Technological innovation and its impact on an amazon com enterprise a focus on business structure an business performance

TABLE OF CONTENTS ABSTRACT CHAPTER 1: INTRODUCTION 1.1 Background 1.2 Amazon.com Overview 1.3 Research Purpose 10 CHAPTER 2: RESEARCH DESIGN 12 2.1 Research objectives 12 2.2 Research questions 12 2.3 Research methodology 13 2.4 Expected contributions of the research 13 CHAPTER 3: LITERATURE REVIEW 15 3.1 Concepts and related studies 15 3.1.1 Concepts of technological innovation 15 3.1.2 Technological innovation and Business structure 17 3.1.3 Technological innovation and Business performance 18 3.2 Previous studies on case of Amazon 19 3.3 Conceptual framework and hypotheses 22 CHAPTER 4: DATA ANALYSIS 24 4.1 Amazon‘s Competitive Profile Matrix Analysis 24 4.1.1 eBay introduction 25 4.1.2 Barnes & Noble Introduction 26 4.1.3 The comparison between Amazon, eBay and Barnes & Noble 26 4.1.4 Competitive profile matrix of Amazon, eBay, and Barnes & Noble 31 4.2 Impact of technological innovation and value chain analysis of Amazon.com 33 4.3 Technological innovation and Amazon‘s Business structure 38 4.3.1 Monetization activities, total assets, and shareholders‘ equity 38 4.3.1.1 The monetization activities 38 4.3.1.2 Technological innovation impacts on total assets and shareholders‘s equity and total assets 41 4.4 The impact of technological innovation on Business performance 48 4.4.1 Labour productivity 48 4.4.2 Products – Services development 49 4.4.3 Market development 50 4.4.4 The analysis of business performance result 51 4.4.4.1 Business performance result review before 2014 51 4.4.4.2 Business performance result review between 2014 and 2019 52 4.4.4.3 The special period of Amazons‘ business performance result in 2020 55 4.4.4.3.1 Covid – 19 pandemic overview 55 4.4.4.3.2 Technological innovation and commercial triumph during Covid–19 pandemic 56 CHAPTER 5: CONCLUSION, IMPLICATIONS AND LESSONS 58 5.1 Conclusion 58 5.2 Implications and Lessons 59 5.2.1 For Amazon 59 5.2.2 For other SMEs 62 5.3 Limitation and future research 64 5.3.1 Limitation 64 5.3.2 Future research 64 REFERENCES 65 APPENDIX 71 FIGURES Figure 1: Amazon.com Business structure 21 Figure 2:The conceptual Framework of the thesis 23 Figure 3: Amazon.com value chain analysis in technology stream 34 Figure 4: Amazon.com Value chain 36 Figure 5: The main activities generate revenue for Amazon.com 40 Figure 6: The bar chart of Amazon‘s Shareholders's Equity 41 Figure 7: Technology and content 43 Figure 8: The investment of Amazon's field 45 Figure 8: The Total Assets of Amazon.com 46 Figure 9: Emloyees in Amazon 47 Figure 10: R&D Expenses and Inventory 50 Figure 11: Revenue, Cost of goof sold, EBIT 53 TABLES Table 1: The comparison between Amazon, eBay and Barnes & Nobles 26 Table 2: CPM of Amazon.com, eBay, and Barnes & Noble 32 Table 3: Revenue generating activities in Amazon 39 Table 4: The investment of Shareholder‘s Equity 42 Table 5: Information about Amazon's Executive Officer 48 Table 6: Financials ratios of Amazon 54 Table 7: AWS market share 57 Table 8: The table of Amazon Income Statement (2014-2019) 71 Table 9: The table of Amazon Balance Sheet (2014-2020) 72 Table 10: Amazon Financial Ratio 2014-2020 73 Table 11: CashFlow Statement of Amazon 2014-2019 74 ABBREVIATION AWS: Amazon Web Service CEO: Chief Executive Officer CFO: Chief Financial Officer SPV: Senior Vice President B2B: Business to business B2C: Business to customer CPM: Competitive Profile Matrix KDP: Kindle Direct Publishing IT: Information Technology SMEs: Small and Medium Enterprises EBIT: Earnings before interest and taxes EPS: Earning per share ROA: Return on Assets ROI: Return on Investment ROE: Return on Equity EBITDA: Earnings before interest, taxes, depreciation, and amortization MWPVL International: A global supply chain and logistics consulting services ABSTRACT Amazon.com Corporation - one of the largest and most tremendous successful webbased shopping worldwide Amazon.com is the most famous for modern innovation in all academic fields they have typically involved In the world, technology innovation has been applied and developed in many fields like security, military, medicine, entertainment, commerce, and post and brings many great benefits High technologies are the right procedure in the commerce field both now and in the future Therefore, the importance of the research is to highlight the benefits, advantages, and the strength that technology innovation brings about in the Amazon.com fulfillment centers, contributions, and warehouses, in such the way that alters the enterprise in the long term by improving