Contemporary Management

Instructor: Dr. Rania ElReedy

Semester 1, Final Exam

Name: Kholoud Mohsen Mohamed Abdelkarim Fadala

Program: MBA, English
Group: 1X
Registration number: 21120673
 Table of contents:

1. Introduction
2. Research purpose
3. Company overview
4. Amazon’s mission and vision
5. Strategies (planning: SWOT Analysis)
6. Porter’s 5 forces model
7. Organizational structure and design
8. organizational culture
9. Leadership styles
10. Motivation : Employee Motivation
11. Control &Change
12. Teamwork
13. Overall recommendations
14. References

1. Introduction

Most of us are no strangers to online shopping. From essentials to luxuries, almost everything
can be purchased online nowadays. Therefore if the topic of online shopping comes up, then we
must also mention most commonly known and frequently used online retail websites. There is a
99% chance that “Amazon.com” would make the top of the list. Because most of us have
bought something off of it or browsed its selection of products, at some point in our lives.
However little know its story or how it effectively became the best leading example in electronic
commerce.

2. Research purpose:

This research paper will focus on the organizational analysis of Amazon. It will shed a light on
Amazon’s mission and vision. It will highlight major business strategies used by the e-
commerce giant through conducting a SWOT analysis as well as Porter’s 5 forces model.
Additionally, it will demonstrate Amazon’s organizational structure, design, and leadership
styles. Then, it will offer insight into motivation methods, control and change practices in place
and end with teamwork frames found at the organization. Finally, it will end with a
recommendations and conclusion.
 3. Company overview:

Amazon.com, Inc. is an American multinational organization which operates in e-

commerce, cloud computing, digital streaming, and artificial intelligence. Amazon is also a
retailer, manufacturer of electronic book readers, and Web services provider that became the
largest online shopping retailer in the world. It is based in Seattle, Washington.

Amazon originally started as a website that only sold books; however, its founder, Jeff Bezos had
bigger plans for the company and a larger vision for future explosive growth and ecommerce
domination.
Jeff Bezos founded Amazon from his garage in Washington, on July 5, 1994. It is now the world's
largest online sales company, the largest Internet Company by revenue, and the world's largest
provider of cloud infrastructure services. So how did Amazon come to be and who is the business
mind behind this success?
Jeff Bezos is an American entrepreneur, investor and computer engineer. Bezos holds a degree
in electrical engineering and computer science. He worked on Wall Street in a variety of related
fields from 1986 to early 1994.
After Bezos graduated from college in 1986, He first worked at Fitel,
a fintech telecommunications start-up. He transitioned into the banking industry when he became a
product manager at Bankers Trust. He then joined D. E. Shaw & Co, a newly founded hedge
fund with a strong emphasis on mathematical modelling in 1990. He was asked to investigate new
businesses, and in particular, this new thing at the early 90s called the World Wide Web. Bezos was
quick to see the potential in this new digital web called the “internet”.
In late 1993, Bezos decided to establish an online bookstore. He left his job at D. E. Shaw and
founded Amazon in his garage on July 5, 1994, after writing its business plan on a cross-country
drive from New York City to Seattle.
Bezos initially named his new company Cadabra but later changed the name to Amazon mainly
because it began with the first letter of the alphabet. At the time, website listings appeared in
alphabetical order, so a name starting with "A" would appear sooner when customers conducted
online searches). Additionally, He chose the name because of its association with the largest South
American river (the Amazon River) as fitting for what he hoped would become the world's largest
online bookstore.
Although Amazon was originally an online bookstore, Bezos had always planned to expand to other
products. Doubters claimed Amazon.com ultimately would lose in the marketplace to actual
bookstore chains once they had launched competing e-commerce sites. The lack of company profits
until the final quarter of 2001 seemed to justify its critics.

However, Amazon rebounded from financial instabilities it encountered at the time. The company
expanded rapidly in other areas. Its Associates program, where other Web sites could offer
merchandise for sale and Amazon.com would fill the order and pay a commission, grew from one
such site in 1996 to more than 350,000 by 1999. Following Bezos’s initial strategy, the company
quickly began selling more than books. Music and video sales started in 1998. That same year it
began international operations with the acquisition of online booksellers in the United Kingdom and
Germany. By 1999 the company was also selling consumer electronics, video games, software,
home-improvement items, toys and games, and much more. In November 2007, Bezos launched
the Amazon Kindle, and Amazon was recognized as the largest online shopping retailer in the world
that same year. In 2018, Amazon reported its highest ever profit with quarterly earnings of $2 billion.
In February 2021, Bezos announced that in the third quarter of 2021 he would step down from his
role as CEO of Amazon, to become the Executive Chairman of the Amazon Board. He will be
replaced as CEO by Andy Jassy.
So how did Amazon become one of the most influential economic and cultural forces in the world?
How did a company that started in a garage become one of the Big Five American IT companies,
alongside Google, Apple, Facebook and Microsoft?
The next sections will shed a light on Amazon’s performance through conducting an organizational
analysis of the company.
4. Amazon’s mission and vision:
A Mission Statement defines the company's business, its objectives and its approach to reach those
objectives. A Vision Statement describes the desired future position of the company. Elements of
Mission and Vision Statements are often combined to provide a statement of the company's
purposes, goals and values. All great businesses start with a clear and concise mission and vision.

