Amazon Case Study: A Change Management
Task: Write a detailed Amazon Case Study critically discussing the change management approach of company.
The current Amazon Case Studyanalyses the change management approach of the compant. Change is the only constant. However, for initiating a change it is very important to understand what change is required and why the change is required. As per Burnes(2020), change could be slow or fast, at a small-scale or large-scale. In every situation, a change signifies a transformation. Before putting a change into effect, it is important to analyse how far it would arouse resistance. The change would require to be managed utilising appropriate change management skills by the organisation’s leaders. In this report, the change management of Amazon will be discussed. The case that has been referred to discusses the expansion of Amazon, which is on the track of completing its first robotics fulfilment centre in Western Sydney, in Australia. The changes that are planned and implemented need to be managed effectively. For getting a clearer idea of managing a change, the book by Burnes 2017 titled ‘Managing Change’ have been referred to along with few other articles. The paper begins with a description of Amazon as an organisation. Furthermore, the change implemented by Amazon will be described. The organisation has used the contingency system approach for managing the change which will be analysed in the later sections of the paper. The objective of any change or transformation within an organisation is with the purpose of achieving the organisational goals or improving the performance of the organisation. In this paper, the change management approach of Amazon will be evaluated to see if the approach is appropriate. There are certain gaps between the organisational, contextual, and situational factors and the approach of Amazon. This gap analysis will be made with reference to some peer reviewed articles. The theories underpinning the change will be analysed. The paper provides recommendation section, which proposes some ways in which the change could be implemented in a better and effective manner. Finally, the paper ends with a conclusion which includes a summary of the organisation development of Amazon.
Description of your Case Study Organisation and its Context and Environment
Amazonstarted as an online bookselling platform founded by Jeff Bezos in 1994 in Washington. Currently, Amazon is the world’s largest e-commence retailer, generating sales revenues of 386 billion in 2020,which is much higher compared to other e-commence companies in the world. Amazon supplies products and services in AI, digital streaming and cloud computing industries (Markinblog 2021). Amazonhas diversified by offering a huge range of products such as electronics, software, furniture, apparel and others,through online or physical stores to be sold from them or their third parties.
They also support the programs that the sellers enable to grow their business by selling their products through Amazon stores.Amazon fulfills their customer orders through North America, International fulfilment networks, their digital delivery and physical stores (Amazon annual report 2021). Amazon had expanded 175 fulfillment facilities reported by Narvaez 2021, providing millions of employees around the world to serve the customer with efficiently and effectively.According to Australia financial review (2020), Amazon Australia’s distribution centre expansion in Melbourne achieved improvement in delivery with quick and efficient services. Additionally,Zacks investment research (2021) reported that the e-commence market in Australia is changing rapidly and growing the increasing customer order demands due to ongoing Covid-19 pandemic and forecasted salesin Australia e-commerce will hit 24.1 billion by 2024. Based on Burnes (2017), Amazon Australia abducts with continuous transformation model of change to align with their external environment customer expectations. Amazon decided to continuous modification in building the first fulfilment centre automated by robotic technology which has four storeys, a size of 200, 000 square metres where they can store up to 11 million items which are distributed by 2000 robots, locating at Western Sydney and expected to complete in end of 2021 (Narvaez 2021). To sustain business in highly competitive and dynamic environments, the main sources of changes in the environment such as competitors, market and technology are concerned (Anand & Ward 2004). The environmental and contextual factors influenced that Amazon leads to expansion of automated warehouse in Sydney are highlighted as follows. Morgan Stanley reported that Amazon sales in Australia is steadily growing and suggested high growth potential in the future due to the fact that65% of people in Australia shopped online and sales orders are increasing, in fact which makes an attractive market for Amazon to expand distribution centres in order to deliver locally(Trafis Team 2017). Competitive edge against second largest e-commerce Alibaba who is targeting to market in Australia pushes Amazon to expand the fulfillment centres in order to position the better services and enhance customer experiences (Trafis Team 2017).Amazon couldn’t manage to process the customer orders within two-day deliver pledge for unexpectedly rising customer demandduring Covid-19 pandemic. Amazon is also seeking better shipping system to beat their competitor, Walmart, offer their products with same day shipping service (Soper 2020).
Therefore, optimizing the new distribution centres by Amazon could improve better delivery system coping with evolving customer shopping behaviours in competitive markets. Moreover, Bogue 2016 mentioned e-commence growth boosts to upgrade the use of robots in the warehouse which not only robots can perform quickly moving items from place to place and also can save time and operating expenses which in turn result in better economic benefits. Amazon’s approach for robotic technology innovation in their warehouse creates to capture the customer growing demands providing the customers with fast and efficient services.
