Amazon’s Organizational Structure and Strategy Implementation

Hierarchal Organizational Structure at Amazon

Amazon employs a hierarchal organizational structure, which makes it possible for the company to exercise extensive control over all its operations across the globe. In any company, the organizational structure determines the interactions among employees and the management (Giri & Ramakrishnan, 2019). For example, Amazon guides the influence of managers on all operational activities within various departments of the business. Grant (2010) describes hierarchy as a traditional structural characteristic used by businesses. In the case of Amazon, the structure is expressed through a system of vertical command lines which influence the activities of the online retail firm. In this regard, the directives of senior managers are applied in the entire organization and affect all relevant departments in all branches worldwide.

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Specialization

Amazon demonstrates the possibility of doing work more efficiently allowing employees to specialize. In this sense, the term specialization of labor describes the extent to which Amazon categorizes all activities into separate jobs. The essence of work specialization is to ensure that tasks are divided into steps, which are to be completed by separate individuals (Giri & Ramakrishnan, 2019). It means that the employees specialize in undertaking specific activities rather than the entirety. The leadership of Amazon believes in the need to maximize efficiency, which can be achieved through specialization. Dividing tasks into small, distinct, categories makes it easier for the employees at Amazon to perform repetitive tasks such as repeatedly packaging boxes.

Coordination

For easier coordination of the company’s activities, Amazon groups jobs based on the function, processes, or geographical region. In this case, functional departmentalization includes the creation of sales and human resources departments. On the other hand, grouping based on geography is guided by sales functions. The managers of stores selling whole foods, for example, stock different items depending on their geographical location. This explains the extent to which departmentalization by region works for Amazon. The management of Amazon makes informed decisions regarding regions that appeal to specific consumers’ preferences.

Cooperation

The same departmentalization that brings employees to work well together in various departments has been blamed for isolating and restricting inter-departmental communication. This has in turn reduced levels of cooperation amongst employees from various sections of the organization. Various departments at Amazon tend to be indifferent to issues affecting other areas. Furthermore, every section of operation gives its agendas importance in pursuit of the organizational goals.

Control

Having some level of control within an organization can be a trade-off for performance. In this regard, it would be easier to lose control of a growing number of employees in the absence of a structured model (Grant, 2010). However, the hierarchal structure allows Amazon to monitor and control employee behaviors. This has been made possible by adding several layers of management within the company’s hierarchy. The structure, therefore, ensures that there is a flow of ascribed authority in all departments. Whereas the frontline managers direct the work of subordinates, employees execute the work as directed by their superiors. The structure creates a clear demarcation on the category of people issuing direction and those executing the tasks.

Implementation of Amazon’s Strategy

The hierarchical organizational structure helps to create clear lines of communication. In this sense, the company establishes how the managers relate with their subordinates as well as the direction of communication. Given that the managers act as the spokesperson for the company in each department, there is a clear understanding of the organizational strategy by all employees at all levels (Giri & Ramakrishnan, 2019). On the other hand, the lower level workers know whom to report to and the source of information and directives. The unifying nature of the hierarchy ensures that all employees coordinate and work towards a common goal. Additionally, the fact that employees are organized by job category allows them to do similar tasks while sharing resources.

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Lattice Organizational Structure at Gore

The lattice organizational structure was the idea of the founder of the company Bill Gore, who had been working for the company from its inception. The business model was supposed to nurture creativity, open communication, collective accountability, and innovation amongst the employees (Kavadarli, 2017). Besides, it was intended to create a working environment where the employees would not wait for instructions regarding what tasks to undertake or how to do them. Upon the adoption of the lattice model, employee motivation and recognition were determined by the impact each had on the success of the whole team.

Specialization

The employees of the company were put to operate into flexible groups which would best accomplish common organizational objectives. Unlike in the case of Amazon’s hierarchal structure, the employees were more flexible as there was no emphasis on specialization. The managers at Gore further rotate the employees across different tasks, therefore, paying more attention to job on the skills than titles held by the workers.

Coordination

The company eliminated the roles of traditional managers in overseeing the implementation of tasks. In this regard, Gore utilized radical decentralization of authority, which means that the workers had full authority over how to execute their work. Additionally, self-management was practiced throughout the organization, leaving the CEO as the central coordination authority. However, the structure left doubts regarding accountability and management roles at group levels, especially when there was no clarity in directives issued.

Cooperation

Even though the employees were allowed to work autonomously, there was the likelihood of asymmetry in cooperation amongst them. This is because every worker was deemed to hold some form of informal power resulting in issues with self-enforced cooperation (Kavadarli, 2017). There was also likely to be problems in mutual understanding when the individual employees within the same group were not ascribed to similar norms, beliefs, and practices.

Control

Another aspect that was derailed by autonomy within the organization was controlled. In this regard, the employees felt happier that the management did not control their decisions and how they performed their work. The lack of control, therefore, introduced an element of satisfaction amongst employers. This made it easier for them to engage in a wider range of skills considering that there were no limits to formal job titles.

Effective Operation and Strategy Implementation

Typical control mechanisms linked to the hierarchical structure make the model appealing for any organization. However, the model restricts the principle of individual freedom, therefore, limiting the creative growth of employees (Giri & Ramakrishnan, 2019). On the contrary, Gore adopted the lattice structure, which facilitates cooperation and enhanced collective responsibility in the implementation of the organization’s strategy. By definition, the lattice model requires all employees to know each other (Kavadarli, 2017). The Gore Company, therefore, limited the number of employees in each branch to facilitate direct communication. Furthermore, the small number of workers in each site promoted interaction between associates, hence the pursuit of the same objectives. Even though teams pursued their day-to-day activities within the sites, there was room for collaboration with associates from nearby plants. The clustering of the branches, therefore, encouraged further interaction between unrelated teams.

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References

Giri, S., & Ramakrishnan, S. (2019). Behavioral momentum in hierarchical and nonhierarchical organizations. Behavioral Development, 24(1), 1-5. Web.

Grant, R. M. (2010). Contemporary strategy analysis [10th Ed]. John Wiley & Sons.

Kavadarli, A. (2017). The network level needed in determining organizational structure. Information Management and Business Review, 9(1), 31-38. Web.

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