Assignment on Amazon

Submitted To : Tazrian Shainam Shahid

Course Code : BUS 203
Course Title : Principles of Management
Assignment Submitted By:
1) Areeb Ahmed Quraishi ( 182011076 )
2) Sanjida Islam ( 182011091 )
3) Tashfaqur Rahaman ( 182011153 )
4) Shahinur Afra ( 173011168 )

Submission Date: 05/09/2019

Company Background
Amazon is an American multinational technology company based in Seattle, Washington ,
United States. This company focuses on e- commerce, cloud computing, digital streaming,
and artificial intelligence. It is considered one of the Big Four technology companies along
with Google, Apple, and Facebook. This company was founded in 5th July 1994. The founder
and CEO of this company is Jeff Bezos. Amazon is the world’s largest internet company by
revenue. In 1994, Jeff Bezos incorporated Amazon. He chose the location Seattle because of
technical talent as Microsoft is located there. In May 1997, the organization went public. The
company began selling music and videos in 1998, at which time it began operations
internationally by acquiring online sellers of books in United Kingdom and Germany. The
following year, the organization also sold video games, consumer electronics, home-
improvement items, software, games, and toys in addition to other items. In 2002, the
corporation started Amazon Web Services (AWS) which provided data on Web site
popularity, Internet traffic patterns and other statistics for marketers and developers. In 2006,
the organization grew its AWS portfolio when Elastic Compute Cloud which rents computer
processing power as well as Simple Storage Service that rents data storage via the Internet,
were made available. That same year the company started fullfillment by Amazon which
managed the inventory of individuals and small companies selling their belongings through
the company internet site. In 2012, Amazon bought Kiva Systems to automate its inventory-
management business, purchasing Whole Foods Market supermarket chain five years later in
2017. In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States
by market capitalization. The company initially started as an online marketplace for books but
later expanded to sell electronics, software, video games, apparel, furniture, food, toys and
jewelery.

Amazon is a powerful engine for growth of the national economy because it revitalize
communities across America through job creation, investment in economy and innovative
services. It is recorded that since 2002 Amazon has invested more than $ 100 billion dollar in
the U.S economy. Amazon has also supported tens of thousands of overlooked and
underrepresented writers through $10 million in grants from the Amazon Literary Partnership
to more than 120 diverse groups since 2009. Amazon is committed to ensure all children
and young adults especially those from under represented and underprivileged communities
who reside in communities where they have a physical presence and have the resources and
skills they need to build their best along with brightest futures. Amazon also focuses on
building long-term and innovative programs that will have a lasting and positive impact in
communities around the world. As part of this focus, amazon works to both inspire and
increase access to computer science and Science, Technology, Engineering and Math
(STEM) education. Their primary computer science focused initiative is Amazon Future
Engineer program aimed at inspiring and educating 10 million students from underprivileged
and under represented communities each year to try computer science and coding.

Amazon today has more than 45,000 workers just in their home town Seattle. All of them
have different colour badges on the basis of their experience and their working duration. For
example workers who have been working within 0-5 years they have Blue Badge. Workers
who are working for 5-10 years they have Yellow Badge. Workers who are working for 10-
15 years they have Red Badge. Workers who are working for 15-20 years they have Purple
Badge and lastly who are with this company for over 20 years they carry Silver Badge. This
badge is the sign for all workers to understand the level of each other in terms of experience
in working with this organisation.

