Amazon’s Organizational Strategy and Leadership

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Amazon’s Organizational Strategy and Leadership
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Abstract
Amazon’s success depends on strategic management and the leadership qualities that
have been exhibited since its inception. Effective Strategic Management requires generic
business strategy, Organizational structure and culture to achieve the objectives. Amazon
Generic business strategy is based on cost leadership and differentiation strategy. Amazon’s
culture is founded on Adhocracy and Hierarchy organizational culture, while the organizational
structure is based on Hierarchical organizational structure.
Introduction
The current paper explores Amazon Retail store with a focus on the Generic business
strategy, Organizational culture, and Formal organizational structure. Amazon founded in 1994
by Jeff Bezos as an online bookstore is currently an “everything store” that supplies consumable
and non-consumable products such as fresh foods, electronics, fashion, and music among many
others through online platform (James 2014). Amazon that started as a pure online book retailer
expanded to supply various products to customers. Along with its growth, new business models
were introduced such as web hosting in 1999 and consumer portals in 2000. In the early days,
Barnes and Noble Retailer were among the largest book store in the USA that had centralized
logistics and distribution channels. B&N strategy made book sourcing difficult as it took more
than three days for an order to be processed and shipped. Jeff Bezos saw the opportunity and
resigned the traditional book retailing system by adopting an online approach that enabled
customers across the world to access various books through a single central location.
Generic business Strategy

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Strategy refers to the direction and scope of an organization over a long period to achieve
advantages through the configuration of the resources and movement to eliminate the challenges
and obstacles as it achieves the objectives (Galpin 2019). The general business strategy thus
refers to the organization’s operations game that seeks at growing the business, attracting and
pleasing various customers, having successful commotion and achieving the target. Chun & Lee
(2013) Identifies Different Generic business strategies that are categorized under three main
groups: cost leadership, differentiation, and focus strategy. Generally, Amazon is based on two
major generic business strategies: Cost leadership and diffraction strategies (Parnell 2013).
During the inception of Amazon, Jeff had a vision of supplying books at low prices to acquire
the economy of scales along with the customer's satisfaction (Noh & Choi 2017). Thus
Amazon’s business strategy is based on simply growth strategy along with the virtuous cycle of
data networks.
Figure 1: Shows Business Generic Strategies, obtained from (Chun & Lee 2013)
Cost leadership

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The strategy focuses on providing a high volume of standardized produced with the
hopes of acquiring the advantages of economies of scale and experience curve effects. The
products are always at a lower cost than competitors thus maintain the strategy require extensive
exploration of the best cost reduction aspects in all business operations (Kachaner, Lindgardt &
Michael 2011). Cost leadership strategy refers to an approach that exploits all sources of cost
advantage to become the cost leader in the market. Through the strategy, Amazon aims at
reducing the operational cost through the application of different technological devices such as
computers and networking. These computers networks enhance the efficiency and effectiveness
of the operations while eliminating the waste elements such as delay in order processing and
delivery of products (Leavy 2018). The company gains a competitive advantage by automating
most of the process from the suppliers, to the stores and end users. The company invests a lot in
Research and Development to enhance its performance of its resources.
Amazon majors on product development to gain wide cost leadership. Through offering
new products, the retail shop has a wide base of revenue collection (Panagiotelis, Smith
&Danaher 2013). The cost leadership enables the company to ensure low production and
operation cost that is translated to the low prices of the products as compared to the competitors.
Amazon has a wide variety of warehouses across the world with well-developed supply chain
management. Amazon’s inventory policies aim at reducing the operating cost by having a central
server for the customer's order processing. The objective is to enhance customers experience by
reducing the order processing time, increase the delivery time by having all possible products in
the different warehouse even before the potential customers think about taking orders for the
same (Reichard & Johnson 2011). It is also worth noticing that Amazon archives its cost
leadership strategy through diversification of its products. Through diversification is one of the

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least applied business strategies, the company has gone through various acquisitions such as
Audible books and related products thus obtain cost leadership by applying same approached to
minims the operational cost and selling prices.
Differentiation strategy
Differentiation strategy refers to the approach a company to attain uniqueness through
having different product’s dimensions that are widely valued by customers while focus strategy
is an approach that aims at narrowing the competitive scope of the market by selecting a
particular group of people to enhance the experience and satisfaction. Amazon funded just as an
online retail shop in 1994 diversified its products and penetrated other different new markets to
become a world largest retail shop, where one is capable of getting all kinds of products
(Nagasawa 2015). The retail shop is characterized by the unique design, technological features
and brand image that have to enable the company to earn revenue above the average returns
resulting into brand loyalty among the potential customers who are price sensitive. Amazon
growth is based on customer-centric strategies.
The strategy aims at value creation and proposition that starts with the availability of the
Amazon’s symbol representing a smile from A-Z of the customers and extended to the
availability of various low priced products to create a deliver value through a good structure
supply value chain (Srisamran & Ractham 2014). The value supply chain has enabled Amazon to
attain extraordinary customer experience and satisfaction resulting in a unique competitive
advantage over other retail shops. Amazon’s value chain is based on the utilization and
implementation of technology. For example, Amazon’s in-house computing cloud innovation

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aimed at managing business operations as a cloud service between B2B and B2C services. The
technology majorly reduced the cost of the operation, enhanced the delivery system.
In order to capture the individualization potential of each customer, Amazon aims at the
value propositioning through having an easy-to-use browsing and searching functionalities as
well as the book reviews and content services, recommendations and on; in community
platforms. Since the creation of the Amazon website, standard setting functionalities such as
customers’ accounts with multiple aspects such as diverse payment options, different newsletters
have enhanced customer’s expense and satisfaction (Stobart & Bailey 2017). Amazon
continuously focused on innovation with a focus on customer experience rather than the actions
of its coleoptiles.
Figure2: Shows Amazon Differentiation strategy, obtained from (Nagasawa 2015)
Organizational Culture