Amazon’s mission statement is to “serve consumers through online and physical stores and focus on
selection, price, and convenience. To be Earth’s most customer-centric company, where customers
can find and discover anything they might want to buy online, and endeavors to offer its customers
the lowest possible prices.”

In its annual report for 2019, Amazon highlights its mission as to “serve consumers through online
and physical stores and focus on selection, price, and convenience.

Amazon vision statement is an extension of its mission as “to be Earth’s most customer-centric
company.

However, its vision gets became popular from a belief summarized as always being in “day one.”
Jeff Bezos explained day one in these terms, “day 2 is stasis. Followed by irrelevance. Followed by
excruciating, painful decline. Followed by death. And that is why it is always Day 1.“ This is a way for
Amazon to keep a “start-up mindset” also if it has become a large organization. It means focusing on
customers, therefore, experimenting with new product lines, services, or anything that might become
“delightful” to the public.

Amazon describes its vision and mission statements as to its DNA and leadership principles. As the
company grew, it incorporated more leadership principles into its culture. Amazon defines its
company culture and innovative objectives through its company leadership principles (will be
discussed in detail in coming sections).

5. Business Strategies

To remind you, Organizational performance is a measure of how efficiently and effectively

managers use available resources to satisfy customers and achieve organizational goals. The job of
management is to help an organization make the best use of its resources to achieve its goals to
reach effectiveness.
Now that we covered Amazon’s mission and vision statements, which offered an insight into its
ultimate objective; do whatever it takes to make the customer happy, let us look at its organizational
performance through examining the business strategies behind Amazon's success.
SWOT analysis and the five forces model are two handy techniques managers can use to
analyze factors inside an organization and outside in the global environment that affect the
organization’s ability to meet its goals now and in the future.
SWOT analysis is a planning exercise in which the below is identified:

❑ Internal organizational strengths (S)

❑ Weaknesses (W)
❑ External environmental Opportunities (O)
❑ Threats (T).

So what are Amazon’s strengths? The answer is a relentless commitment to the customer
experience. Everything that Amazon does — every strategic move, every investment — is guided by
its goal to be the most customer-centric company in the world

Strengths:
➔ A culture of intense idea testing
Amazon has introduced a wide variety of innovations to the market that have revolutionized e-
commerce. From a consumer perspective, these innovations ensure that Amazon is the place to
shop for anything and everything. As a company that is not afraid to fail, Amazon explores
possibilities of developing a product or service, even if the product poses some risk of failing.
➔ Data:
Amazon not only leverages data collected from consumer behavior and feedback/reviews to
improve its own operations and product offering, but also sells that data to advertisers through the
Amazon DSP program.

➔ Possesses High Customer loyalty

Amazon offers free shipping and other benefits to its customers through its prime membership,
which Consumers know and love. There is a high loyalty to the company among Prime members.

A recent survey suggests that over 100 million people in the United States have an Amazon Prime
account. The survey also estimates that Prime members spend double the amount of non-prime
members on Amazon — an average of $1,400 every year.

➔ Worldwide recognition

Amazon has a powerful influence on any new market it enters. Amazon has been able to use its
brand recognition globally, which makes it such a threat to new markets. Amazon now has 31% of
the market share in Germany and 47% market share in the UK.

➔ Superior Logistics system:

Amazon has a logistics system that is far superior compared to other global retailers, and this is
one of the key ways Amazon is able to deliver on its goal of being the earth’s most customer-
centric company. From distribution centers near large cities to an advanced robotics system for
improved efficiency, Amazon invests deeply in its logistical systems this has resulted in Amazon
deriving competitive advantage over its rivals.

➔ Agility in decision making:

Despite its size, Amazon can make decisions quickly that enable it to stay ahead of the game.
The company has several built-in systems that keep teams and decision-making flexible and
fast. One famous system is the “two-pizza rule,” which keeps problem-solving teams small and
forces decision making (More on this will be covered under effective team management-
Teamwork section).

