Amazon's Development and Challenges: An Analysis

This report analyzes Amazon's development and the challenges it faces in hierarchical control to autonomy. It explores the underpinning IB theories and resource-based theory applied by Amazon. The report also discusses Amazon's corporate structure and competitive advantage.

AMAZON DEVELOPMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Analysis on Amazon's Developments..........................................................................................3
Understanding of underpinning IB theory relates with Amazon.................................................4
Ownership advancement or firm specific advancement with application of resource based
theory...........................................................................................................................................6
Challenges faced by Amazon.......................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

EXECUTIVE SUMMARY
The present report is based on Amazon's development and the challenges ahead in hierarchical
control to autonomy by applying internationalization theory. Hence, organisation development is
individual that focused on discipline and this also systematic approach that builds and improve
organisational performance and effectiveness. Also, theoretical discussion will be conducted that
assist to demonstrate the great understanding of IB theories such as product life cycle, global
expansion strategy etc.

INTRODUCTION
Organisation development is termed out to be complex plan of action that intend with
change the beliefs, values, attitude and structure of enterprise (Ferreira, Marcovitch and Val,
2020). It leads to better adapt with new technical advancement of market and challenges. Thus,
techniques to organisation development are employed to bring improvement in organisation
effectiveness. To bring organisation development this is crucial to align business undertakings
with proper strategy, processes and individuals.
The present report is based on topic as Amazon's development and the challenges ahead
in hierarchical control to autonomy by applying internationalization theory. It is multinational
organisation that is known for its disruption of well-established industries through technological
innovation and mass.
Furthermore, study will lay emphasises on implications, structure, innovation and
challenges of chosen enterprise. Also, theoretical discussion will be conducted that leads to
demonstrate the great understanding of underpinning IB theory. Lastly, specific advantage of
chosen entity will be discussed with help of considering resource based theory.
MAIN BODY
Analysis on Amazon's Developments.
Over the past few years, Amazon has developed from small seller to global company that
works with 300 million at worldwide level. It is the firm that has long pursued plan of action of
winning by pricing low. In addition to this, Amazon is entity that offers great customer service as
their leadership is much passionate about the customer service. Therefore, the primary object for
the chosen enterprise is to gain market share (Harney and Dundon, 2020). It is the entity that also
undertake the development with use of cost leadership as its generic strategy and this leads to
gain competitive advancement. Also, this can be stated that minimisation of the operational cost
is one of primary objective in generic competitive plan of action. In order to bring out the
effective developments, Amazon implements some changes in organisation structure that
enables the extensive controls on global e-commerce operations.
Thus, corporate structure of chosen entity determines that how managers directs and
influence operational activities in various business areas. It is leading online retail firm that
needs to maintain an organisation structure that highly supports its expanding market reach.
Also, corporate structure of chosen enterprise is beneficial for chosen entity as this adds more

commodities and also aids in gradually diversifies its business activities. Thus, design for
structure is technical foundation of the business. In the present era, there is aggressiveness of
competition and this is crucial that structural characteristics aids to strengthen the entity and also
ensure about continuing e-commerce success. Therefore, the quoted enterprise uses functional
organisation structure as this considers business functions that bases for determining the
interactions among the enterprise.
Additionally, function based groups are strongest characteristics for the chosen
organisation stricture. Each major function of the chosen entity has dedicated group or team.
This aids to facilitate successful e-commerce operation management throughout the entire
enterprise (Ioris, 2020). Henceforth, following are major function based groups in chosen
organisation structure that includes business development, Finance, Amazon web service,
accounting and International consumer business etc.
Thus, another feature of chosen entity is Hierarchy as this has the traditional structural
characteristics. Also, strategic objective of this feature of corporate structure is to facilitate better
managerial control over the entire organisation working of quoted enterprise. In addition to this,
the another feature of the chosen entity is geographic division (Goel, Verma and Tyagi, 2020).
This structure enables the firm to address the issues in respect of each geographic region. It is
entity that has simple approach for this structure feature and this includes the geographic division
in its operational activities. Hence, it has been analysed that structure of chosen entity is
supporting international growth in e-commerce market. This is entity is continually taking steps
to expand its business and this is indicator of the suitability of organisation structure.
On the other hand, the disadvantage of organisation structure is that this entity has the
limited flexibility and responsiveness. Henceforth, this can be stated that changes in organisation
structure of the Amazon aids firm to enhance its business proficiency and productivity.
Therefore, this is the firm that has changed how and where people work. This also leads to
changed how prices are set and how often they change to bring effective working in the
enterprise. Thus, chosen entity has taken varied steps that develops and introduce cutting edge
technical advancement that assist employees and delivers the best value to customers.
Understanding of underpinning IB theory relates with Amazon.
International business termed out as trade of commodities, services, techniques and
knowledge across national boarders at transaction and global level. This is inclusive of cross

