BUSM4176_1710 Assignment 1- Case study

Introduction to Management

Assessment 1: Amazon Case Study

1. Introduction

Electronic Commerce is the act of buying and selling goods and services or transmission of funds or data, over the internet. The use of E-Commerce has grown rapidly, together with modern technology. Businesses started using the Electronic Data Interchange (EDI) in the 1960’s to share documents with other companies, three decades later, the online market was born and large companies began to revolutionize the industry. Today, it is almost mainstream for businesses to sell their goods online and trading has become an effortless activity, used in everyday life.

The transforming sector of E-commerce sees a lot of managers struggle to choose their style of management. Due to technological growth, managers are now required to become leaders who create a vision rather than just manage the business. When a business begins to grow and mature, new challenges arise every day. This forces managers to try new methods and procedures to ensure employees are working to the best of their ability. After all, most businesses thrive from the operations of its employees.

Amazon, an electronic commerce company is the business that will be examined in this paper. It will prove that a poor style of management, lack of communication and no sense of leadership can be damaging to all employees.

2. Background

Amazon was founded in 1994 by Jeff Bezos in the United States of America. The company made its debut on the internet a year later. Today, it is seen as one of the most successful companies in the E-Commerce industry. As of 2017, Amazon has around 341,000 employees worldwide, with 20,000 at the headquarters in Seattle. The company uses a functional organisational structure focusing on each of its business functions. (Myer 2017) Amazon’s corporate structure includes 8 global function-based groups led by a senior manager, primarily male-dominated.

Although Amazon is one of the top industry leaders and is constantly growing, many employees have fled due the overwhelming pressure they suffer from. The employees left after the annual retrenchment, believe the managerial culture is very dominating. Kantor and Streitfeld (2015) This raises concerns about behavioural issues which are beginning to affect employee drive and performance.

The organisational structure, stemming from the CEO’s autocratic leadership and controlling management affects employee efficiency and confidence. Communication has deteriorated, causing extra dissatisfaction and forced some employees to quit their jobs.

3. Identification of Issues and Problems

3.1. Communication techniques

Amazon has a major problem with communicating between management and employees. The company has created an environment where some staff don’t feel safe to express their opinions or reach out to anyone if they need help. (Kantor and Streitfeld 2015) This is a major problem for future endeavors of the company and possible benefits from employee’s opinions.

The dominance of the global hierarchy and global function-based groups has surfaced issues with messages being relayed to all employees. (Meyer 2017) Managers don’t understand that information needs to be transferred to ALL employees to increase the productivity of the business. A lack of communication can decrease Amazon’s ability to respond to new issues in the industry as quickly as possible, therefore exposing them to possible business failure.

3.2 Management and leadership styles

Another issue among employees at Amazon is the use of an autocratic style of management from their CEO. Bezos practices a traditional style of leadership adopted from Fredrick W. Taylor who believed the person in charge has full authority and control over all aspects of decision making. (Robbins et al. 2016) His Principles of Scientific Management include high speed production lines, only having one best way to complete tasks and a superior view that workers could not think for themselves. Simha & Lemak (2010) observed that even though administrating and control are necessities when managing, this approach has been criticised by many scholars of management resulting in a ‘negative portrayal of Fredrick Taylor.’ (p. 233)

The company’s corporate structure is somewhat effective in sustaining international growth in ecommerce. Some staff said they “thrived at Amazon precisely because it pushed them past what they thought were their limits,” but majority of Amazon’s employees have a negative perception of management. (Kantor and Streitfeld 2015) Overworked staff feel no appreciation for the endless hours they spend in the office, decreasing work ethic and morale of employees.

4. Possible Solutions

4.1. Changing Amazon’s communication techniques

The lack of communication is one of Amazons biggest setbacks. Poor interaction between the CEO, managers and employees has resulted in low staff ambition and drive.

 Advantages

Effective communication is very important in creating a comfortable working environment for employees and overall success of the business. Two-way communication is important in any work setting as it helps create trust and support between colleagues. (Coscina 1998)

 Disadvantages

If communication isn’t shared among staff, they may not understand important issues and problems the business is confronted by. The e-commerce industry is constantly facing new problems with technology and all of Amazon’s employees must be regularly updated with issues to help solve these issues promptly.

4.2. Changing Amazon’s management and leadership style

The view of poor management and leadership styles at Amazon is common among employees. This problem has resulted in a low level of staff initiative and motivation.

 Advantages

Effective management and leadership skills are important in the workplace, as it can enhance employee morale and decrease staff turnover. If managers were to adopt a less power hungry approach and focus on employee’s welfare, the business could increase their competitive advantage.

