Executive Summary
This paper seeks to critically analyze a problem facing Amazon, one of the biggest incorporated companies in the world, and provide it with viable solutions. A historical analysis of the company reveals that it was founded in 1994 and rapidly expanded to become a tech giant by 2000. The company’s mission, vision, and values reveal Amazon concentrates more on the customers and ends up ignoring other vital stakeholders. The customer-centric approach has, however, been beneficial to Amazon, as the company now dominates the global retail industry and is expanding into the cloud computing platform business.
The excessive focus on customers has resulted in employees at Amazon being neglected. This poses a potential threat to the tech giant as some of its skilled workers may migrate to competing organizations. Moreover, little focus on the employees poses potential ethical concerns as well as the risk that the company is involved in unnecessary legal pursuits. The problem is caused by several factors, including management, policies, work environment, culture, and workforce, as illustrated in the fishbone diagram in Figure 2. These interconnected issues should be addressed using the solutions in the study and others that could be identified.
The first potential solution that Amazon could provide is improving the harsh working conditions that its employees are subjected to at the workstation. It needs to refrain from having its employees have mandatory overtime sessions. Safety measures must be implemented to promote employee safety and minimize injuries and unnecessary legal procedures. Amazon could also offer its clients competitive compensation to pay the workers extra for any overtime. A weighted decision matrix shows that these solutions are feasible. To implement these recommendations, Amazon needs to allocate resources, dedicate time, and establish a committee to ensure that workers’ welfare is addressed.
Situation Analysis
Internal Performance
History and Analysis of the Company
The narrative of how Amazon became a giant retail company is both inspiring and amazing. Founded in 1994 by Jeff Bezos as an online bookstore, Amazon diversified to become an everything store online. The company was incorporated in 1997 and expanded its portfolio to include electronics and clothes in the years leading up to 2000.
In the early 21st century, the retail giant launched Amazon Web Services (AWS), a cloud computing platform that revolutionized the industry (White, 2023). According to Amazon’s 10-K report, revenues increased exponentially over the last two years, rising from $ 2.76 billion in 2000 to $ 513.98 billion in 2022, as shown in Figure 1 (Amazon, 2022). The growth was attributable to the diversification of the company’s services and its great cost-cutting strategies.
The growth of Amazon into an industry giant was also contributed to by numerous acquisitions and mergers, through which the company gained control over several businesses, including Zappos, Whole Foods Market, and Audible. In 2010, the tech giant launched Amazon Prime Video, marking the beginning of its content production and distribution, and thus entering the market to compete with organizations such as Netflix and Hulu (Lad et al., 2019). Some recent innovations by Amazon could disrupt the markets in the near future.
Amazon is a global organization that faces stiff competition from a wide array of competitors, including small retail organizations worldwide. According to Amazon’s 10-K report filed in 2022, its main competitors, both current and potential ones, include e-commerce stores, physical shops, vendors, manufacturers, distributors, and producers, among others. The company’s management acknowledges that, due to the ever-changing nature of the online retail business, it anticipates competition to emerge in various dimensions, necessitating Amazon’s continuous preparedness.
Mission, Vision, and Value Statements
The mission, vision, and value statements form an integral part of an organization, enabling its leaders to create a direction that employees and other stakeholders should be committed to following. An analysis of these statements for Amazon reveals that they play a crucial role in ensuring that Amazon’s purpose and principles are clearly defined and consistently implemented by employees. The company’s mission is clear and conclusive and states that Amazon seeks to be Earth’s most customer-centric company (Rashri, 2021). This dedication demonstrates that Amazon prioritizes its customers above all other stakeholders, focusing on ensuring their needs are met and exceeded.
This simple, understandable, and memorable statement reveals that organizations seeking success must prioritize their customers. Indeed, this observation is supported by empirical studies showing that organizations that provide better goods and services typically outperform their counterparts that do not prioritize the customer. The mission statement, which the senior management ensures is followed, has resulted in Amazon ensuring that it is convenient for clients to shop with them, customers select Amazon over its competitors, and there is value in the goods and services offered.
