The Governance Structure of Amazon

Amazon’s Origins and Early Success

Amazon was founded in 1994 with its original name as Cadabra. The name was later changed to Amazon due to the many mispronunciations which depicted a different thing. Jeff Bezos followed his instincts by following the benefits of the internet boom as he was looking for something that would fill the gap. Bezos indicated that he wanted his brand to remain unique and exotic as a way of making it globally competitive. As he was perusing through his dictionary, he came across the name Amazon, which he thought it represented the name he wanted for his business, thus named the company after it. He went ahead and procured a domain that was then Relentless. It was later renamed after he started doing business in 1995. The company went online in the same year and started its operations.

Entering the Book Market and Early Success

There were several deliberations on the company, where it started its operations as an online bookstore. There were many reasons why Bezos choose to specialize in books such as the high demand for literature, which was experienced all over the world (Rossman, 2016). The bookstores were however limited geographically. Moreover, the large number of titles was put online and made available to the customers. Due to the fact that the books did not have to get printed, it made the books cheaper as the prices were down. There was a deal that was however struck between Amazon and Ingram book which saw the books being sold online by Amazon (Bernstein, 2015). The idea was profitable as it did exceed the sale for most of the bookstores within the first two months. The trend continued regardless of the anticipations by the rivals that it would fail as it was an internet bubble, but on the contrary, the business continued to flourish.

Expansion into a Global Marketplace

The current position of Amazon

The initial growth of Amazon encouraged the team to continue working hard and initiating the strategies as a way of exploiting the market and getting the returns. The items which were traded by amazon changed as the company diversified its products and started selling a wide range of products. Moreover, it covered most parts of the world so long as there was internet connection (Bernstein, 2015). The range of products that Amazon offered was categorized into two. The continent part entailed the videos and literature material. The virtue store for Amazon contained videos and books, and the buyers could access the books by paying the fee for the cost of the book. The main merit of this strategy is that millions of people could access the same content at the same time (Parilla, 2017). Moreover, there was no limit on the number of books which could be stored. The readers had access to millions of books where they could select the one that they chose to read for an affordable fee. The buyers also had the option of streaming videos or downloading the ones they wanted after they cleared the fee attached to it. The merchandise part had a variety of products. The perception of Amazon was to connect the buyers and the sellers (Cowles, 2016). The sellers would contact Amazon for the products they sold and Amazon would act as though it was the one selling the product. Most of the products which were sold by Amazon or on display were not actually in the stores for the organization. Amazon only acted as a virtual store for the digital access. It was up to the sellers of the products to store them and supply the product after the company made an order.

Technological Advancements and Acquisitions

Amazon has gained a reputation as an organization that uses the leading technology globally. Due to the fact that it uses technology to sell, most of the available products were made available to the world in the click of the website where there was an internet connection (Rule, & Tskhay, 2014). There were several acquisitions which were made in strengthening the position of the company. Most of the acquisitions were based on companies which used technology. Most of the organizations that Amazon has contact with include Elemental Technologies, Cloud9IDE as well as Quicksilver Solutions. Most of the technology organizations procured by Amazon were taking the market share or sharing it with now the mother company. Others which were procured also helped to transact using the online stores, for instance, EMVANTAGE. The organization used the internet payments to facilitate an easy trade for the transactions (Strauss, 2016). Additionally, the strategy of online payment would help to increase the profits and the amounts that were charged by the payment companies so as to generate the profits for Amazon.

Governance Structure

Board of directors.

