Analyse the strategic rationale behind Amazon’s acquisition of Zoox

ASSESSMENT ONE BRIEFING

Assessment formatIndividual Report (1000 word)   

Weighting: 25%

Assessment task:

The purpose of this assignment is to gain an understanding of the real-world factors involved in mergers, acquisitions and alliances (MAA).  The ability to research an MAA situation in the manner set out in this assignment will help you to be aware of wider issues in the global economy.  In doing so, you will improve your business acumen, a quality highly sought after by employers.

This assignment offers two alternative tasks.  Whichever task you choose, it is designed to challenge you to (a) understand the motives behind the acquisition of artificial intelligence (AI) start-ups and (b) develop skills of investigation and analysis. 

In developing your skills of investigation and analysis, these will be a mixture of:

  • academic skills: using the library search; finding your own sources; reading for meaning; summarising and synthesising information; thinking critically.
  • business acumen skills: deciding which information is relevant to your investigation; making connections between ideas (this can include cause and effect); relating your findings to the wider business context.

Option A: Acquisition of AI Start-ups Case Study

Case study: acquisition of autonomous driving start-up Zoox by Amazon

In June 2020 Amazon announced its acquisition of an autonomous driving start-up — Zoox. Founded in 2014, Zoox had already raised nearly $1 billion of funding to develop autonomous driving technology to provide a full-stack solution for ride-hailing. With this acquisition, Amazon aimed to build its position in the self-driving industry. Along with this, Amazon has also been heavily investing in developing drones or autonomous delivery robots to enter the robot delivery business.  Amazon’s strategic aim in acquiring Zoox is to utilise the company’s autonomous technology in its delivery process, while offering massive scale and resources to the start-up to develop its vision.

Below are the opinions from executives and academic interviewed by Tom Taulli (Forbes) in 2020 about the acquisition:

Gautam Narang, CEO and co-founder of GatikThe deal is a validation for the AV delivery space. The last decade was heavily focused on warehouse automation, and this decade is all about automation of on-road transportation networks. Amazon made the right move in 2012 with their purchase of Kiva. Their purchase of Zoox is a clear indication they’re targeting the same impact with autonomous delivery.”

Dr. Charla Griffy-Brown, professor at Pepperdine Graziadio Business School“The Zoox purchase makes sense given Amazon`s 210 patents on everything from drones to automated ground vehicles. Amazon is already developing a drone delivery service through Amazon Prime Air. This also enables the company to compete across several industry verticals which will be transformed post-COVID19. This is a sign that Amazon is using its resources and building the opportunity for extraordinary innovation where it will prepare and then accelerate during economic recovery.” 

David Somo, senior vice president of corporate strategy, marketing and solutions engineering at ON SemiconductorAmazon likely acquired Zoox to increase automation in its distribution network, particularly the “last mile” delivery service. This should drive operational efficiencies, scale and eventually result in substantial cost savings across their distribution network. I think it is unlikely that Amazon intends to operate a fleet of autonomous vehicles for passenger ride sharing and compete with the likes of Uber of Lyft.”

Task:

  1. Analyse the strategic rationale behind Amazon’s acquisition of Zoox.
  2. Investigate the motivation i.e., relevant ‘drivers to deals’ that prompted this acquisition.
  3. Use up-to-date, reliable business and relevant academic sources to present your discussion and findings.
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