Amazon is currently the largest retailer in the world. The company operates alongside several competitors like Walmart and Alibaba. To remain competitive and retain its leadership role in the industry, Amazon must address challenges from its external environment while implementing necessary organizational changes. The detailed report provides background of a change intervention, opportunities, change justification, and the identified barriers.
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The opportunities are there for e-commerce companies, which justifies the need for frequent strategic updates. Using the Prosci ADKAR change model, Amazon needs to build awareness of the change by informing the employees and stakeholders how they will benefit from the change. It should create a desire among the leaders to accept changes as this will reduce resistance among their subordinates. Knowledge about changes should be disseminated across all groups through training and seminar before the change implementation begins. Kotter’s 8 Step Change model can be applied to create an appropriate climate for the change, engage the stakeholders through effective communication, implement the change and focus on sustainability through continuous improvements.
Organizations seeking to remain competitive in the long run must be innovative and address challenges effectively. Amazon needs to continue to understand the needs of different customers to improve customer experience to outcompete the rivals. It should continually differentiate its products through quality to satisfy customer needs and address any challenges. The company could use private label products to offer more favorable customer services like faster response time. Innovating could be crucial in addressing the challenges facing the company and to improve on its competitive advantage amidst the competitor’s growth.
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Organizational Change & Development Case Study on Amazon
Amazon is the largest retailer in the world and is continually expanding its offering in different industries. The dynamicity of e-commerce market requires an effective strategic plan that is flexible for changes in the organization. To remain sustainable, the company must implement appropriate organizational changes. Amazon has over 230 million items for sale in the United States and is known to offer the best customer services compared with rivals. It gives customers a wide variety of products on one site. Amazon’s 120 plus fulfillment centers associated with the company handle over 30 different product categories. External challenges to Amazon include intense scrutiny from the authorities, constant competition pressure, intention to keep up with industry changes, and the need to adhere to customer expectations. While the company enjoys the mentioned and many more advantages over its rivals, there is a need to rethink its approach in the much changing business environment.
ADKAR’s change model is an abbreviation of Awareness, Desire, Knowledge, Ability, and Reinforcement (Babin & Ghorashy, 2019).
Phase 1: Preparation for the change. The first phase is finding the right team of leaders with the desire, knowledge, and ability. The leaders should identify the challenges in the initial stages of change implementation and develop solutions accordingly (Galli, 2018; Goyal & Patwardhan, 2018).
Figure 1: The Prosci change management model. Source: (Prosci, 2021)
Phase 2: Managing the Change. Managing change requires effective communication, identifying sponsors, and getting a training plan with defined requirements for the employees. It requires a coaching plan to lead the change team, and crafting a resource management plan to reduce resistance.
Phase 3: Reinforcing the change. Amazon should begin by checking if there are behavioral changes among employees after a change intervention and assess the plan to find discrepancies if any. The management must ensure new habits are reinforced with training and reward employees for accomplishments.
Phase 1: Creating a climate change at the company (Waddell et al., 2019). The first step could be creating an urgency for the change by calling an urgent meeting for the internal and external stakeholders. The second step could be identifying the best minds to serve as the guide for the rest and help others carry out the change. Finally, create a vision for change management.
Phase 2: Engage the entire organization (Waddell et al., 2019). The first step is communicating the vision to all stakeholders through all channels available to ensure everyone is on the same page as far as the change is concerned. The next step is empowering the action by removing all possible barriers to the change implementation. The company could create small teams and give them the authority to make changes and handle any resistance in the process. The last step is creating short-term goals to keep the staff motivated with carrying out the process.
Phase 3: Change implementation and sustenance (Waddell et al., 2019). This could begin with change acceleration by ensuring consistent work towards fulfillment, tweaking the strategy as necessary while focusing on the momentum. It could end by incorporating the change in the culture.
Political: The U.S. Treasury Department has been offering support to small businesses to relieve the economic burden caused by the COVID-19 pandemic. This legislation impacts Amazon in a much minimal way (Ningzhi, 2020).
Economic: E-commerce is among the most profitable industries despite the pandemic since buyers are looking for alternatives to physical stores. Amazon has benefited from this trend (Ningzhi, 2020). Developed countries contribute a significant percentage of sales revenue generated by the company, hence they could be the major target.
Social: Before 2020, Amazon was already a successful company. Online shopping has increased since the onset of the pandemic (Ningzhi, 2020). Nevertheless, the pandemic has also raised critics of Amazon, with over 350 workers across the country staging a protest declaring that Amazon lacks effective measures to protect employees.
Technological: Amazon relies heavily on its technology to package, store and distribute products. Amazon has incurred more than $4 million in its investment in acquiring personal protective equipment. Technology remains a crucial factor behind Amazon’s popularity.
