Organizational Theory Functional units and Interrelationship
One of the most compelling discussions about the organization is how the different units function to achieve a common goal (Ivanko, 2013). Onday (2016) asserts that the organization is a scientific discipline younger than others and is incomplete without some of its parts. However, understanding an organization as a body with different units functioning as one is a complex subject. Thus, organization theories emerged to provide insight into organizational practices, principles, and components that primarily influence operations (Yang et al., 2013). Examples of these organizational theories are classical organization theory, human resource theory, organizational culture theory, organization behavior theory, and neoclassical organization theory (Shafritz et al., 2005). Among others, organization theories are derived from the practices of an organization; thus, they are practices themselves (Onday, 2016, p.g17). According to Onday (2016), organization theories are a chain of knowledge that explains the multiplicities of operational processes and organizational structure. In other words, organization theories are knowledge regarding the systems, structure, operation, function, and organizational group or individual behaviors (Zhu, 1999). This essay utilizes the organization’s knowledge to discuss the practices, systems, and functional units of Amazon organization and how these parts function interactively to attain a common goal.
Interestingly, all businesses, even the smaller enterprises, comprise functions and key tasks performed regularly. For instance, products and services are needed to satisfy the needs of the customers. Also, inquiries from the customers, financial management, and analysis must be conducted accurately. Data storage and sharing are required to ensure a complete business cycle, including production, distribution, communication, marketing, and information sharing. While in small enterprises, the functions can be completed by one or two individuals; larger organizations require different specialists to participate in different tasks. Amazon, for example, has potential customers globally who purchase the stock, thereby, require massive specialists to fill the gaps. As a multi-billion global operation, Amazon has effective functional units such as marketing, information technology, human resource, finance, and manufacturing that have largely impacted its innovation and success (Rivet,2017). Other functional areas are distribution, Research and Development(R/D), Customer service, and administration. Generally, these functional areas are vital to larger organizations because the performance of one unit affects others. This means that every area has responsibilities associated with specific objective primary to its success. Besides, these functional areas purpose to ensure that primary activities are completed on time. This is crucial if the organization is determined to achieve its goals and objectives after a given period.
Thus, the marketing function is the unit of an organization that identifies and meets the customers’ needs. Global corporations such as Amazon consider this to be very important, thereby utilizing all opportunities to build their marketing. Besides, marketing requires the organization to ensure human resource activities are effective and produce customer-oriented employees in all sectors of the company. Considering customers as a priority increases sales and customer relationships, thus sustains the company’s brand in the global market. Generally, marketing is divided into four Ps; product, place, promotion, and price. Products are the required needs of the customers, which can change with time. An organization needs to ensure that it sustains or grows its sales by advancing to the changes that influence customers’ satisfaction. Price is the charge of goods and services. Every business must ensure that its prices are favorable to its customers, although this might vary from one organization to another. Some organizations choose to reduce prices to attract more customers, whereas others increase their process to test customer’s affordability. Also, price consideration includes suggestions on discounts, different charges to different products, and the benefits they bring to the business.
Price is an important market function because it directly influences profitability. Promotion, on the other hand, is the act of informing people about the products. It includes advertising, promoting products, and creating publicity. Global corporations such as Amazon utilize technology to increase their awareness. The commonly used marketing promotion method is internet advertising, including social media platforms and websites. Lastly, the place is the location where goods and services are distributed for sales. This includes consideration of the mode of selling and selection of staff that will perform specific activities.
Accordingly, Amazon Company has market segments that ensure the four marketing functions are achieved accordingly; promotion, place, price, and product. Firstly, Amazon is a global business that serves millions of customers across the world. As a result, it has numerous sectors in different places, thereby enabling the company to compete with its competitors effectively. Besides, the company provides different products and services that ensure the needs of diverse customers are provided. Examples of Amazon’s different products and services are Amazon prime, online retail, Amazon Web services, Amazon go, consumer electronics, and virtual assistance. Venturing into different sectors increases the company’s profitability and improves customer relationships because they are created under consideration of the customer’s needs. However, these marketing segments are enhanced by technology, explaining the increased venture of Amazon on technology. Services such as e-commerce and M-commerce are technology-based activities. Perhaps, today’s’ organizational problems are well addressed by the technology. The technology was mentioned by one of the organization theorists; Burton and Borge Obel argued that technology is a contingency factor of an organization that affects coordination, configuration, control, and incentives( Shafritz et al., 2005; Onday,2017; Shafritz et al.,2015).