the value chain Furthermore, this study shows that continuous technological innovation creates impact on business structure and business performance of Amazon.com Corporation CHAPTER 1: INTRODUCTION 1.1 Background Technology has stopped being strange and advantaged all through the modern world, and its efficient utilization has instantly become an essential component in the business field In a particularly dynamic and globalized world, if a business does not innovate or improve manufacturing processes of such enterprises by technological innovation so that becoming technologically out of date can mean preventing it penetrate the market Some other previous research has focused on development as the vital of corporate development and technology innovation is the most widely recognized methodology to expand the development of the corporation (Hervas-Oliver, J.L.; Sempere-Ripoll, F.; Boronat-Moll, C.; Rojas-Alvarado, R., 2018) That is the reason companies should bargain each day with technological advances and adjust to them, in order to accelerate their processes and maintain competitiveness in the market In a turbulent market, those firms which have high technological capabilities become leaders of the market and gain high profitability (Chae, H.C.; Koh, C.E.; Park, K.O , 2018) The fundamental companies are attempting to create and implement their own technical advances in order to overcome their rivals These innovations give various services that assist organizations with building up more straightforward associations with their clients and providers, incomes, improve processes, make modern procedures for the new strategy of the organization Technological innovation is regarded as an important driver factor that significantly contributes to business performance (Hervas-Oliver, J.L.; Sempere-Ripoll, F.; Boronat-Moll, C.; Rojas-Alvarado, R., 2018) The importance of a firm‘s technological innovation capability, which can be beneficial to the company and leads to improved competitiveness, has been confirmed by many studies (Zhang, Y.; Khan, U.; Lee, S.; Salik, M , 2019) It was proven that Industry4.0 is key to the improvement of sustainable business performance for SMEs 1.2 Amazon.com Overview In 1994, when the internet speed was boom over 2.3 percent per year Although this leader - Jeff Bezos had no experience in sales and had no understanding of the Internet, he saw the future of online sales, and he also had seen the difficulties in researching and finding the document, materials,… Hence, Jeff Bezos conceived the idea of selling books online The successful company was sufficiently established in 1994 by Jeff Bezos in Seattle with the first official name correctly was Cadabra, Inc but has been instantly changed to a name-based Amazon.com – Amazon‘s the largest river in the world, and begin with the letter "A" which is the first letter of the alphabet Amazon is a multinational focused multinational technology company focused on cloud computing, digital broadcasting, artificial intelligence, and e-commerce Amazon.com Inc (NASDAQ: AMZN) is an e-commerce company located in Seattle, the United States, Washington This precious corporation is the largest US retail system with sales revenue of 280.522 billion USD (in 2019), business profit of 14.541 billion USD (in 2019), and a combined number of employees worldwide and 798,000 (in 2019) Amazon is a multidisciplinary business company such as books, music services, IT software, home decoration, games, Amazon advertisements catch our brilliant eye whenever our modern devices (Smartphones, laptops, TVs,…) are accessed network Experts call Amazon one of the potential companies now and until the future With annual revenue of trillions of dollars in just four years of development, it is clear online retail stores are one of the giants of the e-commerce world Amazon set up separate websites in Canada, the UK, Germany, France, China, and Japan,… serving more than 17 million conscious consumers in 160 developed countries In 25 years of establishment and development, Amazon has a lot of great improvements, and accomplishments to the company have been like today Amazon.com currently possesses 80 tremendous label brand that they ordinarily have on their ideal platform: (Flamand, Wisher, & Riley, 2020) Amazon.com Amazon Prime Air Amazon Marketplace Amazon Go Amazon Pantry Amazon Music Unlimited Amazon Fresh Amazon Tickets Amazon Payments Amazon Web Services Amazon Games Amazon Prime Amazon Art Amazon Music Amazon Video Amazon Fire Tv Amazon Basics Echo and Alexa Amazon Elements Amazon Kindle Fire Audible Additionally, the fulfillment