Case Study on Amazon Môn Organizational behavior | Đại học Kinh Tế Quốc Dân

lOMoAR cPSD| 58675420
NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL CLASS 2
Organizational Behavior
REPORT - GROUP 1 - AMAZON Team members Vu Thanh Phu ID: 11225127 Nguyen Thuc Quyen ID: 11225489 Le Tri Tam ID: 11225675 Nguyen Thi Phuong Thao ID: 11225935 Nguyen Thanh Thai ID: 11225730 Nguyen Thao Vy ID: 11226991 Nguyen Phuong Thuy ID: 11226205 Hanoi, 2024 lOMoAR cPSD| 58675420 Table of content
I) Company introduction 2 II) Case study summary 3
III) Specify relevant theories at Amazon 3
3.1. Maslow’s Hierarchy of Needs Theory 3
3.2. Herzberg’s Two-Factor Theory 4
3.3. McClelland’s Theory of Needs 5 3.4.Expectancy Theory 6 3.5. Equity theories 7 3.6. Contingency Theory 7
3.7. Transformational Leadership Theory 8
IV) Answers to the questions in the case study 8
V) Conclusion and Recommendation 12 VI) References 13
How Zeff Bezos manages at Amazon.com I) Company introduction
Amazon, the world’s largest online retailer and a leading cloud service provider, is an American
global technology corporation specializing in e-commerce, cloud computing, digital streaming,
and artificial intelligence. The company was originally established as an online bookstore by Jeff
Bezos on July 5, 1994, in his garage in Bellevue, Washington.
Today, Amazon has significantly expanded and is recognized as one of the most valuable brands
globally, described as “one of the most significant economic and cultural forces in the world.” It
is part of the “Big Five” American technology companies, alongside Alphabet, Apple, Microsoft,
and Meta. From its headquarters in Seattle, Amazon operates regional websites, software
development centers, customer support centers, data centers, and fulfillment facilities worldwide.
With a business model that connects Amazon directly to customers, the company offers an
extensive product catalog, ranging from clothing, household items, jewelry, books, movies,
electronics, pet supplies, furniture, toys, to gourmet food. This broad product selection has made
Amazon a comprehensive retail platform for millions of consumers around the globe. lOMoAR cPSD| 58675420 II) Case study summary
The case study describes Jeff Bezos’ strategy to maximize Amazon’s efficiency. Initially, Bezos
aimed to create an online bookstore that would surpass the model of traditional bookstores. To
achieve this, he and his team consistently improved the company’s services by upgrading
proprietary software and enhancing delivery speed to better meet customer needs. This strategy
enabled Amazon to expand globally. Bezos emphasized the importance of customer satisfaction,
making it a core value of the company. He also empowered employees by allowing them to make
decisions independently if it benefited the company, making them feel like contributors to
Amazon’s success. Despite his leadership role, Bezos maintained close relationships with staff,
serving as a role model, which fostered a positive work environment and improved employee performance.
III) Specify relevant theories at Amazon
3.1. Maslow’s Hierarchy of Needs Theory
Maslow’s theory suggests that humans have five levels of needs. As each need is substantially
satisfied, the next needs become dominant.
● Physiological Needs: Basic necessities such as food, water, and shelter.
● Safety Needs: Security, employment, and health.
● Social Needs: Belongingness, friendship, and love.
● Esteem Needs: Self-respect, recognition, and accomplishments.
● Self-Actualization: Fulfilling personal potential, creativity, and growth.
Application by Jeff Bezos:
● Physiological Needs: Bezos offered stable jobs with good benefits, such as stock options,
ensuring employees had financial security and resources to meet their basic needs.
● Safety Needs: Amazon’s growth and successprovided job security and a stable environment.
● Social Needs: Amazon employees were integrated into work groups where they were
socialized and shared the company’s vision for excellent customer service, fulfilling their need for belongingness.
● Esteem Needs: Empowering employees to make decisions and emphasizing customer
service allowed them to feel valued for their contributions.