Like the mission statement, the company’s vision statement can inspire the employees to provide better customer service. Its vision for Amazon states that it seeks to be the world’s most customer-centric company, where customers can find and discover anything they might want to buy online. It endeavors to offer its customers the lowest possible prices. (Sastry, 2019). The vision statement is an extension of the mission statement that addresses the need for Amazon to offer competitive prices. This extension, which includes price sensitivity, aligns with the company’s CEO, Jeff Bezos, who believes that clients should use Amazon’s website as a platform to search for items and find their lowest possible prices. The strategy for Amazon to be profitable, therefore, does not focus on increasing the profit margin but on increasing the total sales.
Amazon has numerous value statements that guide the organization’s operations and contribute to its revenue growth. As shown in the mission and vision statements, the company requires its employees to be constantly focused on meeting the customer’s needs. This is achieved by having employees be empathetic and put themselves in their clients’ shoes. This approach results in better products, services, and more convenience for the client.
Amazon’s leadership has successfully created a culture of ownership within the organization, where employees possess an entrepreneurial mindset (Denning, 2019). The workers at Amazon are encouraged to take the initiative in their work and make long-term-oriented decisions. Innovation is a core value at Amazon, and during the hiring process, the HR team seeks to ensure that an innovative workforce is assembled. Continuous improvement is a core value at Amazon, where workers are encouraged to identify small areas for improvement in services and processes to ensure the company operates at an optimal state.
Industry Perspective
SWOT Analysis
Table 1: Amazon’s SWOT Analysis
The results of the SWOT analysis above indicate that Amazon is performing well in several areas, while also identifying numerous other sectors where improvements or caution are necessary. The company is excelling in innovation, and products like Amazon Go and AWS cloud computing platforms can help ensure Amazon’s long-term profitability. Weaknesses are identifiable in the labor and supply chain business segments, where the company may lack highly skilled workers, and some of its suppliers may be engaging in unethical practices. These issues may lead to Amazon facing regulatory problems, as well as ethical and environmental concerns. Organizations that fail to consider ethical, regulatory, and environmental concerns are more likely to face long-term financial difficulties. Therefore, the company should seek to ensure that these internal concerns are addressed.
Amazon is also affected by external factors, including opportunities and threats to the company. Opportunities encompass market potentials that are available to the company, but they have not been leveraged (Allioui & Mourdi, 2023). Areas such as the entertainment industry and the health service sector, discussed in Table 1, present ample opportunities that Amazon could tap into. Moreover, advancements in the AI and ML sectors enable Amazon to understand its customers better, offering a more customer-centric approach through goods and services that align with their needs. The world is becoming more global thanks to the internet, and this presents a large opportunity for Amazon to expand to new geographical regions.
Competitors Analysis
In Amazon’s 10-K report, it is clearly stated that Amazon has several rivals, including Walmart, as well as competitors from emerging markets such as Alibaba. Regulatory scrutiny, particularly regarding how Amazon utilizes data collected from its customers, poses a significant threat going forward and may erode the company’s ethical trust with its clients. This would undermine the company’s reputation as a customer-centric organization.
Environmental Factors
Amazon’s long-term goals are influenced by environmental factors that impact the company’s reputation and long-term sustainability. Amazon’s global operations, including the distribution of products across various parts of the world, significantly contribute to the company’s overall emissions. Amazon, in its strategic long-term plan, has committed to reducing its global carbon footprint and achieving 100% green status by 2040 (Etumnu, 2022). The initiative will help Amazon avoid the much-criticized activities of the company, but will also increase the company’s operational costs. Additionally, the global retail company has recently faced sharp criticism for its excessive packaging, which contributes to environmental degradation. Therefore, it may be necessary for Amazon to explore reusable forms of packaging to ensure that the unique customer experience gained through excessive packaging is achieved sustainably. Amazon also needs to ensure supply chain sustainability, which can be achieved by purchasing from suppliers that adhere to environmental and ethical practices.
