A focal firm’s growth strategies and performance are greatly influenced by the integrative type of strategies: collaborative (alliances, networks, joint ventures) or consolidative (mergers, acquisitions), to foster the innovation and to deliver new customer value propositions. In recent years, collaborative and consolidation strategies have received a great attention in strategic management literature. Researchers in strategic management argue that the performance outcome of a specific growth strategy is usually affected by the dynamic capabilities and business models [1,2,3]. What is the research gap in the existing literature on the dynamic capabilities and business models? First, dynamic capabilities in merger and acquisition are complex events in the process of sustain completive advantage of merging business for which we have an incomplete understanding, in part because researchers have tended to consider an only explanation of them.
What’s more, there are very few research papers that applied the dynamic capabilities framework as a tool of the business analysis of a reinvention of a business model of an acquirer company in M&A processes.
Second, the reinvention of business models of acquirers still an open area for research due to the following reasons. Johnson at al. [4] gave brilliant ideas on a reinvention of business models and their building blocks for focal companies, but still, a question remains, what capabilities are needed in a reinvention of business models in process of M&A? Pursuing scientific rigor and helping practitioners to re-invent of their business model, Amit & Zott [5] integrated dynamic capabilities with business model design process but what about re-invention of operationalized components of the model or building blocks of business models in M&A process? To re-invent building blocks of business models, Kim and Mauborgne [6] recommended to apply four steps framework: eliminate, reduce, increase and create, namely, to eliminate and to reduce an elements of business model thereby to eliminate and to reduce expenses as well as increase and/or create as a new some elements of business model thereby to increase a revenue stream and to create a new customer value proposition [2]. However, it is a silence about what dynamic capabilities are needed for that. Capturing valuable insights from the dynamic capabilities’ framework [4] and business model canvas [2], this chapter aims to integrate two theoretical perspectives in the cohesive conceptual model. Why is it important to combine the dynamic capabilities and business model literature? Adoption of seminal D. Teece’s framework [7] of dynamic capabilities and operationalized components (building blocks) of business models [2], in online and off-line grocery businesses, allowed the construction of the conceptual model for practitioners and scholars, which consequently can be tested by methods of statistical analysis in future research. The motivation for the research is as follows: I want to know how acquisition based dynamic capabilities support a reinvention of building blocks of business models. The chapter discusses how a focal firm makes strategic decisions under uncertainty and deals with the commercialization of innovation by means of dynamic capabilities to sense a new demand, capture new resources and partnerships, transform channels and customers’ relationship and deliver a new customer value proposition, particularly, by means of acquiring of new technologies, advanced an engineering team and new users’ base. That’s what Amazon did with Whole Food in 2017. This case study of Whole Food acquisition by Amazon was selected due to the following reasons. Firstly, this empirical literature is still at an early stage and opportunities abound to dig deeper into the linkages between dynamic capabilities (DC), a reinvention of business models and long-run firm performance. “The research paradigm of dynamic capabilities is still relatively new. Accordingly, illuminating case studies are likely to yield powerful insights” [8, p.1400]. Secondly, the chapter digs deeper into the acquisition-based DC in M&A to develop an integrated practical example on how dynamic capabilities and building blocks of business models are interrelated in successful M&A process in ICT industry. The main contribution of the chapter is an emerging conceptual model of research that integrates acquisition based dynamic capabilities frameworks [7] and business model canvas [2] together and, thereby, illustrates how acquisition based dynamic capabilities underpinning a reinvention of business models in M&A process. This conceptual practice-driven model can be as a practical guide for scholars who have been studying DCs and BMs, as well as for those who are new to the field. What’s more, the chapter has contributed to the interest of the Strategy Practice group of Strategic Management Society by answering questions which the group attempt to answer: what are the capabilities required to perform strategy work and what are the micro-foundations of the activities involved in the doing of strategy?