What are Amazon’s weaknesses?

The company also has several weaknesses.

➔ Fragmentation:

Amazon as part of its diversification strategy is an “everything” company. It runs a media

operation that produces top-quality television series and movies, a cloud-based web provider,
and an online retailer, all wrapped into one. This could be a strength as Amazon can dominate
multiple industries, but it also limits the company’s ability to focus on one strategic goal causing it
to possibly lose its strategic advantage as it moves away from its core competence.

➔ Not brand friendly:

There are some categories where brand value is more important than others. Amazon has
traditionally done poorly in these categories where brand is important, such as fashion and home
goods.

➔ Limited physical store presence:

Considering the fact that Amazon is an online only retailer, the focus on online retailing might be
an obstacle in its expansion plans particularly in emerging markets.

Amazon has limited physical store presence compared to competitors like Target and Walmart.

But this is changing as Amazon adopts a strategy to move from just an e-commerce giant to
opening up actual stores. Amazon started this journey with its acquisition of Whole Foods
grocery stores in August 2017 as its first foray into the world of grocery shopping. Amazon also
has four other types of physical shops around the United States: Amazon Books, Amazon 4-
Star, Amazon Go, and Amazon Pop Up.

Amazon Go is an especially interesting retail location. Consumers must have the Amazon Go
app to enter the store, but once in, there are “no lines, no checkout.” Consumers can just pick
the items they’d like off the shelf, then upon leaving the store Amazon will charge the customer’s
Amazon account.

What are opportunities for Amazon?

➔ Amazon Pay:
 By launching its online payment system, Amazon now has the opportunity to scale up
considerably considering the fact that concerns over online shopping as far as security and
privacy are concerned are among the topmost issues on the minds of consumers.

➔ Growth of voice:

Alexa has been a strategic move for Amazon to get consumers even further locked into the
Amazon system. While Alexa and the Amazon Echo both further the company’s mission of
providing a great experience, the ultimate motivation for these products is to make the ordering
process seamless.

➔ Amazon’s own brand- Amazon Basics:

Another opportunity is to develop a number of products under its own brand instead of only
selling and stocking products made by its partners. An example of this is Amazon’s recently
launched private brand “Amazon Basics”, which now includes all kinds of products, like kitchen
accessories

What are threats to Amazon?

➔ Data and online privacy:

One of the biggest threats Amazon will face in the future is the continued debate over what is
private data versus what is public data. Additionally, the increasing concern over online shopping
because of identity theft and hacking, which leaves its consumer data, exposed. Therefore, Amazon
has to move quickly to allay consumer concerns over its site and ensure that online privacy and
security are guaranteed.

Despite its power, Amazon is still subject to the laws and regulations of -any country in which it
operates. If any sweeping legislative changes are introduced in these countries, it could damage the
company’s ability to operate as it does.

An example might be a new data privacy regulation. If major reform meant that Amazon could not
collect as much consumer data as it does, it could harm the business.

➔ Local scale competition:

Amazon faces significant competition from local online retailers who are more agile and flexible
because of their small scale. This means that the company cannot lose sight of its local market
conditions in the pursuit of its global strategy.

Because Amazon’s varied types of products and services, Amazon has numerous competitors from
different industries.

In retail, some of Amazon’s biggest competitors include Target, Walmart, Best Buy, and Alibaba. For
tech, IBM, Google, Salesforce, and Accenture all stand as competition. In the media arm of the
company, competition comes from Netflix, Hulu, Disney, and Time Warner.

In this section, we will examine Amazon through Porter’s five forces model. It is a well-known model
that helps managers focus on the five most important competitive forces, or potential threats, in the
external environment is Michael Porter’s five forces model.
The five forces are threat of substitutes, bargaining power of buyers, threat of new entrants,
competitive rivalry and bargaining power of suppliers.

The following are the intensities of the external factors affecting Amazon, based on Porter’s Five
Forces Analysis model:

1. Competitive rivalry (strong force)

2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (moderate force)
4. Threat of substitutes (strong force)
5. Threat of new entrants (weak force)

1. Competitive Rivalry or Competition with Amazon.com Inc. (Strong Force)

Amazon competes against strong competitors. In the case of Amazon.com Inc., the following
external factors are responsible for the strong intensity of competition or competitive rivalry in the
online retail industry environment:

• High aggressiveness of firms

• High availability of substitutes
• Low switching costs

Retail companies are generally aggressive, and they promote a sense of strong competitive rivalry.
For example, Amazon.com Inc. directly competes against giants like Walmart in America, which has
a significant and expanding e-commerce website. Amazon also experiences the strong force of
substitutes because of their high availability. For instance, Walmart’s physical stores are substitutes
to Amazon’s online retail service. Furthermore, low switching costs (cost difference that occurs when
switching brands) impose a strong force on the company. Low switching costs correspond to low
barriers for consumers to transfer from one retailer to another, or from one company to a substitute
provider.