In detail, Amazon’s e-commerce has dominated the world market, and according to studies, nearly 43% of US citizens went Amazon in 2016 (Rivet, 2017). With technology, the company’s customers can order their products online without getting to the stores. Besides, e-commerce led to M-commerce whereby customers can access their services and products using cellphones and mobiles, thereby improving the marketing of the company’s products. Most importantly, e-commerce enhanced by Amazon’s technological functions enables the company to compete effectively with its rivalries, including Wal-Mart, Best Buy, and Target. On the other hand, prime as a marketing segment allows Amazon.com customers to become members who can access benefits such as free prime music, prime video, and two-day shipping (Rivet, 2017). Prime provides nearly 65 million customers to watch their selected videos, thereby, increasing Amazon’s marketing chance amid Hulu and Netflix. Likewise, prime music draws Amazon consumers away from rivalries such as Spotify and Apple Music.
Additionally, Amazon virtual assistance released Amazon Echo in 2015. The Echo, also known as Alexa, is a voice interaction enhanced by a smart speaker; thus, it provides virtual assistance to the customers. Because of the increased invention in R&D, Amazon Echo has effectively competed with Apple and Google (Nathan, 2017). Besides, businessinsider.com shows that Amazon echo has extensively taken over the market share with 70.6% of US users compared to 23.8% of Google. Likewise, cloud-based service/products and Amazon Web Services form an important Amazon system that improves user’s security. AWS sustains up to 40% of global customers against 25% of Google, Microsoft, and IBM (Rivet, 2017). Also, AWS offers cloud-based data storage, security, content delivery, and analytics, which assist users in scaling and growing their businesses. Other marketing segments and venture is Amazon Go and Amazon clothing. Interestingly, these marketing segments and ventures have contributed to Amazon’s increased innovation and success against other multi-billion global corporations such as Google and Microsoft.
Secondly, human resource function remains a crucial element of an organization. Up to decades ago, one of the organizational issues that most organizational theories emphasized was mattered human resources. HR is a vital part of an organization that performs employee recruitment and ensuring that qualified individuals fill positions. This is a critical process because recruitment is not only time consuming but also an expensive process that directly influences organizational performance. Besides, HR commitment determines the number of employees that can leave the job to other workplaces. It is upon the HR, particularly the managers and supervisors, to ensure employees work in an accommodative environment. This is supported by the Human Side of Enterprise theorist McGregor, who argues that employees require monitoring and reasonable control to be productive (McGregor, 1957-1966). Likewise, Parker Follett proposes giving orders theory that emphasizes the relationship between supervisors and employees concerning organizational tasks (Follet, 1996). The two theories agree that human resources are a vital component of an organization influenced by HR officials. Thus, given many individuals are leaving an organization, it is important to identify the genesis of the problem to avoid future job withdrawals.
Normally, employees work while expecting some benefits from their employers. For instance, they hope for fair treatment, conducible working conditions, and fair payment. They also wish for encouragement and appreciation of the good work. These factors increase employee motivation. Business studies indicate that motivated employees are more likely to be productive than non-motivated employees. Likewise, the Human Motivation theory proposed by Maslow argued that attaining employee productivity requires the organizations to provide specific needs that encourage them to work effortlessly (McLeod, 2007). The proponent provides the hierarchy of needs from the most important (physiological and safety needs) to less important needs (self-actualization, esteem needs, and need of belonging).
