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Birmingham Business School

Student ID Number: 1437704, 1492506, 1175911

Programme Of Study: GDBA

Module: Cases in Global Business

Assignment Title: Group Essay No. 2

Date and Time of Submission: 11/01/2015, 22:10

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Name: Hsin-Ying Chou (1437704) Pinpinat Kultarapanupong (1492506), Ioana Teodorescu (1175911)

Birmingham Business School

Cases in Global Business Assignment 2
07 15825

12th of January 2015

Module leader: Dr Nicholas Vasilakos
Amazon: Innovation and its implications for strategic short-term and long-term decisions


The process of innovation involves making changes on a big or small scale to a product or process. Innovation is linked to adding value to the customer’s experiences and expanding the knowledge of the organisation. Two main kinds of innovation can be distinguished: radical innovation and incremental innovation. Radical innovation means changing major features of a product. For example, the Apple iPhone’s conception was based on the idea of the iPod. Similarly, incremental innovation is the opposite of radical innovation, and it involves making small changes to a product that already exists on the market.
With the increased use of the internet and the advances in technology, commercial e-shopping has become one of the most common ways of buying goods. Online shopping presents massive advantages for its customers, such as time saving, ability to compare prices between sellers and a high number of choices of products. One of the biggest shopping website is Amazon. Amazon began as an online book store in 1998. After many years of exploring and studying the market, Amazon is today the biggest global online shopping website in the world.
Innovation has played an important role in Amazon’s development. Technological advances have pushed the company forward and secured a big share of the online shopping market. The main technological innovations that Amazon has implemented include: the 1-click order software, (that remembers the personal details and delivery address of the customer from the first order), recommendations (asking customers for the feedback after purchasing an item) and wish-lists (online lists of products that a customer desires, and can be purchased as gifts by friends and family). Analysing the literature that has been published on the subject of innovation implemented throughout strategic decisions, it can be concluded that Amazon has been continuously improving its products, services and technology in order to satisfy customer demand (Curtis, 2013). We will further use PEST analysis to discuss how contemporary innovation affects Amazon’s decision to design its short-term business strategy. PEST analysis is used to analyze upcoming trends of the market and the performance of businesses which are affected by transformation of external factors such as political, economic, social, and technological factors (Makos, 2013).

II.Short-term strategic behaviour

Political Different types of government and their stability play an important role in business strategy as well as in the legal system, employment law and tax policy (Quick MBA, 2014). These variables are always changed by the government. Hence, international firms ought to adjust their product and operation for synchronizing with the political system in each country.
Amazon has set its headquarters in the United States and exponentially expanded its branches in