The top management of Amazon Inc is headed by four people. The president of the company is also the chairman of the Board. Jeff Bezos takes the position of the chairman and is the company president. The company has three vice presidents who represent the various departments at the company. They are also referred to as the senior vice presidents according to the department which each of them represents. The company structure gives an overview or scope in the way the company operates. One of the departments of the organization is the web services. The department is tasked with the role of ensuring that the servers are working in the right manner (Bernstein, 2015). The web department is also tasked with ensuring the services are operating normally and is headed by Andrew Jassy. The second department is the business development department. The department is tasked with getting the insights of the channels where the company can venture into. It also monitors the activities of the competitors and the recent developments which are taking place through the internet (Rossman, 2016). The main objective of the department is to establish ways where the organization can grow and is headed by the senior vice president Jeffrey Blackburn. The third department is mandated to look after the international consumer. The department seeks at finding the needs of the consumer which are ever growing in the consumer base in the United States and beyond (Parilla, 2017). Though there are several virtual products which can get delivered at any place, it is important to ensure that the merchandise is delivered to the right consumers. In case there are specific jurisdictions to the products, the department analyses the laws to ensure they are followed and at the same use the logistics to ensure efficiency in the operations of the company (Kantor & Streitfeld, 2015). It is paramount to include a department that looks after the market demands of the international consumers, and this is the department concerned with concern. It is headed by the senior vice president Diego Piacentini.

The company has a board which advises the company and ensures the affairs are running on as required. It is important to note that the company President and the rest of the vice-presidents are part of the board of the organization. The rest of the board members as of the year 2017 included Bing Gordon, John Brown, and Tom Alberg. Most of the members who are part of the board have been attached to the organization for a long time, for more than ten years.

External Environment and Competitors

Amazon operates under a technological market. It is a market leader and is one of the most competitive organizations despite having other established players. The new entrants into the market are also taking the market share of the Amazon market. Some of the established competitors of Amazon are Samsung, Sony, and Apple.

Samsung is one of the leading companies in manufacturing electronics and distribution in the world. Just like Amazon, Samsung has a large market presence in the world. The distribution network for Samsung enables it to have its products within a close range of where the consumers are. Among the major similarities between Samsung and Amazon is that both organizations sell electronics (Parilla, 2017). Amazon, however, sells the electronics made by the other companies as Samsung takes a portion of the profits. The competition between the two organizations is however skewed towards Samsung, which manufactures the products and sells them. The skewness is as a result of the fact that Samsung benefits from all the profits from the sale of the electronics. This makes Amazon sell the same products at a higher fee so that it can benefit from some profits for the same products (Clarke, 2016). Amazon needs to make arrangements with manufacturers of the electronics so that they can extend their sales to the consumers. When the customers are purchasing the products, they take into account that Samsung is the manufacturers and choose Samsung company over making purchases over Amazon.

Sony deals with the manufacture of electronics. Moreover, it is concerned with the production of entertainment products, including videos and music. The fact that they develop their own products offers direct competition with Amazon. Although Sony is dealing with the sales of its electronic products, there is a stiff competition in business resulting from the sales of videos and music. The motion pictures are sponsored by Sony in the production of movies and films. Amazon gets the same products and puts them on their website for selling to the masses. Amazon is only concerned with the sales of the products produced by Sony, while Sony is concerned with the distribution (Strauss, 2016). Amazon has, however, popularized its name as a large distribution point. Most of the consumers are likely to look for the products which are sold at Amazon. Moreover, Sony has invested its resources in the production of music and movies through the internet. The move has helped Amazon get an upper hand as the two companies try competing in the entertainment market. Notably, most of the movies and music produced by Sony are made through compact disks, which have become obsolete due to the advanced technology that people have adopted in the world. In the present day, people have turned to streaming videos and music. This has helped Amazon gain a competitive advantage over Sony and thus won the distribution battle for entertainment products.

Apple company manufactures and sells electronics and other electronic products. Amazon is a retailer of the products, including the products produced by Apple. Both Apple and Amazon have a similarity in that both companies deal with the sale of videos and electronics. The competition of the two companies has been on the streaming of videos. Apple charges its customers for streaming products through iTunes. The products are locked and stick to Apple since the consumers require having Apple gadgets to use iTunes. The aspect has created the monopoly of the product to Apple and offered stiff competition. The owners of the videos, however, do not restrict where their music and videos are sold in the market (Ryan, 2016). The sale of videos and music is such a lucrative business with each of the companies hoping to have a larger market share. Although Apple has an upper hand in the sale of videos and music, it has put strategies to ensure it gets the larger portion of the potential market, thus making Apple ahead of Amazon. Apple has also innovated Apple Television that has captured the advertisements and thus generating more profits. Amazon, however, has a limelight to sell Apple products. They have set the price that the customers should purchase their products and hence limit the opportunity of Apple making additional charges and increasing the profits. It makes it difficult for Amazon to compete effectively with Apple.

