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Module Code Module Title: Strategic Management

Academic Tutor: Neil Coade

Module Convener: Submission Type Individual Essay

Word Count (if applicable): 3485 Page Count: 17

I B P 7 0 0 4

Table of Contents

Executive Summary

Amazon Company Overview

Triple Bottom line

Triple Bottom line: People

Triple Bottom line: Environment

Triple Bottom line: Financial

Analysis of Amazon’s business structure

Analysis of Amazon’s business structure: Business Ethics

Analysis of Amazon’s business structure: Corporate Social Responsibility

Analysis of Amazon’s business structure: Sustainable Enterprise

Analysis of Amazon’s business structure: Response to Change

Steps for Amazon’s Sustainable Future

SWOT Analysis

Summary

Work Cited

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Executive Summary

The company I have decided to review and evaluate is Amazon. Amazon is a well-

known company and has a rapid growth rate within its industrial market. I will discuss

Amazon in terms of the triple bottom line factors, people, environment and finances in

order to measure the company’s sustainable growth. I will examine and analysis

Amazon’s business structure. More specifically, areas of the business structure such as,

business ethics, corporate social responsibility, sustainable enterprise and their response

to change. I will make suggestions for future steps to retain sustainable as well provide a

SWOT analysis. In the end I will conclude with my views of the company’s strategic

management style and its measure of success.

Amazon Company Overview

Today the online ecommerce company, Amazon, is a worldwide known name.

The company’s headquarters is located in Seattle, Washington and is consider being the

largest internet-based retailer in the United States (Streitfeld, 2015). Jeff Bezos founded

the company in 1994, Bezos’ initial business plan was expected to have a slow growth for

the first few years. In the 21st century there was a ‘dot-com bubble burst’ which

destroyed many e-companies expect Amazon. This was a significant turning point for

Amazon, as they became the huge player for online sales. Bezos’s business model

shocked most as no one could have predicted he’s slow growth approach would have

been this successful.

With the brand established the company continued to expand international, now

with retail services across United Kingdom and Ireland, France, Canada, Germany, Italy,

Spain, Netherlands, Australia, Brazil, Japan, China, India and Mexico, (Streitfeld, 2015).

As Amazon experienced growth within the online market they also faced new

competitors, which required the company to begin strategies of acquisitions and

investments. Over the years Amazon has acquired Zappos, BookSurge, Audible,

Shopbop, Toby press and many more, (Streitfeld, 2015). Many names are unheard of

because of the company’s’ quick turnaround to buy out the companies before they

reached a foundation within the industry.

Triple Bottom Line

The triple bottom line helps find the main sustainable elements that lay a

foundation for a company’s successful future growth; the people, profit and planet. How

the people impact an organizational structure, i.e. how innovation grows from the staff

and knowledge-based influence. The financials, the bottom line of profit or loss analysis,

i.e. statements of revenue verses expenses. Lastly the environmental aspect which is the

professional business influence on its external community and how it reacts to it. The

triple bottom line is a future-oriented approach with the purpose to set a long-term

outlook for sustainable development and analysis sustainability concerns.

People

Amazon has a great basis for customer loyalty and is known to have helpful and a

supportive customer service staff, which made finding the working conditions to be

‘hellish’ quite shocking. As Bezos is known to reject many of the commonly used

management strategies he aims he’s employee to propel to achieve he’s ‘ever-expanding

ambitions’ (Stone, 2013). The New York Times provided a quite insightful look at how

management actually tares down employees, and if you can’t handle the pressure you

leave. Susan Harker, one of Amazon’s recruiters stated to New York Times, “when

you’re shooting for the moon, the nature of the work is really challenging. For some

people it doesn’t work.” This reflects Amazon’s business practices to not be fair nor

beneficial to its’ employees. The ‘people’ element of triple bottom line looks at the

employees, which displays Amazon to be unsympathetic of working conditions while

they focus more on results and business success.

