Amazon.com Inc.
Student’s Name
Institutional Affiliation
Amazon.com Inc.
Background
Amazon.com is an American conglomerate company located in Seattle, with over 750 000 employees (Nhung, 2018). The company primarily focuses on technology-based businesses, including e-commerce, cloud computing, digital streaming, and artificial intelligence. Currently, it is considered as one of the big tech giants in the country and globally alongside Google, Apple, and Microsoft. Founded in 1995 under Jeff Bezos, the company’s net worth is reported to be $ 160.47 billion as of 2018 (Nhung, 2018; Salam, 2016). With the massive revenue accumulation and thirst for growth and expansion, the company has limitless potential in innovation.
Opportunity
As noted, Amazon.com Inc. has an expansive network and portfolio that allows it to exploit opportunities. One recommended opportunity for Amazon.com Inc. is the development of an Amazon mobile phone (Allen et al., 2010). The mobile phone can provide quality features and applications, including an e-reader, a 24-hour customer service application, and the capability of downloading applications suited for Google Android and iPhone (Salam, 2016). The proposal is for Amazon.com Inc. to introduce the mobile phone with a new operating system known as Fire OS. The operating system is different from the other standard operating systems, including iOS, Android, and Blackberry, among others (Allen et al., 2010). The mobile phone, in a nutshell, will provide additional innovative features, including a customer service application that is not present in other mobile phone companies.
Amazon.com Inc. Resources and Capabilities
First of all, the company has an extensive capital resource for research and development. It is reported that the business invests $ 22.6 billion for research and development (Nhung, 2018). The capital is sufficient to begin a mobile phone research and development team that will embark on developing the best mobile phone device for its target customers (Nhung, 2018). The capital investment makes the company’s business resources and capabilities ideal for venturing into the proposed mobile phone development.
Alongside this, Amazon.com Inc. has a large customer base with over 260 million customers with active accounts. The competitive advantage of this is that the marketing portfolio to reach out to its target customers is already set (Isckia, 2015). With its broad business segments, e-commerce, and digital streaming, the business already has a good idea of how to market the mobile phone to the target market (Isckia, 2015). Ideally, the business has already set up the right marketing and advertisement team that will provide quality representation of the brand during its launch.
Furthermore, the business possesses facilities and the human capital required for manufacturing, distribution, and retail development. Amazon.com Inc.’s expansive network will allow it to reach as many customers are possible within the shortest period of time (Ruslin Chandra, 2008). Interestingly, the business has an already established supply chain, which is an added advantage in the reduction of costs in developing the right supply chain.
The company already has an established brand and good publicity with its customers and target market. It means that Amazon.com Inc. has the best platform to launch its product once it is finished (Ruslin Chandra, 2008). The willingness of the customers to try out the company’s products will be beneficial in launching the product in the market.
Missing Resources and Capabilities
Amazon.com Inc. is not a mobile-based business, nor does it have any background in the development of mobile phone features. In relation to Google’s Android, there is a lot to be considered when developing mobile phones. These include software development, patent and legal rights, operating system, and legal framework on its patent specifications as well as operating platform specifics. It takes a lot for mobile device software to be compatible with all the applications and programs in the market offered within iPhone and Google’s Android play store.
The idea is that Amazon.com Inc. may require multiple partners already established in the creation and complete testing on the design compatibility and features of the OS proposed. The majority of the software developers already have legal patent contracts with established mobile companies or OS developers, which may make it difficult for the business to acquire. The contracts are binding and can be difficult to provide a new OS that does not possess similar features as the rest of the operating systems in the market.
From this approach, it is clear that Amazon.com Inc. does not have the right personnel to help it achieve the launch of its product. As noted above, it takes an entire specialized team to develop the necessary system software and programs compatible with other applications in the market. Essentially, it will mandate Amazon.com Inc. to invest more money in developing the right software, given the increase in customer demand on improved compatibility of mobile software with existing programs in the market.
Additionally, the company lacks the right facility to manufacture a mobile phone. Competitors such as Google and Microsoft manufacture their mobile phones in specific factories built for these devices. It will require the business to invest greatly in a manufacturing company that is separate from the business, which will only manufacture mobile phones. Given that the business only possesses a supply-line factory, the investment cost may be too much.
Innovation Solution Recommendation
The company has to invest greatly in software development. The current customer demand for mobile devices is specific and targeted. If Amazon.com Inc. cannot provide the demanded features, then the business invest will lead to losses. In order to avoid this, it is paramount for the business to take time in research and development for the mobile device. Securing the right software developer is critical.
The recommendation would be to sort out software developers who have already been in the business for a long time. The professionalism and expertise these parties bring can overcome any faults and or limits the phone may have at any given time. Seeking out or out-sourcing developers will reduce costs based on the development and timeframe of resolving issues with compatibility and usability.
Furthermore, the company can use test dummies or volunteers from the market to know whether the mobile phone is market worthy or not. A first-hand perspective is crucial for Amazon.com Inc. in determining how to improve its product, given the tight competition in the mobile phone industry. It will not be recommended for the business to undertake an entire investment package of new software developers as it will maximize on failure launch of the product.
Assessment of Risk/Reward
The risk of entering the mobile phone industry is based on the innovative competition in the sector. The mobile phone industry is a very innovative sector, including technological change and product proliferation, which has to be dynamic (Cecere et al., 2015). The market has an acceptable general design or architecture, especially for smartphones. The design specifies the characteristics of the mobile phone, including smartphones, from the touch-screen to the call user features. Accordingly, the mobile phone industry requires periodic modifications to satisfy the growing demands of the customers and to stay ahead of the competition (Cecere et al., 2015). In other words, each design has a life-cycle that requires the business to be dynamic with the product innovation strategy.
The risky part for a new entrant in the industry is the ability to stay ahead of already establishment dominant companies such as Apple and Microsoft (Cecere et al., 2015). Amazon.com Inc. will have to struggle with maintaining its novel product alongside competing with the other brands through intermittent product upgrades. It may be too much for the company for now; thus, venturing into the mobile phone industry is considered a risky strategy. Therefore, it is recommended for the business to take a long-term approach in venturing into the mobile phone industry, given the strong forces that rivalries bring with regard to product innovation and investment.
References
Allen, S., Graupera, V., & Lundrigan, L. (2010). Pro smartphone cross-platform development: iPhone, blackberry, windows, mobile, and android development and distribution. Apress.
Cecere, G., Corrocher, N., & Battaglia, R. D. (2015). Innovation and competition in the smartphone industry: Is there a dominant design? Telecommunications Policy, 39(3–4), 162–175.
Isckia, T. (2009). Amazon’s evolving ecosystem: A cyber-bookstore and Application Service Provider. Canadian Journal of Administrative Sciences/Revue Canadienne Des Sciences de l’Administration, 26(4), 332–343.
Nhung, X. (2018). Amazon’s resources and competences. Retrieved, 1, 17.
Ruslin Chandra, A. (2008). An Investigation of Amazon’s Supply Chain Management Strategy. Jurnal Akuntansi & Manajemen, 3(2), 87–93.
Salam, M. T. (2016). Devising a Business Model of Amazon’s 1995-2004 Journey. Arabian Journal of Business and Management Review, 6(217).