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Answers the following:

- How did the organization start and evolve
-What were important organizational points of change?
-How did these changes impact the organization?
-What were the organizational responses to these important points of change?
-How did these responses change the organization?



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  • 2 | P a g e INTRODUCTION AT A GLANCE INDUSTRY BROADLINE RETAILERS Sector Consumer Services Fiscal Year-end Dec-13 Revenue $61.09B Net Income $-39.00M 2012 Sales Growth 27.10% Employees 88,400 COMPANY DESCRIPTION, Inc. was founded by Jeffrey P. Bezos in July 1994 and is headquartered in Seattle, Washington. It provides online retail shopping services. It provides services to four primary customer sets: consumers, sellers, enterprises, and content creators. The company also provides other marketing and promotional services, such as online advertising and co- branded credit card agreements. It serves consumers through its retail websites with a focus on selection, price, and convenience. It designs its websites to enable its products to be sold by the company and by third parties across dozens of product categories. It also manufactures and sells the ‘Kindle e-reader’ and strives to offer customers the lowest prices possible through low every day product pricing and free shipping offers, including through membership in Amazon Prime. It also serves developers and enterprises of all sizes through Amazon Web Services, which provides access to technology infrastructure that enables virtually any type of business. The Company also serves serve authors and independent publishers with ‘Kindle Direct Publishing’. The company operates in two principal segments: North America and International. The North America segment consists of retail sales of consumer products and subscriptions through North America-focused websites such as and The International segment consists of retail sales of consumer products and subscriptions through internationally focused locations. ( Inc. Company Information) GLOBAL PRESENCE Amazon has separate retail websites for United States, United Kingdom, France, Canada, Germany, Italy, Spain, Australia, Brazil, Japan, China, India, and Mexico, with international
  • 3 | P a g e shipping to certain other countries for some of its products. In 2011, it had professed an intention to launch its websites in Poland, Netherlands, and Sweden, as well. PRODUCTS AND SERVICES Retail goods Amazon product lines include media - books, DVDs, music CDs, software, videotapes, and software - apparel, baby products, consumer electronics, beauty products, gourmet food, groceries, health and personal-care items, industrial & scientific supplies, kitchen items, jewellery and watches, lawn and garden items, musical instruments, sporting goods, tools, and toys & games. The company launched Auctions, a fixed- price marketplace business, zShops, and a now defunct partnership with Sotheby's, called In August 2007, Amazon announced AmazonFresh, a grocery service. While In 2012, launched of for buying green products. Amazon also owns other e-commerce sites like,, and Consumer electronics In November 2007, Amazon launched Amazon Kindle, an e-book reader and the Kindle Fire in 2011. Amazon MP3, its own online music store, launched in the US on September 25, 2007 and on March 22, 2011, Amazon launched the Amazon Appstore for Android devices. In January 2013, Amazon launched AutoRip, a digital music service. Amazon Art In August 2013 Amazon launched Amazon Art as an online marketplace selling original and limited edition fine art from selected galleries. Amazon Prime Amazon Prime is a service of free two-day shipping on all eligible purchases, for a flat annual fee, as well as discounted one-day shipping rates. Private labels and exclusive marketing arrangements In August 2005, Amazon began selling products under its own private label, "Pinzon"; the trademark applications indicated that the label would be used for textiles, kitchen utensils, and other household goods. Computing services Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3). In March 2013 Amazon announced its Mobile Ads API for developers. Content production Amazon Publishing, Amazon's publishing unit, is AmazonEncore, AmazonCrossing, Montlake Romance, Thomas & Mercer, 47 North, and Powered by Amazon.