● Self-Actualization: The focus on innovation, problem-solving, and continuous
improvement gave employees opportunities for personal and professional growth. lOMoAR cPSD| 58675420
3.2. Herzberg’s Two-Factor Theory
Herzberg’s theory divides motivation into two categories:
● Hygiene Factors: Factors that do not motivate but can cause dissatisfaction if missing
(e.g., company policies, salary, work conditions).
○ Company policies: Inadequate or unfair policies lead to frustration. Employees
expect policies that support them in their jobs without causing unnecessary barriers.
○ Salary: Salary alone is not a long-term motivator, but an inadequate salary can cause
dissatisfaction. Employees expect fair compensation for their efforts, which
addresses their basic financial needs.
○ Work conditions: Poor work conditions can lead to dissatisfaction. This includes
everything from physical workspace to the technology provided for employees to do their jobs effectively.
● Motivators: Factors that lead to job satisfaction and motivation (e.g., growth, responsibility, achievement).
○ Growth: Opportunities for advancement and professional development are key
motivators. When employees can see a path for growth, they are more likely to remain engaged and motivated.
○ Responsibility: Responsibility gives employees a sense of ownership over their work,
which is a powerful motivator. Employees who feel trusted to make important
decisions are more likely to feel satisfied and motivated in their roles.
○ Achievement: A sense of achievement is critical for motivation. When employees
meet or exceed their goals, they feel a sense of accomplishment that reinforces their
desire to continue performing well.
Application by Jeff Bezos:
● Hygiene Factors: Bezos focused on maintaining high-quality work conditions, ensuring
employees had good compensation and benefits. He also provided a well-structured
organization where employees could operate without the dissatisfaction of poor policies or environments. Specifically:
○ Company policies: Bezos ensured that Amazon’s policies were efficient and
employee-friendly. He created a structured environment where employees
understood their roles, and communication was streamlined. A company’s policies,
like clear processes for problem-solving and decision-making, prevent
dissatisfaction by reducing confusion and friction in daily operations.
○ Salary: Bezos recognized the importance of compensation and stock ownership. By
offering competitive salaries and giving employees stock options, Bezos ensured
that financial concerns didn’t cause dissatisfaction. The ability to own stock in
Amazon tied employees’ financial wellbeing to the company’s success. lOMoAR cPSD| 58675420
○ Work condition: Bezos provided a work environment that emphasized efficiency and
the ability to meet customer needs. Amazon’s workspaces, systems, and processes
were designed to be functional and conducive to high performance, ensuring that
employees had the tools and environments they needed to succeed. However,
Amazon has also faced criticism for work conditions in its warehouses, reflecting
the balance needed between maintaining operational efficiency and ensuring employee comfort.
● Motivators: Bezos provided opportunities for growth, innovation, and personal ownership.
His focus on giving employees stock in the company and the autonomy to solve problems
reflected his understanding of the importance of motivators in ensuring job satisfaction.
Employees were encouraged to take initiative, contribute to company success, and see
themselves grow alongside the company. Specifically:
○ Growth: Bezos built a company culture where employees were encouraged to grow
personally and professionally. With the constant pursuit of innovation and
improvement, Amazon provided employees opportunities to expand their skill sets
and take on new challenges. Additionally, internal mobility and the fast-paced
nature of the company created room for upward growth.
○ Responsibility: One of Bezos’ key management strategies was decentralizing
authority, allowing employees at various levels to make decisions and take
ownership of their work. This sense of responsibility, where employees felt
accountable for their contributions, was empowering and motivating. Employees
were encouraged to identify customer needs and solve problems without waiting
for upper management’s direction.
○ Achievement: Bezos established a results-driven culture where achieving high
standards was the norm. Employees were motivated by the challenge of meeting
ambitious goals, particularly related to customer service and innovation. Bezos
personally rewarded achievement by recognizing successful efforts and ensuring
employees had the tools and authority to achieve even greater results.
3.3. McClelland’s Theory of Needs
McClelland's theory focuses on three primary needs that motivate individuals:
● Need for Achievement (nAch): The drive to excel, to achieve in relation to a set of
standards, to strive to succeed.
● Need for Power (nPow): The need to make others behave in a way that they would not have behaved otherwise.
