Organisational Structure And Culture Of Wal Mart Management Essay
This paper discusses about the organisational structure and culture of Wal-Mart. It gives an insight of how it manages to offer quality products and services at low prices and yet successful in the market. The paper focuses on the company’s organisational structure and functions. The structure and culture of Wal-Mart is based on many factors such as cost efficiency, its leading-edge logistics, commitment to customers and ability to install commitment and loyalty within the employees. The organisational structure varies from one organisation to another. Wal-Mart has flat structure which helps in having a wide span of control as compared with tall structure that have narrow span of control. It has strong vertical authority structure which is centralized as compared to those with weak authority structure are decentralized.
There are a number of organisational behaviours that are responsible for the success or failure of Wal-Mart, some of them would be communication, motivation and decision making. An organisation’s values, mission statements and goals make up the organizations culture. The best suited example of a successful company with a strong organizational culture and structure is Wal-Mart. The structure of Wal-Mart is built by separate, semi autonomous units or divisions i.e. within one corporation there can be different divisions and each one has their own goals and objectives to achieve. The manager supervises the activities of the workers under his division and is solely responsible for its success or failure. This enables managers to focus more on results as they are accountable for them.
Organisational Structure of Wal-Mart
Wal-Mart’s management structure and management style model is the created or moulded by Sam Walton’s principles and values. Increasing size and geographical scope of Wal-Mart determined that the corporate executives should remain in touch with customers and store operations on constantly basis. The key to the success of a good structure is the well organised hierarchy levels and effective communication. Wal-Mart is constructed into a three product divisional structure. It is a structure due to which communication between individual stores and headquarters is close and personal. The successful retail business categories include Wal-Mart Stores (U.S.), Sam’s Club (U.S.), and International stores. The divisional structure and approach is for Wal-Mart’s advantage because each division is open to focus on its efforts on specific goals such as products, services, or customers. Narrow focus allows the companies to perform effectively because they pinpoint specific areas which are needed to be changed and adjusted. Wal-Mart’s regional vice presidents are responsible for supervising between 10 and 15 district managers. The divisional structure is divided into three categories: product, market, and geographic.
Product structure groups’ employees which are based upon specific products produced by Wal-Mart. An example of this would be producing three distinct products, “product a”, “product b”, and “product c” and having a separate division for each these products.
Market structure groups employees together based upon specific markets in which it competes. At Wal-Mart also a form of market structure is used. It sells products to individual consumers and business customers. The sales and customer service departments are organized using market structure. Consumer sales and consumer customer service function together while corporate sales and corporate customer service worked together.
Geographic structure groups employees together based upon specific geographic location. This is often used by Wal-Mart as it operates in many areas throughout the United States or in both the U.S. and overseas.
Delegation is to assign tasks and responsibilities to other subordinates within the group or organization. These tasks and responsibilities are delegated to these others but the ultimate responsibility of completion still remains within the top level manager. In Wal-Mart, delegation is widely used to manage the leading functions and controlling. In Wal-Mart delegation takes place from the regional management to store manager to assistant manager and down to the staff members. The eventual responsibility for the store operations rests with the regional manager. Wal-Mart is under the control Walton family members. The Walton family delegates authority and responsibility to the lower level management to manage the employees and carry out their particular task and duties. Planning requires management to evaluate the company’s current position, and where it would like to be in the future. The function of organizing follows planning and shows how the organizations seek to achieve their goals and objectives. Wal-Mart is very forceful in offering low prices than excellent service. The low prices are resulted from the planning and organizing. It uses the process of automated data collection and analysis. Wal-Mart divides their employees into different sections to keep things in order. Initially the employees receive orders and place everything systematically for each department by pricing and