Organizational Structure and Corporate Social Responsibility of Amazon Fresh

Introduction

Grocery shopping tends to be tiresome and time-consuming, especially if you live in a major city due to traffic delays on your way to the store or waiting in long lines at the store. To make grocery shopping easier just, most people opt to pick up fast food, eat at a restaurant or order takeout. However, all these options are not healthy and can harm one’s health. Some businesses have established online grocery delivery services. This helps maximize time and makes healthy eating more feasible.

Amazon Fresh is one of those businesses that exist to make your grocery purchase and delivery easier in the comfort of your home or office. Amazon Fresh is a subsidiary of Amazon.com which is an online company in the US that operates at the global level. Amazon Fresh was established in 2017 and currently operates in some states in the US, including London, Berlin, Tokyo, Munich, and Hamburg. Amazon Fresh offers grocery delivery services as well as other subset items from the Amazon.com storefront. Amazon fresh makes home delivery of items orders based on the time of the order and truck availability. The company also offers fresh foods from locally sourced products (Vanessa, 2015).

The company, which is currently operational in five regions, seeks to provide its customers with diverse access to various items while at the same time assisting in simplifying their lives. Through the creation of a new customer experience, Amazon Fresh aims to constantly set new standards for speedy and convenient deliveries. Amazon Fresh Company uses its technical team to build and maintain a scalable and homegrown system that can ensure the management of fresh product selection, same-day door-to-doorstep delivery, and mobile shopping. In other terms, the Amazon business team focuses on innovation on behalf of its clients. Some of the key Amazon Fresh competitors include Google Express, Instacart, Fresh Direct, Peapod, and Shipt (Liu, 2018).

The organizational structure of the company and its governance

Since Amazon fresh is a subsidiary of Amazon, Com Inc., the organizational structure followed is that of Amazon. Com Inc. The organizational structure provides extensive control of the company’s international e-business operations. Amazon is the largest e-retail business in the world, and it must maintain a governance structure that adequately supports it’s expanding reach. Due to this reason, the e-business has adopted a functional organizational arrangement that constantly ensures interaction among the organization’s components. The structure is divided into three key groups. The first one is a function-centered group which is the strongest Amazon’s organizational structure. Each major business group, such as the Amazon Fresh subsidiary, is allocated a dedicated team and a senior manager. The strategic goal for this level of management is to ensure that the organization has successful e-business operations throughout the organization. This section entails; the CEO, commercial development unit, AWS department, finance, global client business unit, accounting department, consumer business function, and the legal and secretarial unit.

The second level contains the global hierarchy unit. The global system has a vertical line of command and authority that is used to influence the online retail business. Through the senior management command, all the directives are passed throughout the organization’s relevant offices across the globe. The objective of the global business unit is to enable managerial control for Amazon’s fresh and the entire business (Dudovskiy, 2018). The most basic organization structure of amazon fresh is the geographic unit. In this division, Amazon fresh uses geographic divisions to make it simpler to manage and control e-business activities according to the economic situation in each particular region. Currently, there are only two key geographical units, which are North America and the international divisions. The strategic goals for the geographic organizational structure are to empower the firm with the capacity to address issues and concerns relevant to each economic and market condition of each region.

Ethics and corporate social responsibility

Amazon Fresh’s CSR initiatives targets and intends to satisfy the interest of the main stakeholders, which are the customers, employees, and society. Amazon’s Fresh CSR gives the highest priority to its customers since they are the primary determinants of the company’s e-business success. The groceries clients’ main interests include fair pricing, convenience, and online security when making payment transactions. The company uses advanced information and communication technologies to ensure secure transactions and increase efficiency in order placement and delivery. Amazon also efficiently trains its employees to ensure that they maximize these technologies for better customer convenience. The company also maintains fair pricing by ensuring it stays competitive among the existing sellers in the online retail market. Amazon Fresh satisfies their CSR to their employees by continuously providing new ideas developed through HRM-guided development and leader training programs.

It also adheres to CSR towards its employees by providing the workers with high compensation policy, especially those who are directly involved in developing and maintaining the company’s e-business technological assets. The company also supports its employees learning and development ambitions by paying up to ninety-five percent of the tuition fee for their preferred career choice course. Amazon Fresh Company gives back to society through the Amazon smile initiative. Through this initiative, s certain percentage of the company’s revenue is donated to the customer’s preferred charity organizations so it can either support education, healthcare, or environmental conservation activities in the community. The company also has eliminated some of its packing material from society and now offers packing materials that are one hundred percent reusable (Dudovskiy, 2018).

The Amazon Fresh Company has an already established business code of conduct that ensures the firm’s business undertaking observes moral and ethical norms accepted by both the government and society. Amazon Fresh employees are always expected to act lawfully. Ethically and in the best interest of the organization. The established business code of conduct sets the guidelines for the workers, and whenever the members of staff find themselves in a dilemma of whether their conductor colleagues follow the set policies, they are supposed to conduct their managers or the legal division. Workers are expected to comply and follow all the applications with the law, rules, and regulations. Also, it is the employee’s duty to avoid conflict of interest by using judgment all the time in the best interest of the company. The firm has established disclosure guidelines whenever an employee receives gifts from a customer, supplier, or competitor. All the workers are also expected to closely follow and comprehend Amazon’s set insider trading guidelines.

It is the duty of the workers to comply with trading windows and obtain the relevant permission and clearance before trading the company’s securities. Under whatsoever circumstances, Amazon Fresh does not tolerate any form of discrimination against its employees, clients, and suppliers. All Amazon’s Fresh products adhere to health and safety policies. The company does not also allow its workers to have any form of discussion with its competitors on products and services prices, discounts, business operation terms, or market segments and channels. This aims at evading price fixing in the industry. Bribing is also illegal in Amazon Fresh. Amazon trading records, business reports, and financial statements must observe integrity and should always be maintained in appropriate detail.