● Need for Affiliation (nAff): The desire for friendly and close interpersonal relationships.
Application by Jeff Bezos: lOMoAR cPSD| 58675420
● Need for Achievement: Bezos encouraged a culture of innovation and high achievement
at Amazon. Employees were driven to meet high standards and deliver excellent customer
service. Bezos himself was achievement-oriented, seeking out challenges and encouraging
employees to innovate and exceed customer expectations.
● Need for Power: Although Bezos decentralized authority, he also maintained strong
leadership, providing a sense of direction for the company. His leadership style empowered
employees to take control of their tasks and find solutions to complex problems, satisfying their need for power.
● Need for Affiliation: By fostering a team-based environment where collaboration was key,
Bezos ensured that employees had strong work relationships and felt a sense of belonging.
This allowed for the socialization of new employees into Amazon's culture, further
satisfying their need for affiliation. 3.4.Expectancy Theory
Expectancy Theory, developed by Victor Vroom, posits that motivation is influenced by three key
factors: expectancy, instrumentality, and valence. Applying this theory to the context of Jeff
Bezos’s management at Amazon :
Expectancy (Effort → Performance)
Employees are motivated to put in effort when they believe their hard work will lead to high
performance. At Amazon, the culture of high standards and ownership encourages employees to
take initiative and feel that their contributions directly impact their success and the company's
goals. Training programs and performance feedback mechanisms help reinforce this belief,
allowing employees to see a clear path between their efforts and potential outcomes( Kaavyapriya, 2023 ).
Instrumentality (Performance → Rewards)
Bezos emphasizes that high performance is recognized and rewarded. Amazon’s performance
review system ties employee evaluations to concrete results, creating a transparent connection
between performance and rewards such as promotions, bonuses, or recognition. The clarity in how
performance metrics are linked to tangible rewards enhances employees' belief that their hard work
will lead to meaningful outcomes.
Valence (Rewards → Value)
The rewards offered by Amazon—whether financial compensation, career advancement
opportunities, or innovative projects—are designed to be attractive to employees. Amazon
understands that different employees value different types of rewards. For example, some may
prioritize competitive salaries, while others may seek opportunities for professional development
or a chance to work on cutting-edge technology. By providing a range of valuable rewards,
Amazon enhances the likelihood that employees will feel motivated to perform. lOMoAR cPSD| 58675420 3.5. Equity theories
Equity Theory, developed by John Stacey Adams, focuses on the idea that employees are motivated
by fairness in their work environment. They assess their input-output ratio, which involves
comparing what they contribute—such as effort, skills, and time—with what they receive in return,
like salary, benefits, and recognition. When employees believe their contributions are fairly
compensated, they tend to be more motivated.
Employees also compare their experiences with those of their colleagues. If they perceive that
others with similar contributions receive greater rewards, it can lead to feelings of inequity and
decreased motivation. Amazon addresses this by focusing on transparent performance metrics,
ensuring that rewards are based on objective criteria.
When employees feel they are treated unfairly, they may reduce their effort or seek to correct the
situation. To combat this, Amazon regularly reviews compensation and performance metrics to
ensure that high performers are recognized and rewarded appropriately.
A sense of fairness contributes to employee engagement. By creating an environment where
employees feel valued and fairly compensated, Amazon enhances motivation and retention, which
is essential in a competitive landscape. Overall, by applying the principles of Equity Theory,
Amazon aims to maintain high levels of motivation and productivity among its employees. 3.6. Contingency Theory
Contingency Theory emphasizes that there is no universal approach to management; instead, the
effectiveness of leadership and organizational practices depends on the specific context. In
Amazon’s case under Jeff Bezos, several key elements illustrate this theory.
First, Amazon has shown a strong ability to adapt its management style to changing market
conditions, including customer demands, competitive pressures, and technological advancements
( UKessays, 2018 ). The company employs a decentralized decision-making structure, allowing
small, autonomous teams to operate independently and make decisions that best fit their projects
and challenges. This flexibility enables quick responses to various situations.
Bezos's leadership style also varies based on circumstances. He may take a hands-on approach
during new product development while granting teams more autonomy in established areas. This
situational leadership optimizes performance according to the context.