organizing. Wal-Mart has access to good information systems that can track inventory from receipt to shelf placement to purchase. Through this new technology the lower level, manager can delegate the tasks to each department section accordingly. Many factors such as globalization, technology and innovation help Wal-Mart to extend operations to foreign territories and increase their profit margins. Within the basic code of ethic and use the diversity Wal-Mart had become one of the word largest corporation that value customers as their main priority over profits. Wal-Mart is able to achieve its goals because of delegation throughout the organization which makes every employee to feel as an essential asset for the organization success. Wal-Mart is has recently structured its business with global capabilities. It began to look for new opportunities few years ago, and now it is moving ahead rapidly. Due to its size domestically, and because it sells many of the same commodities in various countries, Wal-Mart attain economies of scale when it purchases goods. Its management believes that global procurement would be helpful for the gross margins. The strength can help in having cost advantages and differentiation of its products against local competition, being price sensitive, the low prices which Wal-Mart attains contribute to its success. For the organizations success, managers must know how to plan, organize, lead, and control. Management must use their skills to train associates about how to do a particular job. At Wal-Mart, the style of managing by manager affects the control function. For example, if the manager is not having sufficient control, associates will lose value for the manager, and if the manager is too insensitive, then associates will leave the business. It is the responsibility of the manager to consider all factors for the business to remain successful. Wal-Mart management structure is strong and effective which helps in keeping the company moving in the right direction at a constant speed. Wal-Mart has programs which are designed to identify high-potential individuals and help them in becoming useful assets for the company. The work force of Wal-mart does not have unions which provide more flexibility, productivity, and no threat strike or lockouts. Wal-Mart has a superior logistics system that promises to attain outstanding performance. It provides a competitive advantage as Wal-Mart can gain cost advantage by acquiring sources from the cheapest locations. Because of Globalization, Technology, and innovation management is demanding the change in structures and policies. Wal-Mart is a top business and a good example of a company that effectively utilizes all the functions of management. According to Britt D (2010), globalization provides new opportunities to a broader market and allows more competitors that will need superior level of competence. Because of globalization Wal-Mart is able to work in many foreign countries and increase its profits. Wal-Mart successfully keeps up and passes to other competitors with the decisions they have to make on how to keep up. In 2001 Wal-Mart renovated its technology by changing all of the mainframes. Wal-Mart constantly brings new products to consumers and fulfil the needs at lower prices than competitors. Wal-Mart has adapted to the day to day growing changes and demands of the consumers.
Organisational Culture of Wal-Mart
Wal-Mart is an economic force, world’s largest retailer and a cultural phenomenon. It initiated from a simple philosophy from Sam Walton according to which lowest prices are offered to the shoppers than anywhere else. This basic idea is the driver for the growth of Wal-Mart’s organisational culture. Sam Walton’s vision was to keep prices as low as possible. The margins offered by him weren’t as fast compared to the competitors but he tried to make that up in volume. Sam Walton, thrift and value for money were a religion. Undercutting the prices for competitor’s prices was an obsession that leads to never ending quest for cost economies. He set an example which can be matched by only few of the senior colleagues. He walked rather than took taxis and avoided any corporate traps for success. As a chairman he was clear about his priorities which were related to his employees, customers and operational details. A unique spirit of motivation and involvement was created within the company by giving people responsibility, trusting them, and continually monitoring their performances. Walton used to drive an old pickup truck and share budget-hotel rooms with his colleagues on business trips, even after the success of Wal-Mart. He also wanted his employees to cut down the expenses to bear minimum. This mentality portrayed the loyalty and heart towards the Wal-Mart’s culture even after his death in 1992. The company continued to grow rapidly after his death. For Example, Wal-Mart’s “10-foot attitude” pledge is based on the request to store a employee that: “I want you to promise that whenever you come 10 feet closer of a customer, you will look him in eye, greet him and ask him if you can help. The “Sundown Rule” – that every request no matter how big or small gets same-day service-has become the basis for