Problem Analysis & Description
Overview of Potential Gaps
Despite the numerous successes that Amazon has had over the years, it still faces numerous challenges that necessitate appropriate interventions. Amazon is a large organization that distributes numerous goods worldwide, making it easy for people to overlook counterfeit products sold on the platform. Many genuine sellers have joined the platform to sell their products using the online retail store.
However, the sheer number of traders makes it difficult for Amazon to police the sales and know which ones are original. The presence of counterfeit goods on Amazon’s distribution platforms not only threatens the company’s reputation but also raises concerns about safety and legality when working with the store. A gap has also been identified, suggesting that Amazon does not treat all its employees fairly, particularly those working in retail stores and warehouses.
Fishbone Diagram
The Fishbone diagrams, also called cause and effect diagrams, were created by Kaoru Ishikawa and help in detecting the root cause of a problem within an organization. These diagrams have been put to many uses, the most common ones being to aid in product design, prevent defective products in production, and identify the root causes of adverse effects within an organization (Rodgers & Oppenheim, 2019). This study will utilize this tool to identify potential problems that Amazon may be facing.
After brainstorming, the problem identified for Amazon is that the company has been accused of subjecting employees to harsh working conditions. Six categories have been identified as contributing to this problem. These include harsh work environments where workers lack the necessary ventilation and equipment to ensure their safety and comfort while performing their duties. Ergonomics is defined as the study of people’s working environment and conditions (Mohammad, 2019). Based on the brainstorming sessions about the employees working at Amazon, particularly those working in the warehouses, it can be said that they have poor working conditions.
The company’s workforce is not well-equipped, as employees are not provided with career growth opportunities. Thus, they often end up facing problems in their roles. The employees also have limited labor awareness, which leaves them vulnerable to mistreatment by the organization’s management, as they are unaware of their rights.
As shown in the fishbone diagram below, the mistreatment of the employees is also caused by the cultures and values that the company’s management upholds. Based on the company’s mission and values, more focus is given to customers, while the organization’s employees receive less attention. This culture could make the employees feel less valued and, therefore, become less accountable to Amazon.
Amazon’s management is responsible for the harsh working conditions that the employees face. The CEO of Amazon prioritizes performance over employee welfare, resulting in the company not taking measures to provide workers with ideal working conditions. The management is also poorly trained in handling employees, focusing more on the customers. The lack of training creates a gap in the need for an employee-centric manager.
Six main categories contribute to the problem Amazon is facing, of being accused of subjecting its employees to torture. These include management, policies, work environment, workforce, external forces, and culture and values, as shown in Figure 2 below.
Problem Statement
Based on the fish diagram illustrated in Figure 2 above, the problem statement of Amazon can be stated as “Amazon faces a serious problem with the working conditions that it provides for its employees, which poses several problems such as possible regulatory restrictions, lack of trust in the company, poor public image, and reduced productivity”. Despite Amazon’s current success, this problem could harm the company’s bottom line in the future, making it necessary to investigate the issue and develop solutions. Amazon needs to identify the interconnected causes and develop solutions that promote the well-being of its employees while ensuring operational excellence.
Solutions, Evaluation & Recommendation
Potential Solution 1 and Evaluation
The first potential solution proposed to Amazon to address the issue of harsh working conditions among employees is to create a comprehensive plan that ensures their well-being. Amazon needs to update its systems and establish a work environment that fosters a balance between work and life. The company must stop requiring employees to work mandatory overtime sessions, start paying employees for overtime, and implement a more flexible work routine. The analysis, as depicted in the fishbone diagram, indicates that the company does not prioritize employee safety. To prevent unnecessary legal procedures, Amazon needs to enhance safety measures for its employees, train them on how to handle their jobs effectively, and develop a culture that prioritizes employee safety.
