Introduction
It is doubtless that the success of any organization depends on a wide range of intertwined factors, which have the potential to propel an organization or make it crumble. One of these factors is leadership. In any organization, leadership is usually charged with the responsibility of giving direction and setting performance pace through formulation and execution of strategies.
Through goals and objectives, leaders decide the best course for an organization to take for better results. Besides determining the performance pace, the leadership of an organization also adopts measures, which are at aimed at ensuring that the organization gains a competitive advantage within the business space. This is essential in counteracting the effect of competitors and adopting products and services that address the needs of customers and the market exhaustively.
There are several organizations, which have failed and declared bankrupt because of poor leadership. On the other hand, numerous companies around the world thrive because of effective leadership styles. These two phenomena determine the position on an organization.
How then does the leadership of an organization determine its success or failure? Is leadership related to organizational performance? This research paper explores the role of leadership in maintaining aspects of an effective organization. To achieve this task, the research will analyze several key influences experienced, coupled with results, which are obtained based on management actions.
Throughout this synthesis, Amazon.com will be considered as the reference organization in order to expound how leadership determines the success of an organization regardless of the existing conditions within the market. Authentic and up-to-date scholarly articles will be consulted as key reference materials. The paper is further divided into segments, which cover specific issues that surround the concept of effective organization and Amazon’s leadership.
Organizational effectiveness and leadership
Effectiveness in organizational management is essential in producing results. In most cases, effective organizations register higher market results compared to those that are ineffective in the running of their daily activities. These findings have been documented around the world, with researchers concurring that organizational performance and effectiveness are highly connected.
Like in any other set-up, leaders play a crucial role in determining the future of an organization. Oftentimes, the success or failure of an organization is linked to the management’s ability or inability to give necessary direction. While both men and women have the potential of leading organizations, certain traits tend to cut across the leadership sphere, making successful ones to be quite distinct. For instance, they usually have vision, good communication skills and excellent judgment. These skills are essential in overcoming leadership challenges, emanating from a wide range of factors within the business market.
Any form of successful leadership begins with a vision. In fact, the world is full of people who have excelled as business leaders because of their visions. A good example is Henry Ford, who dreamed of a car that could be affordable to most households around the world, while Steve Jobs is highly credited for his contribution in computer creativity as the leader of Apple Company.
One common characteristic of visionary leaders is that they start with a handful of followers before convincing millions about the workability of their ideas, in not only transforming an organization but also impacting the world in several ways. Importantly, the power of an organization is measured by the vision of its leadership. In other words, it determines how far a company can reach in terms of its goals, objectives and performance strategies. It inspires the entire organization and gives it clarity and focus in setting performance pace for a long period of time.
Another important aspect that determines the success of any organization around the world is communication. It has been found out that communication has the power to make an organization hit the highest level of performance or the lowest level of results ever. This is to say that communication is among common factors, which determine the success of an organization’s management in a competitive business world.
In most cases, communication allows the sharing of ideas within an organization, flowing from all levels of leaders. All these ideas aim at creating a business atmosphere, which allows excellence performance. Due to their tight schedules and minimal time, busy leaders have been found to keep important thoughts to themselves, a trend, which may turn out to be harmful on organizational performance. Such people may not find time to share ideas with their juniors and may not be in touch with major issues affecting employees or the entire organization. Striking a working balance is therefore, essential in ensuring that a leader shares thoughts with his or her juniors because of a collective responsibility of realizing a successful performance.
In addition, good communication allows the sharing of strategies between a manager and the company’s staff, in order to have a feeling of pertinent issues, which could have an impact on an organization’s performance and overall success. Moreover, excellent communication skills allow leaders to be good listening executives, who have time for colleagues, junior employees and customers.
Strategies, which are implemented without proper communication, may lead to unpalatable results and inefficiency within an organization’s leadership. Good communication creates time for questions and answers, and may be important in knowing the response of clients towards a new product in the market or market trends and future expectations in terms of service delivery.
The third component of successful leadership is sound judgment, which revolves around one’s character and philosophy. Judgment plays a key role in drawing a line between what is right and what is wrong, for making sound choices that can drive change and help an organization to gain competitive advantage within the business arena.