Organogram of Amazon
Planning:
Jeff Bezos, the owner of Amazon left his job as an investment manager at the New York City
firm of D.E. Shaw & Company where his yearly income was $1 million. The reason he left
the job is, he intended to start a business and take advantage of the 2,300 percent a year
growth of the internet. Jeff Bezos stated in many of his interviews that he drew up a list of the
best products to sell online and books topped the list, primarily because of the millions of
titles in print. Bezos and his wife moved from Texas to the Seattle, Washington once the
product was decided on because he thought he would have access to a large pool of high-tech
professionals which will be very helpful for his work. Jeff Bezos wrote a business plan on his
laptop while he was travelling from Texas with his wife Mackenzie. He spent months to
decide his company name. At first he thought of giving the company name “Cadabra” but this
name sounded similar to “Cadaver” so later he changed the name to Amazon, after the
world’s largest river. The symbolism proved to be amazingly prophetic. Jeff Bezos rented a
two-bedroom house in the Seattle suburb of Bellevue and began operations in his garage with
four employees with him. Shel Kaplan was the first person he hired as a computer
programmer. Shel Kaplan was given the task of developing the Web site of the company. A
beta, or test version of the Amazon.com website was put in place in June 1995. A small group
of employees, Bezos, and his wife did all of their work from the garage and to save money,
Bezos built bookcases, desks, and other office furniture out of old doors and pieces of used
lumber. To help supply electricity, he used power cables to bring electricity from the house to
the garage. Bezos financed the operation with his own money and a $300,000 loan from his
parents but later he realized he needed more money so he contacted with his former co-
workers and family friends and convinced fifteen of them to invest in his start up. His capital
totaled to $1 million and with this initial investment, after a month of successfully beta
testing the Website, Bezos was ready for business.

Organizing:
The organizational structure of Amazon can be classified as hierarchical. Senior management
team include two CEOs, three Senior Vice presidents and one Worldwide controller, who are
responsible for various important aspects of the business reporting directly to Amazon CEO
Jeff Bezos. There are seven segments such as information technology, human resources and
legal operations and heads of segment also report to Amazon CEO. Hierarchical structure has
developed at Amazon because of the enormous size of the business. It has more than 300
million customers globally and it is the largest internet retailer in the world by revenue
employs 560,000 people worldwide. Amazon organizational structure also integrates many
small teams that deal with various business areas. Amazon has a functional organizational
structure and this structure focuses on business functions based to determine the interactions
 among components of the organization. There are three most significant corporate structure
in Amazon.

I. Global function-based groups: Each major business function has a dedicated group or
team, along with a senior manager. The reason for this is to manage e-commerce
successful operations throughout the entire organization.
II. Global Hierarchy: Senior manager directives are applied throughout the organization,
affecting all relevant offices of the company worldwide. The objective of this feature
is to facilitate managerial control of Amazon’s entire organization.
III. Geographic Divisions: Geographic divisions is also involved in Amazon’s
organizational structure. In this structure, the groups are based on geographic regions
and related business goals. Amazon uses geographic divisions to make it easier to
manage the e-commerce business based on economic conditions of certain regions.

Leading:
Amazon have some power player with many of them having been at the company for years.
Bezos considered this as his strength. Amazon’s executives at the highest level are largely
unchanged according to an internal organization chart seen by CNBC. Almost all of the
executives at the top of Amazon’s consumer-facing businesses, like retail, cloud and
hardware are white men and only four of the 48 executives in those roles are women. The
following are the name and their position in Amazon.

I. Jeff Wilke, CEO of worldwide consumer

II. Andy Jassy, senior vice president of Amazon web services
III. Jeff Blackburn, SVP, business and corporate development
IV. Dave Limp, SVP, Amazon devices, digital management
V. Brian Olsavsky, SVP, & CFO
VI. David Zapolsky, SVP & general counsel
VII. Beth Galetti, SVP, human resources
VIII. Jay Carney, SVP, corporate affairs
IX. Wei Gao, VP technical Advisor to CEO
X. Dave Clark, SVP, Worldwide operations
XI. Dave Treadwell, VP, e-commerce Foundation
XII. Doug Herrington, SVP, North America consumer
XIII. Gur Kimchi, VP, Prime Air
XIV. Neil Lindsay, VP, WW Prime and Marketing, WW Advertising and Marketing
XV. Pat Bajari, VP, and Chief Economist
XVI. Russel Grandinetti, SVP International Consume
XVII. Steven Kessel, SVP Physical Stores
XVIII. Tony Hsieh, CEO, Zappos
XIX. Yunyan Wang, Technical Advisor, Consumer
 Controlling:
Whenever Jeff Bezos faces any problem he follow three methods to solve the problem. One
is asking the team to write up a case study. Case study is effective because the conditions
and circumstances surrounding a problem are complex and varies. So, by forming a case
study the team can analyze these circumstances. To analyze circumstances, skill and focused
thought is very important. By doing this they get more accurate representation of the picture.
The second is identify the root causes. Bezos states that this is important because a single
root cause of a problem could be identified and can be reduced but the problem could
continue to return or even grow if other significant causes go untouched. By identifying all
possible root causes, the problem can be completely eliminate or at least bringing it to as
close to zero as possible. The last one is identify root solutions. Jeff Bezos says it is the hard
part because once a root cause is established, brainstorming begins to fix each problem. A
team should feel free to recommend both traditional and unorthodox solutions. The more
choices, the more chances of selecting best of the best.