In further gathering of research, Amazon strategy in managing its employees is

based per departments. With a divisional structure of different products and services

allow the department managers to autonomy of how to manage their team. Amazon is

separating into eight departments, business Development, e-commerce Platform,

International Retail, North America Retail, Web Services, Digital Media, Legal &

Secretary, and Kindle, (Amazon.com, 2015). Management structure on a result oriented

bases re-enforces the pressures to perform. The company is known to have more

dismissal for performance than promotions of employees, (Stone, 2013). The

relationship between strategy and structure of managing the employees in Amazon, and

opportunity of growth are extreme and completely political on Bezos classified practice

called ORL, which stands for organization and leadership review. The reasoning behind

the difficult ability to get promoted is to avoid political or unnecessary advancement and

to apply the company’s corporate values evenly across the organization, which most

employees’ share that they feel the ORL structure does the opposite, (Stone, 2013). The

ORL is known to be based off subjective decisions and guided by human opinions and

political dynamics, (Stone, 2013). The ability to grow in the company is rare, another

reason being the organizational structure is flat. In most companies a flat organizational

structure is a good thing, but in this case it does not give employees the opportunities to

grow.

Environment

In examining Amazon practices of natural capital and sustainable environment

was quite fragile. The ‘planet’ aspect of the triple bottom line is examining Amazon’s

ecological health and internal and external factors of this that benefit the company’s

growth in sustainability. Internally a good company would have ownership of its place in

effect to its surroundings, and take social responsibility and displaying forms of

environmentally friendly management and strategies.

Amazon displays its environmental interest from its CEO Bezos, to be a great

capital allocator although, only to its own company’s benefit. Amazon lacks to show any

strategies to assist its community and social atmosphere. This is not to say it does not,

but they have faced great criticisms over how it operates its business when looking at its

social responsibility. In response Amazon has recently hired a new director of social

responsibility, Christine Bader with plans to change the company’s corporate culture,

(Frank, 2015).

Social measures would be external factors and how this affects the company and

how the company reacts to these external factors. Social measure looks at education,

equity and access to social resources, health and quality of life. Amazon has faced much

scrutiny over its policies affects and how it affects the outside world, with its low grades

in Greenpeace’s cloud cleanliness reports, (Frank, 2015). Although, now looking at the

population impact of quality of life and household income, Amazon has rapidly expanded

in its home town, where Amazon appears hiring more tech workers with high pay which

is a good thing. This has actually drove up housing prices and running several

construction projects which appears to be beneficial to the local economy, expect

Amazon still lacks to contribute personally to the local community or charitable causes,

(Frank, 2015). As mentioned before in the people aspect, employees have also expressed

their rough and bruising culture and treatment within the company. It is quite impressive

to find such harsh measures of social capital represented from Amazon when looking at

its actually success rates.

Financial

The final element of the triple bottom line is profits, how does Amazon’s finance

support its sustainable growth. CEO Bezos focus has been on long-term turnaround

verses short-term. In research gathered Amazon has quiet a different and far reached

strategy in measure profits for long-term growth, (Chaffey, 2014). With that this results

in overspending in the short term with building, and expanding infrastructures. As this is

apart of establishing long term growth within an industry the outside market, and Wall

Street has criticizes Amazons strategy to overlook the ‘here and now’ impact in its profits

and in the market.

Amazon sales are positive and growing and the company continues to cultivate.

Although, the company’s investments in new products and services, i.e, there expenses,

are growing even faster. Which results in low profits when looking at Amazons annual

reports and financial statements. When examining the sustainable growth of the

company, Amazon has definitely established and maneuvered its financial for future

growth.

Analysis of Amazon’s business structure

In analyzing an organizations well-being and position for future sustainability I

will examine the company’s business ethics; corporate social responsibilities, its

sustainable enterprise; and response to change. Based on this information I will provide

suggestions to the company of next steps to assist in sustainable growth.