  • 4 | P a g e Donations Amazon also created "channels" to benefit certain causes and crises like Hurricane Sandy, Hurricane Katrina and the 2004 earthquake and tsunami in Indian Ocean. Amazon Local Amazon Local is a daily deal service that offers daily deals to over 100 regions in 36 US states Amazon Wireless In July 2009, launched their AmazonWireless website, which offers cellular devices and service plans for Verizon Wireless, AT&T, Sprint Nextel and T-Mobile in the US. OWNERSHIP PATTERN Institutional Ownership Insider Trades Shares Outstanding Buys/Sells/Total Trades Total Number of Holders 946 Trade Type Last 3 Mo. Last 12 Mo. % of Shares Outstanding 69.21% Number of Buys - - Total Shares Held 316,777,037 Number of Sells 25 68 Total Value of Holdings 127,407,724,281 Total Insider Trades 25 68 Net Activity 5,339,879 Net Activity (1,106,413) (2,462,303) [Source: ( Inc)] FINANCIALS Fiscal year is January- December. All values USD millions. 2008 2009 2010 2011 2012 5-year trend
  • 5 | P a g e [Source: ( Inc)] COMPETITORS - (OSTK) - Ebay (EBAY) - Wal-Mart Stores (WMT) - Barnes & Noble (BKS) - Apple Inc. RECENT MILESTONES - NRF’s Retailer of the year 2013 - AMZN Stock Price tops $400 For first time - Amazon Web Services Announces Upcoming China Region for its Cloud Computing Platform - AmazonBoughtGoPago’sMobilePaymentTechAndProduct/EngineeringTeam - Amazon Introduces Personalized Kindle Accessories, Amazon Appstream, and Amazon Workspaces (Key Developments: Inc (AMZN.OQ)) Sales/Revenue 19.17B 24.51B 34.2B 48.08B 61.09B Cost of Goods Sold (COGS) incl. D&A 15.07B 19.2B 26.56B 37.44B 46.13B Gross Income 4.1B 5.31B 7.64B 10.64B 14.96B SG&A Expense 3.31B 4.13B 6.13B 9.77B 14.29B Interest Expense 71M 34M 39M 65M 92M Pretax Income 901M 1.16B 1.5B 934M 544M Net Income 645M 902M 1.15B 631M (39M) EPS (Basic) 1.52 2.08 2.58 1.39 -0.09 EPS (Diluted) 1.49 2.04 2.53 1.37 -0.09 EBITDA 1.13B 1.61B 2.06B 2.1B 2.99B
  • 6 | P a g e COMPANY ANALYSIS JEFF BEZOS AS ENTREPRENEUR From the start, Jeff Bezos wanted to “get big fast.” He was never a “small is beautiful” kind of person. Bezos understood two things. One was the way the Internet made it possible to banish geography, enabling anyone with an Internet connection and a computer to browse a seemingly limitless universe of goods with a precision never previously known and then buy them directly from the comfort of their homes. The second was how the Internet allowed merchants to gather vast amounts of personal information on individual customers. Bezos was convinced of a few things in the mid 1990s – that he saw a big opportunity in the Internet industry, that it would reap rewards only in the long haul, that long-term market share was more important than short term profit, that timidity would get them nowhere, that it paid to be the first mover in a big market and that a customer service “obsession” was essential to make Amazon the market leader in online bookselling. In 1995, Bezos started as a book-selling website that provided customers with a unique shopping experience and continually lowest prices that only the Internet could offer. allowed customers to browse a large selection of books in one sitting without having to go to a bookstore. It started with a bang, shipping orders to customers in 50 states and 45 countries within the first 30 days of business. Figure 1
  • 7 | P a g e The birth of Amazon makes it fall in the Entrepreneurial Stage (as shown in Figure 1), where the service of online book-selling was just being created, people were working late hours, email executives would help pack books to deliver them on time and all activities were centered on technical. Bezos, his wife MacKenzie and the other employees were working out of a three-bedroom house in Seattle, to exploit the Internet boom and the books warehousing facilities available. The Collectivity Stage can be either be identified as missing or amalgamated with the Entrepreneurial Stage in the case of Amazon as the goal(s) of the organization were clear from the very outset, the division of labor highly organized with a very clear mission from Bezos’ side – the “Customer” focus. The Formalization for Amazon has happened gradually, over the years, as the number of employees and the scope of operations have increased. The obsessive need of the CEO to control the working and leadership style of the people has found shape in the Leadership Principles the company espouses  Customer Obsession  Invent and Simplify  Insist on High Standards  Think Big  Bias for Action  Frugality  Dive Deep Bezos has been occasionally criticized for his unusual management style, but more frequently been applauded for the success and degree of growth he has exhibited through his company. He's not always a "nice" CEO. He can inspire and cajole but also irritate and berate. He can see the big picture—and micromanage to distraction. He's quirky, brilliant and demanding. At an offsite retreat, some managers suggested that employees should start communicating more with each other, to which Bezos stood up and declared, "No, communication is terrible!" Although some might see this unusual behavior as the reason for the high rate of manager turnover at Amazon, Bezos justifies it with the vision of a decentralized, even disorganized company where independent ideas would prevail over groupthink. He has instituted, as a company-wide rule, the concept of the "two-pizza team"—that is, any team should be small enough that it could be fed with two pizzas. From the beginning, Bezos was fanatical about squeezing from every incremental degree of usefulness. He created a frugal culture. Amazon used doors for desks, for example. Another example was the 2 pizza teams which were no bigger than you could feed with 2 pizzas, so usually 3-12 people. 1 TPM, 1 designer (could be shared with other 2PTs), and the rest were developers. The team was managed by someone who was both capable of managing developers and someone who could drive the business forward through metrics, analysis, and product vision. Even the new features were often simple
