelevant. The report concludes by summarizing the findings and highlighting the key factors contributing to Amazon's continued success in the market.

Strategy, Enterprise and
Innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
Key drivers of innovation contributing to the success of Amazon..............................................3
Different approaches undertaken by Amazon to help shape its entrepreneurial vision and
business model.............................................................................................................................5
Evaluation of statement...............................................................................................................8
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Amazon is an American multinational technology company that was founded in 1994 in
Bellevue, Washington, U.S. by Jeff Bezos and is headquartered at Seattle, Washington, U.S.
Company was started as online marketplace for books and later expanded into several other
businesses. Presently company has its focus on e-commerce, cloud computing, digital streaming
and artificial intelligence. Services of Amazon includes Amazon.com, Amazon Alexa, Amazon
Appstore, Amazon Music, Amazon prime, Amazon prime videos and Amazon web services.
Amazon is also one of the Big Five in US in information technology industry and in addition to
this Amazon has also been referred as most influential economic and cultural forces in world. In
addition to this Amazon is also world’s valuable brand (Aggarwal, 2019). This success of
Amazon is highly based on strategies that have been adopted for expansion and also innovative
capabilities of the company and approaches taken to shape entrepreneurial venture. This report
will discuss about key drivers of innovation that contributed in success of Amazon. Later report
will discuss about approaches undertaken by Amazon to help in shaping its entrepreneurial
vision and business model. Later report will also involve evaluation of statement that is
“Amazon’s success can be attributed to successful application of the Blue Ocean strategy”.
Key drivers of innovation contributing to the success of Amazon
Finding and Fostering Talent- This is one of the most important driver of innovation that have
contributed in success of Amazon. This is important that for innovation in an organisation it has
talent and people who are able to think creatively and have knowledge and understanding about
how they can change their creative thinking into innovation. One of the reason that Jeff Bezos
selected Seattle for headquarter for Amazon was that Seattle has people who have technological
knowledge and technological knowledge is very important for Amazon (Fellnhofer, 2017). Once
organisation has found knowledge and talent another important element is fostering knowledge.
Fostering knowledge is concerned with developing individuals and working on encouraging
them to think creatively and become innovative n their approach to work.
Creating teams that support innovation- This is another important driver of innovation
contributing in success of Amazon. It is very important that organisation has teams that support
innovation within organisation. This is because individuals alone cannot do everything to bring

innovation within organisation, support of other individuals is important. This is why creating
teams within organisation that support innovation and these teams have people from different
areas of operation that can create and validate innovation. Support of such teams can be very
helpful in creating innovation in organisation.
Valuing new ideas- Innovation is based on new and unique ideas and in order to drive
innovation it is important that managers and leaders in organisation value ideas within
organisation. This is very important that no idea or thought of individuals is discouraged because
this will reduce their motivation and they will be able to think creatively (Ozorhon and Oral,
2017). It is important that in order to motivate individuals in organisation to think creatively their
ideas regardless of their suitability and possibility, they are valued. Amazon is known to be an
organisation that created disruption and this has become possible because of innovative and
unique ideas. This is why all ideas should be valued in order to drive innovation and success in
organisation.
Leveraging diversity- Leveraging diversity is concerned with getting people in organisation
from diverse backgrounds. This plays very important role in driving innovation within
organisation because people with diverse background have diverse knowledge and understanding
and this is why different ideas are created by diversity. Amazon is a multinational organisation
and this is why it encourages diversity within organisation and this is very important for driving
innovation within organisation. Diversity includes several elements that extends to people from
different culture and race, age difference, gender, education difference are also included in
diversity. However in order to ensure success of diversity within organisation this is very
important that diversified workforce is valued and effectively managed to gain best benefits from
diversity within organisation.
Building culture of innovation- Building culture of innovation is concerned with having values
of organisation that involve innovation and value innovation (Prokop, Stejskal and Kuvíková,
2017). Amazon has several values that guide behaviour and actions within organisation and
among these values one is invent and simplify. As per this value organisation encourages
innovation and along with that Amazon also focuses on simplifying as much possible. In
addition to values of Amazon also states that they insist on highest standards and this is only