Regarding Amazon, their website indicates that the company’s HR is committed to promoting a cordial and respectful working environment for all employees. The company has an HR staff that monitors the working conditions. For instance, the senior HR staff liaises with senior management to ensure employees’ views and conditions are known. Examples of Amazon HR positions are an HR assistant, HR manager, and the HR Business partner. These positions serve as teams that ensure the needs of the staff are provided to increase employee performance. Also, Amazon ensures its staffs are well trained for their positions to ensure they can actively provide technology-based services such as Amazon.com, Amazon Go, and Amazon Prime. Most significantly, it was recently discovered that Amazon is increasing the hourly payment and doubling overtime to its workers. This has encouraged Amazon employees to give their best, thereby increasing employee performance, which then increases the company’s productivity and profitability. Besides, increased payment boosts the company’s accountability and reputation. Thus, the company can sustain its position in the global market as a successful corporation.
Nonetheless, most business concentrates on finance function because every business requires a record of financial activities taking place within the business. The financial staff ensures that the income, bills, and cash spent are recorded. These recordings are used by senior management to determine losses and profits. Besides, accurate financial information enables an organization to make appropriate decisions because it reflects the current state of the business. Also, the financial staff ensures the financial requirements of the organization are fulfilled. These include borrowings, savings, and getting money for business expansion.
In larger companies such as Amazon, various financial experts include financial accountants, credit controllers, and management accountant. Management accountant prepares cash flows, analyses day-to-day financial activities, and monitor both departmental incomes of sales and budgets. Also, they ensure the senior management is informed of the prevailing financial changes. On the other hand, the financial accountant prepares statutory accounts. Ensuring there is basic financial information such as balance sheet, cash flow statements, and profit/loss account. Lastly, the Credit controller ensures that overdue payments are well managed and that there is a bad debt settlement. However, proper financial management and analysis require automation that enhances accuracy; thus, it can increase investment (ROI). As a result, global corporations such as Amazon use computer accounting to prepare and record financial transactions. A spreadsheet is also used in financial analysis. While some business uses specialists bureau to process payment, other companies use finance staff to process and pay their employees.
Moreover, manufacturing or production function is another basic function of an organization that ensures the continuous provision of goods and services. The manufacturing team is an organizational segment that ensures goods and services reach the customers on time. They also ensure there are quality products during and after not only after the production process. Manufacturing includes other activities such as buying raw materials from the suppliers. The raw materials should be purchased at a competitive price, considering the delivery and supplier reliability and quality. Most importantly, the raw materials should meet the quantity, quality, and cost. The manufacturing team also ensures items are cross-checked during delivery, and any associated problem reaches the suppliers in charge.
Today, automation is used in manufacturing or production. The robots and machines are left to perform all tasks that were initially performed by the workforce. Some companies employ computer integrated manufacturing whereby, the computer system controls every activity. Modern businesses largely rely on technology to improve marketing, financial functions, and manufacturing activities. At the same time, automated manufacturing can be beneficial because it is faster, accurate, and of quality, team operators can operate activities that cannot be performed by automation. Other production functions include machine utilization and control, production planning, staff utilization, and final quality checks.
Earlier under marketing functions, it was indicated that Amazon continues to distribute billion of products produced through automation, Artificial intelligence, robotics, and AWS. For instance, the company ensures that smart products are provided to all customers. Throughout the manufacturing, Amazon ensures security is provided at its level best. This is achievable because of the cloud solutions used. Besides, customers with AWS benefit from networks built to meet the demands of highly secured organizations. Also, Leverage S3 provided by the AWS cloud ensures recoveries. Generally, AWS improves product quality and ensures supply chain activities are performed efficiently.
Nevertheless, research and development function is important to every organization that prioritizes development and growth. R&D ensures an organization improves its operations. Mostly, industries use R&D for product design purposes. Improving existing products is mostly influenced by either customer’s feedback or market research. Likewise, new products are created under research on the trending in technology and scientific intervention. Sometimes changes are embraced by an organization because Google, Amazon, or Apple provide an idea.
