Key problem
Tony Hsieh worked hard, championed, financed, and managed Zappos. He was a passionate entrepreneur who obtained millions at a tender age. Regardless of the organization’s unabashedly awkward culture, the organization had the lowest employee turnover rate within the industry. It was extensively admired for its incredible customer service, and it was listed among the best place to work by Fortune. The acquisition of Zappos by Amazon took place in 2009 at $1.2 billion, promising to preserve its culture and also management. Though, the decision of Hsieh to undertake the implementation of holacracy, a type of organizational self-management which replaced job tiles as well as a chain of command having circles whereby employees step in and out based on their individual choices and skills was less popular. But he rip the Band-Aid strategy, ensuring that only employees committed to the change stayed in the company. After 18 months of trying to transition the organization to holacracy, The CEO of Zappos, Tony Hsieh, had determined that it was high time for making changes. Tony sent an email to every employee at Zappos in 2015, which offered them three-month severance pay suppose they perceived that they did not like self-management. A month later, fourteen percent of the employees had quit their jobs, entailing twenty percent of the tech department, possibly placing at risk the complex transition of the company to a new online platform operated by the parent company Amazon. Essentially, Amazon is the corporate entity whereas Zappos is the business unit. Therefore, this paper will analyze this key problem that faced Zappo using the SWOT analysis.
External analysis
Opportunities
Landscape-changing technology is one of the opportunities for Zappo. The artificial and machine learning intelligence boom is changing the technology landscape operated by Zappos Hsieh.
Development in artificial intelligence is also an important opportunity. In order to better predict consumer demand, make better recommendation engines and cater to niche segments are used by Zappos for the development of intelligence.
Another opportunity lies in minimizing the market entry cost as well as international market marketing. Globalization, along with social media and thriving in digital marketing, has greatly reduced the risks of publicizing and market entry in the worldwide market.
There are opportunities for Zappos in the adjacent markets. Here, Zappos is capable of exploring adjacent industries’ organizational culture, leadership, corporate culture, and technology to increase market growth specifically through extending features of current service as well as products. By doing this, the company can grow and gain a competitive advantage in the industry.
Threats
Zappos faces a threat from government regulations and bureaucracy. Hsieh needs to monitor the fast-changing governmental regulations under the increasing pressure from protest groups as well as non-governmental agencies, especially concerning environmental and labor safety issues.
There is also a threat from the increasing protectionism. Zappos needs to hedge the risks concerning the rising protectionism, which ranges from data storage in the international market to the diversification of risk through undertaking operations in various countries at a distinct economic cycle.
There is rising bargaining power of buyers. As years go by, there has been an increase in the bargaining power of consumers in Zappos, which is lowering the prices of commodities. The company is capable of pursuing horizontal integration with the aim of consolidating and bringing efficiencies though it will be short-lived.
There is an increase in costs constituent to work in a developed market due to environmental regulations. Zappos needs to deal with the increasing costs as governments attempt to levy high environmental taxes promoting cleaner options. This is likely to lead to high logistics costs as well as high packaging costs.
2. Internal Analysis
Strengths
- A variety of products are offered to its customers and has concentrated on collective corporate responsibility.
- Zappo has a cooperative and reproductive work environment and believes in transparency.
- It possesses resilient customer relations management with customers, stakeholders, and employees
- It is present online and offers customers more vital services for them.
- It has received many appreciations on the best customer service; corporate culture has a strong brand image.
Weaknesses
- Another weakness is on customer dissatisfaction. Regardless of the demand for goods has not slowed down, customers are dissatisfied. It is being reproduced on the appraisals on various online views. Factors improving the post-purchase as well as customer purchase experience, should be focused on by Zappos Hsieh.
- Zappos Hsieh’s business ideal may be easily simulated even with the number of copyrights and patents the company possesses. The knowledgeable property rights are very tough to implement in the company operated by Zappos Hsieh.
- The records surrounding deliberation is not very promising record on environmental problem is not promising from Zappos Hsieh.
- Project management is too concentrated on inner distribution instead of taking into consideration all the welfares of outward stakeholders. Such method can result in poor community relations and backlash from customers.
- Inventory Management- Culture, structure, and radical change concludes that zappos Hsieh is not controlling the inventory and cash cycle based on the information provided.
- Zappos promote its shoe product by use of unethical advertisement.
- Zappos also possess limited profit margin.
- There is a negative impact on customers due to the merger of Zappos with Amazon.
- Zappos online system raises questions mark on the theft of customer data, which includes their credit card information.
Mutually Exclusive Alternatives
Zappos has to imbibe the hierarchical culture in the ideas, individuals as well as strategy of the organization. Without doing this, the hierarchical culture is nothing and ineffective, rendering no benefits to the company. Zappos should focus on maintaining a unique culture that will help in driving changes across every organizational domain entailing strategy, recruitment as well as operations. The company also needs to protect its core values from being compromised. A conflict between the old and new generations is probable to arise, and Hsieh needs to embrace both worlds to achieve a smooth transition. Moreover, Hsieh needs to avoid waiting until when things get critical to force changes. The company needs to take great care of the “too-much-of-good-thing” effect to minimize chaos and as well to evade detrimental impacts.
The recommended course of action and justification
It is recommended that Zappos needs to look beyond structure as it is insufficient in the production of the desired change. The implementation of a new culture remains at the core of the problem. The company needs to establish clear and concise core values that will facilitate the company to propel itself with sustainable growth as well as retain a valuable workforce. Essentially, the capability of holarchical structures will remain dynamic and volatile but stay invariably successful. The company has to adopt new ideas as well as methods of organizing are best considered as experiments for an overt duration and utilizing the resources available, governed by a deliberate vision and a defined direction.