broader transaction of good and service among two or more countries. One of the IB theories
such as Product life cycle can determine the changes that made to enhance the working of chosen
enterprise (Özbağ and Arslan, 2020). The liking of the product reflects with product reviews. If
the product get more reviews that means people are highly demanding it. Thus, second stage of
product life cycle under IB theory defines the star rating of commodity. If any commodities get
more than 3.5 rating then this aids to know the popularity of products. Thirdly, product ranking
defines that the lower ranking of the commodities means the less competition in the market. In
the product life cycle theory, the first phase is introductory when the product is new in the
market so that this will take time to established. At the second i.e. growth, in this firm has
already sold the products and now here is to cultivate the demand for the commodity.
Afterwards, the third stage focus on finer details of selling such as to different features, shipping
perks and more. Now the last is, Decline at this the popularity of commodities start to becoming
fade. Thus, another commodities get launched and this affects the demand of existing
commodities.
On the other hand, Global strategies rivalry theory of IB reflects that Amazon use this
approach to examine the impact on the trade flows among MNC's. Herein, chosen entity
undertakes steps to develop sustainable competitive advancement which can exploit the
international investment and international trade. Amazon needs to takes strategies decision to
compete business activities at the international level. There are number of rivalries of Amazon
such as . Henceforth, this can be stated that the firm competing in the global marketplace have
wide range of ways of obtaining a sustainable competitive advancement. Thus, this theory will
be covered with features as-:
1. Owning intellectual property right- If an entity has intellectual property rights such as
trademark, brand name, patent etc. gains advancement over over its competitors (Cho and
Linderman, 2020). Hence, Amazon, Ebay compete for customers at the world wide level
on the basis of trademark and brand name.
2. Investing in research and development- Research and development plays the crucial
role to undertake the business activities in systematic manner. Thus, entities such as
Amazon needs to invest in R&D to maintain their competitiveness in market. This can be
stated that the entities that acts first often gains the first mover advancement.

3. Achieving economies of scale or scope- This is the fact that defines that this is crucial to
leveraging the existing strength. Therefore, the scale economies assist to reduction to
cost, pass the benefit to consumers and also supports to expand market share. In order to
capture the volume driven economies of scale the Amazon has been expansing its
operations into the international markets. To accomplish high rate of economies of scale
they needs to reduce the cost for customers. For the enterprise as Amazon this is crucial
to spent enormous sums developing and maintaining the website and building customer
base. This is crucial to make the huge investment in the products so that working of
entities can be done in effective and efficient manner.
On the other hand, competitive advantage theory of International Business states that Amazon is
to offering the better customer services (Tilman, 2020). From the past few time, Amazon has
become the winner when its comes to retail sector. This online enterprise takes steps to maintain
profitability and expand its operations in international marketplace. This is entity has become the
successful in attracting the customers and to deal with business rivalries. Behind competitive
advancement of the chosen enterprise, the entity foremost advancement is low price that this firm
offers the wide range of commodities on offer ranging from digital media to grocery and to the
convenience of shopping from home and mobile devices.
Hence, it can be stated that Amazon dominance has not only challenges the traditional
brick and motor business model. This entity has also transformed consumer expectation and reset
the business standards. No hassles, returns, check out experience and huge repository of reviews
assist to make Amazon go to option for wide range of customers. Therefore, the chosen
enterprise such as Amazon uses cost leadership as its generic strategy in order to gain the
competitive advantage. Therefore, this can be stated that minimization of operational costs is the
objective in this generic competitive strategy.
Ownership advancement or firm specific advancement with application of resource based theory.
Resource based view termed out as the model that takes resources as key to the firm
superior performance. Therefore, resources exhibits the attributes of VRIO as this enables the
firm to gain and sustain competitive advancement. In addition to this, the organisation resources
and capabilities needs to combined together in order to constitute its distinctive competencies.
There are two types of competitive advancement such as-:

