BO5501 | Operational Problems Faced by Amazon

The whole procedure of managing all the functionalities that happen in any business corporation on a routine work basis can be called as operations management. On the other hand, the process, which includes information exchange between two different sources or distributing the information to the place where it is needed (Anand and Gray, 2017), is called as informational management. Informational management can also be described as exhibiting all the activities that are happening in an organization. These both terms are designed to manage all the important activities that occur in a corporation and take care of the stored information in different systems. A very high amount of effectiveness and efficiency are required while executing both of these procedures so that the performance level of Business Corporation can be increased.

There would be a number of benefits of data management and operation management, for instance, there will be a great improvement in the customer services like better quality and delivery, assigned goals will be accomplished or completed before or within the deadline and also a healthy communication will enhance more teamwork (Anderson, Anderson and Parker, 2013). The below-presented research has been executed on the operations management of Amazon that is a multinational retailing brand. The business report is focused on the process of operational analysis that is done for analyzing the problem within the organizational structure of Amazon. Further recommendations will be provided as solutions to the problem discussed.  

Description of organization

Amazon is a giant online retailer with its operations in various parts of the globe. Jeff Bezos established an organization in 1994 and in its initial times, an organization was selling books on internet platform but later on, organization enhanced its product offering by adding MP3s, video, audiobooks, etc. Jeff Bezos once dreamt of selling everything over the internet, which was converted into reality in 1994 (amazon.in 2018). In the initial period, an organization was operating from a garage but now a company has 12 registered offices in different countries. Online businesses were encouraged after the introduction of the internet and Amazon has acquired the leading position in the online retailing industry in terms of market capitalization and of revenues. In terms of sales, the organization stands on the second position after Alibaba Group. An organization is operating in more than 188 countries across the globe and planning to expand its business to other parts of the globe. Along with this, an organization is supporting international shopping for some merchandise in those countries where an organization is not yet present. Along with online retailing, an organization is also offering computing services, digital content, consumer electronics and local deal such as groceries. Amazon has acquired the fourth position after Microsoft, Alphabet, and Apple in terms of most valuable companies in the world.

An organization has acquired a leading position and in most parts of the globe, it is the only online shopping website, which is providing huge options for the public. Today, Amazon is offering millions of products over their website and in order to approach its target audience, the company has different website channels for different places. Amazon.com for the United States, Amazon.UK for United Kingdome, Amazon.in for India, etc. are some of its channels through which it operates in different parts of the globe (amazon.in 2018). Along with the different websites, an organization has also offered different language options in different countries so that the target customers could easily be able to shop and transact. With millions of products, an organization has acquired an effective brand image in the global market. Its primary competitors in the United States' market and in other global market are eBay, Wesfarmers, Alibaba Group, etc. Amongst these companies, an organization is performing exceptionally well. Company's strategies are unique as well as effective through which they have acquired a huge customer base compared to the other online retailing companies across the globe.

Company focus on approaching all customer segments through which set goals and objectives could easily be attained. Company's logo also shows that they sell every item over their website and with regard to this; they approach every customer segment in order to boost up their sales, market share as well as revenues. In relation to satisfy its target audience's demands and wants, along with offering them millions of products, an organization has adopted a customer-centric approach which helps the organization to deal with its customers in a fair manner. This approach is useful as well as effective in terms of developing effective customer relations through which competitive advantage could easily be attained.

Operational analysis 

Operational analysis is the mechanism or the methodology that can be adopted by any of the business corporations for scrutinizing the current and the historical performance of the operations and maintenance, investments and measuring the same performance against a developed expense, schedule and performance parameters (Battistoni, Bonacelli, Colladon and Schiraldi, 2013). Moreover, this concept can also be termed as business analysis and in the present case scenario, operational analysis has been executed for analyzing the problem faced by Amazon (Keller 2018). The below-presented report is focused on the problems caused due to Centralization of management adopted by Jeff Bezos:

