This report discusses the integration of business functions in Amazon Inc. and the role of strategic change, leadership, structure, culture, SWOT analysis, Porters five force, and STEEP model. It also includes social, technological, ecological, economic, and political trends.
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Running Head: INTEGRATION OF BUSINESS FUNCTIONS0 INTEGRATION OF BUSINESS FUNCTIONS Student name 1-27-2019
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INTEGRATION OF BUSINESS FUNCTIONS1 Contents Introduction......................................................................................................................................2 Changes in strategy and strategic direction.....................................................................................3 Strategic leadership......................................................................................................................3 Structure.......................................................................................................................................4 Culture.........................................................................................................................................4 SWOT analysis................................................................................................................................5 Porters five force..............................................................................................................................7 STEEP model...................................................................................................................................9 Major stakeholders.........................................................................................................................11 Role of business functions.............................................................................................................11 Conclusion.....................................................................................................................................13 References......................................................................................................................................14
INTEGRATION OF BUSINESS FUNCTIONS2 Introduction The top management team is responsible for the strategy of the company, which is the long term high-level plan from the business to be followed by various business functions of the company. The strategic direction is provided in order to provide direction to middle and lower level managers to organize the business functions well. The strategy has to be changed and updated according to change in environment, that is the external environment and internal environment of the organization. The major decisions depend on various factors, which this report will consider, that is internal analysis, industry analysis, and STEEP model. The business functions also play a significant role in strategic change. The change could be in the form of strategic direction, strategic leadership, an organizational structure, or change in organizational culture, which will be discussed in detail, further in the report. For better understanding, an organizational case would be considered ofAmazon Inc.(Amazon, 2018). Amazon is a leading public company, headquartered in Washington, the U.S. is an e-commerce company dealing in cloud computing, artificial intelligence, and commuter software industry. The company is the first mover for e-commerce business in many countries. The country is serving customers globally, through online mode. The company has also increased other retailers to gain the opportunity by providing platforms to small retailers and help customers to find all the consumer goods in one place, with the ease of a click. Considering the revenue, it is one of the largest e-commerce company, globally. Moreover, according to the statistics of 2017, it was the second largest employer in the US(Alvesson, 2016).
INTEGRATION OF BUSINESS FUNCTIONS3 Changes in strategy and strategic direction Considering the strategy, of the company, the company is more innovation focused company, which makes the need for change in strategy to a larger extent. Moreover, it is one of the most customer-centric company, and serving a large product variety to the world. The reason for the rapid growth of the company was the innovation and change, it has given the retail industry a new face. The company has changed their many strategies in the last ten years especially the supply chain strategy. The company has introduced to the fast delivery strategy, automation warehouses, pull or push supply chain strategy, major delivery options to the customers, outsourcing the stock management strategy, and insourcing logistics strategy. The strategic direction of the company is customer focused and related to covers all the aspects to satisfy the customers while understanding the customer needs and comfort(Birasnav, 2014). Strategic leadership Leadership is the major relevance in promoting change in any organization. Founder of Amazon, Jeff Bezos found the company in 1994. John Rossman, was a transformational leadership, being an executive at Amazon. He was responsible for introducing third-party selling business, this introduction or innovation has now over fifty percent of the company’s units and is supporting three million sellers(forbes, 2019). The transformation of the company is the achievement of its leaders who have changed the business and has introduced the company towards innovation. Another recent innovation, that has been added to the business of the company, by acquiring whole foods and introducing amazon Go and. The strategic decision of the company regarding the whole food acquisition has introduced the business to another industry to gain more opportunity and grow higher. Moreover,