Additionally, good judgment allows the leader to identify a different path of operations, especially when the current path is considered to be inefficient. However, this can only be achieved if the person in-charge can assess the situation and ask correct questions to allow change of ideas. This cannot be achieved independently; it requires correct personalities on board to implement the strategy.
The above segment has given an introduction to effective organizational leadership, by capturing some of the major qualities shared among successful leaders. Of significance is the fact that these can be embraced by any organization, failure to which leads to poor performance and ultimate failure.
The following sections discuss the impact of management in defining the performance of Amazon. In essence, the management of the organization will be analyzed, with regard to the influence it has had on the company. The impact of Jeff Bezos will be synthesized due to his contributions as the firm’s chief executive officer and owner.
Amazon.com
It is doubtless that Amazon is one of the leading companies in E-commerce around the world. The company is located in Seattle, Washington and has tremendously grown from a book seller to an online Wal-Mart, dealing in a wide range of products, including but not limited to music CDs, tools, hardware, toys and games and cookware.
Its growth rate has exponentially increased and threatened several companies in the market. Importantly, the rise in Amazon’s revenue led to an increase in its operating losses, which left the company with a huge deficit. The company’s first profit of $5.8 million was registered in the last quarter of 2001, before it was negatively affected by losses.
The story about the formation of Amazon.com has become an urban legend, having been repeated for years, especially in the 21st century. Jeff Bezos is highly credited as the founder of the company in 1995, when he had the vision of selling books online, triggered by the high growth rate of internet use throughout the world. Bezos is a computer scientist and an electrical engineer from Princeton University. He settled in Seattle after resigning as the deputy president of an investment bank, D.E. Shaw.
Amazingly, Bezos moved into the world of E-commerce without any background knowledge in retailing. It is believed that Bezos chose Seattle because of its closeness to one of the largest book wholesalers, which was located in Oregon. Additionally, Seattle was known to have technical talent, which Bezos was to tap in times of need. The tax laws also contributed to his choice of location, as it was more logical than considering states like California or New York City.
In July, 1995, the dream of Jeff Bezos came true when the company launched its first business operations in Seattle. Two years later, the company went public and continued to thrive in the world of online business. It is quite ironical that the company started in a garage and held some of its managerial meetings in a local Barnes and Noble store.
It is important to note that the company’s initial name was not Amazon. Jeff Bezos had named the company Cadabra, but he quickly dropped it after a lawyer mistook it for cadaver. He chose Amazon because it was simple to spell and started with letter A, implying something big. The name was also preferred by Jeff Bezos because Amazon is one of the largest rivers in the world. He believed that the company would grow to dominate the online market. Furthermore, Amazon launched its websites in countries like the United Kingdom, Germany, China, Canada, Italy, France and Japan. This move was to address the increasing demand for online products through its original website.
Due to his outstanding performance, Bezos was voted as the personality of the year in 1999 by Time Magazine at the age of thirty-five years old, emerging as the fourth-youngest person of the year. In its defense, Times Magazine applauded Bezos’ vision of the online business and its completeness. Additionally, the company’s site was elegant, appealing and a global reference point for online business.
The success of Amazon.com is undoubtedly as a result of its management and leadership approach, led by its chief executive officer and founder, Jeff Bezos. The actions and decisions have remained significant in defining the company’s success story.
Vision and value
The most amazing thing about Jeff Bezos is his understanding of the Internet Retailing and E-Commerce, especially when he is making a comparison between traditional retailing and E-Tailing. He believes that E-Tailing involves the trading of real estate for technology. He further observes that real estate is the mega cost of physical retailers, demanding the need for company location. Due to this demand, the price of real estate continues to rise, making traditional retailing to be more complicated.
On the other hand, the price of real estate is inversely proportional to the cost of technology. In other words, the higher the cost of real estate, the cheaper the cost of technology. Bezos’ vision has remained engraved on the hearts of Amazon’s management team. The vision is characterized by two elements: Firstly, Bezos wished to build a customer-centric company that would become the leading global online retailer. Additionally, Jeff wanted to establish a center that would allow customers to purchase anything at any given moment.
