Wal-Marts Organizational Structure - Essay Example

? Wal-Mart’s Organizational Structure WAL-MART’S ORGANIZATIONAL STRUCTURE Introduction The organizational structure of any companyis referent to the formal reporting and task relationships, which allows a company to motivate, coordinate, and control employees in order to attain a common objective (MacKenzie, 2008). While there are some five to eight basic forms of organizational structures, every organization possesses a unique way in which they consolidate their different organizational components into one outline of structure, which allows them to manage essential relationships. In coming up with the right structure, organizations search for the one that is most effective in categorization of departments and relational coordination, which is essential to achieve optimal production levels. Wal-Mart has a three divisional structure for products. Their business categories are composed of Sam’s Club, Wal-Mart Stores, and International Stores. Approximately 20% of Wal-Mart’s business income is from their international segment, which is responsible for stores and restaurants in thirteen countries, including Sam’s Club and Wal-Mart Stores. By using a divisional structure, they are at an advantage since every division has the ability to focus on its specific objectives and goals, for example customers, service, and products (MacKenzie, 2008). By narrowing their focus, Wal-Mart is enabled to perform with more efficiency as they can locate particular areas that they should adjust or change as needed. Wal-Mart’s Organizational Structure Wal-Mart, as a major retail corporation, consists of stores that are spread all over the US, as well as the world, making them one of the largest retailers in the world. Because of the complexity that this comes with, it is essential that they have a well thought out and strong organizational structure. The organization settled on the matrix structure, which refers to an organization that has various managers reporting to more than one superior in a dual reporting relationship (MacKenzie, 2008). In this type of organizational structure, there are various management levels, as is the case with Wal-Mart. Wal-Mart has management for their domestic operations and their international operations. By having it this way, Wal-Mart was able to create a structure that suited their complex business operations and needs. Because of the many stores that Wal-Mart has all over the world, which are heavily dependent on the organization in order to run efficiently and effectively, this organizational structure allows them to improve their decision-making mechanisms by having managers who can deal with local issues and get the input of the overall executive managers (Brunn, 2012). Wal-Mart is also able to satisfy their customers through this structure since the different managers are able to come up with strategies that suit their local market, rather than overall strategies that may not be compatible. The matrix structure is just one of many diverse structures used by organizations. As mentioned, the organizational structure chosen by a specific company is dependent on the complexities of their business, as well as the requirements of managing their competencies. Apart from the matrix structure, there is the divisional organizational structure. This structure has its basis on the customer, products, and geographic location, which is unlike the matrix organizational structure that is based on reporting and who employees report (MacKenzie, 2008). These could be shift managers, general managers, and CEOs. In the divisional structure, the functional areas that compose an organization are divided into various divisions. Each of the divisions has resources that allow it to function independently. One example of a company using a divisional structure is GE, which has divisions like turbine division and microwave division, each with independent finance and marketing teams. Another type of structure is the functional structure, in which the organization groups various departments with regards to the group’s skills. This allows the company to improve efficiency of different functional groups by allowing, for example, a software company, to staff their engineering department with software engineers (MacKenzie, 2008). This allows management of different functional groups to be more effective and easier. Wal-Mart’s Organizational Function Wal-Mart is made up of a marketing team that aims to keep their customer base happy and retain them in the process. For instance, their slogan “Save Money, Live Better” is aimed at convincing their customers that they have the best prices for everything they would need (Brunn, 2012). Another department that is important to Wal-Mart is the finance department, while the human resource department also plays a critical role in their operations. With three critical departments, as well as others that are not as critical but important all the same, there is a need to consider the different skills required. Thus, a structure that allows these departments to be organized under one operation is required. The matrix organizational structure is best in this case as Wal-Mart has different departments, which require different managers. The matrix structure allows the company system to be broken down in a way that lets each manager report to the same managers above them, which works all the way back to the leadership at headquarters (Baligh, 2011). Owing to the international stature of Wal-Mart, it is essential that they possess a structure that ensures all departments run without major hitches (Brunn, 2012). Lack of a structure that allows for the efficient running of each critical department will risk hurting their operations. Wal-Mart currently faces increasing competition in the retail sector. For this reason, it is important that they have a well-organized marketing department that allows them to overcome competition. Wal-Mart is also one of the largest employers in the US, as well as around the world, which means that their human resource department needs a highly coherent structure in order to operate efficiently. They also need the ability to retain their employees, which means that their human resource department is essential if their business is to flourish as a whole (Baligh, 2011). Wal-Mart’s Organizational Design A divisional structure has various autonomous and separate divisions or units. One corporation could have multiple divisions, each of which has its own specific objectives and goals. Managers who are responsible for the division’s failure or success oversee the divisions (Baligh, 2011). For this reason, the managers are required to focus on their results since they will have to account for any of them. As mentioned, Wal-Mart has operations all over the world, which has a significant impact on their organizational structure. Each of the countries has its own specific way of conducting business, which means that the geographic design of Wal-Mart’s organizational structure is essential. At the same time, however, Wal-Mart also has its own regulations that the different stores all over the world need to follow. A matrix structure assists the employees in understanding what is expected of them in spite of their location (Baligh, 2011). A single misstep at any location could end up hurting Wal-Mart’s reputation. Thus, the matrix structure keeps all the employees informed on what the Wal-Mart mission and goals are to ensure uniformity. A geographical design structure allows Wal-Mart’s employees to be grouped together according to their locations (Brunn, 2012). Owing to this geographically dispersed nature of Wal-Mart, there is a need to delegate responsibilities and tasks to subordinates in the organization, which is enabled by a matrix structure. While these responsibilities and tasks are delegated, the responsibility for their implementation lies with the managers (Baligh, 2011). Delegation is widely used at Wal-Mart in managing and controlling leading functions. In this case, the delegation flows from the regional manager to the store manager and down to the assistant manager and employees, although the final responsibilities for the operations of the store are with Wal-Mart’s regional managers. A matrix structure allows the Walton family, which owns Wal-Mart, to delegate responsibility and authority to lower level managers in order to carry out their duties and tasks. Conclusion Every organization has its specific structure, whether it operates locally or internationally. Where a business operates both locally and internationally, the organizational structure has to cater for the different needs to those that operate locally. This is the case with Wal-Mart; it needs a structure that takes into consideration the importance of its different departments. A matrix structure enables that Wal-Mart is able to run its different stores located around the world efficiently, as well as its different departments that are essential to its success. These include the human resource department, the finance department, and the marketing department. For this reason, Wal-Mart had to come up with a unique organizational structure that considered all these factors. References Baligh, H. H. (2011). Organization structures: Theory and design, analysis and prescription. New York, NY: Springer. Brunn, S. D. (2012). Wal-Mart world: The world's biggest corporation in the global economy. New York: Routledge. MacKenzie, K. D. (2008). Organizational structures, Arlington Heights, III: AHM. Read More