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INTEGRATION OF BUSINESS FUNCTIONS4 another strategic decision change in January 2018 was to introduce new experience of retail, which is said as Amazon Go(twentify, 2019).According to this, there is no staff that would be helping you while someone shop, and one does not have to pass the credit card or information of one’s billing to any machine accept you digital device like a phone. This was the retail expansion strategy, which indicates strong strategic leadership of the company(Brenner, 2015) Structure The company major strategic change includes the supply chain strategy, which also involves major changes in organizational structure. Moreover, the company initiated with selling e-books, which it has been introduced to various another business field, like retail expansion strategy of the company, has vacant major places, that were filled in by the company, moreover, increase in the salesman, delivery agents have been increased. Therefore, it can be said that due to large strategic change, the change in organizational structure was also major with every innovation (Amazon, 2018). Culture The organizational culture includes innovation and customer focus culture to a large extent. Due to a major change in the company’s strategy and introduction to major product line and range. One of the most relevant innovations of Amazon is HR innovation, Jeff Bezos’ two pizza rule, this was a major innovation where each team required to be small in order to be fed by two pizza. This had allowed the company to be agile and has majorly changed in the organizational structure(forbes, 2019). SWOT analysis StrengthsWeakness
INTEGRATION OF BUSINESS FUNCTIONS5 E commerce leader Cloud player Global presence Customer database and loyalty Large range of products Strong financials Innovation focused Operating margins Product failures OpportunityThreats Forward integration Diversification Acquiring new business Realizing new products Heavy competition Regulatory threats Stronger dollar Dependency on the American market Strengths E commerce leader – the company is the first mover and largest in terms of revenue worldwide, therefore it can be said that it is the ecommerce leader globally, and this is one of the major strength of the company(Cherry, 2018) Cloud player – another major strength of the company is its cloud player that is the cloud computing software of the company. This is the major product range or business so the company, therefore it can be one of the benefits for the company and its image
INTEGRATION OF BUSINESS FUNCTIONS6 Global presence– thecompany isexpandedglobally,whichcreatesbetterbrand awareness and customer loyalty for the company. The presence of the company is global, which is the strength of the company Customer database and loyalty – the customer database of the company is very strong to the scale of business is very large, and so do the opportunity to reach out to the maximum customer. Moreover, since the company is working on such a large scale, the trust in the company is also very much by the customer, which is creating strong brand loyalty. Large range of products – the range of the products is very large, which can attract more customers and accomplish more needs of the customers. This is the major strength and reason for high revenue of the company(businesstopia, 2018) Strong financials – the financial aspect and projection are very strong of the company, this could be due to business is done globally if the company is unable to gain profit from one nation, it can gain from another which makes it strong financial company Innovation focused – the innovation is key to the culture of the company, which is one of the major strength that makes the company at a competitive advantage(Edelman, 2017) Weakness Operating margins – due to higher competition, the prices are to be kept low or introduce the sales promotion to attract the customers, leading to lower margins for the company Product failures – some of the products have failed or not attracted the customers much. This is the weaker part for the company(CultureWizard, 2018) Opportunities Forward integration
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INTEGRATION OF BUSINESS FUNCTIONS7 Diversification – the opportunity for the company is diversification of the business that is increasing the product range. Acquiring new business – like the company has acquired various business like food business, the company can gain more such opportunity in future Realizing new products –the new product development is another relevant opportunity for the company(aboutamazon., 2018) Threats Heavy competition – the competition has been increasing with a change in technology and increase in digitalization Regulatory threats – the legal system of the country is one of the threats to the company, as it can be changed for the unfavorable result for the company Dependency on the American market – the company is largely dependent on the American market, which is not good for the company, and any problem in the American market can lead to a poor financial condition of the company(BBC, 2015) Porters five force 1.Bargaining power of buyers – since the company is customer focus, and believe in the benefit of the customer to the maximum. Moreover, there is a large competition in this industry, which is the major reason for the high bargaining power in hands of buyers. The buyers are large in numbers, therefore, the power is in hands of the buyers. Moreover, the switching cost for the buyers are very low, and they have various other option to purchase from. Therefore, the bargaining power is said to be in the hands of buyers(Caillier, 2014)