2. Bargaining Power of Amazon’s Customers/Buyers (Strong Force)

This aspect of Porter’s Five Forces Analysis model determines the influence of consumers on firms
and the industry environment. The following external factors support the strong intensity of the
bargaining power of customers in affecting Amazon:

• High quality of information

• Low switching costs
• High availability of substitutes

Consumers have access to high quality information regarding the services of online retailers and the
products they sell. This external factor affects Amazon.com Inc. in terms of the ability of customers
to find alternatives to the company’s online retail service. In relation, the low switching costs make it
easy for consumers to transfer from Amazon to other firms, such as Walmart. Also, the high
availability of substitutes further empowers consumers to shift from one retailer to another. For
example, instead of purchasing on Amazon’s e-commerce website, a customer can easily go to one
of Walmart’s stores, which are strategically located throughout the United States.
 3. Bargaining Power of Amazon’s Suppliers (Moderate Force)

Suppliers control the availability of supplies or materials Amazon.com Inc. needs for its e-
commerce operations, such as hardware components for information systems. The influence of
suppliers on the online retail industry environment is outlined in this aspect of Porter’s Five
Forces Analysis model. Amazon experiences the moderate intensity of the bargaining power of
suppliers based on the following external factors:

• Small population of suppliers

• Moderate forward integration
• Moderate size of suppliers

The small population empowers suppliers to impose a strong force on Amazon.com Inc.’s e-
commerce business. For example, changes in prices of equipment from a small number of large
suppliers could directly impact the company’s online retail operational costs. However, the moderate
forward integration limits suppliers’ actual effect on Amazon. Moderate forward integration equates
to a moderate degree of control that suppliers have in the sale of their products to firms like Amazon.

4. Threat of Substitutes (Strong Force)

Amazon.com Inc. competes with substitutes in the online retail market. This aspect of Porter’s Five
Forces Analysis model identifies how substitutes affect the industry environment. In the case of
Amazon, the following external factors support the strong intensity of the threat of substitution:

• Low switching costs

• High availability of substitutes
• Low cost of substitutes

Amazon continually addresses the strong force of substitutes, which threaten the e-commerce
company’s performance. The low switching costs show that customers can easily transfer from the
company to other retailers. For example, consumers can easily decide to buy from Walmart stores or
other retail establishments instead of buying from Amazon.com Inc. The high availability of
substitutes and the low costs of their product offerings further increase the influence of substitutes
against the company.

5. Threat of New Entrants or New Entry (Weak Force)

New firms potentially reduce Amazon’s market share in online retail. The effects of new entrants are
considered in this aspect of Porter’s Five Forces Analysis model. Amazon.com Inc. experiences the
weak intensity of the threat of new entry based on the following external factors:

• Low switching costs

• High cost of brand development
• High economies of scale

Amazon’s consumers can easily transfer to new firms, thereby empowering new firms to impose a
strong force against the company. This condition is due to low switching costs, or the low negative
effects of transferring from one provider to another. However, the high cost of brand development in
online retail weakens the influence of new entrants on the performance of Amazon. For example, it
would take years and billions of dollars to create a strong brand that directly competes with the
Amazon brand. As such, new entrants need to achieve similarly high economies of scale to compete
against the company. Based on the external factors in this aspect of the Five Forces Analysis, new
entrants are a minor strategic issue in Amazon’s performance in the online retail industry
environment.

Major Business Strategies:

Being the world’s leading online retailer, Amazon is an innovative learning organization that
derives its strengths primarily from “a three-pronged strategic thrust on cost leadership,
differentiation, and focus”. Range, price and convenience are placed at the core of Amazon
competitive advantage. The global online retailer operates with low profit margins and succeeds
due to a combination of economies of scale, innovation of various business processes and a
constant business diversification. Amazon business strategy is guided by four principles:
customer obsession rather than competitor focus, passion for invention, commitment to
operational excellence, and long-term thinking. The following four points constitute the
cornerstones of Amazon business strategy: This strategy has resulted in the company reaping
the gains from this course of action.

