Fortune Institute of International Business

Team Project
“Amazon’s Organizational Structure”
POST GRADUATE DIPLOMA IN MANAGEMENT
FIRST YEAR MANAGEMENT STUDENTS
TERM-II

Submitted by Team 8:

ASHWIN SHARMA
(20PGDM070)
VAISHNAVI SACHDEVA
(20PGDM112)
MANISHA MITTIMANI
(20PGDM083)
LUCKY MISHRA
(20PGDM082)
AYUSH GUPTA
(20PGDM072)

Under the Guidance of:

Prof. Vibhor Kataria

Managing Networks and Organization
 Table of Content:

Page
Chapter Contents
No.
1 Introduction 2

2 Different types of organisational structure 3

3 Amazon Introduction 7
4 Amazon Organization Structure 8
5 Amazon’s Organization as per the structure type 9
6 Mintzberg’s Structure 10
7 Amazon’s Mintzberg Analysis 11
8 Advantages 12
9 Disadvantages 12
10 Conclusion 12
11 References 13

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Introduction:
An organizational structure is a framework that guide the certain process execution to
accomplish the objectives of an association. These activities can include rules, roles, and
responsibilities
The organizational structure decides how data streams between levels inside the organization.
For example, In a centralized structure, decision making process follows the top to bottom
approach , while in a decentralized structure, decision-making power is distributed among
various levels of the organization.
Organizations, everything being equal, and sizes utilize hierarchical structures intensely.
They characterize a particular pecking order inside an Organization. A fruitful hierarchical
structure characterizes every worker's work and how it fits inside the general framework.
.
This organizing gives an organization a visual representation of how it is formed and how it
can best push ahead in accomplishing its objectives. Hierarchical structures are typically
represented in a type of graph or chart like a pyramid, where the most impressive individuals
from the Organization sit at the top, while those with minimal measure of intensity are at the
base.

Not having a conventional structure set up may demonstrate hard for specific Organization.
For example, representatives may experience issues knowing to whom they should report.
That can prompt vulnerability with respect to who is answerable for what in the Organization.
Setting up an authoritative structure can be advantageous to an organization. The structure
characterizes an organization's order, yet it additionally permits the firm to spread out the
compensation structure for its workers. By setting up the authoritative structure, the firm can
choose different pay scales and perks for each position.
Organizations, everything being equal, and sizes utilize hierarchical structures intensely.
They characterize a particular pecking order inside an Organization. A fruitful hierarchical
structure characterizes every worker's work and how it fits inside the general framework.

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Different types of organisational structure

 Simple Structure

Simple structure comprises owner (top-level) and employees of the lower level. It is the
oldest and most common organizational structure. Almost all small-scale industrial units or
small organizations use simple structures. Generally, small firms produce a single or very
narrow product line in which, the owner makes almost all decisions. This type of structure is
highly centralized. It is highly informal, and the management of tasks is under direct
supervision of owner.

Pros:
 The design may often encourage individualism.
 Helps to make quick decisions
 Highly responsive to environmental changes
 Very quick in communication , since it is simple and informal, and
 Helps to reward right person.

Cons:
 Informality may lead to problems,
 It may create and confusion conflict, due to improper understanding about employees’
responsibilities
 Owner spend more time in day to day operations rather than taking strategic decisions
 Employees play no role in decision making
 No regulatory framework to stop the misuse of organisational resources
 Limit opportunities for upward mobility
 Talent retention difficult, and
 There is no potential for future development.