In essence, as a customer-centric organization, Amazon aims at holistically addressing the needs of customers through three key steps. The first one is figuring out the needs of customers, through surveys, conducted using questionnaires. The second element is identifying the most convenient way for delivery of requested products. This has to be smart enough in order to outshine others. For example, the mode of delivery must be economical in terms of the cost and reliability among other factors. After deciding on how to deliver the products and the method, the actual collection of the products is equally important. These three elements describe the nature of traditional retailing in addressing the needs of customers.
In addition, it is essential to innovate on behalf of customers since they are never in a competition. This can be achieved by figuring out a product, which is needed by customers even though they might not have the knowledge of the existing need. Similarly, the need to have in mind the demands of every customer is important in capturing the attention of all customers.
Through personalization, it is possible to have various stores, which literally address the needs of all the customers. The vision of personalization of stores came true when Amazon.com launched a “Your store” service. Jeff Bezos also ventured into discovering the uniqueness with the internet in establishing a customer-centric company.
Despite the fact that Bezos had a huge vision in the implantation of a customer-centric organization, his critics argued that the idea was not different from other companies in the market, and that it was not going to boost Amazon’s performance in online retailing.
In other words, these efforts by the management were seen as a way of gaining publicity and attention without necessarily leading to admirable business performance. Nevertheless, the vision has been highly credited for its contribution towards the establishment of the company’s customer base and loyalty rate for years. This has seen its customer base expand exponentially, contributing to its growth and growth around the globe.
As mentioned before, Jeff Bezos equally wanted to create Amazon into a store that would allow customers to purchase anything from any destination around the world. This implies the fact that the company has nurtured the dream of transforming Amazon into the world’s largest online store. Whilst Amazon began as the world’s number one bookstore, its management remained focused on attaining long-term global status in terms of business operations and revenue generation through customer satisfaction.
Based on this line of thought, it is worth noting that the company has made tremendous strides, by expanding its business into a wide range of products besides books. One can therefore argue that Amazon’s vision, which was highly propagated by its chief executive officer, played a key role in influencing the entire management towards achieving higher results through expansion of its coverage and customer base.
The geography of Amazon.com
Notably, Amazon.com has numerous geographical dimensions, which can be categorized as real or virtual. For any online company to make any forward step, its website plays a major role. As a result, Amazon’s website has turned out to be an essential tool in determining its position on the global map of E-Tailing. Similarly, its website gives the company’s geography.
The site is simply designed to allow easy navigation, and has a few graphics to allow easy loading, even using less-powerful internet connection around the world. Additionally, the presence of one-click ordering, promotes the site’s backup. The company’s web pages are principally developed from databases of millions of items like books, CDs, gifts and music, which are stocked. However, Amazon’s challenge remains the ability to offer excellent services to millions of people through the internet.
It is believed that most people preferred online shopping because of several reasons, including its speed in terms of saving time and convenience. Despite this preference by millions f people, most companies are unable to achieve these major requirements. Common problems with websites include slow loading, confusion and poor ordering of items on the site. All these challenges carry a negative impact on one’s experience with online shopping. Notably, Amazon’s management has been able to overcome most o these hurdles, placing it higher than most of its competitors in the market. Consequently, this advantage has led to a high rate of repeat business, coupled with an exponential rise in the number of customers.
In addressing the issue of how Amazon’s leadership has contributed to its success, it is essential to note that its geography is also measured in terms of growth, expansion and diversification. This growth is mainly characterized by increased revenue, growth of new and old stores, new facilities and major investments in other companies around the world. Another important aspect of Amazon’s geography is the fact that the company still ships products to customers.
For this to happen, the firm experiences the need for packaging and storage facilities. In order to maintain the quality of its products and services, Amazon packs and ships its products to customers in various destinations around the world. During its early years in business, Amazon.com invested heavily in warehousing facilities, establishing several distribution centers in the United States and a few in Europe.
Leadership and strategic change
Like many other well-performing companies in the world, Amazon, is faced with the challenge of decision-making as a way of defining its future. As a result, strategy formulation remains Amazon’s focus, throughout its years of business and excellence.