Additionally, Amazon's emphasis on innovation is driven by the specific needs of different
projects. The company encourages experimentation and risk-taking, recognizing that diverse
approaches may be necessary to foster creativity and adaptability. lOMoAR cPSD| 58675420
Finally, the performance evaluation system at Amazon is tailored to the requirements of different
teams and projects. This ensures that the metrics used for assessment align with specific goals,
enhancing motivation and accountability.
Overall, Amazon’s management practices demonstrate the principles of Contingency Theory by
emphasizing flexibility and adaptability in response to specific contexts and challenges.
3.7. Transformational Leadership Theory
Transformational Leadership Theory focuses on inspiring and motivating followers to achieve
exceptional outcomes and bring about significant change. Jeff Bezos exemplifies this theory
through his leadership at Amazon.
Bezos communicates a clear vision of making Amazon the world’s most customer-centric
company, which inspires employees to prioritize customer needs in their work. He fosters an
environment that encourages innovation and creativity, empowering employees to take risks and
experiment with new ideas (Gallagher, Aine, 2024). This focus on innovation motivates the team
to actively contribute to the company’s success.
He sets high standards and challenges employees to reach their full potential, cultivating a culture
of continuous improvement and personal growth. Additionally, Bezos recognizes the unique
strengths and contributions of his team members, encouraging open communication and valuing
feedback. This creates a supportive atmosphere where employees feel valued and engaged.
Besides, Bezos leads by example, demonstrating a strong work ethic and unwavering commitment
to the company's mission. His passion and dedication inspire employees to align their efforts with Amazon's goals.
Overall, Bezos’s leadership at Amazon reflects the principles of Transformational Leadership
Theory by inspiring employees with a compelling vision, fostering innovation, setting high
standards, recognizing individual contributions, and leading by example. This approach has
significantly contributed to Amazon's growth and success.
IV) Answers to the questions in the case study
Question 1: In what ways has Jeff Bezos used organizational behavior tools and principles to
motivate and coordinate his employees?
Jeff Bezos has used various organizational behavior tools and principles to motivate and coordinate his employees at Amazon.com.
First, he organized employees into small groups and teams based on the work tasks: the information
technology (IT) group which has responsible for developing and improving the proprietary
software Bezos had initially developed; the operations group that helps handle the day-to-day lOMoAR cPSD| 58675420
implementation of these systems and to manage the interface between the customer and the
organization and the materials management/logistics group which devise the most cost-efficient
ways to obtain books from book publishers and distributors and then ship them quickly to customers.
By dividing the company into groups with specific tasks, each team specialized in a particular
aspect of the business, whether it was customer service, logistics, or technology development. This
made employees more focused and effective, as all of them had a clear task identity, which helped
them understand the meaning of their work and allowed them to improve their skills in a specific area.
Moreover, small teams naturally create an environment of increased accountability. In larger teams
or traditional hierarchies, individual contributions can sometimes be lost in the crowd, leading to
employee disengagement. Employees may also make less effort to contribute to group work, as
described by social loafing theory. According to Rinaily Bonifacio, the diffusion of responsibility
in larger groups can make each group member feel less directly accountable for the outcome. With
small teams, Bezos ensured that each team member’s performance was much more visible and
integral to the team’s success. This created a sense of ownership and accountability because each
employee knew their contribution was critical to achieving the team’s goals. Poor performance
also became more noticeable, which encouraged high standards. Working closely with a small
number of people encouraged collaborative relationships and built trust. When employees were
part of a small team, they could communicate more openly and solve problems together more
effectively. This closeness often led to faster innovation, as team members felt comfortable sharing ideas.