Analysis of Change
For every organisation, change cannot be implemented successfully following the same approach. There is not a single best way for change implementation and management. The changes and its execution are dependent on the situational or contextual analysis of the organisation (Galli, 2018). The change brought about by Amazon is contingent to the situation of Covid-19, which has spurred online shopping. The customers demand fast and easy delivery of goods ordered online. The contingencies like technology level, organisational size, dependency on environment and uncertainty of demand need to be considered while planning for a change.
Amazon is following the contingency approach towards change. It has rejected the idea of one best way to implement the change. The change that is taking place or needs to be implemented is dependent or contingent on several variable factors (Dzwigol et al, 2019). For instance, the change that Amazon is bringing to its operations is the introduction of robotics technology. This change is contingent on different situational factors. The most important aspect is the operation and structure of the company. This also includes the way in which the control is exercised over the labours as well as the way in which the job roles are designed. The other contingent factors involve the business environment, both internal and external. The level of technology is another very significant factor in this case. The application of the robotics technology to the operations of Amazon for catering to customer needs is highly dependent on its technological support. The change is also contingent on the size of the organisation. In most of the cases, the large organisations can easily implement a change while the smaller organisations find it difficult to afford the change (Burnes, 2020). The contingency approach is significant and relevant because it is based on practicality that no two organisations will ever come across the same situation or contingencies. As the situation changes, the organisations vary, so should the process of implementing a change. As per the contingency theorists the organisations are considered to be open systems. The internal operations of the organisations and its effectiveness are contingent on the situational factors that are faced by the organisation at certain point of time. Amazon has analysed the contingencies, including technology, its staffs’ ability to adapt to the change, the need for the change and the yield from the change. Amazon has estimated that the return from the implementation of the change, i.e., the use of robotics technology would increase their revenue and sales. The robotic warehouse will be managing huge stocks. This will facilitate adjusting and adapting to the changing environment. Most importantly the Covid-19 pandemic has created high level of uncertainty. To cater to the changing market demand and varying customer behaviour, the robotics warehouse will be greatly effective.
Understanding those environmental factors could build strategic flexibility between organisational structure and the demand developed by environments (Anand & Ward 2004). Given an example of success of Toyota production system by Anand and Ward 2004, it highlights that Amazon had developed their expansion of automated warehouse which can improve the capability to increase better responsiveness to customer demands with fast and efficient facilities, coping effectively with changing environment instead of avoiding the uncertainties. Therefore, according to the Bernes 2017 change management theories, Amazon had adopted with the contingency approach based on system theory which internal organisation settings can be aligned with environmental factors occurred in term of situational variables.Firm performance can be measurable depending on the fit between internal and external factors. For example, Amazon’s Australia had achieved their sales revenue increase 60 percent in 2020 outweighing than other retailers than JB-HiFi and Harvey Norman (Marsh 9news 2021). It is not deniable Amazon’s first robotic warehouse expansion 2021 project will be successful if Amazon management is adhering with contingency approach by constantly searching for the needs of external environment needs and adjust with their internal operations, however, to be beneficial change, further analysis of change management approach is required.
Amazon is applying the contingency approach to implement the change and incorporate robotics technology in the warehouses. During the lockdown, Amazon faced huge demand from the buyers. However, being unprepared to handle such rush from the consumers, Amazon could not deliver the goods to their consumers within two days. They were not adequately equipped to tackle huge market demand. This is the time when Alibaba, a close rival of Amazon managed to get some of the loyal customers of Amazon, who were in urgent need of some products. The pandemic made online shopping the most convenient option. People avoided going to malls and stores for purchasing goods. They preferred sitting at home and making online orders for their required products. To manage the rising market demand, Amazon felt the need to implement robotics technology in its warehouses. This would help to stock goods more systematically and address to the changing customer demand. The company however, has to keep certain contingencies in mind. The change can be implemented successfully and the desired results can be generated only when the change is made keeping the contingencies in mind. The change should also be consistent to the need of the business environment. The organisational goals and the change need to be aligned. Amazon will be able to reap the maximum benefits from the robotic-based warehouse, if its needs are met.
Gaps in Change Implementation Approach
Every theory when applied in real life setting has its own limitations. The contingency theory hasits drawbacks when applied to change management. No approach or theory can be best suited for any organisation, and Amazon is not an exception here. The reason is no single theory or approach could resolve all the complexities of daily organisational activities (Heide et al, 2018). The contingency approach highlights organisational structures rely on the situational variables such as environment, size, technology and competitiveness that organisation is facing in its external environment (Bernes 2020).