How are ideas formulated at Amazon? How are commitments within the organization made? Does the company possess an institutional capability or it is led by one man’s decisions, Jeff Bezos? It is expected that Bezos would dominate all decisions made at Amazon, being the chief executive officer and the founder of the organization in the year 1995.
However, this is not the case, as defended by Jeff, who notes that the company’s decisions are crafted by a team of senior managers, commonly denoted as the “S-team.” This team stays updated with the activities of the company and gets involved in several strategy issues, which may arise or be projected depending on prevailing business conditions and expected changes. For effective service delivery, this team of managers meets for at least four hours weekly.
Additionally, the team organizes a two-day meeting, twice or ones in a year to discuss an array of issues and ideas geared towards bettering the company’s performance and making it more stable in the business world. To have better results from these meetings, managers are given homework and tasks ahead of time. This further allows leaders to carry out surveys and present their ideas and strategies from a real point of view. Importantly, annual meetings do not address urgent issues, which could be affecting the company. Urgent matters are handled through weekly meetings and constant consultation within the management.
Another important fact about the leadership of Amazon is that it does not solely handle its issues; it involves other employees. Through the web service, the management allows people to make use of the fulfillment network center, to allow strategic thinking to happen in a similar manner. The fulfillment happens at every level of the organization, and therefore, occurs everywhere within the organization. According to Jeff Bezos, this is achieved by having a common cultural viewpoint for the purpose of driving the company’s performance to a higher mark.
Amazon’s cultural viewpoint is based on the virtue of patience, which allows seeds to germinate, grow and become trees. In essence, the management believes in handling matters with a certain pace to avoid making errors, which come with rushed decisions and approaches. This level of management can be considered to be rare since very few companies subscribe to this approach in decision-making and may consider it to be unworkable. The key note in Amazon’s leadership is having the right strategy instead of spending its resources, thinking of what is likely to happen in the following quarter of the year.
In the implementation of the company’s strategy, Amazon’s leadership focuses on how “big” the success of a given course is likely to be and its overall impact on the organization. In other words, success has to be felt across all sectors of the organization for it to be considered as true success. Jeff agrees that it is not easy for incumbent companies to explore new initiatives due to the people’s perceptions towards such initiatives.
For instance, Amazon’s move to diversify its products and incorporation of different ways of doing business has not been met with a lot of ease. Countless questions are asked by customers and other shareholders, concerning the feasibility of such moves in contributing to the success of the company.
Some of the strategies are usually criticized for having negligible impact on the company’s economy. Nonetheless, Jeff Bezos has nurtured the organization’s leadership to focus on long-term economic impact of a strategy, without necessarily looking at what the company is likely to become in a few months of implementing a strategy.
Furthermore, Amazon’s leadership has played a core role in promoting confidence within the company by having a unique point of view with regard to some of the decisions, which are adopted by the company. As such, the management tends to do what is considered to be impossible in the eyes of the public, drawing a wide range of arguments and viewpoints towards the same.
This is to say that Amazon’s success does not depend on what other players within the public domain are doing. In fact, what is considered to be impossible is what is pursued by Amazon, before it turns into the company’s success story. The disadvantage of focusing on what other players are doing or the kind of technology, which is being applied, is that such things are likely to change rapidly and may force the company to adjust its strategy in order for it to rhyme with prevailing developments.
Unchanging strategy
While most of the driving factors of companies change rapidly, it is worth noting that there are certain aspects, which do not necessarily change regardless of what happens. According to Amazon’s leadership, most of such factors revolve around customer insights. This means that, the company’s focus is always on what is more important to customers, since they are major shareholders and players in the success of the company. For example most of Amazon’s customers’ needs are confined within selection, low prices and fast delivery. Due to variation in needs, another company in the same market may chose to omit some of the items from the list because of their driving principles.
Approaching change by addressing permanent factors seems to work well for Amazon’s management. For instance, no customer would be interested to be associated with the company ten years from now if their prices will go high or when its delivery process becomes slow. These will remain to be the company’s drivers no matter the changes, which may take place within the entire market of online retailing in future. It is believed to be Amazon’s scoring point as most of its competitors base their future strategies, on transitory issues that do not overcome the taste of time.