Recommendations:

Amazon must strategically address the major forces of competition, consumers and substitutes,
based on the Porter’s Five Forces Analysis of the business. It is recommended that the company
must address the strong force of competitive rivalry by emphasizing competitive advantage and
strengths of the e-commerce organization. For example, the company must continue boosting its
brand image, which is among the strongest in the industry. Amazon can also focus more on
marketing and deals on its website in the Middle East. (Ex. Amazon.eg) as there are many emerging
and competing e-commerce platforms such as Noon and Jumia. Another recommendation is for
Amazon to fight the threat of substitution by making its service more attractive. For example, the
company must continue to make its website more user friendly to optimize user experience. As well
as offer more product variety in its country specific websites.

Now that we have covered SWOT analysis and Porter’s five forces model, let us look at Amazon’s
organizational structure and design, Culture and leadership styles.

Organizational structure and design:

Amazon’s organizational structure is mostly hierarchical with elements of function-based structure
and geographic divisions. Amazon initially started as a lean, flat organization in its early years,
however it transitioned into a hierarchical organization with its jobs and functions clearly defined as it
scaled.
The Amazon organizational structure favors a vertical hierarchical approach with global, function-
based groups and geographic divisions. This gives the company extensive top-down control over
global operations, allowing it to increase market share and maintain market leadership status.

At the top of this chain is a senior management team reporting directly to CEO Jeff Bezos. called the
S Team, this small team of Amazon senior executives works with Bezos to implement his ideas,
solve problems, set high-level goals, and shape company culture.

The S Team has senior executives in charge of several function-based groups, including:
1. Finance.
2. Human resources.
3. Corporate affairs.
4. Amazon Web Services (AWS).
5. Worldwide consumers.
6. Amazon devices and digital management.
7. Worldwide operations.
8. Legal and secretariat.

Geographic divisions:
The company only has two geographic divisions: North America and International.
The company also uses groups according to physical location and related business goals. For
instance, Amazon.com Inc. is the eCommerce arm of the company. It uses groups to manage
eCommerce operations according to geographic regions and their associated regulatory frameworks
and logistical challenges. Ultimately, this allows Amazon to address country or region-specific issues
proactively and efficiently.

Let us highlight how Amazon used its organizational structure to its advantage. Many would think
that a large, hierarchical organization would be stiff and resistant to change.
However, this is not the case at Amazon. The company is a flexible and adaptive market leader in
eCommerce. Indeed, Amazon has caused disruptive innovation in online marketplaces and also in
global logistics.

One key contributing factor in its flexible and agile decision making is the Two Pizza Rule. Instituted
by Bezos, the Two Pizza Rule states that no meeting shoud be so large that two pizzas cannot feed
the entire group.

The goal here is efficiency and scalability. Smaller teams spend less time managing timetables or
keeping others in the loop and more time doing what needs to be done. In turn, each team has
access to company resources to meet short and long-term goals. A product team, for example, can
add new product lines without having to meet with the project, process, or logistics teams.
In purely theoretical terms, these teams are given more autonomy than say a worker in
an Amazon warehouse.

Stability is also a notable feature of the Amazon organizational structure – particularly in

senior management.
Although there are frequent new additions to the S Team, many members have been in the same
position for years or in some cases, decades. The long-term success of the hierarchical model has
resulted in a highly experienced senior management team.
Ultimately, this has allowed Amazon to grow and expand into new markets without sacrificing
competitiveness.

Organizational Culture:
Now that we have highlighted Amazon’s organizational structure and design, let us look at Amazon’s
unique culture.
Amazon organizational culture has been described as “breakneck-paced, and notoriously cost-
conscious Amazon organizational culture was fiercely criticized in 2015 in The New York Times article
titled “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace”.
The flaws included in the article were: unrealistic performance standards, the work culture based on
fear and the lack of recognition of employee contribution. The article caused debates in the media and
even prompted a response from Amazon CEO Jeff Bezos.

Generally, pushy, combative and ‘bruising’ organizational culture is perceived as outdated. Nowadays,
the popular belief is that workplaces need to be nurturing and encouraging, and managers need to be
nice and friendly and treat their employees like family in order for a company to succeed. The largest
internet retailer in the world by revenue proves this belief wrong.

Amazon has a very intensive corporate culture with an extensive emotional and even physical
pressure to some employees. Nevertheless, Amazon still managed to replace Google as the best
place to work in US, according to LinkedIn at a certain point in time. This can be explained in a way
that Amazon has a unique organizational culture that is not for everyone. Only employees who can
thrive under immense pressure and fast-paced environment can survive in this company.

