Introduction
Essentially, the paper addresses and investigates Amazon, one of the world’s largest companies engaged in selling all sorts of goods and services through the Internet. Amazon achieved customer loyalty and introduced innovations to the e-commerce field, expanding products and services categories compared to other e-commerce platforms. Despite its growth and success, Amazon faces specific problems and has a potential for improvement. Therefore, the strategic case analysis provides clear and detailed recommendations on organizational strategy, change management, ethics, and process improvement to resolve the current issue.
Overview of the Organization
Amazon organization is one of the world’s leading retail companies, dominating the electronic sector of the market. Founded in 1995 by Jeff Bezos, the e-commerce service expanded rapidly, becoming global in the 21st century (Sadq et al., 2018). Initially, Bezos realized that the Internet would change the consuming habit among almost all people; he should be part of this paradigmatic change. Thus, Amazon opens new locations around the world that extend the number of jobs further. In a way, Amazon has become the primary association with the sphere of electronic retail.
Alshmrani (2021) emphasizes that Amazon’s activities were initially narrowed to online book promotion; however, the company grew and started selling various products, such as electronics, computer games, home decor, and clothing. Besides, Amazon provides a detailed description of the products, including information about the production, selling companies, ratings, and user reviews. Amazon owns the idea of buying goods in one click, widely used today everywhere in e-commerce and websites similar to Amazon. Thus, Amazon serves as an effective link between businesses and buyers, organizing convenient purchases and deliveries.
Furthermore, Amazon’s business model has a long history of success. It is determined by the active use of digital innovation, convenient retail formats, and logistics infrastructure expansion for the end consumer (Hahn et al., 2018). Indeed, Amazon possesses an array of critical advantages that solidify its position in the market, enhancing its competitive advantage. Amazon identified five primary strategy dimensions: “reasonable pricing, fast shipping, clear reach, accurate delivery, and quick customer service” (Alshmrani, 2021, p. 78). Specifically, Amazon boasts its customer-centered business model, within which all operations are aimed at improving customer experience and increasing customer convenience and services usability (Hahn et al., 2018). In addition, the reputation of the brand works toward its status as the leader of the industry.
Therefore, years and decades of domination in the electronic retail segment have secured the brand’s leading position, establishing solid associations with quality and reliability. This way, Amazon benefits from the trust of its customer base. The company states its mission as a “customer obsession” as it prioritizes relations with its customers over the focus on competitors (Amazon, 2021). Nowadays, Amazon is not only one of the largest online stores globally but also one of the leaders in sales in general. In addition to the United States of America, Amazon also operates in Europe and Asia. As a result, Amazon has been able to retain its leading position in e-commerce; however, the current landscape exhibits a continuously growing level of competition, which threatens the status of Amazon.
The company’s performance is not impeccable, as initial analysis revealed many weaknesses and risks that may become crucial in the contemporary environment. First of all, the business model of Amazon is subject to replication, as the level of technological progress creates such opportunities for new entrants. More companies venture into electronic retail, especially in the age of digital solutions as the primary response to the COVID-conditioned reality.
Organizational Strategy
Amazon has a functional organizational structure that concentrates on business activities as foundations for interactions management between the organization’s components units. In Amazon’s organizational structure, there are three core elements: global hierarchy, global function-based groups, and, finally, geographical divisions (Meyer, 2019). Amazon has implemented a hierarchical structure due to its enormous business size. Meyer (2019) demonstrates that the hierarchy is illustrated as a global structure of vertical authority divisions that impact the company’s decision-making process.
Consequently, senior managers influence relevant Amazon’s offices in different locations worldwide. In order to efficiently manage e-commerce business throughout the company, Amazon includes function-based groups, which consist of a committed team led by a senior manager (Meyer, 2019). This strategy is beneficial for organizational expansion when considering new target markets. Organizational structure also consists of geographical divisions, which help Amazon control e-commerce operations regarding particular regions’ economic conditions (Meyer, 2019). Therefore, the current organizational structure supports the company expand and control various markets in different geographical locations.
