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Strategic Change Management - The Case of Amazon

7 pages
1816 words
Carnegie Mellon University
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Environments in which businesses operate keep changing on a daily basis. Changes in societies, customers, markets, competition, and technology force organizations to develop new strategies and learn new ways of doing things to remain in business and sustainably compete (Marcum, Green, Tinney, & Schaefer, 1997, p.101). As a result, a need arises for the process of shifting from the past ways of trade to be managed to realize organizational objectives. Change management (CM) entails continual renewal of an organizations direction, structure, and capabilities as a response to the changing needs of the external and internal customers. Since CM involves new organizational processes and procedures to attain the desired future, it cannot be separated from strategy (Todnem By, 2005, p.369). By referring to relevant theory, this paper explores the change management strategy of Amazon. A discussion on how to implement change and overcome resistance to change will also be examined.

The Case of Amazon

Company Overview

Established in 1994 in Seattle, Washington, Amazon has recorded tremendous growth over the last 23 years to become one of the leading retailers in the world. The company pioneered online business and has since grown to become the worlds largest online retailer where third-parties sell their goods and services directly to customers (The Economist, 2014; Zhu & Liu, 2016, p.8). Amazon began as an online bookstore and expanded to accommodate various products. It has since evolved and turned the retail market upside down through diversification and massive investments in online businesses. Some years after its foundation, the company quickly diversified into other products such as by CDs, DVDs, apparel, video games, furniture, toys, and jewelry, among other products. Today, Amazon is a global marketplace, device manufacturer, offers publishing services, and cloud computing services (Zhu & Liu, 2016, p.8; Rao, 2011). It almost sells anything that can be sold through online platforms. Through globalized delivery and logistics platforms, the company has expanded over the last decade, setting location in many countries around the world.

The globalized nature of its business and the unique business model in which where third-parties and Amazon come together to create value for customers, has made it beat other retail giants such eBay and WalMart in the retail business. As of 2015, Amazons website attracted 175 million visitors per month compared to eBay and WalMart who attracted 122 and 82 visits respectively. Third-party membership has also grown quite significantly. By 2013, it had accumulated at least 2 million third-party sellers, and this group accounted for 40% of the company total annual sales. Moreover, Amazon offers free shipping services to its two broad categories of its customers. Subscribers to Amazon Prime get unlimited free two-day shipping on the items such persons buy at an annual membership fee of $99.This is a valuable source of revenue for the company. On the other hand, customers who order merchandise of at least $35 through its platform receive free delivery of goods within five to nine days under its Amazons Free Super Saver Shipping (Zhu & Liu, 2016, p.8).

Evaluation of Change Strategy at Amazon

One of the essential contextual features of change strategy based on the widely-acknowledged kaleidoscope model is the timing of implementing change strategy. According to Rao (2011), Amazon examines the state of the company, takes stock of its advantages, and designs ways to make those benefits irresistible to customers. Unlike most firms, Amazon does not employ knee-jerk reactions for public relations image control. In other words, the company does not worry about short-term negative publicity issues. What matters most is its long-term plans, and it has sacrificed profits for long-term objectives on many occasions(Zhu & Liu, 2016, p.10).Long-term strategic planning is an essential element of achieving stability of the organization in the long term as it allows the organization to undergo a complete overhaul of its structures in order to remain adaptive as changes occur in society (Pacios, 2004, pp. 260-61).By concentrating on long-term strategies, the mission is not compromised by industry disturbances.

Diversification has played a vital role in placing Amazon where it is today in so far as retail business is concerned. Leveraging on technological advancements in communication and online payment mechanisms, Amazon has created a competitive advantage purely on its own initiatives driven by the desire to enhance customer experiences as well as reduce the cost of doing business in a multiplicity of fields (The Economist, 2014). All these have been achieved by the ability of the company to design clear and realistic objectives for its business vis-a-vis the customers needs and expectations. Having been a retailer for many years, Amazon built the capability to sell products to third parties through quality service delivery. However, its design of business in such a way that it does not control the authenticity of the products of their parties and their customer services sometimes causes a lot of problems to the company (Zhu & Liu, 2016, p.8).

Diversification is a strategy in which business organizations expand to different product lines at the same time by capitalizing on customer loyalty (Chirani & Effatdoost, 2013, p.23).Amazon has used diversity to expand to various lines of product distribution which are meant to expand market power. According to Chirani and Effatdoost (2013, p.23), firms employ diversification to limit competition in several markets at the same time, and prevent competitors to potentially entering their markets. Amazons experience in online retail and its capabilities enables it to circumvent barriers to entry to different lines of businesses (Zhu & Liu, 2016, p.9).This strategy has made the company involve itself in selling almost every item that can be delivered online.