Besides laying its focus on factors, which do not change with respect to time, the company’s management understands the rate at which the world is becoming transparent and the need of perfecting an organization’s information. This is essential in aligning the operations of the firm with its customers, by ensuring that the information sourced is well utilized through good mining, warehousing and application.
According to the leadership of Amazon, a great company is achieved through building a great service for customers and spending less time talking about the service itself. Similarly, Bezos and his team operate on the spirit that things are likely to become better and stabilize with time regardless of the current business atmosphere.
With this kind of assurance, they also align their activities, to allow proper coordination of the firm’s development ideas over a long period of time. Of great significance is the establishment of a check and balance mechanism, which allows the leadership to evaluate the viability of previously held viewpoint towards a particular investment strategy.
Leadership actions
As previously mentioned, the leadership of any company deeply contributes to the success or failure of a given organization through managerial actions and implementation of various strategies. Similarly, the success of Amazon is highly connected to the influence of its management through different ways of business operations. Since its inception in 1995, the company has remained focused towards customer satisfaction, diversification and business expansion.
These drivers have also been paramount in defining the nature of actions and strategies that are formulated by the company’s management for the purpose of maintaining excellent performance for most of the time. Importantly, the company’s leadership played a major role in dealing with third-party individuals, who sell their products through Amazon’s website and other developers.
In establishing the developer community, Amazon was keen in making appropriate choices that were to promote the organization’s performance in the long run. In order to avoid disappointments, the firm’s management was quick to consider reliable candidates in forming partnerships for the developer’s community.
With regard to third party partners, Jeff Bezos believed that such individuals needed to be more committed towards making sales, which was the main determinant. This implied that such sellers could only support their commitment by proving that they were able to make sales over and above the expectations of Amazon.
Failure of auction business
Although the conditions of identifying third parties were thought to have contributed to Amazon’s unsuccessful auction business, Jeff Bezos denied, arguing that the incident was precipitated by other factors. He argued that Amazon’s activities and services make buying of products to be more convenient and motivating to customers.
As a result, most customers would prefer saving their time by simply getting their product of their choice from the company’s store, instead of waiting until the auction process is over. In addition, the company was more interested in creating a vast selection in the manner in which the business operated.
Accordingly, Jeff Bezos at the helm of Amazon’s leadership noted that vast selection could only be possible by inviting third party sellers onto the website and participate alongside with the host company. According to the architects of this idea, all participating partners were considered to be winners even though Amazon was not impressed with the results of auctions.
After trying different options unsuccessfully, Amazon opted to do business on a single-detail-page model, which made third party partners to take off. The model allowed third party sellers to place their products right besides those offered by Amazon.com with specified price before being entered into the “buy” box, which allowed customers to make their choices. This turned out to be unsuccessful even though it was a decision, which had been reached upon by the company’s leadership. This denotes the fact that leaders of an effective organization can equally make a decision or implement a strategy that does not turn out to be as effective as anticipated.
Amazon Diversification
As indicated before, Bezos’ dream in 1990s was to have a number one global bookstore. However, the company’s leadership strategized on how to introduce other products in the business, while meeting the needs of customers beyond their expectations and win their loyalty against its competitors. In the year 1998, Amazon introduced music as its new product besides books, before venturing into toys and electronics in 1999.
In November 1999, the firm introduced home improvement products, software and video games. All these decisions were made by the management as a way of ensuring that Amazon.com remained at the peak of online retailing around the world. Importantly, these diversified products played a major role in expanding the geography of the company in terms of its customer base, news sites and stores around the world. Its mega profit which was announced in 2001 was highly attributed to its diversified nature, which had dominated most of its operation, especially towards the end of 1990s.
For example, Amazon’s introduction of music was quite dramatic. By the end of 2001, the sales of CDs by Amazon had edged out CDNow Inc., which was a leading dealer in CD business. Although this was the case, it was uncertain whether the same success would be experienced in other products like cookware and hardware. The following points explain why Amazon ventured into rapid diversification as an online retailer and some of the benefits, which have been achieved as a result of this approach that was implemented by the company’s leadership.
Diversification factors
It believed that Amazon was driven by the need to gain a leading fraction of customer’s shopping basket, described as cross selling. According to Amazon’s leadership, the company had already established a relationship with its customers through selling books via the internet. As a result, they were left with the task of leveraging this trust in convincing them to buy everything else that the company was to offer.
