5. Findings and discussion

"The literature on dynamic capabilities has addressed the fundamental question of how companies develop the skills and competencies that allow them to compete and gain an enduring competitive advantage… However, the literature does not tell much about the antecedents of new firms' dynamic capabilities" ([33], pp. 919– 920). This chapter addresses the latter issue in great depth. The author used contextual content analysis [32] to justify two propositions. The contextual analysis provided a comprehensive solution to the challenge of identifying and categorizing key textual data [51]. Content analysis transformed unstructured data into organized information to give you a competitive edge [51].

When the chapter explored acquisition-based dynamic capabilities and business models of Amazon and Whole Foods, the research found the acquisition enabled a series of strategic innovations to integrate Whole Foods products with Amazon functionality and vice versa. Bridging two perspectives together, Table 5 demonstrates what and why Amazon did with Whole Foods at the end of 2016 and how acquisition-based dynamic capabilities support a reinvention of building blocks of business models.

Amazon has high dynamic capabilities in online technology but not in food distribution. When some dynamic capabilities are missing, a company has the option to develop them internally or purchase them from outside. Amazon needed to acquire more knowledge of the retail market, improve management of its supply chain for the offline retail store, and continue investing in R&D for the grocery retail business. Dynamic capabilities of Amazon and Whole Foods are aligning and allowing them to improve existing products by sharing' experience, advanced technologies, and broad users' base. With Whole Foods acquisition, Amazon would benefit as it would get access to tons of consumers and lifestyle data packed into consumer's buying habits [44]. Whole Foods is an attractive platform for Amazon for the transformation of an industry. Therefore, two propositions have been justified empirically. Does click successfully meet brick? The integration of Amazon and Whole Foods is not fully finished. Amazon is trying to become Walmart—not just an online megalith but also a physical powerhouse with dynamic pricing and stocking strategy—faster than Walmart can become Amazon [44].

substantially more insights into the role that dynamic capabilities can play in acquisitions and how dynamic capabilities relate to business model transformation. Besides contributing to dynamic capabilities view on competitive advantages by adding fresh insights about successful acquisition practice, the research core contribution is in the emergent conceptual model for future research on the reinvention of a business model in merger and acquisition process as shown in Figure 1. Collis and Montgomery [56] argue that good corporate strategy requires a continual reassessment of the company's scope, requires continual investment in building and acquiring strategically valuable resources, and develops organization ability to marshal them. Thereby, the conceptual model also integrates a great corporate strategy triangle: strong market positions (scope), high-quality resources, and an

The conceptual model of future research: bridging together acquisition-based dynamic capabilities and a process

The Transformation of Business Models in Technology-Enabled M&A: A Case Study of Amazon

The conceptual model makes dynamic capabilities more visible, tangible, and to

When some dynamic capabilities are missing, a company has the option to develop them internally or purchase them from outside. Teece argues: "In short, the business model outlines the (industrial) logic by which customers are served and money is made" ([25], p. 41). The current chapter contributes to theory and practice by illustrating how this logic works in the M&A process. The model demonstrates that the intersection of sensing and seizing capabilities can result in a new

efficient organization [56] as shown in Figure 1.

Figure 1.

193

of the transformation of a business model.

DOI: http://dx.doi.org/10.5772/intechopen.85134

6. Conclusion, limitations, and future works

some extent measurable with the help of business model canvas.

With Whole Foods acquisition, Amazon would benefit as it would get access to tons of consumers and lifestyle data packed into consumer's buying habits [44]. Morgan Stanley analysts think that the new Whole Foods has the ability to close the pricing gap between it and its competitors [53]. Zahra et al. [10] argue that entrepreneurs and other key organizational decision-makers failing with current applications spur attempts to change. However, key dynamic capabilities, such as transforming resource and developing new competencies, might be challenging for Amazon. Should Amazon manufacture its own products to make a higher margin? Could Amazon's offline retail marketing concept be developed globally [54]? To become one of the biggest offline retail players, Amazon needs to educate customers and make a lot of investment. According to Tom Caporaso, the chief executive officer of Clarus Commerce, the Amazon Go business model relied on several recent technological innovations that required more time for testing [55].

Don Stuart, a managing partner at Cadent Consulting Group, concurred that even for the biggest online retailer like Amazon, to make the platform was a huge challenge [55]. What novel have I learned that goes beyond these existing frameworks of dynamic capabilities and business models? How do we need to change these frameworks based on insights from the case? The current research gave

The Transformation of Business Models in Technology-Enabled M&A: A Case Study of Amazon DOI: http://dx.doi.org/10.5772/intechopen.85134

#### Figure 1.

5. Findings and discussion

Strategy and Behaviors in the Digital Economy

business models.

for testing [55].

192

Walmart can become Amazon [44].

nized information to give you a competitive edge [51].

