Organizational Background – Summary of company’s history, vision, mission, growth, development, and core competencies

ORGANIZATIONAL BACKGROUND –

Samuel Moore Walton, the founder of Walmart opens the first Wal-Mart store called ‘Wal-Mart Discount City’ combining general merchandise and a full-scale supermarket store in 1962 at Rogers, Arkansas, with its headquarters in Bentonville, after years in the retail management business.

1969 The company officially incorporates as Wal-Mart Stores, Inc.

Walmart’s USP officially becomes ‘Sell brand merchandise at low prices’. Introduced the concept of Every Day Low Prices (EDLP)

In 1971, a profit-sharing plan allowing employees to set aside a certain percentage of their salaries towards purchasing subsidized Walmart stock.

In 1972 Walmart as (WMT) is publicly traded at the NYSE

1975 ‘Walmart Cheer’ is introduced as an employee morale booster

In1983 Walmart’s first Sam’s Club warehouse stores or Sam’s West, Inc (with membership operations) opens in Midwest City, Oklahoma followed by 5 types of store formats over the years to gain entry into otherwise closed markets.

Walmart opened its first Supercenter (179,000 sqft), (Walmart Express stores 15,000 sqft), Walmart Discount Store (105,000 sq feet), Neighborhood Markets, gas station/convenience store. An upcoming format under trial is the Walmart on Campus convenience stores (2,500-square foot)

In 1985, the ‘Made in America’ campaign is launched to compensate trade deficits and the loss of American manufacturing jobs,

In 1990, Walmart became America’s number-one retailer.

Wal-Mart gained a global presence in 1991 as it expanded into Mexico

Post 2000- Walmart launches drive-through pick-up option and drive-in pick-up centers, and Home delivery services,

Acquires  Moosejaw, ModCloth, Bonobos and Parcel. J

Introduces a 2-day free shipping

Wal-Mart operates over 5,000 stores and is the world’s largest corporation, employs over 1.6 million people million in the United States alone according to 2005 Fortune 500 list for its one-stop shopping convenience ranging from groceries to generic medication and car mechanical services. Its annual revenue is $288 billion with over $10 billion in profits.

Vision: To be the best retailer in the hearts and minds of consumers and employees.

Mission: “Saving people money so they can live better.” (based on Porter’s model)

Growth: Walmart is implementing a 3-year growth strategy which includes:

Offering a seamless shopping experience, introducing 3D print figurines (2018)

4-pronged shopping accessibility- (mobile, online, in-store, combination)

Pursuing an unorthodox route towards growth by shrinking its stores

Expanding the assortment in products

Development: Business Model: Perfect SMB solution with a simple interface, effortless automation, and a convenient pay-as-you-go plan. In the implementation of this plan were involved the following factors:

– Lead on Price

-Invest to differentiate on access

-Be competitive on assortment

-Deliver a great experience

Maintaining the net sales at 12% pa

Expanding internationally into high population areas

Reducing operating costs

Adding critical capabilities

Enhancing the digital relationship with the customers

Core competencies:

Low cost operations and EDLP (Everyday Low Prices)

Optimal usage of Walmart’s (JIT) Just-in-time inventory  management and IT

Streamlined logistics and technologies to maintain communication with suppliers and customers

Work culture; efficient and process driven employees

Analysis of Management Functions:

Planning. Based on what you have learned through your research, how would you characterize conditions in the planning environment? What types of problems does the organization face (e.g., structured, unstructured), and to what extent should the organizations decisions be programmed or non-programmed? How would you characterize the level certainty, uncertainty, and risk the organization faces?

Organizing. How is the organization organized? Would you characterize it as centralized or decentralized? Describe the organizational structure and evaluate how appropriate this structure is for the organization (the strengths and drawbacks of its structure). If you learned about the organizational culture, describe the culture and evaluate the extent to which the culture enhances organizational effectiveness and efficiency.

Leading. Based on your research, how would you characterize the nature of leadership of your organization? How would you characterize its leader’s leadership style, communication style and interpersonal skills? How effective is this leader?

Controlling. Describe what performance indicators are important for this company to track and measure. How effective is management at using these controls to ensure that it is achieving its goals and objectives?

PLANNING – The organization experiences problems of both types which it handles flexibly with

Unstructured problems: Example- Walmart faces the problem of increased competition from Target, Kroger and Amazon.

Structured problems: Employee overtime, salary, sexual harassment and discrimination.

The organization’s decisions are programmed with regard to customer dissatisfaction with a product.

Non-programmed decisions are taken by the company

To improve distribution systems

While competing with rivals and

Maintaining the customer base in times of an economic fluctuation or crisis.

ORGANIZING –

Wal-Mart follows a ‘Two-tier system or Divisional Organization Structure’ at the top level and a matrix organizational structure at the store level. It includes these key elements:

The Organization structure features:

Strengths

Reacts quickly to an unstable environment.

Scale of operations

Good Employee retention rate

Competence in information systems

Wide range of products

Cost leadership strategy

International operations

Training and Development

Feedback option: Sam’s suggestion system

Employee advancement programs

Drawbacks

Creating vacancies more than necessary

Hampers the career growth of its specialized professionals

Involved in frequent labor related lawsuits

High employee turnover

Negative media publicity

Too much market experimentation- eg: Goodies.co

Organizational culture: It is inclusive in nature and founded on simple rules like: The ‘three basic beliefs’, ‘ten foot rule’, and ‘the sundown rule’ that have steered the organization’s culture besides implementing the basic principles or values of Walmart which include :

The work culture at Walmart enhances its organizational effectiveness and efficiency which is gauged by the following indicators:

High levels of employee participation Denison (1990).