possible when organisation regularly focuses on innovation and improving quality through
innovation.
Allowing people to be creative- This is also an important driver of innovation that contributed
in success of Amazon. Allowing people to be creative is concerned with providing them
adequate knowledge and training regarding their job and their purpose for being in organisation.
In addition to this, it also involves providing adequate and required resources so that they can
experiment their ideas and validate their ideas. It is also important to create an environment that
is suitable on the basis of authority and their contribution in organisation so that they understand
their contribution is important.
Ownership- This is a value of Amazon and also a driver of innovation contributing in success of
Amazon (Cai and Li, 2018). Ownership is that everyone becomes responsible for their actions in
organisation and their ownership in organisation extends to their job role and includes their
responsibility and ownership for Amazon. This means that every individual working within
Amazon is responsible for overall success of the organisation.
Different approaches undertaken by Amazon to help shape its entrepreneurial vision and
business model
Amazon is highly successful business organisation and has its operations in different
industries and in order to become successful Amazon have taken several steps that have helped it
in succeed. There are different strategic frameworks with help of which strategies and
approaches of Amazon can be analysed. One such framework is Porter’s five forces model. This
model helps in identifying competitive forces within industry and for success of organisation
appropriate strategies to overcome impact of competition is highly important. Approaches taken
by organisation and analysis on the basis of this model is as follows-
Threat of new entrants- This is concerned with threat that is created by organisations that are
likely to enter in an industry. In order to reduce threat of new entrants Amazon requires to have
economies of scale and because of strategy that Amazon have adopted its economy of scale is
very high and because of this approach of Amazon its power in this threat is strong. Amazon has
managed to reduce its cost whilst increasing profit and market share and does not have
significant threat of new entrants.

Threat of substitutes- Substitute is a product or service that can be used in place of a give
product or service and higher the substitute higher the threat for Amazon (Bruijl, 2018). There
are different substitutes and these are in form of different types or retail businesses and in order
to ensure its strong power company has focused on providing high value to its customers.
Amazon Prime is an example of such in which high value is provided to customers. This
approach of Amazon also has helped it in gaining trust of customers.
Bargaining power of buyers- Amazon works on providing high value to its customers in order
to gain customer satisfaction and runs its business on customer-centric approach. Application of
this approach Amazon has managed to maintain customer satisfaction. However because of
several choices and high intense competition in retail industry bargaining power of customers is
high. In this advantage for Amazon is its capability of providing high range and quality products
at affordable price.
Bargaining power of suppliers- Because of its strong position in retail market it has significant
influence on its suppliers. There are several suppliers working with Amazon and because of this
Amazon have strong power in suppliers’ power. All suppliers of Amazon have to follow strict
rules and regulations. However because Amazon focuses on selling products that has less
suppliers because this reduces competition between suppliers and here less number of suppliers
increases their power to moderate from low.
Industry rivalry- There is strong rivalry in retail industry where Amazon operates and
approaches of Amazon that are offering high quality and value products at affordable price and
customer-centric approach for business operations have helped it in becoming leader in industry
(Omsa, Abdullah and Jamali, 2017).
BCG Matrix is another important strategy framework that can be used to analyse different
approaches of Amazon. BCG matrix analyses approaches of organisation on the basis of market
growth rate and on the basis of relative market share.

Figure 1 BCG Matrix
Stars- This is a position in which growth rate and market share of the company both are high.
This is most ideal position for a company because it has both profitability as well as scope for
growth in market. E-commerce business of is in this category which contribute to around 49% of
market share of Amazon. This success and position of Amazon is because of the approaches that
they have adopted and this includes constant focus on increasing value for customers (Flamand,
Wisher and Riley, 2020). In addition this reducing cost and identification of different customers
and understanding customer requirement have also played important role in star position of the
company.
Question marks- Amazon Web service is another important business of Amazon that operates
in other industry and this business contributes to around 26% of market share of Amazon. This
business can be considered as in Question mark position compared to its competitors that is
Microsoft Azure.
Cash cows- Cash cows is a position in which market growth rate is low but market share is high
and because of these, such businesses are able to generate significant revenue.

Dog- This position is one in which both market share and market growth rate is low and this
requires that businesses do not invest much in such units. Amazon prime is one of the business of
Amazon that is in this category (Roy, 2020). This is because it contributes to 29% of market
share whereas close competition of company is Netflix and this has a total market share of 50%
market share. In addition to this brick and mortar stores of Amazon are also in this position
because of their least market share and low growth rate.
In this, approaches of Amazon that is customers focused and innovation and quality focus
of company is used at corporate level. On the other hand providing high value to customers at
affordable price and adopting effective competitive strategy are some of the approaches that have
been considered by business unit level of Amazon retail business.
Competitive strategies that have been adopted by Amazon includes intense growth, and
cost leadership, economies of scale and focus on technology are some of the strategies that have
been adopted by company for its success and growth and shape its entrepreneurial vision and
business model (Hewage and et.al., 2018).
Evaluation of statement
Amazon’s success can be attributed to the successful application of the “Blue Ocean Strategy”.
Blue ocean strategy is concerned with adopting and implementing differentiation and low
cost strategy simultaneously for creating new market spaces and for creating new demand. This
involves creating and capturing market places that are uncontested and this makes competition
irrelevant (Orlov and Chubarkina, 2017). Blue ocean strategy is based on view that market
boundaries and structure of industry are not given and can be reconstructed by actions and
beliefs of organisations operating in an industry. In other words, blue ocean strategy creates
uncontested market space and makes competition irrelevant in industry. Blue ocean strategy also
works on creating and capturing new demand in market and break the value-cost trade-off and
also aligns whole system of activities of organisation for differentiation and low cost.
Statement given above about Amazon’s success can be attributed to the successful application of
the Blue Ocean Strategy is very apt. This is because Amazon has managed to become one of the
most successful organisations in limited time from its foundation. One of the reasons is
disruption of well-established industries and organisation because of technological innovation

