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Amazon.com Inc.

s Organizational
Structure Characteristics (An
Analysis)
UPDATED FEB 12, 2017 PAULINE MEYER

Defense Secretary Ash Carter (left) with Amazon CEO Jeff Bezos on March 3, 2016.
Amazon.com Inc.s organizational structure enables managerial control of the e-
commerce business. (Photo: Public Domain)
Amazon.com Inc.s organizational structure enables extensive control on
global e-commerce operations. An organizational or corporate structure
establishes the design and system of interactions among members of the
firm. For example, Amazons corporate structure determines how
managers direct and influence operational activities in various business
areas. As the leading online retail business in the world, Amazon.com
must maintain an organizational structure that adequately supports its
expanding market reach. An evolving corporate structure could even
benefit Amazon as the company adds more products and gradually
diversifies its business.

Amazons organizational structure enables managerial control. The


characteristics of this structure also provide support necessary for
Amazon.com Inc.s new product launches in the e-commerce market.

Features of Amazon.coms Organizational


Structure
Amazon.com Inc. has a functional organizational structure. This structure
focuses on business functions as bases for determining the interactions
among components of the organization. The following characteristics are
the most significant in Amazons corporate structure:
1. Global function-based groups (most significant feature)
2. Global hierarchy
3. Geographic divisions
Global Function-Based Groups. Function-based groups are the
strongest characteristic of Amazons organizational structure. Each major
business function has a dedicated group or team, along with a senior
manager. The strategic objective in having this structural characteristic is
to enable Amazon.com to facilitate successful e-commerce operations
management throughout the entire organization. Considering its ongoing
global expansion, the company grows through this feature of the
corporate structure in terms of ease of establishing operations in new
markets [Read: Amazon.com Inc.s Generic & Intensive Growth
Strategies]. The following are the major function-based groups in
Amazons organizational structure:
1. Office of the CEO
2. Business Development
3. Amazon Web Services (AWS)
4. Finance
5. International Consumer Business
6. Accounting
7. Consumer Business
8. Legal and Secretariat

Global Hierarchy. Hierarchy is a traditional organizational structural


characteristic. In the case of Amazon.com Inc., such characteristic is
expressed in terms of a global system of vertical lines of command and
authority that influence the online retail firm. For example, senior
managers directives are applied throughout the organization, affecting all
relevant offices of the company worldwide. The strategic objective of this
feature of the corporate structure is to facilitate managerial control of
Amazons entire organization.

Geographic Divisions. Amazons organizational structure also involves


geographic divisions. In this structural characteristic, groups are based on
geographic regions and related business goals. For example, Amazon.com
Inc. uses geographic divisions to make it easier to manage the e-
commerce business based on economic conditions of certain regions. The
strategic objective in having this characteristic of the organizational
structure is to enable the company to address issues or concerns relevant
to each geographic region, considering differences among regional
markets. Amazon has a simple approach for this structural feature,
involving the following geographic divisions in its operations:
1. North America
2. International

Amazon.coms Organizational Structure


Implications, Advantages & Disadvantages
Amazons corporate structure is effective in supporting international
growth in the e-commerce market. The companys continuing success in
expanding its business is an indicator of the suitability of this
organizational structure. An advantage of function-based groups and
hierarchy is that they enable Amazon.com Inc. to rapidly and effectively
implement managerial directives. Also, geographic divisions are
advantageous in supporting focus on online retail market concerns and
related economic conditions in certain regions, such as North America.

A disadvantage of this organizational structure is that it has limited


flexibility and responsiveness. The dominance of the global function-based
groups and global hierarchy characteristics reduces the capacity of
Amazon to rapidly respond to new issues and problems encountered in the
e-commerce business. Thus, a recommendation is for the company to
consider reducing the dominance of these structural characteristics.
Amazon could also establish higher flexibility and responsiveness by
increasing the empowerment or degree of autonomy of regional or local
offices.