Business Ethics

We can measure Amazon’s business ethics by looking at how the company

responses to moral or ethical problems that arise in the business environment. First, to

examine the internal atmosphere, recent articles and data show Amazon’s has terrible and

hard working conditions. The company has monitoring technology that tracks minute-

by-minute movements and performance of its employees, (Head, 2014). The company

also practices Taylorism management for most efficient performance. Knowing the

general knowledge that Taylorism, this takes the humanity out of the tasks to reduce

motions to work most efficiently. Internally the company represents poor working

conditions reflecting on bad ethical approach. Externally, customers are treated with

‘care’ and ‘trust’, as in line with Amazon’s mission and company culture representation.

From a customer stand point the company displays good ethical principles and from an

employee stand point the company operations are quite unethical.

Corporate Social Responsibility

In the past Amazon has received tough criticisms for its ungenerous corporate

giving, appalling workplace environment, its deficiency of diversity in hiring, and low

marks for levels of clean-energy use, (Greene, 2015). In response to this the company

has hired Christine Bader, who was a former advisor to the United Nations business and

human rights to help with their company’s problems. Alongside Bader, Amazon’s

sustainability executive, and Kara Hartnett Hurst have been putting together of programs

and initiatives for the company to expand on CSR. One area is, supporting the local

communities by donations of electronic devise and gift cards to schools across the United

States, (Greene, 2015). Another initiative is, to tackle energy consumption, where

Amazon plans to use ‘district energy’ which is recycled heat to support 3 million square

feet of its head office in Seattle, (Greene, 2015). These are great starting points to show

the company is taking some form of social responsibility. Although, the company still

lacks to show any efforts to improve labor and human rights, employee heath and safety

and gender equality and minorities, which are all strong areas Amazon is being criticized

for, (Dudovskiy, 2016).

Sustainable Enterprise

A sustainable enterprise is another word for a ‘green business’ where the

company displays progressive environmental and human right policies to have minimal

negative impact on the global and local environment. In one perspective Amazon is a

good company, where it has great customer service and great for shareholders, but when

looking at its sustainable reports you could not say ‘Amazon is a good company’,

(Gunther, 2012). Amazon actually doesn’t have any sustainability reports, they have

made little efforts to measure let alone improve its performance when it comes to its

environment; external and internal. The only reason for Amazon CSR team and initiative

is because of the negative criticism and reputation it has received in the media in the past

few years. Going back to the CEO Benzos strategy, it is solely to benefit his company.

To provide an example of just how little Amazon cares about the environment, they

received an F on the Greenpeace examine report, ‘How Clean is Your Cloud?’ ranking

behind Yahoo, Dell, Google and Facebook, (Gunther, 2012). The company currently has

not shown significant steps to improve this other than initiatives mention in its CSR.

Response to Change

Amazon being an online ecommerce they must quickly response to change as

technology is rapidly changing and growing. The external environment is always

changing, some are noticeable and some will come to a surprise in an industry. Amazon

is always innovating new ways to develop its services to its consumers and to keep up

with market changes. As Amazon consumers are loyal because the company provides the

most up to date products with the most convenient and fast services, (Streitfeld, 2015).

Amazon also offer a lot of free trails to test out the consumer market and how successful

new services are, such as free monthly subscriptions of web-streaming services, and other

bundles including music library and unlimited photo storage. Another factors of change

Amazon faces is competitors, the company has many competitors in different areas as

Amazon is an umbrella company of many different products and services. For example,

Netflix as a direct response Amazon now offers monthly subscriptions of Prime videos to

similar costs as Netflix, (Iyengar, 2016). Amazon is very compliant to change to its

external environment as they are always trying to improve and expand their services.

Areas where Amazon displays resistance to change are externally among its

management of employees and teams. Despite Amazon’s flat structure and innovation

team, most employees are limited to there tasks and job position with no growth or

further contribution. As shared earlier, Amazon uses the Taylorism approach of

minimum motions in job tasks. CEO Benzo’s resistance and negligent of he’s employees

work atmosphere and personal development or growth. In this aspect Amazon response

to change is low as there are many new ways of management developing and helping

success of companies today.

