When thinking of technology companies, traditional players such as Apple, IBM, or Microsoft first come to mind, with overlapping and non-overlapping product offerings between them. Amazon, however, has carved a space for itself within this industry throughout recent years. At its inception, Amazon’s IT organization likely served as a necessary utility while also providing business value in maximizing the efficiency of its supply chain which the internet retailer leveraged to associate its brand with quick purchasing and delivery. As Amazon furthers what appears to be a jack-of-all-trades strategy in terms of its business, the firm has produced its own IT-reliant products such as the Echo device and has begun offering IT infrastructure services to both enterprise and non-enterprise clients with Amazon Web Services. By doing this, Amazon transformed its IT Organization into one that more directly generates revenue for the firm (IT ”is” the Business). What makes the firm unique in comparison to the above mentioned competitors, however, is the diversity of its lines of business that also require its resources. Can Amazon compete with other technology companies in the long term while maintaining a competitive edge in its other businesses?
Zara, a Spain-based fast fashion company, has dramatically disrupted the way luxury brands operate. Fast fashion brands like Zara and HM operate in a much more agile manner compared to traditional designer fashion brands, who typically have a very silo-ed structure. “Zara effect” is a concept used by those in the fashion industry describes the tendency of customers to check back in more regularly for new product, which has increased the pace of the current trend cycle. The agile structure of Zara means the company can more quickly produce fashion goods that meet customer needs and desires. Luxury brands are restructuring to better use customer data and become more adaptable, modeling after start-ups. High end brands are also investing in tools like AI software and other data-parsing technology. Luxury brands have prime opportunity to adjust their organizational structure due to their creative industry.
Microsoft’s organizational structure is classified as divisional. It’s broken down into two divisions: engineering and business. One advantage the arises from this is the elimination of bureaucracy in the business processes which grants more flexibility. This organizational restructuring took place in 2016 and resulted in the elimination of 7,400 jobs resulting in cost savings for Microsoft. Another advantage is that the specific divisions can specialize in the tasks they perform resulting in greater levels of efficiency. By breaking apart the products into different independent and self-sustaining sections allows Microsoft to create great products and innovate using their core competencies. Product innovation is highly encouraged as well as the implementation of features that can help the end consumer. While Microsoft has not been creating groundbreaking innovation, they support systems that great majority of the world use every day. A disadvantage that comes with this new structure is that there is a greater separation between the technical and business employees. Additionally, because each division functions independently, they need a competent manager that understands the product or service offering for the division well. What other advantages or disadvantages do you see from this structure? Is there anything Microsoft can do to improve?
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Netflix is well known for its flat, organizational circle structure. Employees are given more freedom and responsibility than those at other companies, which is evidenced by the unlimited vacation days and lenient expense account policy. Netflix avoids top-down decision making and seeking management approval for everything. These practices are characteristic of a traditional bureaucratic organizational structure. Instead, the company values high employee performance and excellent work. The company believes that in order for employees to perform well, they should be given the freedom to make their own decisions and dictate their schedules. Even though the company may be less rigid about certain policies, the work environment at Netflix is not as “chill” as one might expect. According to Netflix’s former Chief Talent Officer, Patty McCord, the culture is “intense” and there is a lot of “pressure” (View the Source Here). Employees are expected to perform at an exceptionally high level. Managers are required to periodically perform a keeper test. For this test, the manager imagines that one of their team members is thinking about leaving Netflix for another company. She then must assess whether she would fight hard to keep that person. If she answers no, that person is promptly removed and offered a severance package. Netflix doesn’t support keeping “B level” employees. So even though Netflix may have a flexible organizational structure, there is a trade-off between freedom and stability that employees face. Would you like to work in a Netflix type of environment or would a job that offers more security and stability appeal to you more? What would be the benefits/drawbacks of each?
Amazon recently announced that it will now be offering free 2 hour Whole Foods delivery to prime members in select states. This announcement is not very surprising, ever since Amazon acquired Whole Foods last summer people have been expecting some sort of service connecting amazon’s distribution expertise and Whole Food’s products. This also is not even an innovative service, the grocery delivery market is already a very competitive space with many other companies likely to join in as well. So it would appear that Amazon has an uphill battle ahead of them in order to be market leaders here, but is that the only way they would consider this service a success?
When looking at this from a systems thinking perspective getting involved in this market is likely only a positive for them. By providing this service they continue to give people more and more reasons to do all of their shopping from home. Groceries are an essential for everyone and for those who have not already switched to grocery delivery this Amazon/Whole Foods deal might change that (especially if they are loyal Whole Foods customers or already Amazon Prime members). So with customers no longer leaving their house to shop for their groceries many will decide to also buy other supplies online that they would typically get on the same trip and amazon has those supplies. Also by adding this service they gain more customer data which can enhance their advertising and algorithms on their customer’s interests (which is already a strength for them). Even if Amazon gets stuck in the pack of many companies providing grocery delivery services, the continued push towards complete online shopping that this move represents is a positive for them. As more customers get used to never leaving the house for shopping, Amazon will have more potential customers in the market they already dominate, online retail.
After the US Tax Cuts and Jobs Act, CVS Health has made improvements to its business. They are making changes to their employment systems. This act allows them to share in the tax savings. CVS Health has decided to invest in three programs that will enhance their employee benefits and wages. One program is meant to increase the starting wage for hourly employees. This change will affect almost all employees, regardless what department they work for. The second program will allow for affordable health care. CVS will not increase premiums and absorb entire cost for medical and prescription costs. Lastly, the final program allows for paid maternity leave for up to four weeks. This is a new addition to the company benefits.
With these changes, CVS Health is aiming to create long-term and sustainable changes. It is “part of their ongoing commitment to their patients, customers and communities [they] serve…” They want to show that they value their employees. It is due to them that the company strives each and every day.
There is often heavy debate over the aggression from big companies towards Mom and Pop shops, as often it is seen as overly ambitious and even malicious. The simple fact is that these small companies usually don’t put too much of a dent in the corporate giants of whatever industry they’re in, and therein lies the outrage from the public. The same principals at play in these scenarios, however, don’t necessarily apply to Google, despite their enormous size and scope. Enter Just Dial, a local search engine who’s stock rose 9% when rumors spread that Google was to purchase the company. Although they have denied any such claim that there was a buyout present and even proclaimed news sources were incorrect in this allegation.
Some would wonder why Google would even bother with a local level search engine, as it couldn’t possibly be doing enough damage to Google to even make a blip on the radar. The fact of the matter is, with some of these smaller options, the search giant actually does. Many of these localized search engines and other apps (food, travel, etc.) have really began to attract popularity due to their end-to-end process handling as well as the local depth these smaller search engines are able to achieve. Where once Google was the answer for any question you might have, even in regards to your plans for the evening, today is a different day and age. Apps run everything and people have an insane variety when it comes to options. While current capabilities of these smaller apps include transaction processing, listings and discovery platforms, and greater depth than Google can offer.
The point is that whether this allegation is true or not (as we are never sure in events such as this), it would make sense for Google to make such a move. Enough local engines/smaller applications on the market with the greater depth and insight compared to the high level Google could eventually cause damage to the company, and they should be slightly worried at varied rates throughout the world as different populations become more adept to other options.