 Cost advantage- In this, it can be said that cost advancement exist at the time when firm
is able to deliver the same benefits as their competitors but at the lover rate of price.
 Differentiation advancement- In this, it can be stated that differentiation advancement
exist in which the firm delivers the benefits that assist to surpass their competitors.
Therefore, the significance resource and capabilities of Amazon is as-:
 Brand image and equity- Amazon is the entity that is customer focused and brand
image of entity is the major source of competitive advancement (Tilman, 2020). Thus,
chosen firm managed to create high level of trust as this based on quality of the
commodities and service its sells.
 Large customer base- Amazon is the enterprise that has very large customer base from
all over the world and this is one of the major advancement for E-commerce brand.
 Global presence- This is the entity which has effective brand recognition. Henceforth,
this can be stated that global presence of the brand is one of the effective source of major
advancement of the enterprise.
 Customer loyalty- The quoted entity has maintain and managed high level of the
customer base and loyalty that assist to retain large percentage of customers for life time.
 Technological innovation- In this, it can be stated that the technical innovation is said
out to be one of the source that aids to gain competitive advancement in the market.
Amazon is the entity that offers valuable and unique customer experience. However, it is
the brand that has continued to enhance its investment on research and development.
With help of this, the entity may chose to develop their business activities in more
proficient and in advanced manner.
 Huge product range- Amazon is the entity that sell wide range of the commodities
whose number ranges in hundreds of millions. Therefore, innovation of product and
innovation in services is greater ownership advancement of this entity.
Therefore, the Amazons organisations resource and capabilities are outlined as-:
Amazon’s Organizational Resources &
Capabilities
V R I O
The presence of Growing brick and mortar ✔
Enhancement in the diversification of online ✔

services.
Increase in the portfolio of private label products ✔
Entity uses the extensive deliver network that
includes domestic, regional and international
partnerships
✔ ✔
In this, expertise based on considerable history
of e-commerce
✔ ✔
Effective hubs for warehouses and distribution ✔ ✔
Sustained competitive advancement-:
 Effective global brand presence
 High market capitalisation
 Entity has high Artificial capabilities
✔ ✔ ✔ ✔
✔ ✔ ✔ ✔
✔ ✔ ✔ ✔
Amazon Non- core competencies-: As per the above stated table the non-core competencies of
entity is inclusive of company growing brick and mortar presence. It is the capability that has
valuable and contributes competitive advancement (Ioris, 2020). Therefore, it is imitable and not
rare. On the other hand, Amazon growing diversity is online service as this is the most valuable
in relation to adding the revenue sources. This also has showed that the growing portfolio of the
private label commodities diversified the company offering, boost market presence and increase
the profit.
Amazon Core competencies- The sustainable competitive advancement of the Amazon are
derived
Amazon core competencies- Sustainable competitive advancement of Amazon are derived from
the core competencies of the business organisation. In the above mentioned VRIO analysis case
there are four resource and capabilities that assist to form the foundation for long term
competitive advancement (Tilman, 2020). Henceforth, Amazon is the brand that has high equity
in the global market. This is the entity that attracts customers to its current and emerging