and mass scale. Amazon has applied adopted Blue Ocean Strategy in which it tapped
uncontested marketplace and because of this Amazon has strong presence worldwide. Because of
its successful operations and expansion Amazon also has made competition irrelevant, this
means that there is competition but because of successful strategies it has managed to stand
strong in competition (WHAT IS BLUE OCEAN STRATEGY?, 2021). Concerned with value-
cost trade-off as per Blue Ocean Strategy, Amazon has managed to create and achieve
differentiation and maintaining low cost.
In order to analyse these statement some of the tools and frameworks are as follows-
Value Innovation
Value innovation is a strategy in which organisation works on pursuing differentiation
and low cost simultaneously and by this strategy organisations create leap for company as well
as buyers or customers of the company. In this it is considered that customers’ value is generated
from utility of the product minus price of the product. This means that whatever extra that
product provides to its customers is value for the customers. This means that value of the
products requires to be much higher compared to its price that customers are charged by
organisation. In addition to this for Amazon value is generated from price of offering minus cost
of its offering. This requires that companies ensure that their cost of as low as possible. Value
innovation strategy is about creating alignment in cost, profit and utility of the product in order
to generate highest utility for customer and Amazon.
 In this cost saving is done by removing and decreasing factors on the basis of which an
industry competes.
 In order to increase value of buyers elements that industry did not offered raised and
created.

Figure 2 Value Innovation Strategy
On the basis of this it can be concluded that Amazon have effectively applied that
strategy because one of the most important focus area of the company are on innovation, low
cost and quality (VALUE INNOVATION, 2021). Because of quality and innovation they ensure
that utility for customers is highest and by low cost they ensure that they are able to generate
highest cost for Amazon.
Four Actions Framework
This is another blue ocean strategy in which a four actions framework is developed and is
used to reconstruct value element of buyer while crafting a new value curve or a strategic profile
for business. This also involves breaking a trade-off between differentiations and low cost while
creating a new value curve and in this curve there are four questions that challenges strategic
logic of an industry.

Figure 3 Four Actions Framework
This figure outlines different questions that are there in this curve and by rightly and strategically
answering these questions Amazon can increase create new value. These questions are about
factors that should be raised above industry standards and Amazon by its performance in
different industries has raised several factors above industry (FOUR ACTIONS FRAMEWORK,
2021). Another is creating factors that have never been offered and several elements in services
and products of Amazon are example and proof that it has offered several services that were
never offered by any company operating in its industry. In addition to Amazon have also worked
on other elements like reduction and by identifying such factors it has worked on those factors
one of these important reasons is also to reduce cost of products and services.
Amazon have worked on creating value through identifying right and effective answers to these
questions and this is why the statement that effective application of Blue Ocean Strategy is very
suitable for Amazon.
Three Tiers of Noncustomers
This is a strategy in Blue Ocean strategy in which organisations strive to expand their
market share and strive to retain its existing customers base and also work and expanding its
existing customer base.
Following figure outlines three tiers for customers of an organisation.

Figure 4 Three Tiers of Noncustomers
 Soon to be customers are those customers who are on the edge of market of Amazon.
 Refusing customers are those who have consciously selected against market of Amazon
or in other words have chosen another market.
 Unexplored customers are those who are from distant market of Amazon
Expansion and extensive presence of Amazon suggests that it have effectively managed
to unlock noncustomers of the company over time and have managed to create demand in its
customers (THREE TIERS OF NONCUSTOMERS, 2021).
This means that statement that outlines that Amazon has effectively applied Blue Ocean Strategy
is very true and above discussion justifies that.
CONCLUSION
On the basis of above discussion, it can be concluded that drivers of innovation that drive
innovation in Amazon includes finding and fostering right talent for organisation and than
creating teams that support innovation within organisation. In addition to this there are several