Nevertheless, it is essential to add that the hierarchical organizational structure has outlived its usefulness, and in the future, the company is encouraged to consider other options. Meyer (2019) suggests that Amazon’s organizational structure has limited flexibility due to global hierarchy and reduced capabilities to react to arisen issues in the business rapidly. Thus, it is crucial to challenge traditional organizational structures, empower teams, give people more responsibility, and build a culture of shared information, vision, and goals.
Organizing global-function-based groups around mission, product, market, or customer needs rather than business functions will improve the structure and positively impact communication within the company. Amazon may empower global teams to set their own goals and make their own decisions in the context of an overall strategy or business plan, thus changing the traditional goal structure and performance management. Also, an essential strategic move is to shift people from team to team as needed. In the future, the company could rearrange people to customer-, product-, market-, or goal-oriented teams, led by leaders-experts in their fields rather than professional managers.
In addition, global groups need to have enhanced rights, assertive communication, and fast information sweep. Simultaneously, the digital revolution provides international teams with opportunities to stay connected. For example, teams can easily use the web and mobile apps to share goals, maintain awareness of customer interactions, product quality, or brand issues, and build a shared culture. Instead of sending messages up and down the levels of the corporate pyramid, company employees can receive information immediately. Amazon is recommended to continue to focus on innovation and refusal from the usual hierarchical organizational system, replacing it with efficient and flexible global teams and enhancing the successful and rapid exchange of information between them.
Change Management
Jeff Bezos, the founder of Amazon, himself spoke of the possibility of the company’s bankruptcy. For instance, he mentioned that the extensive life expectancy of large organizations is no more than thirty years (Hamilton, 2018). Bezos also reportedly stated that his goal is to delay the inevitable by focusing on customers and their needs (Hamilton, 2018). Thus, organizations do not live long; their lifespan is getting shorter. Notably, one of the reasons may be a lack of attentiveness to customers’ interests, but this is not the main problem. The companies that disappeared did not respond to the change.
Essentially, this statement may sound overly simplistic; however, it is a central problem. Galli (2019) assumes that change management is vital for every organization and industry. Consequently, change management refers to “continuous improvement, business reengineering, strategic alliance, adoption of the outsourcing pattern, and merger and acquisition” (p. 606). Hence, organizations are recommended to seek changes in order to obtain new opportunities and gain a competitive advantage.
Many organizational issues are complex and broad, so a more comprehensive view of surviving long term is needed. Mobtahej (2020) acknowledges that organizations should identify relevant objectives, unfreeze organizational structure, and maintain changed processes. Galli (2019) states that Lewin’s model is the most influential in change management; it consists of three core steps: unfreezing, changing, and freezing. The first stage, namely unfreezing, relates to the organization’s preparation for change.
Galli (2019) highlights that at this stage, the organization moves out of its comfort zone. The second stage is called changing, and it associates with a transition from the current state to a target model. In this stage, communication and cooperation methods should be accentuated (Galli, 2019). Finally, Galli (2019) suggests that the third stage, namely freezing, follows transition and adaptation. Accordingly, the stage enables an organization to consolidate and vitalize new changes and patterns.
The organization may apply Lewin’s model to initiate and manage changes. Nonetheless, the issues should be analyzed at different organizational levels (Mobtahej, 2020). Significantly, Amazon should consider the change management from individual to teams and evaluate it regarding the entire organization. Moreover, it is highly advisable to focus on innovations and customers’ needs to apply changes. Therefore, Amazon should not maintain a fixed structure; instead, the organization should respond quickly to competitive markets and continuously investigate customers’ needs to provide high-value services.
When employees work in their familiar environment, they do not want to accept any changes. Therefore, as a rule, the first reaction of employees to proposed organizational changes can be a reaction of resistance. Managing change related to the individual component leads to the fact that employees cease to perceive the proposed changes in work as a negative factor and accept the changes. To manage change, you need to understand what goals you need to achieve. The objectives of change at the personal level must be strictly aligned with the goals of organizational change.