INTEGRATION OF BUSINESS FUNCTIONS8 2.Bargaining power of sellers – the sellers are in large number, and since the company is providing a space for the retailers to sell their goods, the bargaining power is not in hands of the seller. This could be possible in case of major brands that the power is in their hands of the seller that is the official brand sellers. In the case of book writers, in the business of e-books, the bargaining power is in hands of sellers. 3.Industry rivalry – this is the major aspect in such industry. The competition is very high in such an industry, the major competitors in today’s world are eBay, all express, and Walmart. Moreover, within the Amazon, the competition also exists among the retailers in case of the same goods. The rivalry among the industry is very high, which has affected the operating profits of the company as they have to include various promotional tools to attract the customer. Moreover, retaining the customer is much more difficult due to high competition(aboutamazon, 2018) 4.The threat of new entrant – there are many companies which are coming in the industry, if not on this much larger scale, there are various small companies transforming their brick and motor business to e-commerce business. The chances of better software and technology used, to reduce the cost can be introduced. This can be the major threat to the company. For instance, Amazon was the first mover, but in today’s world, there is a large number of e-commerce companies that are Amazon’s major competitors. There is always the risk of a new entrant in the industry due to the increase in the use of social media platforms to sell the goods, which could affect the Amazon sale. 5.The threat of substitutes – the substitutes in case of Amazon would be the brick and motor places, such as libraries for book availability, or departmental stores that are making goods available in lesser prices to the customers. Moreover, in today’s world, the
INTEGRATION OF BUSINESS FUNCTIONS9 brands also have their personal websites to connect to the customers directly and sell their goods itself, which could be the substitute to the Amazon. In addition to the brands, the local retailer can provide the delivery to home for customers, although reaching this way globally is not possible, this could be possible within the nation, or two, which can lead to decrease in sales of Amazon(BBC, 2015) STEEP model This model can be helpful in understanding the future trends as to understand the major change in the external environment, it can be broken down into various categories of trends. One of these group is STEEP, which is social, technological, ecological, economic, and political trends. 1.Social trends – the behavioral change of people also largely depends on the social trends of the country. For instance, Amazon is majorly impacting the health of the residents due to increases in obesity among the children, as the company is providing the source of entertainment,shoppingexperience,andluxurywithoutanyphysicalactivities. Moreover, the grocery expansion in the business of the company has negatively impacted the consumer’s wellbeing, as they are receiving the grocery material at their doorstep as well. However, the trend of online shopping has been increasing in the various national, specifically among the youngsters in most of the developing countries, which is positive for the company’s operations(Read, 2013) 2.Technological trends – amazon is the technology company, where the focus is largely on the technological up gradation and digitalization. The customer’s preference regarding the adaptation of the technology will depend on the technological trend of the nation. For instance, in the case of the United Kingdom, the nation technological trends are positive,
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INTEGRATION OF BUSINESS FUNCTIONS10 and people like to adopt the newest technology in the country. Therefore, it can be said that western nations are more favorable according to technological trends(Trivedi, 2016) 3.Economic trends - the economy has a major impact on business, if the economy of a nation is positive, the chances of the profitable business for the company increasing. Moreover, economic conditions decide the purchasing power of the customer, through which it can be said that the company can increase the sales in that nation or not. Disposable income of the nation indicates the buying nature and needs of the customer, they would prefer to spend their mong on entertainment or luxury, which Amazon leads to provide(amazon, 2018) 4.Ecological trends – the pressure from the government is constantly increasing for a large organization to diminish the emissions of the companies. The level of emission for the company can be in form of logistics and product delivery on the same day, as the fuel consumption is increased, or the air pollution is affected due to this. Therefore the company has to acknowledge the ecological trends of the nation, to sustain in the market (businessteacher, 2019). 5.Political trends – the company is working globally, therefore the political trend is very relevant while conducting business in nations. Amazon largely depends on the support from the government in every nation in order to implement, distribution, and company’s profit margin. Since our working in nations, they need to abide by the political system of the nation. For instance, in 2017 the company initiated to test their new process that is the drone deliveries, for which the company needs government allowance, and it was not that simple and easy to initiate this in every nation due to the political trend of nations (pestleanalysis, 2019).