Recommendations

Based on the above-presented case scenario, it has been analyzed that Amazon is the multinational business organization, which is facing problems in the execution of operations and managing the same. As concluded from the research, Jeff Bezos was making use of a concept of centralization in management that is a type of organizational structure under which the decision-making authorities and daily operations are delegated by the management. Under this type of organizational structure, the leaders follow an autocratic form of leadership and Jeff Bezos followed the same. All type of authorities and decision-making powers were residing in the hands of management and this was creating negativity in the organization. Due to this, approach Amazon was facing various problems such as employee retention rate was very low. Due to less involvement of management and low employee engagement, the workforce was getting demotivated and hence the employee retention rate was declining. As the decision making authority was only with the management and due to which there was the delay in work in case of unavailability of management. Bureaucracy leads to red-tapism, under this set-up, there is not the only delay in the work but also sometimes helps in the raining of eyebrows because bureaucracy always leads to discrimination. These all are the barriers that were generating the varied range of operational issues for Amazon and below described are the recommendations that can be implemented as solutions over the above-mentioned problems.

Decentralization of management and all other authorities and decision-making powers can be considered as one of the biggest recommendation or the solution for the problems that are faced by Amazon. Decentralization of management means creating the division of roles and responsibilities and all other decision-making powers and delegation of these powers to the middle and lower level managers and authorities. Moreover, this type of approach can also be defined as a systematic effort of the delegation of powers to the lowest level authorities. There are the varied ranges of advantages that will be gained by Amazon if the entity will be making adoption of decentralization. For instance, this approach will be reducing the burden of management and of the top executives, as due to decentralization the obligations will be distributed to the lower level managers and which will release the burden of top executives.

Amazon can also make alterations in the human resources policies and practices so as to increase the level of employee retention. Employee engagement programs and staff motivational sessions and practices can also be organized for motivating the employees. This will increase the rate of employee retention.

Hiring new employees and training them is very time and money consuming and this was one of the problems that were faced by Amazon due to the approach of centralization. But making adoption of decentralization will be proven cost advantageous for the business corporation as it will positively affect and improve the rate of employee retention.

Moreover, making provisions of advanced training sessions which consist of training programs related to management operations and developing capabilities of better decision makers. Providing all these pieces of training will develop and enhance the skills and capabilities of the middle and lower level managers and which will result in appraisal in performance and quality of services offered.

Centralization is not a good management approach for the large-scale industries like Amazon. Although in most of the cases this approach is quite efficient for the organization the key challenge is to find a correct balance between centralizing the organization or decentralizing. For major industries like Amazon, which have different branches in different locations, decentralization management approach can help in to overcome all the challenges produced by centralization. Proper strategic choices and laying out the optimal business approach is a work of mind and proper techniques. Decentralization will allow Amazon to cover large geographical and market areas with the help of multiple functionalities. Decentralization approach will provide companies with many benefits like flexibility, motivated and high morale employees, strong customer employee base, efficient production of the information before the timeline and many more. Decentralization provides employees with the power of decision making and as a fruitful result, the organization will be able to lay out its branches in different locations of the world. It will also make the operations budget friendly since it allows to take advantage of the low-cost labor in different locations. Decentralized companies give the responsibility of decision making to their employees who are working in different departments of different branches. So as a result, the company can meet the different requirements of the different customers situated in different areas. According to the customer demands, the products can be customized. It will also help solve the communication problem, which arises due to centralization. It will give the employees a chance to talk to their customers in different areas and make the decision accordingly rather using different channels to facilitate communication on different levels. Centralization prohibits the employees from coming up with new ideas and motivation which is not the case of decentralization. Because decentralization allows the employees to take, part in the organizational decisions and provide their feedback about the issue. This opens a large number of options or choices for the company. These choices will allow the company to choose their new strategy or operational plan. Since the employees will feel more involved in the decision-making function, therefore, they will be highly motivated and will think of more ways for the company to grow. If there is an issue or problem that arises in the organization, then the employees will be empowered to solve the issue without any kind of approval like they require in centralized management approach.

Conclusion

After summing up the above-executed analysis it is concluded that Operations management is a crucial task and same should be executed efficiently. The above report is focused on operational analysis that has been executed on Amazon and for analyzing the problems faced by the business organization. The analysis concluded that Amazon is facing the operational problem due to the adopted organizational structure that is centralization. The report also comprises of the recommendations that are provided against the problems faced by Business Corporation.

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