  • 8 | P a g e things, like 1-Click ordering forbids any other online retailer from using a one-click purchasing option without paying a royalty to Amazon. Amazon never rests on its laurels, nor do they fall prey to the age-old idea that everything has been invented already. Bezos always has his eye on the future and sees an ever- expanding path ahead. Whenever asked where Amazon is, or where the industry is, or how far any of it has left to go, he replies: "It's still day one." (See Exhibit 1) AMAZON: THE BIG SHIFTS COMPETITIVE ADVANTAGE AND STRATEGY LOW PRICES The consistent aim of the management to provide Low Prices, Large Selection and Convenience to the customers put Amazon in the Low Cost Leadership Strategy in the Porter’s Competitive Strategies. Amazon’s aim was to maintain low prices to be able to gain the trust of their customers. Bezos himself claimed in an interview about the possibility of increasing prices but the choice to not do the same. “…We’ve done a price elasticity studies, and the answer is always we should raise prices. And we don’t do that because we believe– and again, we have to take this as an article of faith– we believe by keeping our prices very, very low, we earn trust with customers over time, and that that actually does maximize free cash flow over the long term.” In its SEC (2005) filing Amazon describes the environment for our products and services as ‘intensely competitive’. It views its main current and potential competitors as: 1. Physical-world retailers, catalog retailers, publishers, vendors, distributors and manufacturers of our products, many of which possess significant brand awareness, sales volume, and customer bases, and some of which currently sell, or may sell, products or services through the Internet, mail order, or direct marketing; 2. Other online E-commerce sites;
  • 9 | P a g e 3. A number of indirect competitors, including media companies, Web portals, comparison shopping websites, and Web search engines, either directly or in collaboration with other retailers; and 4. Companies that provide e-commerce services, including website development; third- party fulfillment and customer-service. Considering the success of their Low Cost Leadership Approach, one can easily identify the Porter’s Five Competitive Forces as follows: 1. Threat of New Entrants: High and Unpredictable 2. Power of Suppliers: High, but Amazon controlled the same by becoming the seller instead of ‘broker’. Suppliers also Customer in Amazon’s Business Model 3. Power of Buyer: High, variety of option available 4. Threat of Substitutes: Internet Industry new and not evolved enough for substitutes, but Brick-and-Mortar stores convenient substitutes for customers 5. Rivalry among Existing Competitors: Not very intense, but not applicable for all industries THE CULTURE OF METRICS ‘Data is king’ at Amazon. Bezos was from the very start an undaunted devotee of the Culture of Metrics. He was sure that the algorithms of computerized search and access would provide the keys to a consumer kingdom whose riches were as yet undiscovered. With Amazon, he set out to construct a 21st century ordering mechanism that would deliver goods. Data reigns supreme at Amazon, particularly head-to-head tests of customers’ reactions to different features or site designs. With dozens of these gladiator-style showdowns under way each week, there isn’t much time for soothing words or elaborate rituals of social cohesion. FROM HUMAN TO SOFTWARE BASED RECOMMENDATIONS Amazon has developed internal tools to support this ‘Culture of Metrics’. The ‘Creator Metrics’ tool shows content creators how well their product listings and product copy are working. For each content editor, it retrieves all recently posted documents including articles, interviews, booklists and features. For each one it then gives a conversion rate to sale plus the number of page views, adds (added to basket) and repels (content requested, but the back button then used). In time, the work of editorial reviewers was marginalized since Amazon found that the majority of visitors used the search tools rather than read editorial and they responded to the personalized recommendations as the matching technology improved. INFORMATION AND CONTROL PROCESSES
  • 10 | P a g e Infrastructure for Amazon is a huge competitive advantage. They can build very complex applications out of primitive services that are by themselves relatively simple. It follows that the Amazon technology infrastructure must readily support its culture of experimentation and this can be difficult to achieve with standardized content management. Amazon has achieved its competitive advantage through developing its technology internally and with a significant investment in this which may not be available to other organizations without the right focus on the online channels. As Amazon explains in SEC (2005) ‘using primarily our own proprietary technologies, as well as technology licensed from third parties, we have implemented numerous features and functionality that simplify and improve the customer shopping experience, enable third parties to sell on our platform, and facilitate our