The strategic leadership of the company

Strategic Leadership of a company will mainly focus on its competitive advantage and to be unique in the market with its own strategy applied to attract customers where there should be effective management that will look after the strategic making decisions. Amazon.com subsidy Amazon fresh brought up such a huge strategy to serve customers in terms of fresh groceries that the overall report exceeded $ 1.5 billion in 2017, as per reported by OneClickRetail states. Online USA grocery shopping is nascent yet. It takes only 1.5% of total grocery shopping, which shows it is still incipient. The below image shows the market of grocery in the years 2016 and 2017. Where using this as main consent, Amazon came up with a unique strategy to lead the market as Amazon fresh.
Source: Kantar WorldPanel.2016+2017

Having known the gap in this sector, Amazon took a strategic step ahead. They had good R & D, which they started in 2007 for testing the fresh in Seattle. They had to clean up the logistics issue, which had tied up the hands of many in the market; it came up as their strategy to stabilize the logistics and have a competitive advantage. Having been overcoming this challenge, they came up with fulfillment and delivery strategies to resolve the delay in miles issues. Amazon came up with a delivery strategy of 2-days delivery initially and then to 1-day delivery, but Amazon continued transforming the industry, launching 2-day delivery, then 1-day delivery, And then recently 1-2 hours delivery for a few concerned areas. Amazon’s timeline draws its own tremendous growth in this market either which may be the challenge of facing the click-and-collect strategy which was used by a few of the store’s competitors like Walmart or Kroger.

Noticing these strategies, we can see the sneaking of Amazon is towards almost a large portion. Where they also have a prime sample platform, and Go technology, specifically for fresh online products, is reaching out to customers at a larger scale. The company’s success was also due to merchandise convenience, which is the main fundamental strategy of Amazon fresh. It was also noticed as a wise strategy of Amazon to the acquisition of Whole Foods, which gave them, in turn, a lot of distribution in various locations and having two separate systems without any clashes of logistics or buying and supplying strategy. Amazon Fresh also has a strategy of consumer convenience which shows the greater success rate of the company.

It also had a strategy towards the supply chain known as Omni channel supply chain, meant to meet the growing customer requirements and expectations in coming days where customers can order in any method and can pick up or get delivered in various ways. Even having locker drop off or placing them in the trunk of the car etc., is going to be their ahead strategy.

Financial viability and growth of the company

Amazon Fresh was started in March 2017 as an e-commerce website that is a subsidiary of Amazon.com. Amazon Fresh is a membership-based online delivery concept, where the minimum subscription varies from 14.99$ per month, with free delivery of all orders over 50$ and charging 9.99$ below the minimum order for delivery.

According to 2017 business insider Amazon fresh sold 2 Billion worth of online groceries. The key to their success is maintaining fresh produce, limiting the product ranges, delivering within the estimated time, and being customer friendly. It captured 59% Year over year sales of the US market in online grocery shopping since it’s been established, which is higher for any e-commerce business to achieve, which pushed Walmart to second place in sales.

The goal of the company is to hit $100 Billion in sales by the year 2025. Since the establishment of the company, it achieved to capture 18% of the online grocery market. It has the majority share of any single retailer in the online grocery store market in the US, making the sales double the Walmart online grocery sales. In the 2nd Quarter of 2018, Amazon announced that online grocery sales the company achieved a whopping $650 Million. The growth of the online sales of Amazon fresh has increased to 40%, which is a feat to achieve, for a newly established company.

As Amazon went globally with delivering groceries globally, the top 3 markets of amazon include the US with a growth rate of 59%, Germany – with a 54% growth rate, and UK 56% growth rate just for the year 2017.

How the company formulates and implements the strategy at the functional, business, and global level

Amazon Fresh formulates and implements its strategies at functional, business, and global levels through the utilization of its organizational structure features and characteristics. For instance, at the global level, the company uses the global function bases group to identify new markets for its ongoing global expansion strategy. Through the senior managers, the firm is able to facilitate successful e-business management across the globe as well as managerial control. At a business level, Amazon Fresh formulates its strategy by studying the market and identifying the common products that the customers require. Upon identifying that basic customer preferences, Amazon Fresh ensures that all the groceries preferred by most customers are readily available on the website and in their stores. This enables easy and timely delivery of products. At functional levels, the company ensures that all the functional divisions are operating smoothly through the deployment of the best technological services. Amazon’s business strategy focuses on investing in technologies to enhance the supply chain and logistics and improve its web service fulfillment capacity (Schieber, 2018).

How does the company’s strategic planning relates to domestic and global expansion and growth

Amazon Fresh’s strategy is to provide grocery products beyond Whole Foods. Although the Amazon Fresh business has been able to achieve increased retail sales from online business only, the company wishes to venture into too many channels of business operation and introduce the initiative to deliver whole foods at the global level. This will result in global business expansion. On the domestic level, the online grocery market is not completely tapped. Compared to other international markets, US grocery e-commerce sales only take approximately 1.5 % of the total grocery sales. Upon realizing that most online grocery market in the US is untapped Amazon Fresh has launched a domestic expansion strategy across several states.

The strategies aim at solving all the logistical challenges and creating a new perishable concept. Through this strategy, Amazon fresh will be able to transform its domestic into a bigger scale. The company also wishes to launch a day and or two-hour delivery concept in most areas.

Did you like this example?

330

17