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  Functional Organisational Structure:

A functional organizational structure is one that departmentalizes a business dependent on its

particular basic employment capacities. Organizations with this sort of structure would, for
instance, bunch every one of their advertisers in a single division, at that point its sales reps in
another, and client assistance group in another.
Pros:

 Employees tend to have specialisation in their specific business operation

 Skill-based offices permit workers to investigate their field and recognize what
they're acceptable at
 Facilitates away from of everybody's work
 Each division has characterized duties, guaranteeing no duplication of work

Cons:

 Sometimes it could be inefficient if business operate in diverse set of products

and different markets
 It can have barriers between different business operations which limits the
knowledge and communication of employees with other departments
 Departments sometimes more focused on their department’ goals rather than
focusing on organisation’s goals
 Work can become monotonous for employees, which affect their morale and
enthusiasm
 
Application of Functional Structure:

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Bigger organizations are especially appropriate to this sort of structure, particularly those
large firms which produce physical goods .Small firms might feel limited by the structure and
will look for other appropriate structures.

In the event that business chips away at ventures where the profundity of information is a
higher priority than the expansiveness of data, at that point a utilitarian authoritative structure
is suitable.
For example, a fundamental research and development programme :
a functional organisational structure can be applied since the project will be having expert
from each department and will use this expertise at their full potential which will lead to
successful completion of project.

 Divisional Structure

Such type of organizational structure is used by larger companies that operate in a wide
geographic area or have separate smaller organizations within an umbrella group that covers
different products or markets. Under this structure, every division basically works as its own
organization, controlling assets and the measure of cash it spends on tasks and angles inside
said divisions.
Pros:

 Allows for better flexibility within large companies

 Brings together expertise from different business department and geographical
locations to make more balanced and informed decisions with diverse views
 Comparative independence allows needs to be met more rapidly

Cons:
 

 Distance between divisions can make communication difficult

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  The same departments across divisions may create unnecessary competition and
schism between geographical locations e.g. different marketing departments
competing with and weakening each other’s efforts
 Size and scope make this structure particularly costly
 
Application of Divisional Structure:
Divisional structures are best suited to organizations that need to be near sources of supply
and/or its customers. Additionally, any company with a variety of product offerings or
regions of geographic operation could thrive within a divisional structure

 Matrix Structure

In this structure, all employees have two reporting manager, answering to two supervisors
relying upon the circumstance or undertaking. Commonly, this appears as practical
announcing and item based detailing. For example, a worker works for one chief yet when
another task emerges where they are required, they'll at that point need to likewise answer to
that undertaking's director as well.
Pros:

 Provides flexibility and more balanced decision-making

 Employees can share knowledge across different functional divisions, providing
better communication and understanding of each function’s role
 Through working across functions, employees can broaden their skills and
knowledge
 

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Cons:

 Reporting to multiple managers can create its fair share of conflict and confusion
over what should be reported.
 Such conflicts can lead to issues over who is responsible for what, and if things
go wrong, creates a blame game culture as a result

Application of Matrix Structure:

Matrix structures are well suited to companies that have both a diversity of products and
markets and are required to complete large and complicated projects. A project that requires
vast amounts of information to be processed efficiently, and the deployment of specialised
knowledge, could benefit from matrix structures.

About Amazon:

The e-commerce business has been emerging as the most competitive platform when it comes to
shopping experiences. Customers do not need to step out of their house to make any purchase.
Moving fingers and making a couple of clicks, the goods/services will be delivered to the front door.
This rising trend is enabled by the popularity of technologies such as digital devices (i.e. laptops,
tablets, and Smartphone) and an Internet connection (i.e. Wi-Fi, 3G, and 4G). Companies across
different industries have turned their eyes onto these market opportunities and opened up their own
online business. Amazon, the most recognizable online shopping platform, is the leader in this field
without a doubt. Amazon not only has its own products but also has a powerful connection with all
types of sellers across the globe. Individuals can sell/buy/exchange stuff on Amazon while big brands
look for collaborating with Amazon to support their online business.

Research was conducted to learn the key strategies that Amazon creates and proves to be a success.
Meanwhile, different factors of Amazon’s organizational design were reviewed and analysed to get a
better idea of what contributes to their popularity. Methodology introduced by the course
Organizational Design was adopted as the guidance and direction for the analysis. 10 aspects -
structure, external environment, internal environment, inter-organizational relationship,
manufacturing and service technology, information technology, organizational culture, innovation and
change, decision making and conflict, power and policies were going through to have a
comprehensive view of Amazon’s organizational factors.