Key strategy of Amazon

The tools which make Amazon successful is the six pages memo which considered to be
primary among the keys to Amazon success. Amazon focused their customers like a
laser,instead of making a new product and convince the executives that customers will love
this idea they works from the perspectives of the customer which ideas customers are going
to like. Prime was created as it helps customer to buy products with less amount of money
and also receive the product as fast as possible so it helps the customer to do both with the
help of prime. To improve the betterment of customer satisfaction Amazon created a six
pager memo which would help the busy and distracted executives to make a good decision.
They need executives to do this task reading the front and back part of the memo discuss and
dissent the idea that presented and then make a decision which can be called as powerful
management and decision-making methodology. The six pager contain Heading which is the
name of the product, Sub Heading which describe the market for the product, Summary
which it give a brief summary of the product and the benefit, Problem it needs to describe
what the product solves, Solution is how the product solves the problem, Quote from Amazon
executive which will say the customer that product might need to deliver after two or three
hours, How to get started which describe how easy it was for customer to get starting using
the services, Customer quote which means if the customer has faced any problems regarding
receiving the product, Closing call to action is reinforce the customer why the product and
service is a must have. So, this six pages memo help to identify where a company should
place its focus and why. Six-pagers enforce discipline and rigor in decision-making. Six-
pagers are an excellent management tool. There are more strategies in making amazon the
dominant company in worldwide. Amazon Prime was the central part of the incremental
improvement of the company position as it offers free shipping of its products worldwide.
Amazon was also a reason for all the small business as they offer financing to new ventures
which will increase various ecommerce services. Amazon also started an artificial
intelligence which are Alexa and Siri. Siri is embedded in the iPhone while Alexa offers
unparalleled access to Amazon's ace in the hole zero-click. Zero-click will revolutionize
shopping, providing users the ability to replenish much-needed supplies. They also developed
an Alexa Fund which will help for investment in a startups company. Amazon also was in hot
news as they start to deliver their product by drone from state to state and they make sure
whether the product is delivered within 48hours by their logistics. Moreover, Amazon also
enter the pharmacy market where they make a force with Cardinal health to distribute devices
in hospitals and other medical care places. Amazon focus on customer satisfaction rather than
expanding their product which helps them toachieves excellent customer satisfaction
services. Amazon is poised to become the most valuable company in the world with their
different business strategies.

Scandals of Amazon:

Tax avoidance was the biggest one on this list is Amazon’s tax avoidance, particularly in the
UK. It was reported in 2012 that the organization made more than £3.3 billion in sales but
didn’t pay any corporation tax, and that it was being investigated by the authorities. After
eventually agreeing to pay corporation tax, in 2017 it was once again reported that the
company was avoiding tax when it turned out Amazon paid just €16.5m (£15m) on European
revenues of €21.6bn (£19.5bn) reported through Luxembourg in 2016. Its declared UK
corporation tax bill halved from £15.8m to £7.4m year-on-year in 2016 despite
revenues rising from £946m to £1.46bn. Then, in October 2015, Amazon banned sales of
Apple TV and Google Chrome cast products that serve as rivals to its own Fire TV
range. Amazon stated that this was to prevent ‘customer confusion’ as Apple and Google’s
devices did not support Amazon’s Video service. Critics argued that Amazon had
deliberately refused to develop an app for those other devices and that it was trying to
suppress their sales. In December 2017 Amazon launched an Amazon Video app for Apple
TV but neither it nor Chrome cast products have returned to the site. It was known as removal
of competitor products.

