Company Background
Amazon is one of the largest companies in the world. It was founded by Jeff Bezos in 1994 as a small online bookstore. Later, it transformed into a more general online store with a wide range of goods. It experiences rapid growth via acquisitions, optimization, and implementation of new business strategies and technologies. Today, Amazon has hundreds of thousands of employees around the world, a large number of services, such as Amazon Music and Video, and worth hundreds of billions of dollars. Its crucial advantages are online shopping growth worldwide and high flexibility, while its primary disadvantages are data security issues and monopolistic tendencies, which lead to lawsuits and a reputation decrease.
A PESTEL Analysis for Amazon in the UK
One can use a PESTEL analysis to examine it more deeply and understand how it succeeded and which threats it faces. This framework divides the company’s performance into six areas: political, economic, social, technological, environmental, and legal. It focuses on the company’s interaction with external macroeconomic factors and, thus, shows how it functions in particular conditions (Washington State University, 2022). One can see the PESTEL analysis results in Table 1: It studies connections between the company’s facilities and external factors of the United Kingdom, resulting in facts that help evaluate Amazon’s total performance.
Table 1. A PESTEL analysis of Amazon in the UK
Opportunities and Threats in the UK
PESTEL analysis shows that the UK has a robust legislative base to protect the environment, workers, and economy: high corporate taxes, high minimum wage, and corporate responsibility requirements. In my opinion, two main opportunities for Amazon are the growth of online shopping and the company’s high stability. Two main threats are data security problems and the risk of lawsuits due to Amazon’s politics of preferring their own products on marketplaces, which is quite unethical. One can see both threats and opportunities in Table 2, where they are fully described.
Table 2. Two biggest threats and opportunities for Amazon
Leadership Styles and Their Appropriateness for Amazon
There are several leadership styles, each of which portrays a model of communication and team organization aimed at reaching particular goals. Examples are transactional, transformational, democratic, autocratic, digital, spiritual, and ethical leadership models, which explore leadership from various perspectives (Demirtas & Karaca, 2020). Transactional and transformational models are compared and contrasted: transactional leadership simply orders team members to do something and motivates them by reward. Contrary, transformational leaders inspire and motivate employees to learn, understand what they should do, and even experiment and make innovations by themselves.
Amazon is a web-based company based on technologies and communications between people of various cultures. Therefore, many traditional leadership styles are inappropriate for Amazon, especially those based on a highly centralized approach. Transactional leadership, the most widely used style, while being useful in regular life, is one side and, thus, quite limited (Demirtas & Karaca, 2020).
Autocratic leadership is highly centralized and inappropriate for a decentralized company like Amazon, with many specialists who would barely listen to a harsh authoritarian leader. Democratic leadership, however, is not well suited, as Amazon relies on complex, data-driven decisions that cannot be made quickly and efficiently by simple negotiations between employees. Still, elements of those models may be used: strong, authority-based decisions and employee empowerment would benefit Amazon on various levels. To summarize, transformational, ethical, and digital models are those which, in my opinion, are the best for Amazon.
I think transformational leadership is well-suited for the company, as it is based on employees’ empowerment and motivation, inspiring them to accomplish tasks, study, and innovate. Ethical leadership is also suitable: unlike spiritual, it is based on clear ethical principles and visions of a better future for all, which would inspire Amazon’s workers and increase its reputation in the world (Crane et al., 2019). Lastly, digital leadership fits Amazon perfectly well, as it relies on the web-based infrastructure, and leaders who can work via the Internet are valuable. People from different parts of the country can work, even from their homes, solving business problems, united by such leaders.
From these styles, I believe digital leadership is the best for online-based companies, such as Amazon. People can work remotely: computer specialists, logisticians, and customer managers require only a PC for their work. Leaders and managers who can efficiently do their work using communication services such as Skype are especially valuable.
However, in my opinion, it is not enough, and elements from both ethical and transformational leadership models should be incorporated into Amazon’s model. Ethics is the basis of values and sustainability, which is important for Amazon and for the building of a better future, and ethical leadership would increase the company’s value in general (Crane et al., 2019). Transformational leadership includes empowering and inspiring employees, which is crucial for an innovative company like Amazon, which greatly relies on research, development, and creativity.