Unlike Google, Facebook, Microsoft, and other tech giants Amazon did not invent a product or service. The company used an existing technology to design ingenious ways of facilitating the movement of goods and services from the seller to buyer. It is a fairytale of sorts for the company as its current market power was not as a result of technical wizardry but the ability to discern the environment, identify customer needs and massively invest resources to satisfy the identified needs (Rao, 2011). This is due to its internal capabilities of staff to develop products that seek to fulfill the need of customers by exploiting existing internet technologies.

As pointed out earlier, strategic changes come due to the need to reposition in the market as a reaction to the changes that occur on a daily basis. That is, a strategic change becomes necessary when a company senses that change is necessary to avoid falling behind its competitors or failing to deliver what the customers need (Ali Naghibi & Baban, 2011, p. 542).According to Ali Naghibi and Baban (2011, p. 542), strategic change entails a change in the firms scope, resource deployments and competitive advantages geared at improving the companys position in its environment. This is not an easy task. It is even more difficult for adapt people and systems to new ways of doing things altogether. As such, strategic change implementation requires a great leader because introducing significant changes to an organization needs a champion spur the necessary commitment and enthusiasm among employees to implement their vision successfully (Korbi, 2015, p.2). This explains why leadership is a vital component of the process.

The strategy pursued is that of a mind game.It does not concentrate on product building or marketing. The phenomenal success that has been attained by the company can be attributed to its ability to pick a move and pursue that step wholeheartedly to its logical end. Once it has designed the objective of the company, Amazon conducts a complete overhaul on its structure to reflect the new needs of the organization in so far as its current strategy is concerned (Rao, 2011). Also, Amazon has made the tradition to make a move when the company considers such step as the best course of action in the interest of the company. When a decision is made to enter into a given line of business, it is done through foresight. The Kindle Fire is a typical illustration of foresight. It is an opportunity pursued following the continued expansion of smartphone technology. As a result of its launch, customers have access the Amazon Appstore, TV shows and also allow streaming of moves (Rao, 2011). By coming up with Kindle Fire, Amazon demonstrated it could leverage on current technologies to foster innovation in line with its core business operations.

Implementation of Strategic Change

Unlike other organizational changes, strategic changes involve changing organizational structure and culture (Rezvan & Dehkordi, 2012, pp.112-16). In other words, it is a complete overhaul of how an organization operates. This activity requires a lot of resources (in terms of time and money) the employees for change. Employee readiness is a shared psychological condition in which both followers and managers feel committed to the implementation of an organizations change strategy and confident in their collective ability to actualize the change (Weiner, 2009, p.9). According to Weiner, when organizational readiness for change is high, employees are more likely to embrace change, show greater effort as well as display more cooperative behavior to change (2009, p.1).The readiness of employees is meant to reduce turnover intentions as well as reduce the stress that is associated with adapting to new ways of doing things and uncertainties that such experiences present to employees (Neves, 2009, p.215). Successful reorganizational of structure and preparing employees as one of the most challenging tasks for leaders in the modern management era.

Leadership is a key ingredient in the process of strategic change implementation. It is critical in instilling a new culture in workers as part of the readiness process. Tsai describes culture as the shared values, beliefs, practices, assumptions that define employees of a particular organization (Tsai, 2011, p.2).It takes long to entrench itself in employees. Similarly, it takes long to be modified to fit strategic change efforts. As such, able leadership is critical for culture to be aligned with strategic goals of the organization (Tohidi & Jabbari, 2012, p 858-59) because a culture change is what makes strategic change efforts fruitful. As put by Kargas and Varoutas (2015), leadership and culture are the most crucial elements for organizations to sustainably compete.

Leadership does not entail controlling people for a particular goal alone. It is more of offering the requisite resources essential for employees to feel part and parcel of the change objectives of the organization (Mintzberg, 1998.pp.141-44). These functions enable employees to understand in clear terms the need for the change thereby making them feel part of the process. If not implemented accordingly, the resistance of employees may curtail efforts to implement change.

Why employees Resist Change

Employees resist due to lack of effective communication seeking to involve them in the change process. Inadequate communication makes employees feel that the results of the intended change would impact on them negatively (Pieterse, Caniels, & Homan, 2012, pp.800-04).Lack of training to meet the new demands of their duties can also be a major contributor to employee resistance. It makes employees lose motivation as well as predisposes employees to stress due to the uncertainty on ho...

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