Environmental: Amazon is addressing environmental concerns about its delivery processes. Amazon has invested a lot of money in nature-based climate solutions. Continuing such work could earn Amazon more customers.
Legal: Amazon incurs huge costs from changing import and export regulations. Certain product restrictions have raised consumer costs. Reducing these costs could be a financial advantage.
- Competitive rivalry is high: The number of competitors entering the industry has been rising, with many retail and small-scale brands. There are competitors like Walmart, Alibaba shifting focus to online business to cover the gap left by physical stores.
- The bargaining power of buyers is high: Customers are highly price-sensitive, switching from one retailer to another is inexpensive (Ningzhi, 2020). Competition has intensified as demand declines due to recessions caused by the pandemic. Amazon, however, has a customer-centric approach that allows its customers to get a wide variety of products at one site and compare prices to find the minimum price that offers relatively good quality.
- The threat of substitution is moderate to high: During the pandemic, consumers’ reluctance to shop in physical stores has lowered this threat. Many local businesses have had to dissolve or suspend their businesses because of the pandemic.
- The bargaining power of suppliers is low to moderate: Retailers can easily buy a product from more than one vendor. For most products, Amazon can influence the prices because of bulky purchases (Ningzhi, 2020). Most vendors cannot get another e-commerce website with the same customer traffic as Amazon.
By 2022, Amazon’s delivery network would provide $100 billion worth of business for non-Amazon packages. Amazon Fresh should continue offering fast delivery at low prices to support people in the pandemic. Amazon has a podcast service integrated into the Amazon Music platform to rival Apple Music and Spotify. It is an opportunity because of increased customer target and differentiation. There are a few threats that must be addressed. For instance, if third-party retailers sell counterfeit products, Amazon could be liable for damages. There are rising concerns by the government regarding Amazon’s monopoly and data-privacy security. The Senate has raised concerns on whether the company prevents healthy competition. Another threat to Amazon is that other traditional competitors could develop their e-commerce services to pull market share from Amazon.
The pandemic and several changes in the world have brought changes and opportunities. Amazon has to assess the needs of different customer segments using technology to improve their experience. It must update and differentiate its product offerings continually. The private label products at the platform could cost more than other products, but Amazon products must stand for quality with better customer service. This is because Amazon label products could offer quality customer services, such as real-time response, compared to third-party retailers. It should push the normalization of third-party retailers, require each retailer to provide customer services for its products. To reduce product quality variation, Amazon could classify retailers, since hierarchy of retailers would encourage customer habits of purchasing from prized retailers.
Amazon should move customer service back to third-party vendors to relieve its workers of the burden. The substantial demand at Amazon puts its workers under more stress, harming their health and human rights. To reduce the workload of delivery employees, it could employ high-tech drone delivery. Investing in robotic sorting that automatically packages parcels through programmed robots can reduce the burden and the use of paper and the possibility of privacy compromise. With a shift to electronic systems, security concerns could also decrease.
During the periods of change at Amazon, there might be just a few disruptions. However, these disruptions will occur against a backdrop of continuity and stability. During the change intervention, communication should provide details regarding the “what,” “what,” and “how” of the change (Beatty, 2015). Such communication must start at the beginning of the change implementation through to the end.
Job insecurity among employees could result to a resistance to change. The employees who believe the management is involved in the change for a different reason than announced may also cause some resistance (Grama & Todericiu, 2016). To solve this, it is necessary to ensure there is a certain level of trust from all stakeholders towards the process involve employees in all levels. The Prosci methodology could also help minimize change resistance among employees through its three steps; the preparation approach, managing the change, and sustaining actions. Training of the employees and stakeholders can help solve other issues and barriers emanating from an abrupt technological change, the lack of skills, low worker morale, and lack of consensus.
Change resistant employees might experience emotional distress because of the pressure to conform to the changes. Resistant could be addressed by motivating employees and involving them more in various steps of the intervention. To reduce the negative attitude towards the change and its impact on the organization, Amazon should focus on more regular training. Another issue could be employee favoritism in organizational culture, which may cause further demotivation to the workforce. To address this issue, Amazon’s recruitment department should ensure fair and just processes.
Amazon has been doing better in the global market than its rivals, but still there is a need to focus on more innovation and adoption of strategies that guarantee sustainability. The workforce must be motivated, the leaders must be willing to participate and accept change, and the entire organization must be ready to adopt better processes. The company has to get into brick and mortar model to build a stronger brand and engage with its customers. Amazon needs to regularly conduct internal and external analyses to tell when change is necessary. With the growing competition in e-commerce, sustainability will most likely be the factor that determines whether Amazon retains the position of the largest retailer in the world.
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