Generally, Amazon organizational culture implements the following elements:

1. Continuous reinvention and optimization of organizational culture

Jeff Bezos emphasizes the importance of constantly assessing and adjusting Amazon’s culture so it
never loses the agility, nimbleness, and hunger for experimentation”. Accordingly, Bezos constantly
opposes “one-size-fits-all” decision making culture. He believes that “failure and invention are
inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to
work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing
to suffer the string of failed experiments necessary to get there”

Moreover, Bezos uses “two pizza rule” for meetings, where the numbers of participants in a meeting
are limited to a group that can be all fed with two pizzas. This also provides a better environment for
decisions to be made faster and more effectively.

2. Customer-centricity.

Amazon positions itself as one of the most customer-centric companies in the world. Founder Jeff
Bezos emphasizes that “your customers are far more important than your competitors. Your customers
contain the evidence your organization needs to validate or invalidate new business ideas that could
propel your company into the future”. Amazon’s high level of customer-centricity is one of the pillars
in which Amazon’s corporate culture is built upon with direct implications to a wide range of
organizational processes and procedure.

3. Diversity among workforce

Valuing diversity among the workforce is placed at the core of Amazon organizational culture. The
company has employees of many different ethnicities, nationalities, backgrounds and does not show
discrimination against a specific group as it views its diversity as another pillar to its success.

According to their official website, Amazon describe themselves saying “We are a company of builders
who bring varying backgrounds, ideas, and points of view to inventing on behalf of our customers. Our
diverse perspectives come from many sources including gender, race, age, national origin, sexual
orientation, culture, education, and professional and life experience. We are committed to diversity
and inclusion and always look for ways to scale our impact as we grow.”.
 4. Outcome-, not output-, focused

An output is the result of an activity (e.g., three new features launched) rather than the result of
those outputs (e.g., checkout takes 20% less time for customers). Teams are therefore encouraged
to try lots of different outputs to uncover which is most effective in reaching their desired outcomes.
This also reduces the natural urge of leadership to micromanage teams and dictate their outputs
5. Decentralized
There is no Chief Product Officer at Amazon and no product divisions, either. This means that plans
are made and shared by a dispersed group of product managers across the organization who have
to work together, rather than a top-down approach (more in this in effective team management
section).
6. Favors narratives more than Power Points.
There is a six-page rule at Amazon, and when plans are shared, they must fit on those six pages––
and when plans are combined across multiple teams, they are still expected to fit on just six-page
document.

Leadership styles:
After examining Amazon’s culture, let us shed some light onto some of Amazon’s leadership styles.
Amazon leadership style has been classified as pragmatist. Pragmatist leaders “set high standards
and unapologetically expect those standards to be met by themselves and by their employees”

Bezos efficiently exercises visionary and servant leadership styles (a leadership philosophy built on
the belief that the most effective leaders strive to serve others, rather than accrue power or take control.
The aforementioned others can include customers, partners, fellow employees and the community )
and places exceptional customer service at the core of Amazon’s business practice.

Jeff Bezos’ leadership style can be analyzed through the prism of contingency leadership theory.
According to contingency leadership theory, “leader’s effectiveness is contingent upon with how his or
her leadership style matches to the situation. Jeff Bezos leadership style has been characterized as
harsh, cutthroat and demanding. It can be argued that such a leadership style fitted the situation on
the onset of the business, when the company had to strengthen its position on rapidly expanding
industry.

Amazon leadership principles found in official company job site consists of the following 14 points:

1. Customer Obsession
2. Ownership
3. Invent and Simplify
4. Leaders Are Right, A Lot
5. Learn and Be Curious
6. Hire and Develop the Best
7. Insist on the Highest Standards
8. Think Big
9. Bias for Action
10. Frugality
11. Earn Trust
12. Dive Deep
13. Have Backbone; Disagree and Commit
 14. Deliver Results

Amazon Board of Directors comprises 9 members, who are experienced business leaders in a wide
range of industries. The company ‘s senior leadership is aided by three committees – Audit Committee,
Nominating and Corporate Governance Committee and Leadership Development and Compensation
Committee.

Amazon leadership challenges include sustaining the profitability of the business despite the current
thin profit margin. Up to date, the company has been able to deal this challenge through process
innovations, deriving maximum benefits from human resources and constantly entering new business
segments.

Motivation

Let us shed some light into motivation methods and practices followed at Amazon. However, It is
important to remember that an organization will be effective only if its members are motivated to
perform at a high level. Additionally, Amazon, like many other companies, houses employees that
are motivated by various factors and can include intrinsically and extrinsically motivated employees.
Nevertheless, how does Amazon motivate its workforce?
There are various factors to employee motivation at Amazon, and they include the following, the
environment, development opportunities, career development, and money — all of these factors play
a significant role in motivating employees.