centers, warehouses, and standard distributions of Amazon.com allow tremendous robotics and artificial intelligence devices such as RFID, red laser code, to graciously please Amazon customers by responding to potential clients' valuable goods quickly Currently, Amazon owns more than 200,000 robotic vehicles to increase labor productivity and appreciably reduce shipping time The e-commerce industry in the modern world is developing strongly and diversifying innovative products and services Technology is constantly changing and developing, causing businesses to constantly innovate and innovate to meet the competitive needs of competitors in the market in the 4.0 economies If a company stops creating and adopting technology innovation it immediately makes obsolete by a radically various rival in the corresponding markets On the contrary, it will gain an aggressive and firm position in the economy To express the economic importance of technological innovation in today is the modern economy, the author chose Amazon.com Enterprise one of the leading enterprises in technology innovation trends to study the revolution impact of practical application in this business Therefore, the author chooses the topic of this research as ―Technological Innovation and its impact on Amazon.com Enterprise: A focus on Business Structure and Business Performance.‖ Amazon is one of the most enormous business groups in the world, so this research based on analyzing the impact on Amazon will provide many valuable lessons for local and foreign enterprises to develop the business 1.3 Research Purpose This study aims to uniquely identify and clarify economic issues with the practical application of technological innovation in the Amazon positively affecting business structure and operations results Recognizing the strength of technology innovation reduces inventory costs, labor, Also, increase the revenue for Amazon and reduce the latest price for customers The study is expected not only to highlight the potential benefits of technological innovation in the creative exploration of strategic 10 Secondly, human beings are less and less valued in the work place as their role are replaced by computers Outsourcing has meant larger profits for firms, however a decline in wages and conditions and additional state for standard staff, particularly in Western nations transnational companies are more and more not possible to manage by individual nation-states Thirdly, issues of privacy have become huge as it become increasingly difficult to control personal information in the digital and the Internet world Financial details can be hacked into, can did photos or videos posted on the web, slurs, and accusations made against people‘s characters and personal identities can be stolen Fourthly, intellectual property theft and piracy have made it more and more difficult for creative people to make any money from their output Media can be digitalized and then distributed across the internet very easily and the process seems impossible to control Ultimately it will lead to a decline in artistic and creative quality as people no longer have the time and fund to pursue projects Fifthly, modern societies are increasingly dependent on technology So much so, that many basic services such as hospital, power grid, airport, rail and road transport systems, and military defenses can now be knocked out by cyber attack or catastrophic failure Humans would be almost helpfulness if the technology was taken away overnight Sixthly, we are increasingly becoming overwhelmed by the information overload that modern technology brings, as we are bombarded by irrelevant emails, sales telephone calls, text messages, internet advertising etc rather can saving us time, new technology means that we are expected to process more and more information and work even more intensively Seventhly, technology brings with it all sorts of environmental problems As well as machine and devices often being made from toxic or non - biodegradable materials, most technologies need a power source, which can often mean an increase in the consumption of electricity and fossil fuels 61 Lastly, technology has a general dehumanizing effect as well as in the workforce An example is Amazon use more and more robots and intelligent systems, which can replace and kill human workers 5.2.2 For other SMEs The reason why other companies need to invest in technological innovation based on the case of Amazon.com Corporation Firstly, Technology helps businesses save time by optimizing, automating, simplifying operations, and even eliminating some tasks that employees will take days to complete One