Moreover, the company’s move to diversify can be explained using economies of scale. For instance, the strategy was implemented after Amazon had spent on fixed costs for developing programs and software for online retailing. This meant that expansion into other categories of products would allow the firm to share these costs a cross a large spectrum of business transactions, leading to profitable results.
According to the company’s chief executive officer, online companies can either be classified as small or big, without having the class of average organizations. This diversification, therefore, guaranteed Amazon the ability to expand the usage of its software, leveraging of customers, maintaining the brand name and the overall infrastructure. Based on this analogy, it was easy and inexpensive to open a new category of products as compared to setting up a pure-play single-line store. Similarly, it was not possible for players in the market to complete with Amazon since it was several miles ahead in terms of technology, brand name and customer base among other factors.
Additionally, Bezos’ initial strategy was to turn the firm into a leading global E-Tailer. This meant that selling books alone would not have created opportunities for the company to come a cutting-edge firm in the world of online business, outshining several players in the market. Minus such options, Amazon would have been left with a limited room for its expansion. By dealing in other products, the company was viewed as a dominant player in the market as opposed to being considered as a small business.
Companies like BN.com, which concentrated on book selling could not match revenue and profits realized by Amazon, after diversifying into a wide range of products. While Amazon registered more visiting customers after the move, its competitors within the market recorded very few new customers, losing some of the customers to Amazon.com.
On the other hand, Amazon.com was a darling to Wall Street, as they were in good terms, during the time of diversification. Due to this relationship, Amazon was viewed with optimism as disbelief was overruled on the basis that the organization represented a new economy and new approach of doing business on a global scale. This was a golden opportunity for Amazon, and put into use every chance of business expansion, which presented itself. Besides numerous benefits and factors, which led to the diversification measures taken by Amazon’s leadership, there are arguments, which have viewed this approach of business from a critical point of view.
Against diversification
Throughout the history of Amazon.com, diversification is one of the ingredients, which has been highly applauded for its role in propelling the company to the peak of online business, since its inception in mid 1995. In this segment we address the negative effects of the strategy, which was backed by the company’s management. How have the operations and activities of Amazon been hampered by the introduction of different products?
It is crystal clear Amazon established a firm relationship with its original customers on the basis of selling and purchasing of books. It is therefore the “book-language,” which put the company on the map of online retailing after it ventured in E-Tailing of books. The concept of redefining the relationship of the company with its employees is seen as a non-trivial.
This move was to affect perception of some customers towards the company, since they could not figure how a bookstore could be transformed into a hardware, cookware or electronics center. The adjustment was not easy for most customers who had a fixed image of Amazon as a book center, venturing in no other products. Most of these customers had seen Amazon advertise as a bookseller and did not understand the dramatic shift from books to other products like music and software, among others.
Although the decision by the company’s management to introduce other products appeared attractive and promising to the future operations of Amazon, several challenges were to be faced by the company. Firstly, the management had to deal with bulky products like cookware, which were hard to stock and expensive to ship for customers or from one point to another. This was a direct contrast to books, which are considerably portable, light and cheap to ship to any destination around the world.
One advantage of selling books was the fact that books are classified as informational products, which lend themselves to unique features like sample chapters and reviews. Except for music and CDs, Amazon’s new products were to be non-informational, making them lack the numerous advantages associated with selling of books through an online store.
Importantly, Amazon has not been able to obtain its electronics directly from leading manufacturers like Sony. This has left the company with certain competitive disadvantages in the market, which cannot be eliminated with ease. Additionally, Amazon has developed strained business relationships with giants like JVC because of selling its products at lower prices, contrary to the expectations of the manufacturer.
Stained relationships with electronic manufacturers was a major blow to Amazon, based on the fact that electronics usually have stringent rules for one to be recognized and licensed to operate as an authorized dealer. Due to this shortcoming, Amazon did not enjoy some of the benefits attached to being an authorized dealer in electronics. They include lower prices, funding for cooperative ads and the audacity to sell product warranties.
