Introduction
On the basis of the research conducted on Amazon’s organizational design and structure, three key elements were identified. These include a hierarchical organizational structure, company flexibility, and top management stability. Although the company is able to mitigate some disadvantages associated with its size and scale, there are major underlying problems inherent to stated design and organizational structure features. Therefore, the core disadvantages of Amazon’s structure are reflected in hierarchal rigidity, limited flexibility, and excessive dependence on top management.
Main body
Firstly, the hierarchal structure of Amazon provides broad control over its massive scale of operations, which is beneficial when it comes to standardization and universalization. However, the core issue is that it creates a rigid system, which is the main cause of a number of risk factors. According to the annual report by the company, it is stated that “demand for our products and services can fluctuate significantly for many reasons, including as a result of seasonality, promotions, product launches, or unforeseeable events…or geopolitical events” (Amazon.com Inc., 2021, p. 7). In other words, the fact that Amazon operates in highly diverging and differential markets with a multitude of factors that bring even more differences makes the hierarchal structure highly rigid and ineffective. The company cannot impose a standardized approach everywhere and needs to make adjustments on a regular basis, which is a challenge for a company of this size.
Secondly, although Amazon was described as flexible for its size, it is still not flexible enough to be responsive. It is stated that “a disadvantage of this organizational structure is that it has limited flexibility and responsiveness” (Meyer, 2019, para. 10). In other words, the modern dynamic international market with constantly changing environments and conditions requires a higher level of flexibility than the company currently has. For example, structural analysis suggests that “the dominance of the global function-based groups and global hierarchy characteristics reduces the capacity of Amazon to rapidly respond to new issues and problems encountered in the e-commerce business” (Meyer, 2019, para. 10). Thus, flexibility is still undermined by its organizational structure, and the pressure is ever-increasing.
Thirdly, the top management stability comes at the cost of excessive dependence and ineffective reciprocity and bureaucracy through the vertical axis of the company. It is stated that “the dominance of the top-level members has to be reduced. Otherwise, it becomes difficult to respond to various new issues emerging in the e-commerce section” (Samuel, 2021, para. 14). Therefore, many key decisions are not made autonomously but rather with a higher degree of reliance on top management’s involvement. Considering the sheer scale and scope of Amazon, it might be better to provide some form of autonomy to regional branches and minimize top managers’ engagement in the region-specific issues. For example, it suggested that “the regional offices can be provided with more power to solve this issue” (Samuel, 2021, para. 14). In other words, more independence of regional managers’ decision making process can result in more flexibility and responsiveness, which Amazon critically needs.
Conclusion
In conclusion, the core problems of Amazon’s organizational design and structure include hierarchal rigidity, limited flexibility, and excessive dependence on top management. The rigid hierarchy at the company contributes to a number of its external and operational risk factors. The lack of sufficient flexibility is also a problem despite Amazon’s major achievements of being flexible for its size. The top management stability makes the entire company excessively dependent on these managers’ involvement in endeavors that do not necessarily require their attention.
References
Amazon.com Inc. (2021). Form 10-K [PDF document]. Web.
Meyer, P. (2019). Amazon.com Inc.’s organizational structure characteristics. Panmore Institute. Web.
Samuel, J. (2021). Amazon.com Inc.’s organizational structure characteristics. How I Got the Job. Web.