"The literature on dynamic capabilities has addressed the fundamental question of how companies develop the skills and competencies that allow them to compete and gain an enduring competitive advantage… However, the literature does not tell much about the antecedents of new firms' dynamic capabilities" ([33], pp. 919– 920). This chapter addresses the latter issue in great depth. The author used contextual content analysis [32] to justify two propositions. The contextual analysis provided a comprehensive solution to the challenge of identifying and categorizing key textual data [51]. Content analysis transformed unstructured data into orga-

When the chapter explored acquisition-based dynamic capabilities and business models of Amazon and Whole Foods, the research found the acquisition enabled a series of strategic innovations to integrate Whole Foods products with Amazon functionality and vice versa. Bridging two perspectives together, Table 5 demonstrates what and why Amazon did with Whole Foods at the end of 2016 and how acquisition-based dynamic capabilities support a reinvention of building blocks of

Amazon has high dynamic capabilities in online technology but not in food distribution. When some dynamic capabilities are missing, a company has the option to develop them internally or purchase them from outside. Amazon needed to acquire more knowledge of the retail market, improve management of its supply chain for the offline retail store, and continue investing in R&D for the grocery retail business. Dynamic capabilities of Amazon and Whole Foods are aligning and allowing them to improve existing products by sharing' experience, advanced technologies, and broad users' base. With Whole Foods acquisition, Amazon would benefit as it would get access to tons of consumers and lifestyle data packed into consumer's buying habits [44]. Whole Foods is an attractive platform for Amazon for the transformation of an industry. Therefore, two propositions have been justified empirically. Does click successfully meet brick? The integration of Amazon and Whole Foods is not fully finished. Amazon is trying to become Walmart—not just an online megalith but also a physical powerhouse with dynamic pricing and stocking strategy—faster than

With Whole Foods acquisition, Amazon would benefit as it would get access to tons of consumers and lifestyle data packed into consumer's buying habits [44]. Morgan Stanley analysts think that the new Whole Foods has the ability to close the pricing gap between it and its competitors [53]. Zahra et al. [10] argue that entrepreneurs and other key organizational decision-makers failing with current applications spur attempts to change. However, key dynamic capabilities, such as transforming resource and developing new competencies, might be challenging for

Amazon. Should Amazon manufacture its own products to make a higher margin? Could Amazon's offline retail marketing concept be developed globally [54]? To become one of the biggest offline retail players, Amazon needs to educate customers and make a lot of investment. According to Tom Caporaso, the chief executive officer of Clarus Commerce, the Amazon Go business model relied on several recent technological innovations that required more time

Don Stuart, a managing partner at Cadent Consulting Group, concurred that even for the biggest online retailer like Amazon, to make the platform was a huge challenge [55]. What novel have I learned that goes beyond these existing frameworks of dynamic capabilities and business models? How do we need to change these frameworks based on insights from the case? The current research gave

The conceptual model of future research: bridging together acquisition-based dynamic capabilities and a process of the transformation of a business model.

substantially more insights into the role that dynamic capabilities can play in acquisitions and how dynamic capabilities relate to business model transformation. Besides contributing to dynamic capabilities view on competitive advantages by adding fresh insights about successful acquisition practice, the research core contribution is in the emergent conceptual model for future research on the reinvention of a business model in merger and acquisition process as shown in Figure 1. Collis and Montgomery [56] argue that good corporate strategy requires a continual reassessment of the company's scope, requires continual investment in building and acquiring strategically valuable resources, and develops organization ability to marshal them. Thereby, the conceptual model also integrates a great corporate strategy triangle: strong market positions (scope), high-quality resources, and an efficient organization [56] as shown in Figure 1.

The conceptual model makes dynamic capabilities more visible, tangible, and to some extent measurable with the help of business model canvas.

#### 6. Conclusion, limitations, and future works

When some dynamic capabilities are missing, a company has the option to develop them internally or purchase them from outside. Teece argues: "In short, the business model outlines the (industrial) logic by which customers are served and money is made" ([25], p. 41). The current chapter contributes to theory and practice by illustrating how this logic works in the M&A process. The model demonstrates that the intersection of sensing and seizing capabilities can result in a new

and more efficient cost structure; the intersection of sensing and transforming capabilities can result in the generation of a new revenue stream. The intersection of seizing and transforming capabilities can result in a new customer value proposition. Thereby, the acquisition-based dynamic capabilities are transforming the acquirer's business model and underpinning the acquirer's competitive advantage. The conceptual model integrates dynamic capabilities and business model perspectives in the new conceptual model for future research that encourages practitioners to grasp an exact relationship between the micro-foundations of each perspective. The conceptual model makes dynamic capabilities more visible, tangible, and to some extent measurable at least on the level of expected results (reduced cost and increased revenue streams). The resulting model is given in Figure 1 also advances the discourse on DCs and BM.

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There are several strong limitations to the research. Due to a limitation of the number of submitted pages, the research has provided only one evidence from M&A practice. Through the small data size and missing validation through a lack of robust analysis, the current chapter serves more as an introduction to the research, then as the results. Thereby, the chapter, being of an exploratory and interpretive in nature, raises several opportunities for future research, both in terms of theory development and findings validation. The conceptual model discussed in Figure 1 could also be used to generate a number of hypotheses for further empirical testing using a broader sample and quantitative research methods.

What is more, because changing the BM is a central top-management task, there is potentially very fruitful link to top management team (TMT) theory [57]. For example, what dynamic managerial capabilities are more needed in BMI in M&A the process: managerial cognition capabilities, social capital, or human capital [58]? What is more important and what are less important dynamic managerial capabilities for decision-making processes in technology-enabled M&A deals (idea, justification, due diligence, negotiation) and for integration processes in M&A deals (acquisition integration, synergy management) [59]? The study can also be extended in longitudinal and comparative ways.

### Acknowledgements

The paper support from RISEBA University of Applied Sciences is gratefully acknowledged.

### Author details

Andrejs Čirjevskis Business Department, RISEBA University of Applied Sciences, Riga, Latvia

\*Address all correspondence to: andrejs.cirjevskis@riseba.lv

© 2019 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

The Transformation of Business Models in Technology-Enabled M&A: A Case Study of Amazon DOI: http://dx.doi.org/10.5772/intechopen.85134