Second, Jeff Bezos decentralized authority and empowered employees to search for ways to better
meet customer needs. By using this method, employees are empowered to make decisions about
the aspects they are responsible for. According to self-determination theory, which proposes that
people prefer to feel they have control over their actions, decentralizing authority and empowering
employees also boost their intrinsic motivation. Drawing upon self-determination theory, we argue
that empowering leadership can activate employees’ intrinsic motivation such that employees are
more willing to break the silence at work (Dong Ju et al., 2019). Moreover, knowing that their
work directly improves the customer experience provides a deeper sense of meaning and purpose,
which is a strong intrinsic motivator. This motivates them to become proactive and innovative in
finding the best ways to satisfy their customers. Employees who have the authority to make
decisions and contribute their ideas are given a sense of importance, value, and belonging within
the organization. This increases employee involvement, which in turn leads to higher commitment
to Amazon's success. Allowing lower-level managers and regular employees to make decisions is
an effective strategy for recognizing those with the potential to assume higher responsibilities in
the company's future. Promotion also serves as an extrinsic motivation for Amazon's employees.
Third method Jeff Benzos used is socializing his employees into his company by encouraging them
to adopt his values of excellent customer service, also establishing strong norms about how
employees’ first task is to satisfy customers. To be specific, all Amazon.com employees are lOMoAR cPSD| 58675420
carefully selected and recruited; they are then socialized by the members of their work groups so
that they quickly learn how to provide excellent customer service.
As members of a group, individuals naturally seek acceptance, making them susceptible to
conforming to group norms. By encouraging employees to adopt values centered on excellent
customer service and establishing strong norms that prioritize customer satisfaction as the primary
task, Amazon can achieve multiple benefits. This approach not only empowers employees by
encouraging them to contribute new ideas for improving service, but also leverages the pressure
of conformity. Consequently, new employees feel motivated to align with these established norms,
fostering a culture of innovation and customer-centricity.
On the other hand, socializing with work group members offers significant benefits. It accelerates
employees' integration into the work environment and fulfills their need for social belonging, as
outlined in Maslow's hierarchy of needs. This sense of connection increases employee satisfaction,
which in turn enhances their motivation on the job. As a result, employees who feel socially
integrated tend to be more engaged, productive, and committed to their roles within the organization.
Finally, Bezos gives all employees stock in the company. This strategy serves multiple important
purposes within the organization. By making employees shareholders, Bezos effectively aligns
their personal interests with the company's success, creating a shared stake in Amazon's
performance. This approach also provides a powerful financial incentive for long-term
commitment, as the value of an employee's stock options grows alongside the company's success.
Research by Pierce et al. (1991) highlights that employee stock ownership creates a sense of
psychological ownership, where employees feel a greater sense of responsibility and connection
to the company. This emotional connection drives them to invest more in the company's success,
leading to increased motivation and performance. This feeling of being more than just workers,
but actual part-owners of the business, can dramatically increase engagement, loyalty, and
dedication to Amazon's mission and goals.
Question 2: As Amazon.com continues to grow in size, what challenges do you think Jeff
Bezos and his managers will confront as they attempt to increase the company’s performance?
As Amazon continues to grow, increased competition from various fronts poses a significant
challenge for the company. Amazon not only faces giants in e-commerce like Walmart, Alibaba,
and eBay but also traditional retailers such as Target and Costco, which have established
foundations and long-term customer relationships. For instance, Walmart has heavily invested in
improving its delivery services and enhancing its e-commerce platform, creating substantial
pressure on Amazon to maintain its market share. Furthermore, the rise of emerging online
platforms like Shopify presents another challenge, as small businesses can easily set up online
stores at a low cost and compete directly with Amazon. To retain customers, Amazon must
continually innovate and enhance service quality, from fast delivery to excellent customer service. lOMoAR cPSD| 58675420
In addition to competition, maintaining innovation and agility is a major challenge as Amazon
scales its operations. Rapid growth can lead to management bloat, reducing the company's ability
to adapt to market changes. Jeff Bezos has emphasized that "creators should not become
managers", highlighting the importance of maintaining an entrepreneurial spirit. If processes and
systems become rigid, Amazon may struggle to develop new products and respond quickly to
customer demands, ultimately diminishing its competitive advantage.
Moreover, optimizing the supply chain and logistics is another crucial challenge as Amazon
expands globally. The company has built a strong reputation for fast delivery; however, with the
increasing volume of orders and product diversity, Amazon faces significant pressure to maintain
delivery times without escalating costs. In 2020, Amazon invested over $70 billion in logistics to
expand its transportation network. Without optimizing this process, the company may find it
challenging to meet customer demands and maintain their satisfaction.