Wal-Mart’s fast -response management system. Wal-Mart replaced its mission slogan; “Everyday low prices” by “Save money, Live Better” was projected to imitate Walton’s perseverance that Wal-Mart played a vital role in the happiness and well-being of common people. Currently it has four retail divisions- Wal-Mart Supercenters, Wal-Mart discount stores, Neighbourhood Market stores and Sam’s Club warehouses. The first Wal-Mart was opened in Rogers, Arkansans in 1960. They continued to grow by going public in 1970 by adding more stores per year. By 19990, Wal-Mart exceeded their key rival Kmart in size and in other two years it exceeded Sears. The penny-wise culture, found by Walton played a vital Wal-Mart’s success. This culture is present at the company’s headquarters. Wal-Mart has their headquarters in Bentonville, Arkansas, instead of a high-priced city like New York. The building is dowdy and unexciting. They work long hour shifts starting at 6:30 a.m. and working half-days on Saturdays. The main objective of Wal-Mart is to keep retail prices low – which proved to be the successful strategy for Wal-Mart. It has been estimated that Wal-Mart saves shoppers by more than 15 percent on a usual cart of groceries. By including technological and corporate culture Wal-Mart ensures to deliver the ultimate goal of lowest prices possible. Wal-Mart forces its suppliers to cut prices. In “The Wal-Mart Effect,” author Charles Fishman has discussed the logic for how the price of a four-pack of GE light bulbs decreased from $2.19 to 88 cents within five years. Ethnical diversity plays separately and it changes and affects the way Wal-Mart management lead their staff. For example, there may be a manager that understands; on the other hand, a manager finds that leading a staff that is lazy, does not care for the work, they might find another way to lead the team. This may cause the manager to manage or lead the staff in order to get the job done. Wal-Mart is known as the company which helps the customers to save money they can live better. It also serves unique corporate culture. The business is based on the values and morals. The rules and customs have served Wal-Mart in becoming one of the most admired companies. The rules and customs are based on the basic value of respect for the customers, associates, and suppliers. Wal-Mart serves the community in which it operates and builds a business which is dedicated to excellence.
Wal-Mart culture is based on open door policy which includes open communication which is critical for understanding and meeting customer needs. Associates can trust on open door and it is the most important part of their culture. Sundown rule means that Wal-Mart does their best to answer requests by the close of that business day on which it is received. It is done by combining the efforts and depending on each other to complete the job. Sam’s philosophy plays a vital role in Wal-Mart’s Grass Roots Process i.e. the formal way of capturing associates’ feedback. The 3 Basic Beliefs & Values which focuses on respecting the individuals, services to customers, striving for excellence. These beliefs are practiced each day while interacting with our customers and each other. 10-Foot Rule is secret for the customer service. While visiting various stores, Sam Walton encouraged employees to promise for interacting in a good way with the customers and help them. Servant Leadership states that effective leaders do not lead from the desks. Wal-Mart promotes the idea of developing leaders who are servants and listen to their partners, employees and helps in accomplishing the goals and duties assigned. Sam Walton believed in the power of teamwork. As the stores grow and the pace of modernizing increases teamwork plays and vital role in adapting those changes and working with cooperation.
Based on the analysis of the structure and culture of Wal-Mart it can be concluded that they play a major role for the success of the organisation. The structure of Wal-Mart clearly defines the roles of employees and lines of authority. By following divisional structure approach Wal-Mart has .flat structure which enables to have wide span of control. Effective communication and coordination among the employees is the key for having good Superior subordinate relations. The mission statements of Wal-Mart constitute the culture of the company. The main aim of Wal-Mart is to provide product and services at lower cost than any competitor. Wal-Mart’s management structure and culture is modelled by Sam Walton’s principle and values. Walton’s focuses on the executives to be in constant touch with the customers and store operations. Sam Walton gave importance to valuing the customers, providing services to customers and striving for excellence rather on profits. Wal-Mart delegates the tasks to the employees to have trust and maintain good environment within the organisation. The concepts of “10 -foot attitude” and “Sundown Rule” enabled Wal-Mart to maintain good customer services. The structure and culture of Wal-Mart are dependent on the founder of the organisation i.e. Sam Walton. He set simple and clear objectives for the company which can be achieved through following values and principles.