KATHLEEN IRAH B. MAGALIAOBA 190 - STRATEGIC MANAGEMENTUNIVERSITY OF THE PHILIPPINES PROF. MITA ANGELA M. DIMALANTA

1999, Nick SwinmurnMother Idea – “In the beginning, let there be shoes”Vision: “One day, 30% of all retail transactions in the US will be online. People will buy from the company with the best service and the best selection. Zappos.com will be that online store.” Mission: “Deliver happiness”

THE BIRTH OF ZAPPOS CORE VALUES

Deliver WOW Through ServiceEmbrace and Drive Change

Create Fun and A Little WeirdnessBe Adventurous, Creative, and Open-Minded

Pursue Growth and LearningBuild Open and Honest Relationships With Communication

Build a Positive Team and Family SpiritDo More With Less

Be Passionate and DeterminedBe Humble

The Monkeys: Tony Hsieh – CEO, Fred Mossler - No Title, Steve Hill - VP of Merch, Arun Rajan – COO

2009

STRATEGIC SUCCESSStructure Culture Control

COMPETITIVE ADVANTAGE

ORGANIZATIONAL DESIGN

Operations: Independent from Amazon.com, stopped drop-shipment orders Warehouse stocks, overnight shippingHuman Resource: Flat Organizational Structure, Benefits, happy employees, no outsourced employees for customer services, rotational training of staff, 24/7 staff

STRATEGY TO DELIVER HAPPINESSMarketing: 1,200 brands, User friendly interface, communication practicesFinance: $1 Billion annual sales (indicator), happy investors

StructureFlat10 subsidiariesCut off of drop-shipment orders

Efficiency and Flexibility

CultureEmpowered employeesCore values Happiness

ControlInformal cultural control system to formal reward systemOutput Control

STRATEGIC SUCCESSStructure Culture Control

COMPETITIVE ADVANTAGE

ORGANIZATIONAL DESIGN

STRATEGIES

(a) bottom-up decision initiatives (b) empowered employees through freedom of practicing their own decisions and applying own personality styles in customer service (c) low degree of specialization and formalization as seen in the rotational job training on the horizontal level of the employees (d) a flat organizational structure of the company.

1. What elements of an organic organization are apparent in Zappos?

2. How does the Zappos business strategy match its organizational structure?

Business Strategy (Speed+ Accuracy) Flat organizational

Structure

WOW Costumer

Service

3. Which strategic control-and-reward system discussed in the chapter would be most appropriate for Zappos? Zappos allows their employees to practice their own ways of dealing with customers. They don’t provide specific scripts and standards that should be practiced by the employees. Their reward system is based on informal cultural control system to formal reward system where “the firm rewards employees who apply values well in their day-to-day decision making”. Output control system is the appropriate strategic control-and-reward system for the company.

Do you think Zappos’ decision to honor every sale, despite its explicit business terms and conditions that would allow it not to do so, was a sound one? Why or why not?

Do you think Zappos’ decision to honor every sale, despite its explicit business terms and conditions that would allow it not to do so, was a sound one? Why or why not?

Given the two perspectives stated above, Zappos made a sound decision since the company upholds strongly the core values it has. It is important for a company to live on what is important - none of the core values of the company emphasizes financial gains. Financial losses realized by Zappos, though large, can be potentially covered up by the customers it hooked by honoring the sales orders from the price mistake they had. In the long run, this is more important since customers are the life blood of the company.

References•Zappos.com (n.d.). Retrieved September 2015, from Zappos.com:http://www.zappos.com/c/about-zappos

•Rothaermel, F. T. (2015). Strategic Management (2nd ed.). New York: McGraw-Hill Education.