Amazon Organizational Structure- All About Amazon

Getting Introduced To Amazon

Amazon, located in Seattle, Washington, United States is a multinational e-commerce company that also rules the worlds of streaming media, cloud computing, and Artificial Intelligence (AI). It employs lakhs of employees across various countries and continents. Let us have a look at the Amazon Organizational Structure.

Amazon was founded in July 1994 by a business tycoon named Jeff Bezos. The journey of this huge enterprise started from a garage. It was meant to sell books online. Music and books had much demand at that time. However, its growth has been irresistible since then.

Amazon’s Organizational Structure

It is a vertical and hierarchical top-down approach. Such a top-down model seems to be rigid that cannot be changed easily. But Amazon has handled that effectively. The top-level executives take the main decisions making it look more like a bureaucratic structure. Amazon was started as a simple lean structure but then turned into the hierarchical one.

1. At the top lies Jeffrey Preston Bezos(Jeff Bezos), the President, Chairman, and CEO of Amazon.
2. Then there is a group of following senior employees:

• Brian Olsavsky. He is the Senior Vice President (SVP), Chief Financial Officer (CFO).
• Andrew R. Jassy is a part of the Amazon Web Services. He works as the Chief Executive Officer (CEO) and the President there.
• David H. Clark works as the CEO of the worldwide consumer business of Amazon.
• David A. Zapolsky, the Secretary, SVP, and General Counsel (GC) of Amazon.
• Beth Galetti. He is the Senior Vice President of Amazon’s Human Resources.
• Shelley L. Reynolds. She is the worldwide controller and the Vice President of Amazon.
• Adam N. Selipsky is the CEO of Amazon Web Services.
• Christine Beauchamp. She is the President of Amazon Fashion.
• Jay Carney. The chief of the Public Policy and Communications of Amazon.
• Greg Pearson. Vice President, of Worldwide Commercial Sales at the Amazon Web Services (AWS).
• Carla Stratfold. Vice President, Amazon Web Services Global & Strategic Accounts.

3. This little team of top executives is directly answerable to Jeff Bezos. Along with Jeff, this team sets the goals for the company, solves the problems, and shapes the future of the company.
4. These members are the heads of their respective departments and they properly understand the processes related to the same.
5. These highly experienced executives are not replaced regularly. They mostly continue to be in the same position even for decades.
6. In this way, ‘diversification’ has played a vital role in enlarging the business.
7. The international headquarters are provided with independence to a certain extent to follow a local approach according to the audience. Divisions are clearly defined for international operations.
8. Still, the size of a team has to be limited.

Here comes the ‘Two Pizza Rule.’

The Two Pizza Rule

• The size of the teams working on the projects should be limited enough that the team can be fed only with two pizzas. The size of the team is limited to up to 8 or 9 people.
• This strategy is said to be the secret of Amazon’s success that makes the meetings more effective.

Advantages Of The Two Pizza Rule

• The team members get more engaged and feel free to express their ideas. The members have to interact with a few people allowing the decisions to be taken faster.
• No two teams will be working on the same domain. This will save time.
• The team members get more innovative as ideas are shared freely in a small team. Thus, no team member will feel suppressed or lost.

Disadvantages Of The Two Pizza Rule

• Much independence may break the data flow amongst the various teams.
• The team members working on a certain project should have complementary skills.
• If transparency is still not maintained, and good communication tools are not used, they may face a challenge.
• Feedbacks have to be given regularly by every member. So, every member has to be active.

The Three Primary Components Of Amazon’s Organizational Structure

1. Geographic Divisions And Subdivisions

• The only two geographical divisions considered here are International, and North America whereas, the company is popular globally.
• The company’s business goals and physical geographic locations are considered here.
• Amazon’s e-commerce section can be managed by the details and the challenges of these locations.
• Thus, the issues of various geographic regions can be handled individually with efficiency.

2. Global Hierarchy

• This approach has become popular as many organizations use this.
• Consider the scenario where Jeff Bezos is at the topmost position and a team of particular members work directly under him. They are answerable to him.
• These important team members further affect the flow of the business.
• This approach provides managerial control to Amazon.