report shows that investing in technology can increase productivity by 20%, and employees who spend 60-80% of their time working remotely have the highest levels of engagement In Amazon, white-collar workers can work from home to save time for going to the office, save money for transportation and Amazon can save their working space, reduce hiring cost in some small warehouses Secondly, investing in information technology security is important for any company looking to achieve success A data breach will cause shocks in public opinion, take away customer trust, customers feel insecure and will quit the business Good security will help businesses keep all the information of employees and customers safe, and avoid unauthorized access Thirdly, Interact better with customers Customers love and keep up with technology, businesses need to be at the same wavelength to interact and connect with them In fact, 84% of US small businesses use at least one social media platform to provide information to customers, and 80% of small businesses use digital technologies, like messaging apps instantaneous, to communicate with partners and customers Fourthly, computer regulation and automation means that many devices and machines now function much more efficiently and use less power, either because they are working at the most efficient rate, or they automatically switch themselves off when not in use This provides benefits for the environment as well as being cost saver If new enterprises can apply that new technology in their business, they can have a big 62 attention from customers and make a difference from other rivals therefore, they can succeed in there business 63 5.3 Limitation and future research 5.3.1 Limitation The research is also founded on the information and experience of the author, so it has not been verified, specifically, and clearly classified Furthermore, it has emotional perspectives on understudies doing research This research has limitation because of the qualitative method by gathered secondary data so that the author has not clearly and specifically classified the strength of technological innovation in all fields which mentioned above Furthermore, the business performance result has not been persuasively analyzing because of the knowledge limitation of the author In addition, in this thesis, the author just has pointed out the correlation to business structure and business performance results in primary, have not clearly seen the causal relationship between technological innovation, business model, and business performance results 5.3.2 Future research For future research, I suggest the author take an in-depth in technological innovation impact on business structure, and business performance by quantitive method, collect data, which find more convincing evidence, iron out the limitation of this thesis as well as research more information, values, and data to improve the business operation of Amazon.com 64 REFERENCES Amazon (2017) Annual Report Amazon (2018) Annual Report Amazon (2019) Annual Report Annual Report, 77 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2014 2015 2016 2017 2018 2019 Revenue 88,988 107,006 135,987 177,866 232,887 280,522 Cost of good sold 62,752 71,651 88,265 111,934 139,156 165,536 Gross profit 26,236 35,355 47,722 65,932 93,731 114,986 Research and Development Expenses 9,275 12,540 16,085 22,620 28,837 35,931 SG&A Expenses 16,650 20,411 27,284 38,992 52,177 64,313 Other Operating Income Or Expenses (133) (171) (167) (214) (296) (201) Operating Expenses 88,810 104,773 131,801 173,760 220,466 265,981 Operating Income 178 2,233 4,186 4,106 12,421 14,541 Total non-Operating Income/Expense (289) (665) (294) (300) (1,160) (565) Pre-Tax Income (111) 1,568 3,892 3,806 11,216 13,976 Income Taxes 167 950 1,425 769 1,197 2,374 Income after Taxes (278) 618 2,467 3,037 10,064 11,602 Income from Continous Operations (241) 596 2,371 3,033 10,073 11,588 Net Income (241) 596 2,371 3,033 10,073 11,588 EBITDA 4,924 8,514 12,302 15,584 27,762 36,330 EBIT 178 2,233 4,186 4,106 12,421 14,541 Basic Shares Outstanding 462 467 474 480 487 494 Shares Outstanding 462 477 484 493 500 504 Basic EPS (0.52) 1.28 5.01 6.32 20.68 23.46 EPS - Earning per share (0.52) 1.25 4.90 6.15 20.14 23.01 Inventory 8,299 10,243 11,461 16,047 17,174 20,497 Liabilities And Share Holders Equity 64,747 54,505 64,747 83,402 131,310 162,648 Source: Amazon Annual Report (Amazon, Annual Report, 2019) 71 Table 9: The table of Amazon Balance Sheet (2014-2020) (Unit: Million USD) Cash on hand Receivables Inventory Total Current Assets Property, Plant, And Equipment Goodwill And Intangible