Amazon’s organizational structure enables control in global operations. This corporate structure establishes the system of interactions among personnel, offices, divisions, departments, and resources in the IT, e-commerce, and retail company. This organizational structure supports subsidiaries, such as Whole Foods Market. Also, Amazon’s structure adapts to enterprise diversification. This business structure helps withstand retail and e-commerce competitors, like Walmart, eBay, Home Depot, Aldi, and Costco, as well as IT and consumer electronics firms, like Apple, Google (Alphabet), Microsoft, Samsung, IBM, and Intel. Moreover, Amazon’s company structure supports competitiveness against entertainment content producers and distributors, like Netflix, Disney, Sony, and Facebook (Meta Platforms). These firms necessitate a business structure that addresses the diverse competition examined in the Five Forces analysis of Amazon. The company’s organizational structure facilitates strategies that strengthen business competencies.
The benefits of Amazon’s organizational structure include support for managerial control. This control facilitates strategic management initiatives in the information technology business. Thus, the business structure contributes to the strengths detailed in the SWOT analysis of Amazon. The characteristics of this company structure also provide support for new product launches in the e-commerce market, as the corporation diversifies its operations. In this regard, the fulfillment of Amazon’s corporate mission statement and corporate vision statement partly depends on the design of this organizational structure.
Organizational Structure Type & Features of Amazon
Amazon has a function-based organizational structure. This company structure uses business function as the main basis for determining interactions among components of the organization, in contrast to other organizational designs and organizational structures wherein variables, like market location, dictate corporate management decisions, strategies, and control. Amazon’s structure has the following characteristics:
- Global function-based groups (most significant structural feature)
- Global hierarchical structure
- Geographical divisions
Global Function-Based Groups. Function-based groups or departments are the strongest characteristic of Amazon’s organizational structure. Each major business function, such as Consumer Business, has a dedicated group or team, and a senior manager. A strategic objective in having this structural characteristic is effectiveness combined with efficiency in Amazon’s operations management throughout the organization. Function-based grouping in the company structure affects resource availability for various areas of operations, such as consumer electronics design and development. Through this feature of the corporate structure, the company grows with support for establishing new market operations, as described in Amazon’s generic competitive strategy and intensive growth strategies. This corporate structure reflects traditional organizational design that focuses on basic business functions relevant to information technology, retail, and e-commerce. The following are the major function-based groups or departments in Amazon’s organizational structure:
- Office of the CEO
- Business Development
- Worldwide Amazon Stores
- Amazon Web Services (AWS)
- Finance
- International Consumer Business
- Accounting
- Consumer Business
- Legal and Secretariat
Global Hierarchical Structure. Hierarchy is a traditional organizational structural characteristic applied in Amazon’s organizational design. This hierarchical structure is expressed in terms of a multinational system of vertical lines of command and authority influencing the online retail firm. For example, senior executives’ directives are passed down through the company structure, from the headquarters to lower-level managers in online services, inventory and warehouse management, and other business areas. These directives are then applied throughout the organization, affecting all relevant offices of the e-commerce company. A strategic objective of this feature of Amazon’s organizational structure is the facilitation of managerial control of the organization. The effectiveness of these function-based groups in the corporate structure relates to human resource support for vertical lines of command in online and brick-and-mortar operations. Amazon’s organizational culture (work culture) influences how corporate activities and human resources provide such support for this business structure.
Geographical Divisions. This organizational structure involves geographical divisions representing target markets for Amazon’s international business. In this structural characteristic, divisions are based on geographical regions and related business goals for retail, Internet-based services, and consumer electronics. These divisions of the corporate structure facilitate the management of the regional trends, opportunities, and threats described in the PESTEL/PESTLE analysis of Amazon. In this regard, a strategic objective in having this characteristic of the organizational structure is enabling the e-commerce company to address issues relevant to each geographic region, considering differences among regional markets. These divisions of the business structure influence how strategies and tactics are implemented in Amazon’s marketing mix (4Ps). Thus, this aspect of the organizational design determines the success of strategic plans for providing goods and services. Amazon’s corporate structure has a simplified approach for this feature, involving the following geographical divisions:
- North America
- International
Implications, Advantages & Disadvantages of Amazon’s Structure
Amazon’s organizational structure supports business growth in the international market. The e-commerce company’s success in expanding its business is an indicator of the suitability of this corporate structure. An advantage of function-based departments and the hierarchical structure is that they enable rapid and effective implementation of managerial directives from Amazon’s corporate headquarters. Also, geographical divisions are advantageous in terms of ensuring that e-commerce and retail operations strategically address the socioeconomic conditions of regional markets.
A disadvantage of Amazon’s organizational structure is that it has limited flexibility and responsiveness. The dominance of the global function-based groups and global hierarchy can limit the company’s capacity to rapidly respond to new or emerging issues and problems, such as security risks in online data processing involving some regions. Thus, an applicable recommendation is that Amazon consider reducing the dominance of these two characteristics of its business structure. The IT and e-commerce company can also achieve higher flexibility and responsiveness by increasing the empowerment or degree of autonomy of regional or local offices. Improving the company structure’s flexibility and responsiveness can help in satisfying Amazon’s stakeholders, in support of the company’s corporate social responsibility (CSR) and ESG strategies.
References
- Amazon.com, Inc. – Corporate Offices.
- Amazon.com, Inc. – Form 10-K.
- Amazon.com, Inc. – Officers and Directors.
- U.S. Department of Commerce – International Trade Administration – Retail Trade Industry.
- U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry.
- Wyland, R., Hanson-Rasmussen, N., & Clark, F. (2024). The structure-culture alignment activity: Aligning organizational structure elements with diversity, equity, and inclusion cultural values. Journal of Management Education, 48(1), 141-167.
- Xia, Y., Li, X., & Wang, X. (2023). The influence of organizational structure on the dynamic capability of enterprises: The regulating effect of technological innovation. Science, 11(2), 57-66.