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Now the question arises: “What drives Amazon to be so successful?” First considerations are
answers like "CEO, Jeff Bezos" or "it's capacity to advance". Truly, those are positively
central point in the accomplishment of an organization of this height, however it is more
unpredictable than that. Finding out about Amazon's Organizational Structure will respond to
this inquiry all the more absolutely. "How does Jeff Bezos' initiative style enable him to
picture the structure for progress that he has executed so well with Amazon?"

Amazon’s Organization Structure:

Amazon has divisional structure to provide high quality services specific to each product
or service category. However, cross-departmental communication and coordination needs to
be enhanced through adopting more methods to tighten up the links between different units.
Technology development benefits Amazon in more than one way. Externally business
running, Amazon achieves closer relationship with its customers, suppliers and partners.
Internally organization operating, Amazon improves the productivity and efficiency, and
establishes better internal communication with the help of technology. Because online
business is a field that is evolving rapidly, Amazon has to be flexible and dynamic enough to
adapt to the fast-changing environment. Learning what is new on the market, understanding
how customer’s preference changes and adopting the newest thinking are essential for
Amazon to survive today’s marketplace. Establishing collaborative relationships with
different parties is important. For example, working closely with different brands and helping
them achieve high volume of sales can create the win-win situation for both ends.
Negotiating with suppliers and distributers to get a common ground of providing more real-
time responses to customer’s requests can improve the customer satisfaction significantly.
Utilizing social network to promote the company and its products/services can reduce costs
associated with marketing and public relations. Creating a rich network involving all
functions is crucial for better allocating resources and achieving the most optimal outcomes.

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Amazon’s Organization as per the structure type:
Amazon employees are coordinated across 12 levels of hierarchy. At Level-12 is Jeff Bezos
himself. At Level-11 are the as of late declared CEOs, Jeff Wilke and Andy Jassy, and all the
SVPs (around 20 senior pioneers). At Level-10 are for the most part the VPs (two or three
hundred). Level-9. Level-8 is for Directors (a few hundred), Level-7 for Senior Managers (two
or three thousand), Level-6, 5 and 4 for Managers and individual supporters (scarcely any
several thousands). Levels 1, 2 and 3 are basically for help staff, FC laborers and other
comparable jobs (a many thousands). New alumni join at Level-4, while MBAs join at Level-
6 or 5. The association is level, comparative with different organizations of this size. While
there are endless individuals at lower levels, the check of senior pioneers is little.

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Amazon is coordinated into groups, each running a specific item as well as business and not a
capacity like promoting, item or designing. Amazon pioneers are generally solid head
supervisors as opposed to useful specialists.

Senior administration (CEOs, SVPs, VPs) regulates various organizations building smooth
cooperation across organizations and guaranteeing they influence each other's qualities. Chiefs
(level-8) head every individual business practically like CEOs of little organizations, while
Senior Managers (level-7) at Amazon are utilitarian heads in each such independent company.
Supervisors and Individual donors (at levels 4, 5, 6) are basically the labor force of these
private ventures. They incorporate programming advancement administrators, venture/item
directors, advertisers, seller chiefs, site merchandisers, engineers, and so on This infers that
Hierarchy is a conventional authoritative underlying attribute of Amazon.

Mintzberg Organizational Structure:

Henry Mintzberg suggests separating the executives jobs and obligations and putting
together the work environment to rearrange complex ideas. This assists with getting sorted
out organizations into a more effective culture, and it permits every part to build up their own
aptitudes. Henry Mintzberg is an administration master, creator and scholastic. There are five
famous hierarchical structures, as per Mintzberg, they are:

1. Simple structure (entrepreneurial organization). This type of organization consists of a

few managers/executives and multiple subordinates.