INTEGRATION OF BUSINESS FUNCTIONS11 Major stakeholders The role of major stakeholder in the business would be discuss while considering following stakeholders of Amazon: 1.Customers – this is one of the major stakeholder for which the company is performing the business. The company is customer focus, and change in preference and need of the customer, majorly effect the business of amazon(Amazon, 2018) 2.Retailers – the retailers are provided by a platform to sell their products, and in case change of prices of product quality by the retailer can influence the image of amazon 3.Investors – these are the shareholder of the company, who are providing finance to the company and are responsible for sustainability of the company, moreover the company is working for the benefits of the investors and shareholders 4.Employees – the employees of amazon is are the major part of the business, as the company is service oriented and the possibility of reaching out to the customer on time is not possible without competent and skilled employees(Alvesson, 2016) Role of business functions Human resource management – this is the base for the success of the company. The leadership is the major source for strategic change decision, and successful strategy leads to the success of the company. For instance, Amazon HR innovation of two pizza rule is one of the major cases where it can be said that human resource management had played a significant role in the company’s success. The small team’s lead to a more agile organization, and better management of work(amazon, 2018)
INTEGRATION OF BUSINESS FUNCTIONS12 Finance – finance is one of the strongest aspects of Amazon, which makes it more reliable to be part of the success of the company. The responsibility of this business function is to manage the operating cost and increase the operating profits of the company, through which the company has become one of the largest company in terms of revenue(amazon, 2018) Marketing – marketing is a very important function of the company which includes every aspect related to the packaging, promoting, advertising, and sales of the company’s product.Thesuccessoftheretailexpansionstrategyishighlydependentonthe marketing function of Amazon. As the company is largely promoting their products globally, this includes advertisement through audio-video mode in various nations and social media promotion. Moreover, one of the major marketing function responsibility is sale promotion, like lightening deals of Amazon, through which the company was able to increase the sales(Ang & Rusli, 2018) Operations management – operations are the major activity in every organization. Since the Amazon is a large organization working globally, the operations are to be managed and appropriately integrated. This business function of Amazon is largely responsible for one of the successful strategy of reaching to the customer with their order on the same day. That is the same day delivery is only possible, if the operation is properly conducted in the family, and warehouse, delivery agent are organized through this business function (amazon, 2018) Conclusion To conclude the report, it can be said that the Amazon is one of the leading global technological companydealingincloudcomputing,e-commerce,artificialintelligence,andcommuter
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INTEGRATION OF BUSINESS FUNCTIONS13 software industry headquartered in Washington. Major strategic change has been observed in the company in last ten years, the major strategic change included strategy related to the supply chain, quick delivery strategy, HR innovation of two pizza strategy, and retail expansion strategy. The transformation of the company is the achievement of its leaders who have changed the business and has introduced the company towards innovation. Another recent innovation, that has been added to the business of the company, by acquiring whole foods and introducing amazon Go and. The strategic decision of the company regarding the whole food acquisition has introduced the business to another industry to gain more opportunity and grow higher. From the SWOT analysis of the company, the strengths include e commerce leader, cloud player, global presence, customer database and loyalty, a large range of products, strong financials, and innovation focused. Weakness includes operating margins and product failures. The opportunity for the company included forward integration, diversification, acquiring new business, and realizing new products. The threats included heavy competition, regulatory threats, a stronger dollar, and dependency on the American market. While analysis the industry, the porters five force model was conducted, it can be concluded that the competition is very high in the industry, major competitors were Ali express, eBay, and Walmart. Moreover, through STEEP model it can be said that the Political and economic trends of the nation are largely responsible for the business of Amazon.
