Integration of Business Functions: Amazon Inc. Report Analysis

This report provides a comprehensive analysis of the integration of business functions, using Amazon Inc. as a case study. It begins with an introduction to the concept of business strategy and its evolution, highlighting the importance of adapting to changes in both the internal and external environments. The report then delves into specific aspects of Amazon's strategic approach, including its leadership, organizational structure, and culture, with a focus on innovation and customer centricity. It examines the company's strengths, weaknesses, opportunities, and threats through a SWOT analysis, followed by an application of Porter's five forces and the STEEP model to assess the competitive landscape and external factors impacting the business. The report further explores the roles of various business functions within Amazon and concludes with an overview of the key findings and implications for strategic management.

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INTEGRATION OF BUSINESS FUNCTIONS
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1-27-2019

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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

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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 of Amazon 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).

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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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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
Strengths Weakness

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 E commerce leader
 Cloud player
 Global presence
 Customer database and loyalty
 Large range of products
 Strong financials
 Innovation focused
 Operating margins
 Product failures
Opportunity Threats
 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

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 Global presence – the company is expanded globally, which creates better brand
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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 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)

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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

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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, shopping experience, and luxury without any physical activities.
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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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).

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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)