In that way, Amazon would benefit most from using all three leadership styles: digital, transformational, and ethical. They are all decentralized, data- and value-based, which means they are good for large and innovative companies, especially if it is almost purely web-based. In my opinion, the digital approach should be the basic, as Amazon is a digital company and would certainly benefit from leaders who can efficiently manage many people remotely.
The transformative approach relies on employees’ empowerment and motivation by granting them responsibility and enabling them to realize themselves. The ethical approach is based on values and visions of a better future, which inspire employees and motivate them. As one can see, these three styles complement each other, resulting in a perfect leadership model for Amazon.
Amazon and Climate Change
Amazon pays much attention to the problem of climate change and tries to ensure a sustainable approach to its business. It has a division, Amazon Sustainability, which ensures the company’s corporate responsibility and issues regular reports about achievements and progress in this field (Amazon Sustainability, 2021). The Climate Pledge is an initiative established by Amazon and the Global Optimism organization in 2019, and it is working to decrease the detrimental influence on nature (Amazon Sustainability, 2022).
Amazon successfully implemented a circular economy based on waste and emission recycling in many of its facilities (Yu, Hassan, and Adhikariparajuli, 2022). It plans to use renewable energy in 2025 and only non-carbon vehicles by 2030, becoming a fully emission-free company by 2040. These plans are ambitious and valuable, considering the large size of Amazon, with thousands of various operational facilities around the world.
Still, Amazon is often accused of actions that lead to environmental pollution and climate change, which thus contradict the company’s philosophy. According to the 2019 Greenpeace investigation in Virginia, only 12 percent of its data centers work using renewable energy (Reynolds, 2020). While the company donates money to organizations dedicated to environmental protection, its employees accused the company of donating to legislators, possibly to obtain some privileges.
Amazon’s greenhouse gas emission is tremendously high, with more than 70 million tons of carbon dioxide in 2021, similar to 180 gas power plants. This fact led to accusations of using sustainability claims for PR only (Calma, 2022). Despite trying to act responsibly and environmentally friendly, Amazon certainly cannot deal with its large-scale atmospheric pollution and other environmental problems.
Therefore, Amazon’s approach toward climate change and sustainability is controversial. While it poses itself as a highly responsible company and works to reach nature-friendliness, it is widely criticized for using this position only for PR purposes. It plans to reach zero-emission as quickly as possible, but its environmental pollution remains very high for now.
It promotes corporate responsibility and environmental friendliness but cannot be an efficient example to follow. This leads to wide criticism for not fulfilling its own ideals and betraying itself and everybody who believes in Amazon’s sustainability. Amazon is actually trying to cope with global warming and other climatic challenges by implementing waste recycling and using renewable sources of energy. However, the problem is large and wide, and it is hard for Amazon to solve; thus, it cannot fulfill all of its claims.
Reflections
For me, Amazon was an ideal company: it uses technological advancements extensively, relies on an Internet-based infrastructure, strives for an ecological and environmentally friendly approach, and promotes corporate responsibility. However, this research shows that the situation is not so good: Amazon has many flaws and concerns, often contradictory to its own claims. While it strives for corporate responsibility and sustainability, it is still far away from its ideal of being responsible for large greenhouse gas emissions. Despite claiming that it provides freedom and good working conditions, it requires large shifts for its employees. Therefore, while the company has the reputation of being ethical and responsible and works to ensure zero-emission and environment-friendliness, it still has flaws in it.
There are other problems that Amazon faces based on its activity and strategies. The risk of identity thieving seems negligible, but one can think about how much data are collected when using Amazon: card numbers, addresses, and purchase lists. Amazon’s strategy and dominating position led to its acquisition of various companies and selling its own goods in the marketplace, pushing out other players and building a monopoly. I think this approach is unethical and, in perspective, destructive for Amazon itself.
As Amazon uses the Internet, progressive technologies such as robotics, and an online-based working approach, the most suited leadership style is the combination of digital, transformational, and ethical guidance. Such an approach would help maintain the dominating market position and fulfill the company’s vision and mission. Digital leadership would make employees more autonomous and freer without reducing efficiency.
At the same time, an ethical approach would bring value to the company, helping to close the gap between claims and reality. Examining Amazon gave me a beneficial experience in using business analysis frameworks, such as PESTEL, on large companies. I have searched and analyzed many sources, learned various information, and applied it to understand the company better. It was interesting and, I believe, will certainly benefit me in the future, as analytical thinking is necessary for managing a business.
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