3. Global Groups On The Basis Of Function

• This is considered a powerful part of the organizational structure of Amazon.
• The main objective here is to efficiently enhance the management of the e-commerce operations of the company.
• Every major business consists of a senior manager such as the CEO or SVP and a committed team working under the senior manager.
• This may also help the company to set up its operations effectively in new markets.

• In Amazon’s Organizational Structure, Following Are Some Main Function-Based Groups:

• Accounting. This comes under VP Shelley Reynolds.
• Business Development. This comes under the SVP Jeff Blackburn.
• Legal and Secretariat. This is managed by the SVP David Zapolsky.
• Amazon Web Services (AWS). This is handled by the CEO Andy Jassy.
• Consumer Business, headed by David H. Clark.
• CEO office. This directly comes under Jeff Bezos.
• Finance. This comes under Brian Olsavsky, the SVP, and the CFO of Amazon.
• Corporate Affairs. This is managed by Jay Carney.

Advantages Of The Organizational Structure Of Amazon

• The organizational structure is stable as it has boosted the development of the company worldwide.
• Managerial directives can be implemented faster.
• The economic and e-commerce issues in various geographical regions can be handled separately.
• The stakeholders, the executives, and the managers can be addressed quickly.
• The primary focus is on the results instead of the process.

Disadvantages Of The Organizational Structure Of Amazon

• There are limitations when it comes to responsiveness and flexibility in the structure.
• The dominance of the top-level members has to be reduced. Otherwise, it becomes difficult to respond to various new issues emerging in the e-commerce section. This can be termed the bureaucratic approach. 
• The regional offices can be provided with more power to solve this issue.
• The employees may end up relearning the stuff they already know due to a lack of functional expertise.

Conclusion

• The primary objective of having a particular organizational structure for Amazon is to boost the performance of every employee in turn boosting the efficiency of the projects.
• However, Amazon follows a vertical hierarchical approach.
• These efficient projects will lead to an increase in sales and profit across the globe.
• The top-level executives are chosen according to their dedication in the respective field, their experience, their knowledge, and much more.
• Customer satisfaction also plays the principal role in taking the company ahead.
• Company’s Organizational structure complements its objectives. Thus, the company can face its competitors and various online and offline processes.

Frequently Asked Questions

1. There Are Different Job Levels At Amazon. What Are They?

Answer:

• At level 4(L4) lies the Software Development Engineer-I.
• At level 5(L5) lies the Software Development Engineer-II.
• At level 6(L6) lies the Software Development Engineer (SDE)-III.
• At level 7(L7) lies the Principal Software Development Engineer (SDE).
• At level 8(L8) lies the Principal Senior Software Engineer.
• At level 10(L10) lies the Distinguished Software Development Engineer(SDE).

2. Is Divisional Structure Present In Amazon?

Answer:

Yes. The divisional structure is present to provide the services with high quality. These services are specific to each product. But, when it comes to enhancing the coordination and communication between the departments, new approaches will be required.

3. Does Amazon Have A Matrix Structure?

Answer:

Yes. Matrix structure is the blend of the Divisional and the Functional structure. The employees here have more than one head employee. This approach is useful when different types of services, as well as products, are provided by a company.

4. What Are The Positive And Negative Of The Matrix Structure?

Answer:

Positive points of the matrix structure:

• The working environment is collaborative. Various departments can communicate on a project because the employees are answerable to many managers. Thus, the issues are solved quickly.
• Increase in teamwork. This is because the employees work on various projects collaborating with various departments.
• Results in the individual growth of the employees. While working across various departments, the employees get exposed to various ideas, perceptions, and rules. Thus, they get to learn something new every time.
• Resources can be used at their best. When used properly across various projects and various departments, the resources.

Negative points Of the matrix structure

• Decreased effectiveness of the work. Since employees work across various projects, they have to prioritize every task. This creates ambiguity.
• Conflicts between the managers. As employees have to answer various managers, they may come across a diverse set of rules at the same time. One manager may not approve the work done under another manager.
• Effect on the company’s budget. The company has to pay many managers working on different projects.