Research is the act of discovering new ideas proposed by scientists and using the opportunity to improve business activities. While pure research is mostly carried to understand a specific concept, applied research involves discovering how to improve products. R & D team collaborates with designers to identify new products that can be sold at fair costs, safe to use, and competitive. However, R&D can only attract experienced staff because developing an improved product requires a deeper understanding of the nature of a product. Amazon is one of the largest corporations that have ventured into technology to improve its products. The company embraces several engineering design activities, including an AWS or cloud solution, which ensures user security. The prime video and music are recent designs introduced by the organization to attract more customers against its competitors, such as Google and Netflix.
Other organizational function important includes sales function, customer service, and administration. Administration function serves as a support system that ensures the performance of all administrative activities such as the distribution of mail, researching information, organization of meetings, and sharing of messages. Sales function ensures products are sold to the targeted customers and that customers’ inquiries are responded to. The sales team also provides technical assistance to its clients. Relatively, Customer service ensures inquiries, problems, and complaints of customers are addressed. Lastly, ICT ensures computer-based activities are performed effectively for the benefit of the company. The ICT staff’s function is to ensure that senior management is informed of the progress of technology-driven activities utilized by the organization.
However, none of the mentioned organizational units can work under isolation. In a smaller business, people from different sections responsible for various activities rely on each other to serve their customers. For instance, the sales personnel know customers who should not receive products until a debt is cleared, as indicated in the bill. The manager can also identify the hardworking teams without being informed. In larger operations such as Amazon, the case is different because people work from separate units, and perhaps, they rarely meet in person. However, information sharing is still important because the units must function together to achieve the intended goals and objectives. In other words, constant communication is required to ensure a joint decision is made across all the different departments.
The first relationship exists between sales and production. Sales must communicate with the production team to know the schedules on when products are ready. This is important as it ensures promises made to customers are fulfilled on time. Also, it ensures there is on-time delivery of products and services to customers. Besides, the production team informs the sales department on the problems that could affect customers should they find solutions. Secondly, finance customer service and sales are related in that; finances rely on customer inquiries to confirm credits before selling their products. Besides, the finance team might propose discounts which, in return, reach customers through the sales team and customer service units.
Additionally, finance integrates with all departments to monitor organization spending and achievements, contributing to profits or failures producing losses. Likewise, Human resources collaborate with finance on matters bonuses, overtime, and salary increase. Finance also works together with the distribution department to identify the places where the invoice should be sent. The sales department communicates with the distribution team on the exact delivery dates when customers receive their products. R&D work with production to identify new products and design that can improve sales. Besides, R&D requires knowledge from ICT to create engineering designs that will benefit the company. ICT also works with other departments to ensure data accuracy, production of quality products, and fast manufacturing of goods. Besides, ICT ensures customer engagement and relationship is improved to attract more customers. Most importantly, Human resources work with all units to ensure only qualified people take positions in the various departments. Also, it ensures products are promoted to increase market awareness.
Conclusion
In conclusion, organizational theory is a complex and larger concept of an organization. The reason being, organizations, is made up of different units that serve as one. Several theories emerged to describe the important parts of organizations, including human resources, finance, and technology. Other theories emphasized employee motivation, monitoring, and control as a central determinant of an organization’s success. Amazon, as a global corporation, is made of units that interactively have influenced its success. Generally, the functional areas are responsible for specific activities required to attain goals and objectives. These main functional areas are marketing, research and development, manufacturing, finance, sales, and human resource function. Marketing includes advertisements that ensure customers are informed of the existing products. The sales unit ensures customers receive their products on time—research and development assistance in business growth by identifying expansion opportunities. Finance provides financial information that determines business failures or success. The manufacturing unit ensures there is a continuous provision of goods and services. On the other hand, human resources are responsible for the recruitment of employees, whereas ICT serves as a unit that ensures technology is embraced.
However, these sections do not serve in isolation but are rather dependent on each other. For instance, the Sales team requires distribution and manufacturing to know the delivery time of the products and services. R&D requires production and knowledge of ICT to develop new product designs. Human resources and finance are central units that influence all the departments. Recruitment of non-qualified employees affects the entire organization, whereas financial management provides information on the transactions across the departments. Therefore, it can be concluded that organizational units that work as separate entities are all interrelated. Perhaps, the absence of each can affect the entire operation of a specific organization.
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