Internal Environment and Sales Taxes

Sales tax and Amazon

Every corporation has an obligation to pay taxes. There are various types of taxes which need to be paid. The sales tax involves the taxes paid for what the consumer pays. The impact of this is the increase in the price of the products which are purchased. All the retailers in the United States are required to get the sales tax from the final consumer (Rossman, 2016). There are no guidelines, however, on which procedure may be used to approach the sales tax issue. Amazon has been unable to collect the taxes from some states for the products which they sell. The absence of the sales tax for some of the products has made the commodities cheaper. The requirement is, however, to ensure that all the players use the same rules to run their operations in the business world (Rule, & Tskhay, 2014). The failure of Amazon to collect the taxes has given the company an unfair advantage over the other retailers. The impact of the move will result in the federal operating from another stream of revenue where the government derives its funds.

Recommendations for Amazon

Same day delivery

Amazon operates an online shop where they can do their shopping. The issue of the time which it takes to take the shopping to their homes has been a concern due to the increasing entrants in the market. Due to this reason, Amazon needs to adopt the strategy of the same day delivery in order to end the anticipation of waiting for some products by the customers (Kantor & Streitfeld, 2015). It will help to gain some confidence in the company and increase customer loyalty for the consumers who purchase their products on Amazon.

Sale of Kindle

Kindle is a technological tool that helps learners and book lovers access their preferences. The device has features which help the reader to listen to the content from the gadget. The information, however, is different from what is contained in the books and papers. The foreseeable future has indicated the increase in demand for the gadgets (Kotler, 2015). The tool is created in a way which will ensure the users do not have to carry the books they need and hence is an important element that is not likely to lose value in the future. Amazon should not contemplate selling the innovation since it has not realized the actual value and is expected to increase in price in the near future.

Streaming content

The shift from traditional means of receiving entertainment to digital technology has facilitated easy access to the products that Amazon sells. There is a significant decline in the purchase of flash disks and compact disks since consumers are seeking to use the internet and stream the content they require. Amazon should capitalize on its business activities from the sale of CDs and flash disks and invest the resources in streaming technology as a strategy of benefiting from the available market (Bernstein, 2015). The people who produce such content such as Amazon should find ways of expanding their business venture and ensure the consumers get the right content. This will help the company to compete competitively and gain an advantage in the limited market share.

Other recommendations

The internet has spread to most parts of the world. Due to the element of the global market base, the management and the board of directors should consider expanding their market in the rest of the nations and set up business sales points in the rest of the world. This will help to increase the profitability of the organization. Moreover, the organization should consider the sale of advertisements through its website, which is another component of the digital technology generating profits (Ryan, 2016). The main objective of the organization should be to diversify the methods of delivery of its products, mainly videos and streaming music, to ensure it reaches a large market scope.

Conclusion

Amazon is an organization that has built its market base based on technology. The organization has taken advantage of the availability of the internet to market its products globally despite the changing dynamics of the market. The company is headed by a president and three vice presidents who represent the various departments in the operations of the company. The company president is also the chairman of the board. The organization initially specialized in the sale of books and videos but has increased its capacity and efficiency to sell other products such as electronics. Some of the factors affecting the external environment include competition from established companies like Sony, Samsung, and Apple. Amazon has, however, found a way of dealing with the external factors affecting the business. The internal factors affecting Amazon include the sales tax generated from the sale of the products. Among the recommendations for helping Amazon gain a competitive advantage include same-day delivery for products, shunning the sale of Kindle, and increasing the streaming content due to the changing dynamics of the market.

Reference

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