fulfillment and customer service operations. Our current strategy is to focus our development efforts on continuous innovation by creating and enhancing the specialized, proprietary software that is unique to our business, and to license or acquire commercially-developed technology for other applications where available and appropriate. The big architectural change that Amazon made was to move from a two-tier monolith to a fully-distributed, decentralized, services platform serving many different applications. At the moment, they can scale their operation independently, maintain unparalleled system availability, and introduce new services quickly without the need for massive reconfiguration Amazon pioneered A/B testing using technology in 1997 and by 2001 they had software in place to measure the cost of each product shipped. RELATIONSHIP BETWEEN BUSINESS/PARTNERS As Amazon grew, its share price growth enabled partnership or acquisition with a range of companies in different sectors. Marcus describes how Amazon partnered with (pharmacy), (furniture), (pet supplies), (wines), (groceries), (auctions) and (urban home delivery). In most cases, Amazon purchased an equity stake in these partners, so that it would share in their prosperity. It also charged them fees for placements on the Amazon site to promote and drive traffic to their sites. Similarly, Amazon charged publishers for prime-position to promote books on its site which caused an initial hue-and-cry. Analysts sometimes refer to ‘Amazoning a sector’ meaning that one company
  • 11 | P a g e becomes dominant in an online sector such as book retail such that it becomes very difficult for others to achieve market share. Some partnership arrangements include the Amazon retail platform which enables other retailers to sell products online using the Amazon user interface and infrastructure through their ‘Syndicated Stores’ program. Another example is the Amazon Marketplace which enables Amazon customers and other retailers to sell their new and used books and other goods alongside the regular retail listings. A similar partnership approach is the Amazon ‘Merchants@’ program which enables third party merchants (typically larger than those who sell via the Amazon Marketplace) to sell their products via Amazon. Amazon earns fees either through fixed fees or sales commissions per-unit. It also facilitated formation of partnerships with smaller companies through its affiliates program. See Exhibit 2 for the list of companies acquired by Amazon over the course of the years in order to expand or cut out competition. INDESPENSABILITY OF TECHNOLOGY AND INNOVATION
  • 12 | P a g e INNOVATION Innovation has been the key to Amazon’s unprecedented growth over the year which focuses on the long term keeping the customer in mind. Two key areas, where Amazon innovated is the birth of the Kindle and the ebook industry and the second being Amazon Web Services that powers half of the online business today. Kindle Kindle is the perfect example of Innovation in forwarding it’s agenda of reading being taken digital. The product is more a service than a product, as it was built only to increase the purchases online and to keep the customers locked in. It’s a platform meant to create an exclusive user experience and an innovative new ecosystem. The vision was that of the CEO, but the engineers took their own time to bring the product to the market finally. AMAZON WEB SERVICES Amazon attempts to capture the market by providing a B2C cloud market as well by encouraging usage of Amazon Cloud Service, thereby profiting the business. (See Exhibit 3) SWOT ANALYSIS Strengths Weaknesses Global brand Focus on research and development Strategic location Customer-centric vision No physical presence Low profit margins Low cash flows Weak performance in China
  • 13 | P a g e Diverse products Applied advanced technology ’s Merchant Program Skilled workforce Strong logistics Opportunities Threats Growth in movie downloads Social networking Growth of online shopping in China Expansion through acquisitions Growing e-commerce sales Growth in digital media Increased consumer spending in India Dependent on vendors Strong competition Patent infringement
  • 14 | P a g e EXHIBIT 1 Inc. Organizational Structure (Guillaume)
  • 15 | P a g e EXHIBIT 2 Companies acquired by Inc (Distinguin, 2011) EXHIBIT 3 Companies that run on Amazon Web Services (Distinguin, 2011)
  • 16 | P a g e REFERENCES Inc. (n.d.). Retrieved from Marketwatch: Inc. Company Information. (n.d.). Retrieved from Hoovers: information/cs/company-profile.Amazoncom_Inc.ef53c3d095de033c.html Brandt, R. L. (2011, October 15). Birth of a Salesman. Retrieved from Wall Street Journal: Distinguin, S. (2011). The Hidden Empire. Faber Novel. Guillaume, F. (n.d.). Organizational Structure. Retrieved from Stony Brook University: Hoff, T. (2007, September 18). Amazon Architecture. Retrieved from High Scalability : Key Developments: Inc (AMZN.OQ). (n.d.). Retrieved from Reuters: Phan, S. (2013, May 4). Inside Amazon's Culture of Metrics. Retrieved from SlideShare: Stone, B. (2013, October 15). Why It's So Difficult to Climb Amazon's Corporate Ladder. Retrieved from Businessweek: hard-to-climb-jeff-bezoss-corporate-ladder#p1 Wasserman, S. (2012, May 29). The Amazon Effect. Retrieved from The Nation: Marcus, J. (2004) Amazonia. Five years at the epicentre of the dot-com juggernaut, The New Press, New York Round, M. (2004). Presentation to E-metrics, London, May 2005. SEC (2005) United States Securities And Exchange Commission submission Form 10-K from Amazon. For the fiscal year ended December 31, 2004