commodities. Therefore, the brand equity is valuable and rare in the market. In addition to this,
the high brand equity is also very difficult to inmate. In addition to this, it can be stated that the
Amazon works as to maximizes the welfare of this core competency with help of organizing its
business around it and by the use of brand name for various products.
Therefore, high market capitalisation is one of the sustainable competitive advancement
that is mainly considered as per VRIO analysis. It is the core competency that is valuable and
this leads to corresponding to the high capitalisation in market. It is the level of market
capitalisation that is difficult and uncommon to imitate for most of the players in market.
Challenges faced by Amazon
Amazon is competitive entity but this also has faced varied challenges that affects the
profitability and productive of the enterprise. Therefore, there are some of potential challenges
that faced by chosen firm are as-:
 Keeping up E-commerce growth- Growth in the Amazon e-commerce has lost some of
its steam. In the present era, there are number of the online business that has operating
segment and this affected half of profitability of chosen enterprise.
 Product return and refunds- At the time of shopping online, there are lot of customers
that check for return policies before making any purchase. If the Amazon start to make
easy return then customer will return the product when their need full-fills. In order to
cope up with, the entity needs to set the right expectation with customers. By providing
detailed image of commodities and description (Harney and Dundon, 2020). This firm
can able to cope up with the challenges in effective manner.
 Customer loyalty- Ease in the online shopping can motivates the customer to look for
the best price and then sticking to particular brand. This is crucial to maintain the
customer loyalty as this one of effective source of competitive advancement. If customer
get the bad experience then it will affect online ratings.
 Pricing competition- Highly competitive market results in varying pricers for the same
product across the different online marketplace. There are number of the small firms that
are affected ny the competitive pricing. It is the things that greatly impact the chance of
securing the buy box spot. In order to cope up with challenge, the entity needs to offer the
competitive price for customers.

 Brand recognition- Online selling entities provide chance to display the product of
brand. Due to lot of presence of competition in the market entity may lose plethora of
options for the customers (Ferreira, Marcovitch and Val, 2020). It may results in less
favourable sales performance of the online selling business.
Therefore, this can be stated the challenges faced by the entity on the huge level is that running
out of stock can damage the brand reputation in market at the huge level. Thus, entity needs to
maintain supply chain process so that suppliers can offer the transparency. Amazon has set-up
performance targets for their sellers in order to establish a safe shopping environment for all of
their buyers. Failure to meet these targets can bring results in immediate suspension and expiry
of selling advantage. In addition to this, the sellers buy high volume products from
manufacturers of any particular same brand and get into a listing war by continually re-pricing
their products to a low price that leaves very small profit margin.
CONCLUSION
Hereby, it can be concluded that organisation developments termed out as to use
organisational resources that leads to improve the efficiency and productivity in workplace.
Effective working of the organisation can boost the moral of employee as they feel more
empowered and valued. Developing the organisation means to improving, reinforcing strategies
and processes that undertake the business activities in more streamlined manner. The present
report has covered the topic as Amazon's development and the challenges ahead in hierarchical
control to autonomy by applying internationalization theory.
Furthermore, study has focused on implications, structure, innovation and challenges of
chosen enterprise to analyse their effectiveness and efficiency in market. Also, theoretical
discussion has been conducted that demonstrate the great understanding of underpinning IB
theory such as Growth driven strategy and product life-cycle etc. Lastly, specific advantage has
been provided by use of VRIO analysis on chosen entity.

REFERENCES
Books and journals
Ferreira, G., Marcovitch, J. and Val, A.L., 2020. A systematic review of the production chain of
the Arapaima gigas, the giant fish of the Amazon. Management of Environmental Quality:
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Harney, B. and Dundon, T., 2020. Amazon: HRM and change in the house of neo-liberalism.
In Case Studies in Work, Employment and Human Resource Management. Edward Elgar
Publishing.
Ioris, A.A.R., 2020. Peasant Farming in the Amazon Frontiers. In Frontier Making in the
Amazon (pp. 73-100). Springer, Cham.
Goel, P., Verma, P. and Tyagi, S., 2020. Customer Experiences, Expectations and Satisfaction
Level Towards Services Provided by Amazon. International journal of Tourism and
hospitality in Asia Pasific. 3(1). pp.89-101.
Özbağ, G.K. and Arslan, O., 2020. A Resource-Based Theory Perspective of Logistics.
In Handbook of Research on the Applications of International Transportation and
Logistics for World Trade (pp. 195-209). IGI Global.
Cho, Y.S. and Linderman, K., 2020. Resource-Based Product and Process Innovation Model:
Theory Development and Empirical Validation. Sustainability, 12(3), p.913.
Tilman, D., 2020. Resource Competition and Community Structure.(MPB-17), Volume 17.
In Resource Competition and Community Structure.(MPB-17), Volume 17. Princeton
University Press.