Amazon, although well-known for compensating its employees well, should consider increasing its minimum wage for low-wage employees. Offering competitive payment terms would benefit the company, as it would motivate employees to work more effectively. Moreover, Amazon needs to establish clear communication channels and systems to ensure that workers can easily raise their concerns and address the issues they face.
Upon evaluating this solution of offering employees better working conditions, it is clear that the solution is very feasible. The solution entails gradually modifying Amazon’s internal processes, and it can be implemented without disrupting other activities. Additionally, the impacts of improving working conditions for employees are substantial and include enhanced levels of customer service, which aligns with the organization’s mission.
Potential Solution 2 and Evaluation
The second recommendation for Amazon to improve the working conditions for the employees is to invest in technology and automation. Having ML systems trained to perform mundane and repetitive tasks could help employees with tiresome tasks like packaging and stock management, which can be tedious and lead to employee burnout. Leveraging predictive analysis techniques can help organizations plan their workforce in a manner that ensures optimal performance without causing burnout. It is also essential for the management of the incorporated company to set aside funds for training and upskilling its employees, as this would result in enhanced safety and job satisfaction.
Critically analyzing this solution reveals that it is viable, as it aligns with the company’s core values of innovation and the adoption of the latest technologies. By modernizing its technological infrastructure, Amazon will minimize strenuous tasks and enhance the safety of its employees. With reduced accidents caused by technology, Amazon will be able to attract highly skilled workers who seek to work in a safe environment.
Weighted Decision Matrix
The choice between Solution 1, which involves improving working conditions for employees, and Solution 2, which involves being innovative and leveraging technology, will be weighed using various metrics. The first consideration is feasibility, and although both options are highly feasible, the first solution is selected because it requires fewer resources and systematic changes to implement.
Both solutions have significant potential impacts, including reduced employee turnover rates and a positive public image. Therefore, since the two options are the same, option one is selected because it is the cheaper option. Regarding cost-benefit analysis, adopting a flexible working routine over technological innovation would be the optimal choice. Finally, regarding alignment with Amazon’s values, it is clear that both options align with the vision, mission, and core values of the global institution.
Cost-Benefit Analysis
The decision to improve the employee working space offers a clear cost-benefit compared to technological improvements. The costs for improving working conditions include creating a safer environment, compensating workers for overtime, and hiring additional staff. Although these expenses could reduce profitability quickly, they will ultimately result in improved sales and profitability, as a motivated staff can become more productive. This solution will likely result in immediate success for Amazon as the motivated workforce could distribute the good brand name to their friends.
Criteria and Recommendation of Solution
The best strategy for Amazon to address the problem under analysis would be to implement a comprehensive plan to improve the workforce by providing them with good working conditions. The solution addresses the immediate challenges facing the organization, including poor working conditions for its workers. The method is chosen mainly because it is cost-effective and can be adopted immediately, yielding expected profits. The project is likely to be successful as it is feasible, has potential impact, is cost-effective, and aligns with company values, as shown in Table 2 below. This solution would be helpful since it would enable Amazon to leverage available technologies to enhance the working conditions for implementation.
Table 2: Criteria for Success Using Weighted Decision Matrix
Implementation & Success Metrics
The timeline for implementing this solution to improve working conditions for Amazon employees is expected to take between 12 and 18 months. The schedule will begin by examining the existing policies and procedures, followed by a six-month implementation period. Ongoing monitoring and feedback will be conducted periodically to ensure the training is effective. A budget of $100,000 shall also be set aside to ensure that thousands of employees are subjected to the training program.
Additionally, part-time employees will be used to fill in the gaps for workers in training. To implement this solution, management will need to form a committee responsible for addressing clients’ problems and providing solutions. Following this structured program will ensure that employee turnover is reduced, employees have high morale, and risks of legal actions are minimized.
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