• Financial gains
At Amazon money plays a very important part in motivation of their employees. Amazon understood
that money itself is not a huge motivator especially once you have already earned it. However, the
‘hope for money’ is a huge motivator’ of employees and it keeps people going. Once an employee
understands the visibility of their future pay today, that becomes a motivating factor. Employees feel
motivated to run towards that future and work hard for it.
Additionally, At Amazon, Performance is rewarded with increased responsibilities and an opportunity
to buy into stocks as awards.
Amazon employs other methods of motivating their employees such as learning, growth
opportunities, and work environment.
• Work Environment
A poor work environment can make any good employee lose motivation and the enthusiasm to
increase performance. Job incentives such as competitive pay, benefits and programs such as
tuition reimbursement, flexible hours, scheduling and time-off would act as stimulant to increased job
satisfaction.
Amazon even has a unique leave called “Pilgrimage leave” for employees who have been with the
company for 5 years. This leave allows Muslim employees to go to pilgrimage and perform their
religious activities.
Bezos also revealed a flexible working policy whereby employees across over 10 states work from
home, providing customers with virtual customer service from the comfort of their own homes.
• Fear of not being the best

Jeff Bezos admitted that he uses “fear” as a motivator before as he mentioned, “I constantly
remind our employees to be afraid, to wake up every morning terrified,” the Amazon founder
 wrote in a 1999 shareholder letter. “Our customers have made our business what it is,” he
continued, “and we consider them to be loyal to us – right up until the second that someone else
offers them a better service.”

For Amazon to remain competitive in the future, employees needed to be scared of no longer
being the best and commit to “constant improvement, experimentation and innovation in every
initiative.”

• Training and career development

Training programs are encouraged as this has proven to increase job satisfaction in Amazon.
Increased job satisfaction has shown to increase employee motivation, which then increases job
retention rates. Amazon employs this tactic as the majority of its employees have agreed that
Amazon is the place to learn and grow one’s career.
Jeff Bezon actively utilizes this employee management tactic called 'Career Choice'. He mentions
the below as an example of the application of this tactic.

''[W]e pre-pay 95% of tuition for our employees to take courses for in-demand fields, such as
airplane mechanic or nursing, regardless of whether the skills are relevant to a career at Amazon,''
wrote Bezos. He said the goal was to enable choice.

''We know that for some of our fulfillment center employees, Amazon will be a career. For others,
Amazon might be a stepping-stone on the way to a job somewhere else – a job that may require
new skills. If the right training can make the difference, we want to help.'
Amazon also invest in employees’ success. Amazon will spend over $1.2 billion to provide free skills
training to employees—helping them further their careers in tech and in-demand roles such as cloud
computing.

Control & Change

Now that we covered general motivation methods in Amazon, let us focus on control and change
practices found at the organization.
Control, does not mean just reacting to events after they have occurred. It means keeping an
organization on track, anticipating events that might occur, and then changing the organization to
respond to whatever opportunities or threats identified.
The below example was provided as part of a research paper titled “Amazon Case Study: A Change
Management” which best showcases Amazon’s situational-based response to change.
For example, the change brought about by Amazon is dependent to the situation of Covid-19, which
has heavily encouraged online shopping. Customers’ demand for fast and easy delivery of goods
ordered online increased. Elements like technology level, organizational size, dependency on
environment and uncertainty of demand needed to be considered while planning for a change.
In this case, the increase in demand for products and management of huge number of customers is
the factor driving the change in Amazon. The application of the robotics technology to the operations
of Amazon for catering to customer needs is highly dependent on its technological support. Amazon
has analyzed the elements, including technology, its staffs’ ability to adapt to the change, the need
for the change and the ROI from the change. Amazon has estimated that the return from the
implementation of the change, i.e., the use of robotics technology would increase their revenue and
sales. The robotic warehouse will be managing huge stocks. This will facilitate adjusting and
adapting to the changing environment, changing market demand, and varying customer behavior,
thus the robotics warehouse will be greatly effective.
Amazon has applied the contingency (Situation- based) approach to implement the change and
incorporated robotics technology in the warehouses. This helped stock goods more systematically
and address to the changing customer demand. The change was successfully implemented and
Amazon was able to reap the maximum benefits from the robotic-based warehouse in the form of
increased revenue and faster response to customer demands. Thus, situational needs and goals
were met.