Assets Other Long-Term Assets Total Long-Term Assets Total Assets Total Current Liabilities Long-Term Debt Other Non-Current Liabilities Total Long-Term Liabilities Total Liabilities Common Stock Net Retain Earnings (Accumulated Deficit) Comprehensive Income 2014 2015 2016 2017 2018 2019 2020 17,416 5,612 8,299 19,808 5,654 10,243 25,981 8,339 11,461 30,986 13,164 16,047 41,250 16,677 17,174 55,021 20,816 20,497 84,396 24,542 23,795 31,327 35,705 45,781 60,197 75,101 96,334 132,733 16,967 21,838 29,114 48,866 61,797 72,705 113,114 3,319 3,759 3,784 13,350 14,548 14,754 15,017 2,892 3,445 4,723 8,897 11,202 16,314 22,778 23,178 54,505 29,042 64,747 37,621 83,402 71,113 131,310 87,547 162,648 128,914 225,248 188,462 321,195 28,089 8,265 33,887 8,227 43,816 7,694 57,883 24,743 68,391 23,495 87,812 23,414 126,385 31,816 7,410 9,249 12,607 20,975 17,563 12,171 17,017 15,675 43,764 17,476 51,363 20,301 64,117 45,718 103,601 50,708 119,099 75,376 163,188 101,406 227,791 5 5 5 1,949 2,545 4,916 8,636 19,625 31,220 52,551 (511) (723) (985) (484) (1,035) (986) (180) Source: Amazon Annual Report (Amazon, Annual Report, 2019) 72 2014 2015 2016 2017 2018 Current Ratio 1.12 1.05 1.04 1.04 1.10 1.10 1.05 Quick Ratio 0.82 0.75 0.78 0.76 0.85 0.86 0.86 Long-Term Debt/Capital 0.43 0.38 0.29 0.47 0.35 0.27 0.25 Debt/Equity Ratio 0.77 0.61 0.40 0.89 0.54 0.38 0.34 Gross Margin 29.48 33.04 35.09 37.07 40.25 40.99 39.57 Operating Margin 0.20 2.09 3.08 2.31 5.33 5.18 5.93 EBIT Margin 0.20 2.09 3.08 2.31 5.33 5.18 5.93 EBITDA Margin 5.53 7.96 9.05 8.76 11.92 12.95 12.47 Pre-Tax Profit Margin (0.12) 1.47 2.86 2.14 4.84 4.98 6.26 Net Profit Margin (0.27) 0.56 1.74 1.71 4.33 4.13 5.53 Asset Turnover 1.63 1.65 1.63 1.35 1.43 1.25 1.20 Inventory Turnover Ratio 7.56 7.00 7.70 6.98 8.10 8.08 9.80 Receiveable Turnover 15.86 18.93 16.31 13.51 13.96 13.48 15.73 Days Sales In Receivables 23.02 19.29 22.38 27.01 26.14 27.08 23.20 ROE - Return On Equity (2.24) 4.45 12.29 10.95 23.13 18.67 22.84 Return On Tangible Equity (3.25) 6.19 15.30 21.12 34.73 24.50 27.21 ROA (0.44) 0.92 2.84 2.31 6.19 6.64 ROI (1.27) 2.76 8.79 5.78 15.02 13.56 Book Value Per Share 23.10 28.42 40.43 57.25 88.69 124.62 185.69 Share 3.04 10.43 10.30 1.71 24.19 14.97 Free Cash Flow Per Share (0.15) 11.40 6.01 Operating Cash Flow 2019 5.14 2020 17.03 Per (4.77) 21.95 12.44 53.12 9.58 Table 10: Amazon Financial Ratio 2014-2020 Source: Amazon Annual Report (Amazon, Annual Report, 2019) 73 Table 11: CashFlow Statement of Amazon 2014-2019 2014 2015 2016 2017 2018 2019 (241) 596 2,371 3,033 10,073 11,588 Amortization 4,746 6,281 8,116 11,478 15,341 21,789 Other Non - Cash Items 1,234 2,450 2,709 3,894 6,078 7,411 Total Non - Cash Items 5,980 8,731 10,825 15,372 21,419 29,200 Change In Accounts Receivable (1,039) (1,755) (3,436) (4,780) (4,615) (7,681) Change In Accounts Receivable (1,193) (2,187) (1,426) (3,583) (1,314) (3,278) Change In Inventoties 1,759 4,294 5,030 7,100 3,263 8,193 Change In Accounts Payable 741 1292 1,955 738 1,151 1,711 Change In Assets/ Liabilities 974 2,557 3,847 -242 (1,043) (2,438) 6,842 12,039 17,203 18,365 30,723 38,514 Activities (4,893) (4,589) (6,737) (10,058) (11,323) (12,689) Net Change In Intangible Assets (979) (795) (116) (13,972) (2,186) (2,461) 807 (1,066) (2,663) (3,054) 1,140 (9,131) Investments 807 (1,066) (2,663) (3,504) 1,140 (9,131) Investing Activities (5,065) (6,450) (9,516) (27,084) (12,369) (24,281) 4,426 (3,882) (3,716) 9,928 (7,759) (9,950) 73 (116) Net Income/Loss Total Total Depreciation Change In And Assets/ Liabilities Cash Flow From Operating Net Acquisitions/Divestitures Net Change In Short-term Investments Net Change In Long - term Cash Flow From Investing Activities Net Long - Term Debt Net Current Debt Cash Flow Activities From 4,426 (3,882) (3,716) 9,928 (7,686) (10,066) 4,432 (3,882) (3,716) 9,928 (7,686) (10,066) Financial 74 Net Cash Flow 5,899 1,333 3,759 1,922 10,317 4,237 Stock - Based Compensation 1,497 2,119 2,975 4,215 5,418 6,864 Source: Amazon Annual Report (Amazon, Annual Report, 2019) 75 ... Amazon Fresh Amazon Tickets Amazon Payments Amazon Web Services Amazon Games Amazon Prime Amazon Art Amazon Music Amazon Video Amazon Fire Tv Amazon Basics Echo and Alexa Amazon Elements Amazon. .. label brand that they ordinarily have on their ideal platform: (Flamand, Wisher, & Riley, 2020) Amazon. com Amazon Prime Air Amazon Marketplace Amazon Go Amazon Pantry Amazon Music Unlimited Amazon. .. Impact of technological innovation and value chain analysis of Amazon. com 33 4.3 Technological innovation and Amazon? ??s Business structure 38 4.3.1 Monetization activities, total assets, and