 Disadvantages

If new management practices and leadership styles aren’t put into place, the staff turnover and employee morale will begin to increase.

5. Proposed Solutions

5.1. Improving communication techniques at Amazon

Amazon must change their communication techniques in order to rise even further in the industry. Strategies must be applied to all sectors of the company. Communication, cooperation and collegiality are three important aspects of success that every business should utilize. (Coscina 1998)

More effective methods of communication, such as monthly meetings instead of written emails will improve employee morale and see a clear transfer of new ideas and information between levels. This sees managers understand everything their staff do for the company and appreciate their efforts, rather than instruct them to ‘rip into colleagues’ ideas’. (Kantor and Streitfeld 2015)

5.2. Improving management and leadership styles

Amazon’s success will begin to improve out of sight if new management and leadership styles are put into place. It might be unlike for Bezos to change his management approach as he recognises how successful the business already is, although it can still continue to rise with new tactics.

Meyer (2017) advises that reducing the dominance of the structural characteristics could be beneficial for the company in many ways. A safer and happier environment for employees to work in will allow the company to increase productivity and respond to new issues in the industry rapidly.

6. Recommendations

6.1. Strategies for improving communication techniques at Amazon

Strategy 1- The Three Cs

Communication, Cooperation and Collegiality are three ideas that must be pursued at Amazon to keep staff organised and efficiently relay information between managers and employees. Twoway communication between staff is important to increase cooperation and typically deal with any disagreements among themselves rather than higher management. (Coscina 1998) The relationship between colleagues or ‘collegiality’ should be a common practice in any workplace, and employees should go to work every day, wanting to be there, not simply ‘crying at their desk.’ (Kantor and Streitfeld 2015)

Strategy 2- Monthly meetings

Face-to-face communication is much more effective than written communication. Employees have the opportunity to express their opinions and ideas off the top of their head, and managers can actively listen. This also creates an opportunity for business information to be relayed to staff, such as future goals and performance of the business. Managers can give feedback to employees in these meetings, and ensure all members have understood the information they have given them by asking questions, which will improve accuracy. (Robbins 2016)

6.2. Strategies for improving management and leadership styles at Amazon Strategy 1- Contingency management approach

The contingency approach to management, developed by Fred Fielder could be beneficial for Amazon. It states that leadership effectiveness involves task motivation and circumstances. Since the e-commerce industry is changing at a fast pace, managers need know how to adapt to these changes quickly. (Robbins 2016) Amazon managers must develop their own contingency structure and operations relating to the e-commerce industry and what kinds of changes they will face. (Burnes 1996) This will create less stress on managers and therefore reduce the dominance against staff thus creating a cooperative working environment.

Strategy 2- Adequate management training

I believe that all levels of management at Amazon need to complete sufficient leadership training. Ensuring that all managers are real leaders and employ excellent confidence and resilience, which is what all successful managers should possess. If managers lead by example in all the correct ways, employees will be more productive and even more customer focused, as they want to give back to the business for treating them well.

Reference List

Amazon 2017, Amazon's global career site, Amazon, viewed 21 April 2017, <https://www.amazon.jobs/en/principles>.

Burnes, B 1996, ‘No such this as… a “one best way” to manage organizational change’, Management Decision, January, vol. 34, issue 10, pp. 11-18.

Coscina, D 1998, ‘The “Three Cs” of chairing: Communication, cooperation and collegiality’, The Psychologist-Manager Journal, vol. 2, issue 4, pp. 34-43.

Kantor, J & Streitfeld, D 2015, 'Inside Amazon: Wrestling Big Ideas In A Bruising Workplace', Adapted From Business Day, New York Times, Aug. 15.

Meyer, P 2017, Amazon.com Inc.’s Organizational Structure Characteristics (An Analysis) -

Panmore Institute, Panmore Institute, viewed 21 April 2017,

<http://panmore.com/amazon-com-inc-organizational-structure-characteristics-analysis>.

Robbins, SP, DeCenzo, DA, Coulter, M, & Woods, M 2016, Management the essentials 3e, Pearson, Melbourne.

Schneider, L 2017, Understanding Amazon.com's History and Corporate Culture. The Balance, viewed 20 April 2017,

<https://www.thebalance.com/amazon-com-company-research-2071316>.

Simha, A & Lemak, D 2010, ‘The value of original source readings in management education: The case of Frederick Winslow Taylor’, Journal of Management History, vol. 16, no. 2, pp. 233252.