Recommendations:
Considering the size of organization, the application of the robotics technology and the formation of
the fulfilment center is an effectively strategic move. However, Amazon management originally may
not have properly taken into consideration the impact of the level of technology and external
environment they implemented on their non-tech savvy employees. Some employees found it
difficult to adapt to the system of the robotic fulfilment center.
Amazon could have been more effective by informing the staff and interacting with them about the
change, more management- employee involvement and increased level of support towards the
change and how intensely they want the change to be incorporated.
Amazon could have also tried to involve its employees so that they take increased interest in
adapting to the change. Once the robotics technology is introduced, the change needs to be further
evaluated through regular follow ups and checking on the outcome of the change

Effective Team management (Teamwork principles)

After highlighting Amazon’s contingency-based control and change practices through the above-
mentioned example, let us shed some light on Amazon’s teamwork philosophies.
Amazon usually favors small team structures. Its small-team structure means new projects are
approved quickly and it is one of the secrets to the company's success.

As previously mentioned, Amazon is famously organized into small "two-pizza" (8 -10 person)
teams. This directly adds flexibility and agility. Small teams can move quickly.

Amazon's two-pizza teams are agile, developed flexible inter-team structures, offer clarity or
purpose, and are fast to innovate. They are also highly autonomous. In other words, if your team is
larger than 5-7 people, you’re losing effectiveness. An example of this is the “Prime Now team” was
able to launch its pilot on the iPhone first even though Amazon is generally an Android company.
When the workload for a team becomes too big, Amazon may decide to break it into multiple smaller
teams to keep their agility.

But teams mostly form because an employee sees an opportunity — a big one like Prime Now or
one of the countless smaller ones. That employee is free to seek support and sponsorship inside or
outside his own current team.

How that happens at Amazon seems quite different from most companies, which have clearly
defined chains of command. For an idea to be implemented, it must move up the chain of command
to the point where management is senior enough to act. Once approved, team of Innovators start by
working backwards to develop a clear vision of what the project is for, who it will serve, and why
specifically customers will benefit. As it comes into focus, and more evidence is added that the
project is worth pursuing, it may attract more resources from inside and outside the original team.
That might include part-time help from other areas like logistics or human resources or advertising.
Of course, There is one usual criticism that follows as a result of this, which is small teams also
compete for resources and projects, so from another perspective Amazon has created an
environment in which teams compete vigorously (sometimes viciously) on behalf of their projects
and initiatives. Not everything gets funded, so there are naturally winners and losers. This hyper-
competitive environment is another way Amazon pushes teams to innovate.

Additionally, despite the approach's initial success, few people inside Amazon actually talk about
two-pizza teams. Instead, the model was gradually refined and ultimately replaced by a far more
capable type of team model, one still in use today called “Single threaded leader teams” (STLs).

Two-pizza teams were small. Autonomous. Measured by a well-defined set of metrics. Owned
responsibility for all aspects of their area of focus: design, technology, business results, etc. All of
which sounds great in theory. Yet sometimes two pizzas really wouldn’t be enough. Research has
found that two-pizza teams were only successful for tasks like product development, an area where
tangled dependencies had historically slowed the rate of innovation and implementation. It's hard to
get something done when another functional area resists, much less actively works against you.

As time went on, Amazon found that the biggest predictor of a team's success wasn't whether it was
small but whether it had a leader with "the appropriate skills, authority, and experience to staff and
manage a team whose sole [my italics] focus was to get the job done." Or as Amazon's SVP of
devices, Dave Limp, said, "The best way to fail at inventing something is by making it somebody's
part-time job."

That's why, in time, two-pizza teams evolved into single-threaded leader (STL) teams, a term
borrowed from computer science that means to only work on one thing at a time.

However, Jeff Bezos always recommends his teams, whatever type they may be, to focus on long-
term successes. He encourages teams to always be stubborn on vision, and flexible on the details.
Being firm about where you want to go is the important part of strategy. Being firm about how you
get there, on the other hand, is unwise.

Conclusion and Overall Recommendations:

Amazon is a predominantly hierarchical organization incorporating function-based groups and

geographic divisions.

Amazon does not believe in “one size fits all” decision making systems, its control and change
practices in place, as well as business strategies. The organization has used the contingency
system approach for managing change

Overall recommendation is to Strategically address the strong force of competitive rivalry by

emphasizing competitive advantage and strengths of the e-commerce organization.
For example, the company must continue boosting its brand image, which is among the strongest in
the industry.
Amazon can also focus more on marketing and deals on its website in the Middle East. (Ex.
Amazon.eg) as there are many emerging and competing e-commerce platforms such as Noon and
Jumia.
The company must continue to make its website more user friendly to optimize user experience. As
well as offer more product variety in its country specific websites.
Amazon should also make an effort to minimize negative publicity to avoid reputational damage.
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