Amazon should concentrate on communication enhancement, knowledge sharing, and fast learning within global teams in order to solve change management challenges and overcome competition. Mobtahej (2020) argues that communication, commitment, and collaboration are vital in change management. Thus, communication between global teams facilitates change management and helps to approach conflicts and challenges. Consequently, commitment in teams and especially tasks delegation, knowledge, and resource exchange are crucial in an organization’s adaptation to change.
Finally, Mobtahej (2020) suggests that collaboration between various units and divisions leads to mutual benefits achievement. To summarize, these three aspects assist in change management when considering the marketplace, products, and services development and understanding organizational and customers’ needs. It can be argued that without a competent organization of change management, the company will not develop, and therefore, will not correspond to the constantly changing surrounding world, in particular, the market situation.
Ethics
Corporate ethics are the codes of conduct confirmed by a particular organization or a firm that emphasize the regular functioning of individual employees and the whole organization. Notably, ethics addresses the concepts “of honesty, integrity, probity, diligence, fairness, trust, and respect” (Mwikonji, 2021, p. 30). Joseph (2020) emphasizes that strict adherence to ethical practices and values is a crucial element of every organization that helps to improve decision-making processes. Hence, organizations may succeed in any environment if they follow moral and fair standards and condemn any unethical patterns or behaviors (Joseph, 2020). Thus, ethics relates to decisions and impacts that facilitate and improve business and provide organizational opportunities.
Despite Amazon’s interest in the best specialists, the company does not pay more attention to meeting the needs of its employees in a comfortable working environment and social packages. Peters (2021) identifies that Amazon corporation has ethical issues regardless of its significant success around the world. In 2021, many workers have complained about mistreatment, unsanitary working conditions, and especially shifts without breaks. Moreover, Peters (2021) states that Amazon is famous because of its union-busting and preventing employees from protecting their rights and fair working conditions. Thus, Amazon is advised to take responsibility and attend to each employee’s requirements and interests separately.
Therefore, it is recommended to adhere to the business communication standards, provide fair working conditions, respect employeesâ rights and confidentiality, and create and maintain a good organizationâs reputation. Significantly, employees in the organization should have the right to be treated fairly, regardless of their location, nationality, gender, sexual preferences, and political or religious beliefs. Moreover, the organizationâs proper ethical and moral environment has a crucial role in the business success and operation benefits.
The stable development of an organization often depends on team cohesion and primary ethical responsibility for work processes in front of each other and society as a whole. Thus, the absence of a code of corporate ethics can negatively affect the strategy and success of the company as a whole, and lead to a lack of employee loyalty to the organization, reduced efficiency, and lower motivation.
Significantly, the e-commerce giant has shown to have environmental issues. According to CBS News (2020), Amazon’s CO2 emissions equaled approximately fifty-one million metric tons in 2019. In addition, the company displayed a carbon footprint due to shareholders’ and employees’ pressure and complaints. Baram (2021) states that Amazon reached the 63rd percentile according to CSRHub data; however, there is a place for improvement. Amazon’s negative impact on the environment cannot be ignored, and the company should improve its environmental ethics to fight climate change.
The goals are to decrease the CO2 emissions, use renewable energy and recyclable materials for production and logistics. An integral attribute of modern organizations is the requirement to control the impact on the environment, social and environmental responsibility. Singh et al. (2019) point out that an organization’s economic activities often have a negative side, such as ecological imbalance. Therefore, environmental ethics enables organizations to implement value-creating business strategies through environmental training and performance (Singh et al., 2019). Hence, environmental, ethical practices help gain competitive advantage and maintain synergy between society, organization, and environment.
The complex of problems arising at the intersection of economics, ecology, and ethics presupposes active implementation in practice of ethical principles of responsible attitude to the environment and care for future generations. For instance, Amazon’s need to create and operate large servers and global data centers is a serious reason for the direct negative impact on the environment, animals, and humans.
