Introduction

The organizational behavior and operations are affected by external resources utilized by the firm. The current business environment has been very competitive. Most companies seek to exploit all the potential business opportunities in the market so as to sustain their competitiveness and development in the industry (Borkowski, 2015). There has been an increased tendency by organizations of building redundancy into the acquisition of resources with the aim of minimizing reliance and dependence on single sources. Organizations have been investing a lot of resources in gathering, altering, and exploiting raw materials in a steady rate, and this acts as a fundamental to success.

Amazon Overview

Amazon.Com, Inc, is a 500 fortune e-commerce firm based in Seattle, Washington. Amazon company deals with clothing, electronics, video games, music, toys, home furnishing, and kitchen gadgets among many other products (Ignat & Maha, 2012). Amazon is a complete customer focused company and has always taken advantage of any potential market opportunity, and this makes the company remain competitive. The internal behavior at Amazon is affected by external resources used by the firm, such as raw materials and the ordering of the brand products the company sells. This report aims at describing how resource dependency theory clarifies the manner in which Amazon deals with its dependence on other organizations for scarce resources and how it influences them to make the resources available.

Resource Dependency Theory

The resource dependency theory studies the existing relationship between organizations and the resources required by any firm to operate (Yin, 2013). Amazon.Com, Inc requires employees, the point of sales systems, distribution networks,  patents, lines of credit, and capital heaving to run its e-commerce operations. Amazon has designed sophisticated technologies that help the company offer cloud services to customers across all global markets. Resource dependency theory (RDT)  supports the management of  Amazon collect, alter, and exploit these resources faster than Google, Walmart, Target, and Alibaba who are the main competitors to the company (Ignat & Maha, 2012).

How Resource Dependency Theory Clarifies Amazon’s Dependance on Other Firms

The success of Amazon in the competitive e-commerce environment has substantially resulted from the management’s ability to understand the importance of RDT when dealing with its dependence on other organizations for scarce resources (Cummings & Worley, 2014). Competition for resources from Google, Target, and Walmart creates pressure on the success of Amazon since resources are limited and scarce. However, Amazon still continues to thrive and remain competitive in the business environment due to proper approaches when dealing with suppliers. The RD theory has helped Amazon  by:

Establishing Excellent Relationships

According to the resource dependency theory, organizations need to build healthy relationships with other firms where they seek to acquire resources from. In this regard, Amazon has laid down strong relationships with credit card companies, the shippers, and box makers company and this makes the company acquire resources quickly from these firms (Yin, 2013). The good relationships enjoyed by Amazon with the suppliers of products acts as a competitive advantage strategy for the company since the providers give the company top most priority when delivering raw materials, providing loans, and shipping products as compared to other competing firms in the e-commerce sector.

Minimizing its Dependence/ Raising Dependency of other Companies on Amazon

Amazon has gone an extra mile to alter the internal organization structure and behavior patterns as a strategy to acquire and maintain the required external resources. Amazon needs loans and credit funds to finance the company’s capital projects and hence has increased its dependency on credit firm businesses and banks in the United states of America (Cummings & Worley, 2014). However, Amazon does not acquire loans because it has no sufficient funds to run its operations, the main agenda is to create a mutual dependence between the credit firms and the company itself. Amazon has altered the internal structure of the enterprise by modifying the firm’s power and set the power mechanisms to correspond with power with the organizations it depends upon.

Strategizing Alternative Business Plans for Risk Reduction

The dependence on other agencies for the acquisition of scarce resources creates uncertainty, and this subjects Amazon external control hazards. These other companies such as financiers and web designer firms may impose control on Amazon’s activities, and this significantly affects its operations. However, since Amazon cannot deal without the external market players due to the limited resources, the management has designed alternative business plans to lower the risks accompanied with this approach (Jones, 2010). The RTD has helped managers of Amazon, an e-commerce dealer of over 500 fortune products single out the clients whom to depend upon. The company depends on particular firms who deliver resources to the company, and this has reduced the risk of uncertainty and hence the firm remaining competitive in the market.

Influence of Resource Dependency Theory to other Organizations in Making Resources Available

The internal resources and external resources influence both the company and other suppliers when making strategic decisions (Jones, 2010). The resource dependency theory plays a significant role and impact in the strategic decision making of organizations that Amazon depends upon for the acquisition of scarce resources which are competed for by various firms in the market. These influences of RDT to supplier companies making resources available for Amazon are:

Impacts Positively and Negatively on Making Strategic Decisions

The management of other organizations that are depended upon by Amazon in the supply of resources measures the uncertainty and the capacity of scarce resources before forming any decision (Hillman, Withers, & Collins, 2009). As per the RDT, the management of Amazon has no control over the scarce external resources, and this affects the production capacity, recruitment approaches, and creation of external organizational links. With limited and scarcity of resources, the management has little or no control over them.

Influences Power and Dependence

The RDT helps managers understand inter organizational relationships that contribute to either success of failure of the firm or other organizations. The fact that Amazon has created excellent relationships with external companies which supply the company with resources, the external suppliers value the relationship established between them and Amazon (Hatch & Cunliffe, 2013). As a result, this influences their power while maintaining stability in their respective firm’s exchange relationships. The effect of power have made these companies triump profits and establish distinct insights against the odds for Amazon is a reliable client for these enterprises.

Influences organizations strategies of enhancing their autonomy and pursuing interests

The resource dependence by Amazon to the above-mentioned groups is influenced by the significance of the resource, the capacity of resources available, and the controller of the resources available factors (Hessels & Terjesen, 2010). These organizations have enhanced their presence and autonomy of business interests bearing in mind that they provide scarce resources to a competitive environment (Coghlan & Brannick, 2014). The external organizations have gone to an extra mile of building industry-level dynamics at Amazon company. The motivation and reliance upon Amazon have ensured clients survival as well as enhanced autonomy.

Conclusion

Resource dependency theory plays a significant role in the success of organizations which apply the model in running the business operations. The scarcity of resources leads to stiff competition for the limited resources by firms that utilize them in their day to day operations. There is a need for businesses to alter and exploit the scarce raw materials steadily to remain competitive in the market. Organizations need to acknowledge that customers act as resources predisposed to scarcity. How the business behaves is influenced by the availability of external resources the company use. Business managers should continuously seek the benefits of improving networks and relationships with other firms so as to strengthen their own. Therefore, the resource dependency theory should get understood and it its concepts applied effectively in business operations.

References

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Yin, R. K. (2013). Case study research: Design and methods. Sage publications.