Amazon scandals are not exclusive to the 2010s, as the turn of the millennium saw a proven
case of price discrimination. One user a regular Amazon customer found a DVD at one price
but when they deleted their cookies they were offered the DVD at a substantially lower price.
The company’s response may be a bit of a shock given its tendency nowadays to stick to its
guns. CEO Jeff Bezos followed up the news by apologizing for the pricing and stated that
Amazon never will test prices based on customer demographics. The company said the
difference was the result of a random price test and offered to refund customers who paid the
higher prices. After that, in December 2015 a report was published by The Guardian to
expose the sale of illegal items on amazon.co.uk. The items, which were in contravention of
British law included a pepper-spray gun sold directly by amazon.co.uk stun guns and a
concealed cutting weapon both sold by Amazon Marketplace traders.
Crisis of Amazon:
Amazon has built its brand on being a trusted partner for retailers and consumers alike, a
place where consumers feel they can find the lowest price and brands and manufacturers
benefit from an open platform model that connects their goods and services with millions of
consumers. As more brands got wise how partnerships are benefiting amazon and allowing
retail giant to compete on customer experience and as consumers encounter more expensive ,
less predictable features and amazon faced so many crisis. Amazon raised the price of Prime
memberships last summer for both monthly and annual members, resulting in a drop-off in
membership. Last October, data reported that Amazon Prime memberships dipped from an
all-time high of 47.8% of all U.S. consumers in April to 42.9% in August. Prime members on
average buy $1400 a year on the site versus non-prime customers who spend $600 according
to a Business Insider story. The slowing of the Prime machine could also mean price
increases elsewhere. Amazon was also the first retailer to take a page from Uber’s book by
implementing surge pricing on goods sold, meaning consumers can see different prices on
products depending on the time of day and other factors. According to this recent story by
Dig day , Amazon argues that it can lower prices as part of promotions or match any price at
another retailer that undercuts an Amazon price for the same product.

Retailers and brands have been selling goods on Amazon for what seems like forever. As
more sellers came on board the more powerful the Amazon machine became as consumers
were easily able to find the products they were looking for at a good price on the Amazon
site. With Amazon being the go-to location for most consumers for price and convenience it’s
not likely that many third-party sellers foresaw how Amazon would use their consumer data
against them. According to Business Insider, Amazon can now capture more revenue from
selling its own products than it can from selling other companies which is certainly making
sellers nervous. The article also states that competition from Amazon is a concern for 38
percent of Amazon’s third-party sellers but with 60 percent saying that they get 61 percent or
more of their total sales from the e-tailor’s platform for now they’re doing little more than
grumbling.

What was done to recover?

Likely sensing frustration Amazon has been widening the trap further to entice sellers to
stay on board. In February, it began lowering both the minimum fees and the percentage fees
it charges third-party sellers for some categories on its Marketplace platform noting in an
email that it is making the changes so that sellers can increase selection of products. The
move only reinforces Amazon’s reliance on sellers for data that they will likely use to create
even more of its own private label products. Amazon has more data than anyone, and they
know how to use it. That said the road that has gotten them here has been paved by sellers
who now consider themselves more a competitor than partner to the behemoth. Trust has
become a factor for consumers as well as sellers. As more consumers are able to find the
products they seek at the prices they expect outside of Amazon and retailers are able to
capture and gather insights from voice of consumer data in order to compete, trust may
become valuable currency particularly as the future of retail molds around consumer
expectations .Greg realized there was a better way for retailers to make decisions and devoted
him to revolutionizing the retail industry. With decades of experience in retail, economics
and growing Saabs businesses, Greg has helped to build First Insight a technology company
transforming how retailers make product and pricing decisions into the world’s leading
platform for creating differentiated products.