Steps for Amazon’s Sustainable Future

Despite Amazon’s successful brand establishment within its industry it has much

to improve on for a sustainable future. A few ways and steps Amazon can improve and

prepared for the future are integrating public policies, expand on sustainability goals

across the company, embed sustainability within the company culture and to its

employees, and lastly, Amazon should begin measuring its’ sustainability, (Rowe, 2013).

Integrating public policies will voice to environmental issues and the company’s

efforts to avoid negatively impacting the environment. Corporate social responsibility is

something Amazon greatly needs to work on cultivating. By building goals across the

company, the employees can better integrate social responsibility in their tasks and

management. Placing goals, and incorporating public policies will greatly strengthen

Amazon’s CSR and outside views of the company. Steps to help Amazon develop and

sustain these goals and objectives within their company are to embed this idea of

sustainability within its company’s culture, (Rowe, 2013). This culture should start from

senior management and tier down into all areas. Not only will this help the idea of

sustainability to grow for Amazon’s innovation but also retention of employees by

engaging them to a common culture and goals. This will be challenging as embedding a

new culture in a huge company such as Amazon will not happen overnight, but this is a

good foundation where Amazon’s CSR team can elaborate ways to maintain this across

departments. Where as now, Amazon does not strongly represent company culture

within its companies. These are a few areas where Amazon can improve to gain

sustainability growth for its future.

SWOT Analysis

Looking at Amazons strengths, weaknesses, opportunities and threats we can

better determine their position within the online shopping industry and support what steps

the company should take to sustain future growth.

Amazon’s strengths are its low cost structure and its large selection of third party

sellers, (Jurevicius, 2016). Its low cost structure is on the combination of low prices and

huge range of products. Amazon cost leadership strategy has resulted in successful turn

around. Of course remaining as only an online retailer the company avoids all costs of

running and maintaining physical outlet stores. Amazon is actually the largest online

retailer in the world, which marks them as quite strong within there industry. Further

research shows Amazon has actually grown faster than the entire US e-commerce market,

which is possible by taking market share from competitors. This reconfirms their

strengths over competition and their stable position within the market.

Amazon has quite a few weaknesses in regards to its finances. Currently the

company is suffering shrinking margins where delivery network and price wars of

Amazon are resulting very low, (Jurevicius, 2016). Another weaknesses based off

financial decisions of tax avoidance has resulted in a negative view in the public eye. In

addition, Amazon is still struggling to make enough profits to cover its expenses. This

growth of expenses over profits is due to Benzos’ investments into long term assists.

These are quite significant factors that affect the company and the sustainable growth of

the company. The company should better strategize its budget and strategic decisions in

its markets to overcome this debt and negative view it have created.

Opportunities are always growing with the online industry, and Amazon has quite

a few areas to grow and expand. Currently Amazon is taking the advantage of global

expansion, currently into Asian and other developing countries. Being the leading

frontier into these new markets provides low barriers of competition, (Jurevicius, 2016).

Threats that Amazon faces would be how easy it is to enter into the online

industry. Although, this is not an area that personal threatens Amazon as they are well

established within there industry. Other threats Amazon does face are government

regulations related to multi brand retails and applicable regulations based on region on

purchase and distribution. These threats are actually more so challenges, where Amazon

must strategize to over come.

Summary

In conclusion Amazon appears to be a company heading for the ground instead of

a sustainable future. Although, despite the company’s harsh workplace environment,

lack of CSR, and long financial turnarounds the company has actually been quite

successful. From one viewpoint Amazon has been successfully prospering, not according

to the triple bottom line theory as mentioned above but in other aspects; people, most

customers become loyal customers; financials, Amazon is preferred over the competition

and the high scores of ‘best prices’ products and services, (Vozza, 2014). People admire

the clear vision and leadership Bezos’ displays and shows Amazon to represent. Despite

calculations of an analytical review where there are areas Amazon can improve in,

overall, the company has built a strong foundation within their industry based on their

CEOs own strategic decisions.

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