Many manufacturers resisted to sell their products with Amazon, with the fear of lower prices, which was a major characteristic of the online giant retailer. It was considerably safe for it to deal with well established dealers like Best Buy and Circuit City, for the sake of safeguarding the reputation of its brand name.
Furthermore, Amazon made serious losses during early stages of diversification. This turned off several manufacturers, who felt that Amazon lacked relevant experience in online business and they were not willing to take the risk of partnering with the company. Notably, this was coupled with company’s reliance on email as the main tool of addressing the needs of customers and manufacturers.
Competition is also another challenge, which Amazon.com had to face in shifting from bookstore to diverse business products. For instance, the company enjoyed monopoly of online bookstore market, with most of the players in the field, failing to match its pace and quality of products and services. However, this trend was not observed in other categories of products. For instance, there were several E-Tailers in the music industry like CDNow. The move exposed Amazon to new levels of competition and created room for different vulnerabilities. These challenges worsened by the expansion of online stores like Circuit City and JC Penney.
The last challenge which affected Amazon was the overall cost of complexity. The company was being driven by several costs, besides technology. Importantly, most of the costs were mainly concerned with handling of inventory and physical goods. Due to diversification, the cost of real estate rose, leading to an increase in labor and inventory. Generally, Amazon.com experienced several costs, which dragged the company’s growth.
Jeff Bezos’ leadership
Like other organizations, Amazon.com has a structured management, which oversees its business activities around the globe. Different managers, directors and officers head unique departments and coordinate them towards realizing a common goal. Despite, this structure, the company’s president, Jeff Bezos has played an immense role in shaping the firm into what it is today. He has nurtured a culture that propagates his management style throughout the company, with most of the strategies having been solely formulated to transform a bookstore into a leading global retailer.
By the 2006, Bezos was valued at $3.6 billion, according to a research done by Forbes. As mentioned before, he was recognized in 1999 by the Times Magazine as the personality of the year for his tremendous innovative ideas in online retailing. Bezos remains a unique entrepreneur today; he owns Amazon.com and runs it as the chief executive officer. He is therefore tasked with several responsibilities of heading thousands of employees in different departments of the company. He is generally described as a man with enough innovations and humor, which he carries to office.
One of the credits of Bezos has been his transformational skills, which have literally changed the face of Amazon.com from what it was, more than fifteen years ago. He is believed to be the pillar of most innovative ideas, which have propelled the company, ranging from diversification to the establishment of a customer-centric organization.
Besides being described as a transformational leader, Bezos is also concerned with the performance of every manager overseeing any department of the company. For the purpose of impacting the management, Bezos launched the Just Do It program, to augment participatory leadership. This program has a reward scheme, which acknowledges the efforts made by individual managers and recommends their promotions based on such findings. Jeff Bezos is also driven by perfectionism. This implies that he invests in hiring managers who are intelligent and highly skilled in order to achieve long-term goals of Amazon.com.
Conclusion
Amazon.com remains a leading online retailer, specializing in an array of products, including but not limited to books, music, cookware, hardware, software and CDs. From the above analysis, the company has tremendously grown from a bookstore to a leading global E-Tailer in less than two decades.
Although there are several factors which have transformed the organization into what it is today, its leadership has considerably played a key role. Its founder and CEO, Jeff Bezos has been on the forefront in ensuring that the company addresses the needs of its customers and that the firm becomes a center for everyone’s shopping needs. Through decisions and actions, Amazon’s leadership has endured varying business conditions, which exposed the company to manageable vulnerabilities.
Diversification remains one of the strategies that were implemented by Amazon’s leadership team. This allowed the entry of different products into the market, even though the decision was received with mixed reactions. While diversification was viewed in varied ways, it is regarded as the main driver, which continues to propel Amazon to higher performance levels in the current business world.
From this synthesis, it is evident that the management of any company has a major role in defining the future of an organization. For a successful company, there is need for effective leadership to allow sober formulation of strategies and their implementation. This has been demonstrated by Jeff Bezos, who transformed a simple bookstore into a global online retailer of different items. In collaboration with other managers, Bezos has engraved Amazon’s vision and mission in his heart, beating his closest rival, Staples Inc., by more than three times its revenue.
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