In this regard, new environmentally friendly projects should be developed to create large servers and data centers that cause minimal harm to humans and the environment. To conclude, the ecologically oriented policies will allow Amazon to cooperate with environmental organizations, control CO2 emissions, and provide recyclable materials; thereby, expand the range of opportunities both in terms of financial benefits and social responsibility.
Process Improvement
The management of the core business processes of an organization involves constant improvement and optimization. Bakotic and Krnic (2017) suggest that business process improvement results in better overall performance. In addition, process improvement empowers three vital elements related to employees’ behavior in the organization, such as knowledge exchange, communication, and motivation, which, as a result, lead to an improvement in the value proposition and the innovationsâ introduction.
Amazon is a giant e-commerce organization that hires thousands of people around the world. According to Reuter (2021), Amazon employs over 950,000 people in the United States, making it the nation’s second-largest employer after Walmart. Each of these people’s experiences begins with the first interview for the position and persists through all work stages until the contract’s termination. Reuters (2021) mentions that, despite the decision to set the company’s minimum wage at $15 per hour, the annual turnover rate attains 150%. Thus, employee experience needs to be reviewed in full within the process boundaries to instill significant improvements.
The human resource management process at Amazon is vast and encompasses all stages of an employee’s communication and interaction with the company. At the initial stage, an individual is added to the organization’s workforce and introduces their inputs. The process begins with the first acquaintance with Amazon’s work organization, values, benefits, and regulations.
This point will not be subject to significant modification, as the issues tend to arise later. In the current process, Amazon provides employment benefits without regard to the expectations and needs of the employees. In other words, the benefits’ nature and distribution are centered around the management perceptions and the prevalence of a customer-focused model. Nevertheless, the proposed modifications are related to a better mutual dialogue throughout the stages of later employment. This way, both parties will remain in the spirit of cooperation, reducing the number of forced or uncomfortable resignations.
In order to evaluate Amazon, it is necessary to consider the annual turnover employees metric. According to Reuter (2021), this metric currently equals a negatively impressive 150%. Nonetheless, such a high turnover rate has been achieved despite the reported impacts to increase the workers’ salaries and benefits. Thus, these efforts have been either insufficient or made in the wrong direction. Notably, the employeesâ happiness directly affects labor efficiency in the organization.
The recent employee satisfaction figures provided by Del Rey (2021) indicate that the level of happiness among workers, indeed, leaves much to be desired. Important to mention that Amazon corporation remains subject to wrongful termination lawsuits. Jeans (2021) affirms that some current and former employees have complained and filed lawsuits against Amazon concerning discrimination and retaliation. Naturally, the company does not reveal the exact percentage of such cases, but the goal is to reduce them to a statistically insignificant minimum.
Most of the proposed metric changes target a one-year distance to allow Amazon to complete an entire annual cycle for more objective results. The essential milestone of the process will consist of reducing the turnover rate below the psychological threshold of 100%. It appears feasible to have an average of 80% in this regard across a one-year term. In addition, there are avenues for enhancing job satisfaction, as these two metrics are inseparable. Thus, it is proposed to aim at an average of 65% of employees who report being happy with their position. Finally, the third aspect of improved performance will reduce the rate of wrongful termination lawsuits to the level of statistical insignificance. This process will become an objective of the Employee Rights task force, investigating all terminations’ legal and moral aspects within the company.
The core purpose of the process improvement is to ensure the defense of workers’ rights to a sufficient degree that will refute the public’s accusations. Additionally, the best ideas are born in that environment where all employees feel safe, cohesive, and inspired to offer their unique solutions. Through the correct execution of the process, Amazon will reinforce its internal relations, preventing burnout and employee turnover.
Conclusion
To conclude, employees will be more likely to perform at the optimal level required by the organization, as long as these requirements correspond with the perceived employment benefits. Additionally, Amazon should refine the following processes: organizational structure, corporate and environmental ethics, and human resources management. As a result, the processes’ improvement will strengthen the organization’s value proposition, competitive advantage, social responsibility and enhance daily workflow.
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Appendix A