INTEGRATION OF BUSINESS FUNCTIONS14 References aboutamazon.,2018.Successstories.[Online] Available at:https://www.aboutamazon.com/supporting-small-businesses/success-stories aboutamazon,2018.Innovation.[Online] Available at:https://www.aboutamazon.com/innovation Alvesson, M., 2016.Organizational culture.New York: Sage. Amazon,2018.aboutamazon.[Online] Available at:https://www.aboutamazon.in/?utm_source=gateway&utm_medium=footer amazon,2018.AmazonGlobalStore.[Online] Availableat:https://www.amazon.in/gp/help/customer/display.html/ref=hp_left_v4_sib? ie=UTF8&nodeId=202043730 Amazon,2018.Booksatamazon.[Online] Availableat:https://www.amazon.com/books-used-books-textbooks/b/? ie=UTF8&node=283155&ref_=topnav_storetab_b amazon,2018.EnhanceyourAmazonexperiencewithPrime.[Online] Available at:https://www.amazon.com/amazonprime?_encoding=UTF8&%2AVersion%2A=1& %2Aentries%2A=0 amazon,2018.Payment,Pricing&Promotions.[Online] Available at:https://www.amazon.in/gp/help/customer/display.html?nodeId=201894450
INTEGRATION OF BUSINESS FUNCTIONS15 amazon,2018.Promotions&Deals.[Online] Available at:https://www.amazon.in/gp/help/customer/display.html?nodeId=201894800 Ang, C. & Rusli, H., 2018. The Impact of Marketing Mix 4Ps and Consumer Behavior toward Purchase Decision of Adidas Products.iBuss Management,6(2). BBC,2015.Ahistoryofthedepartmentstore.[Online] Available at:http://www.bbc.com/culture/bespoke/story/20150326-a-history-of-the-department- store/index.html Birasnav, M., 2014. Knowledge management and organizational performance in the service industry: The role of transformational leadership beyond the effects of transactional leadership.. Journal of Business Research,,67(8), pp. 1622-1629. Brenner, S., 2015. Leadership style and the process of organizational change.Leadership & Organization Development Journal,pp. 2-16. businessteacher,2019.amazon.[Online] Available at:https://businessteacher.org.uk/pestel/amazon.php businesstopia,2018.SocialMarketingTheory.[Online] Available at:https://www.businesstopia.net/mass-communication/social-marketing-theory Caillier, J., 2014. Toward a better understanding of the relationship between transformational leadership,publicservicemotivation,missionvalence,andemployeeperformance:A preliminary study..Public Personnel Management, ,43(2), pp. 218-239. Cherry,K.,2018.UnderstandingtheTraitTheoryofLeadership.[Online] Availableat:https://www.verywellmind.com/what-is-the-trait-theory-of-leadership-2795322
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INTEGRATION OF BUSINESS FUNCTIONS16 [Accessed 01 08 2018]. CultureWizard, 2018.5 Strategies for Working in Cross-Cultural Virtual Teams.[Online] Availableat:https://www.rw-3.com/blog/5-strategies-for-working-in-cross-cultural-virtual- teams Edelman, P., 2017. Training leader emotion regulation and leadership effectiveness,.Journal of Business and Psychology,32(6), pp. 747-757. forbes,2019.think-like-amazon-the-principles-of-success.[Online] Availableat:https://www.forbes.com/sites/kevinkruse/2017/09/18/think-like-amazon-the- principles-of-success/#5a1a94a46def forbes,2019.what-is-the-internal-culture-like-at-amazon.[Online] Available at:https://www.forbes.com/sites/quora/2017/10/11/what-is-the-internal-culture-like-at- amazon/#478109814a50 pestleanalysis,2019.pest-analysis-of-eretail-leader-amazon.[Online] Available at:https://pestleanalysis.com/pest-analysis-of-eretail-leader-amazon/ Read, G., 2013. A political, economic, social, technology, legal and environmental (PESTLE) approach for risk identification of the tidal industry in the United Kingdom.Energies,6(10), p. 5023. Trivedi, M., 2016. PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology (IRJET),3(1), pp. 384-388. twentify,2019.amazons-retail-expansion-strategy.[Online] Available at:https://www.twentify.com/blog/amazons-retail-expansion-strategy