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 2. Machine bureaucracy. Workers operate as parts of a machine. Each department is
responsible for its own tasks, and decision-making is centralized.

3. Professional bureaucracy. Each professional works independently, without

centralization, on tasks that match their specific skillset.

4. Divisional (diversified) form. Diverse work is delegated among divisions. Each

division focuses on its own activities and functions.

5. Adhocracy. There is no formal structure; rather, highly qualified employees form

teams to complete tasks and adjust to any industry changes.

Strategic Apex: The top of the management

Middle Line: a group of managers who are concerned with converting the objectives and
broad plans of the Strategic apex into operational plans that can be carried out by the
workers.

Operating Core: They include front line executives, or we can say that they take care of
product and services.

Techno-Structure: Group of people specifying output, ensuring that personnel have

appropriate skills and so on. They include Analysts, Designers.

Support Staff: Group of people who supports all the other parts of the organizational
structure of Mintzberg

Amazon’s Mintzberg Organization Structure:

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Source: https://pbs.twimg.com/media/DxyInsYUYAA5MQm.jpg:large

As Amazon has a wide range of product offerings and specialty units, its normally a
divisional structure set up. A focal central command bolsters various self-sufficient divisions
that decides, and have special structures. As Amazon is huge and developed associations that
have an assortment of brands, produce a wide scope of items, or work in various geological
locales. Results in framing the reason for an independent division.

The critical advantage of a divisional structure is that it permits line troughs to keep up more
control and responsibility than in a machine structure. Likewise, with everyday dynamic
decentralized, the focal group can zero in on "higher perspective" vital plans. This permits
them to guarantee that the fundamental help structures are set up for progress.

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A huge shortcoming is the duplication of assets and exercises that go with a divisional
structure. Likewise, divisions can will in general be in clash, since they each need to go after
restricted assets from central command. Also, Amazon can be unyielding, so they work best
in enterprises that are steady and not very mind boggling.

Amazon's procedure incorporates item or market expansion, this structure can function
admirably, especially when the organization is too enormous for compelling focal dynamic.

Advantages:
Teams work like a small company. Decisions are made quicker. Representatives feel more
possession as they see the effect of their work. The essential spotlight is on Results, much the
same as the sink or swim disposition found in new businesses and little organizations. Cycles
are not given a lot of significance like a few huge organizations where representatives feel
they simply need to manage their responsibility competently and not stress over the outcomes.
Indeed, there are numerous different motivations for these favourable circumstances, however
association structure is one of the principle reasons.

Disadvantages:
Because of absence of utilitarian skill, most people relearn stuff definitely known by
somebody, causing loss of proficiency. It isn't unheard that at least two groups deal with the
practically same thought, separate from one another, again causing loss of proficiency.
Absence of a cycle can in some cases moderate things down or cause unnecessary beat when
individuals don't have the foggiest idea what should be done to tackle an issue. The greater
part of these hindrances is tended to through fitting systems. Useful specialists are accessible
as chief designers, head item administrators, and others. The board guarantees that when
various groups take a shot at a similar thought, they gain from one another's slip-ups and
furthermore take to some degree various ways to evade same work in different groups.

Conclusion:
In our view, the favourable circumstances far exceed the disservices of Amazon's association
structure. Amazon nearly works like a huge VC firm that puts resources into different
thoughts. The emphasis is on finding fruitful thoughts, and not on staying away from
disappointment of any thought. Like any great VC knows, one effective thought more than
compensates for several bombed ones.

References:
http://amgimanagement.com/founder/ProjectSummaries/MIE459_2014_Winter_02%20AMA
ZONS%20ORG%20DESIGN.pdf

https://medium.com/@objoutlook/amazon-works-because-of-its-org-structure-22efc8ed1002

https://nanookjoe.wordpress.com/2017/10/09/amazon-com-organizational-complexity/

https://www.repricerexpress.com/amazon-success-story/

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