Therefore, organisation effectiveness is highly dependent on how managers implement in aligning organisational structure to mitigate against the adverse effects of situational contingencies. There are certain drawbacks of the contingency theory when applied to change management. In order to attain a good performance, Amazon needs to analyse the situation logically. The organisation has to adopt to the contingencies and organisational structure so that they can execute a change. The change must be aligned with the organisational size, structure, environment, and technology (Al-Ali et al, 2017). The evaluation of the contingency theory signifies that there are some gaps in the theory and the real time contingencies or factors. The contingencies include the technology, organisational size and environment. Considering the size of organisation of Amazon, the application of the robotics technology and the formation of the fulfilment centre is useful. However, evaluation of the level of technology and external environment suggests that most of the organisations, employees and customers are not that tech-savvy to easily adapt to the system of the robotic fulfilment centre. Thus, following the contingency theory shows that there lies some gap between planning and adaptability or implementation. While considering the contingency approach it can be stated that this approach also has some drawbacks. One of the contingencies that affect the adoption of a change is the monitoring over theworkforce. The fulfilment centre would generate employment for 1,500 people. However, to put the fulfilment centre and the robotics in use, the demand for automated shopping in Australia, the level of technology of the country and the investment factors need to be taken into account. While implementing the changes, to overcome this gap in thought and application, the circumstances or situation must be accounted for. The change once implemented implies a transformation in the circumstances. Thus, to adapt to the changed circumstances the organisational structure needs to be appropriately accepting and flexible. To bridge the gap between plan and action, the managers or leaders of the organisation, here Amazon, have to collect the data on the variables that are situational. This data needs to be interpreted and analysed. The structural options of the organisation have to be matched with the situational variables so that the organisation is able to implement the change successfully. The situational validity must be accepted and the change has to be put into effect to bring about the system or structural change across the organisation (Matthews et al, 2018). The gap analysis suggests that the drawbacks arise due to problem in relating the performance to the organisational structure. The other limitation of applying a theory is that the definition or implication of technology, environment and size of an organisation keeps varying. The organisation’s political and cultural nature has to be taken into account while planning for a change in the organisation. The exact relationship between the contingencies and the organisational performance should be analysed to understand the basis of this gap.
Recommendation for Organisation
Greer, Ford and W (2009) suggested to be successful change, organisation should adhere with not only external shifts in process, systems but also internal shifts in employee’s values and behaviours. To cope with turbulent, uncertain business environment, emergent approach is the most appropriate to implement the change. Hence, Amazon should adapt emergent approach which emphasize on management of organisational structure, culture, learning, managerial behaviour and policy aligned with the change within dynamic and uncertain business environment (Burnes 2017). In emergent change implementation, managers encourage the staffs to adapt new ways of working styles in line with aim of policy to achieve the goal (Lurking and Linge 2015).
As per Chidiac(2018), emergent approach refers to the approach to a change in which the change in accommodated. Amazon has brought about a change by introducing robotics. Now, this change requires to be incorporated into their system. Through the application of emergent approach, Amazon can list their set of actions or desired behaviour which will be welcoming for the change. The emergent approach will also help Amazon to outline a pattern which was initially not intended to address the change. There are certain steps which could be followed by Amazon to implement the change effectively within its system. For making the organisational change successful, there is the need for the management to support the change (Eden, Ackermann & Vito, 2021). While informing the staff and interacting with them about the change, the management needs to show their involvement and level of support towards the change and how intensely they want the change to be incorporated. The second way is to create a case for the change. There should be a valid cause for the change which needs to be reflected either in customer service reviews or market demand statistics (Wee& Taylor, 2018). In this case, the increase in demand for products and management of huge number of customers is the factor driving the change in Amazon. The other way is employee engagement, which means involving the employees in the process of change. Amazon should try to involve its employees so that they take increased interest in adapting to the change.The management of Amazon should communicate the change effectively to its employees and further monitor its implementation. Once the robotics technology is introduced, the change needs to be evaluated. The management of Amazon needs to follow up and check on the outcome of the change. Through the application of these change implementation strategies Amazon can successfully implement robotics to its business process.
It has been inferred that reaping rewards in a company takes place only when change takes place at the individual employee level. It could be concluded that a contingency theory acts as an organizational theory that helps to rearrange a corporation. This in turn helps to direct a company thus making fruitful decisions. Change influences almost every organization at the transformation level. The report reflects on the fact that a framework is established by change management that is regarded as the starting edge in implementing change. A proposed change in a company relies on particular theories that describe the diverse stages related to change management. The change must be aligned with the organisational size, structure, environment, and technology. The structural options of the organisation have to be matched with the situational variables so that the organisation is able to implement the change successfully.It could be concluded that in order to comprehend the ultimate objectives, it is required toregard organizational strategy. The goal of any change as well as transformation inside an organisation is with the drive to accomplish the organisational goals or developing the performance of the organisation. The intervention of any theory depends on the change that cascades from highest management level within a company. This in turn influences the ability of a leader who is able to set positive examples. It could be concluded that in order to accomplish competitive advantage over competitors it is imperative to initiate change management procedure. It is interpreted from the report that change of the technological level as well as external environment initiates the fact that most of the organisations, employees and customers are not that tech-savvy. As a result, it becomes difficult to easily familiarize to the system of the robotic fulfilment centre.
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