Consistent incentives, appraisal and performance measurement systems

Maintaining appropriate error-detection and accountability systems (Schein 1999)

Training, identifying role models (Schein 1999)

LEADING: The organization exhibits Transformational Leadership, which is based on the 4I’s: Individual Consideration (like employee stocks), Inspirational Motivation (Wal-Mart Cheers), Intellectual Stimulation (EDLP, Universal Product Code (barcodes, private satellite system for Walmart’s inventory) and Idealized Influence (strong determination, Sundown Rule). ‘Servant Leadership’ was an outcome of this approach of leadership which involves:

Walmart has been presented with the Ron Brown Award for Corporate Leadership that recognizes companies with outstanding achievement in employee and community relations.

CONTROLLING

To gauge the organization’s Key Performance Indicators (KPI), which focuses on issues most relevant to that product’s lifecycle impacts on the environment and/or society, Walmart has closely partnered with ‘The Sustainability Consortium’

Modern technology and inventory system (JIT)

Digital communication with its suppliers and customers

Customer controlling via predictive analytics

Partnerships and alliances

Supply chain excellence.

Important performance indicators include but are not limited to spoilage per day, amount of electricity used per day, weekly employee hours, and store sales per day.

Employee satisfaction, turnover, performance, and absenteeism are also good to have.

Ethics and Corporate Social Responsibility

1. Which ethical systems are in use in the company (Teleological, Egoism, Utiliarianism, Deontological, Justice, Relativism per the Ethical Systems link under Week 8) and why do you think so?
2. Identify your company’s ethical issues.
3. Explain and defend your response to these ethical issues, in light of the Markkula app and the other reading on Ethical Systems (see link under Week 8) This may be what you used in the third building block assignment, perhaps with some improvements to it).

ETHICAL SYSTEMS- Global Ethics

Walmart in its initial stages was founded upon Teleological ethics, which was a part of its Global Ethics system and includes the religious ideals of ethical involvement versus a purely rational mindset and logical approach. I think it is so, because Sam Walton the founder introduced the art of ‘Servant Leadership’ amongst his employees, which is based on Biblical principles. However, with time, the Global Ethics system seems to have overtaken the former.

ETHICAL ISSUES –

Walmart has had its share of ethical issues (5,000 lawsuits/year) as any Big Box store would, which the media has highlighted repeatedly for the following reasons:

It discourages labor/ trade unions

Its influx into communities causes a net loss

It thrives on immigrant and child labor

It underpays its women staff (SC-2011)

Discriminates against physically challenged or elderly staff

Overnight employees have been locked in to make certain their shift hours was complete

Enforcing work during off the clock hours

Thefts in employees wages observed

Pathetic healthcare offers

Employee sexual harassment

Uses animals to lure customers- cockfights etc

ETHICAL RESPONSE-

In light of the Markkula app, the organization has taken the following steps to restore its brand image in the Global market as per its Follow-up report released by its Global : Multilingual Global Ethics Helpline 24 X7

Corporate Social Responsibility- Scholarships for higher studies, disaster relief, wildlife habitat protection, global waste diverted from landfills, training US associates. Strengthening local communities

Global Anti-Corruption Policy,

Prohibition on the improper use of drugs and alcohol,

Discrimination & Harassment Prevention

To fully comply with all its corporate policies and procedures related to wage and hour issues and off the clock work

Conclusions

In this section you should state your opinion on what you have learned from your research. Would you want to invest your money in this company? Do you think it is a survivor? Would you buy its product or service? Is its competition better than it is? If the reader only read this section, what would you want him or her to know about this organization?

CONCLUSIONS –

Though the global presence of Walmart, its position in the stock market, its work culture and principles were initially commendable, but after Sam Walton passed away, things haven’t been the same. The store still runs but the spirit doesn’t. It is a survivor, but more because of the brand name and image that one man built out of sincerity, on principles of Christian discipleship. It’s just managing to prop itself up on past glory.

I would probably still shop at Walmart for the convenience of shopping but not invest my money, because it comes across as a company that looks more out of the window than at the state of its own house. Its busy with environmental issues, corporate social responsibility, feeding the poor, educating the poor and helping evade disasters but from reports about the corporate retail giant, the following have come to light:

Walmart employees earn an average of $13,312 pa, while the Federal poverty cut-of for a family of 3 members is $14,630. Surprisingly, union grocery workers
earn 30% more.

Contrary to its ‘Make in America’ campaign, it imported 12 billion in goods from China, 10% of US imports from China.

The Walmart Healthcare charges 20% of a worker’s paycheck. Employees can’t afford it

Walmart offers bargains which customers buy at any cost.
Eg: Walmart customers trampled on a woman in their desire to buy a $29.00 DVD sold at one of the Walmart stores.

History has on record that even organizations can be noble or evil. Walmart fails the test in bringing out the best in people. In short, if Walmart pulls up its socks, it can regain its former glory of being the best retain store in the world ethically!

SOURCES

Bergdahl M. (2006). The 10 Rules of Sam Walton. Retrieved Apr 23, 2014, from http://www.dmmserver.com/DialABook/978/047/174/9780471748120.html

Walmart Now Has Six Types of Stores

fromhttps://247wallst.com/retail/2014/03/22/walmart-now-has-six-types-of-stores

/ Cherry K. (n.d.). What Is Transformational Leadership? Retrieved Apr 23, 2014, from http://psychology.about.com/od/leadership/a/transformational.htm

Farfan B. (n.d.). Wal-Mart Stores’ Mission Statement – People, Saving Money, Living a Better Live. Retrieved Apr 21, 2014, from http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission

Walmarts LongTterm GrowthStrategy-Try,try and try again

From: https://www.cnbc.com/2014/08/12/walmarts-long-term-growth-strategy-try-try-and-try-

From: https://www.scribd.com/doc/60889116/Executive-Summary-Walmart