Finally, managing human resources and retaining talent is a significant challenge for Amazon. The
company needs to attract and retain highly skilled employees to sustain innovation and growth.
However, competition from other major tech companies like Google and Apple makes employee
retention more difficult. According to a Glassdoor report, Amazon has faced criticism for its high-
pressure work environment, leading to higher turnover rates. If the company does not improve
working conditions and provide career development opportunities, it risks losing valuable talent,
which could negatively impact its performance and competitive position.
Question 3: Search the Internet to find out how well Amazon.com is currently performing
and give examples of how it has used OB to enhance its effectiveness.
Amazon.com is currently performing strongly, with net sales reaching $170 billion in the fourth
quarter of 2023, reflecting a 14% increase from $149.2 billion in the same quarter of 2022. This
growth can be attributed to a record-breaking holiday shopping season and improvements in
customer experience and operational efficiency, particularly through the regionalization of its
U.S. fulfillment network, which has enhanced delivery speeds for Prime members while
simultaneously reducing costs.
To enhance its effectiveness, Amazon employs several organizational behavior (OB) strategies.
Central to its operations is a customer-centric approach, as the company strives to be "Earth’s most
customer-centric company," which influences all business decisions and innovations aimed at
meeting evolving customer needs. Additionally, Amazon fosters a high-performance culture
where employees face immense pressure to meet ambitious goals; this competitive environment
drives exceptional results but has also raised concerns about employee burnout. The company
encourages decentralization by empowering employees at all levels to make significant decisions,
instilling a sense of ownership that motivates them to contribute actively to the company's success.
Furthermore, Amazon maintains a startup mentality that promotes risk-taking and lOMoAR cPSD| 58675420
experimentation, ensuring agility and responsiveness to market changes. Lastly, its data-driven
culture utilizes extensive metrics for assessing employee performance and enhancing
organizational effectiveness, allowing for informed decision-making that aligns with both
employee capabilities and customer demands. Overall, these strategies have proven effective in
driving Amazon's success while also highlighting important considerations regarding employee
well-being in such a demanding environment.
V) Conclusion and Recommendation
In summary, a major factor in Amazon’s success has been its strong emphasis on customer
satisfaction as employees' primary goal (Tiwari, S., 2018). From the start, Jeff Bezos envisioned
Amazon as a customer-centric company. This strategy centers on enhancing the customer
experience with the brand, aiming to build strong loyalty and encourage repeat business. Bezos
believes that prioritizing customer benefits outweighs paying attention to competitors, as shown
by Amazon's commitment to offering the lowest prices and exceptional customer support.
In Amazon's early days, Bezos and his team were dedicated to building customer trust by focusing
on features like order confirmations and customer reviews, which were innovative for e-commerce
at the time (Filson, D., 2004). This approach, known as Working Backwards, involves identifying
customer needs and providing tailored solutions through products, services, or experiences. Bezos
maintains that customer-centricity benefits both the customer and the business. As a result,
Amazon has achieved high levels of customer satisfaction by employing various motivating methods for its staff.
Furthermore, Amazon instills a sense of ownership among employees through stock options. By
offering shares, Bezos encourages employees to see themselves as stakeholders in the company.
This approach not only helps retain top talent but also boosts morale and work responsibility,
ultimately enhancing productivity and efficiency.
Instead of awarding stock to all employees upon recruitment, Amazon could consider reserving
this incentive for those who achieve specific accomplishments that contribute to the company's
success. This approach would encourage everyone to strive for excellence daily and reduce the
likelihood of employees with low motivation assuming they automatically deserve stock. In
contrast, employees who receive positive feedback from supervisors and are highly evaluated
could be granted more stock than others.
Moreover, implementing flexible benefits could help tailor rewards to individual preferences. This
strategy would enable each employee to select a compensation package that best meets their
current needs, such as insurance, retirement plans, or opportunities for personal development
courses to enhance their skills. lOMoAR cPSD| 58675420 VI) References
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