Organisational Structure of Wal-Mart, Core Business Values - Case Study Example

AN ANALYSIS OF A FAMILY BUSINESS INTRODUCTION The concept of a family business has been symbolic of corporate growth since the 16th century when suchenterprises were entirely managed by members of the family or one of more families, which involves the involvement of a significant ownership interest within members of the family. Family businesses are known to induce a great degree of commitment towards the organization, wherein individual stakeholders from the family often manage the several facets and departments by sharing each and every individual responsibility within the business (Kelin E. Gersick, 1997). In fact, many of the modern businesses, some of which are publicly traded on stock exchanges, are family owned enterprises. Some of the most famous business enterprises operated and owned by families includes successful and reputed ventures such as the ArcelorMittal group, the Ford motor company as well as the Wal-Mart group of supermarkets. The involvement of members of the family in organizing and running the business in managerial and executive capacities is known to strengthen the foundations of the company as such an involvement is often associated with an enhanced level of commitment and loyalty towards the firm and dedication to the welfare and growth of the family business. However, such an involvement is also known to include several deficiencies that arise mainly out of the dynamics on the basis of which a family system works and the mismatch between the system at home and the system at work often causes imbalances leading to tussles between family members. It is also necessary to point out here that additional problems may arise owing to the interests of family members that do not align with the larger interest of the business, which gives rise to friction and may even lead to the division or dissolution of the business (Marshall B. Paisner, 2000). Given the above introductory aspects of a family business, the discussion of a family business will be undertaken through a case study, which will analyze it from several perspectives. For the purpose of the current research, the Wal-Mart group shall be studied on the lines of the family business. The reasons for considering the group are many with the most significant among them being that Wal-Mart is the largest retailer in the world in addition to being the world’s largest employer for over 2 million people. Additionally, several top members of the Wal-Mart family manage the business in senior executive positions and continue to steer it towards newer challenges. As such, in view of the company’s size and success in a highly competitive environment as a family business, the individual aspects of the company’s operation will be studied. ORGANIZATIONAL STRUCTURE Wal-Mart was formed in mid 1962, by an Arkansas businessman Sam Walton by the opening of the first store in Rogers, Arkansas. Over the course of the next ten years, the chain went from expanding to 24 stores in several states other than Arkansas such as Missouri and Oklahoma. By 1970, the company grew to operating over 38 stores with sales of $45 million. The company was listed on the New York Stock Exchange in 1972 and the company was operating over 125 stores by 1975 with over 8000 employees with sales of more than a quarter billion dollars. In the 25 years of its existence, the company operated as many as 1200 stores with sales reaching a staggering $16 billion. During this period, the company is also known to have acknowledged its growing global presence and in response to increasing volumes of trade, the company implemented a global satellite network that helped track inventory and sales and allowed stores to communicate with each other (Stanley D. Brunn, 2006). The Waltons hold a 39% controlling stake in the company and members of the family have been consistently listed in the Forbes’ annual list. Currently, 6 members of the Waltons possess individual stakes in the company with a collective worth of over $75 billion. After Sam and Bud Walton steered the company during the initial 25 years, Wal-mart is currently headed by Rob Walton, the eldest son of Sam. After Sam’s departure from the scene, the company was headed by the four surviving members of the family that included John, Jim and Alice Walton apart from the current chairman, Rob (Greg Spotts, 2005). Among these four members, aside Rob Walton, none of the other members chose to get involved in the day to day operations of the business and instead decided to maintain an ownership stake in the company. The board of directors comprises a mix of distinguished individuals from several walks of life apart from consisting of two of the members of the Walton family comprising Rob and his younger brother Jim. Additionally, the board includes Aida Alvarez, a former member of the cabinet in the Bill Clinton Administration, who has been involved in several community based organizations. Jim Walton, the youngest son of the company’s founder is the chairman of Arvest bank and is ranked as the 4th richest person in the United States. The board also includes members of the academia such as James Cash Jr. from the Harvard Business School as well as a former chairman of the reserve bank of Australia, Roger Corbett. The Wal-Mart also includes people with a working knowledge of the consumer industry in the form of Douglas Daft, the former CEO of the Coca cola Company. Gregory Penner, a former partner at an investment firm has fulfilled the need for an expert in the financial aspect of the management of the chain while Arne Sorenson has chipped in to complete the legal component of the company board. It is also clear that the company has laid a prime emphasis on the management of capital by the induction of Christopher Williams, a well known personality credited with heading a number of Wealth management firms (Wal-Mart, 2009). The group of 16 board members of the firm thus represents a fine mix of professionals from several critical disciplines apart from the involvement of two members from the owing family in the firm. Thus, it can be easily seen that despite being owned and run as a family business, Wal-Mart continues to be guided by a number of additional people, whose contributions have been crucial in ensuring the continued success of the retail chain. ANALYSIS OF NON-CORE VALUES MANAGEMENT OF THE CORE BUSINESS VALUES For the purpose of the current study, the elements of Corporate Strategy and Quality will be studied. Wal-Mart has used three elements as part of its strategy formulation in addition to a fourth component to drive forth its corporate strategy in a successful manner. Wal-Mart believes in the need to dominate the retail sector in every area where it has a presence. Secondly, the company further believes that it can only grow through rapid expansion whether it be in the US or on an international scale. Wal-Mart has also worked towards maintaining a vibrant brand image by creating a widespread recognition and niche for itself and ensuring customer satisfaction at all times. The retailer is often associated with the notion of offering the best prices to consumers and the company has also branched out into other sectors within retailing that has included everything from conventional grocery sales to automotive repair and pharmaceuticals (Charles Fishman, 2006). Dominating the market where it exists has been one of the hallmarks of Wal-Mart’s growth initiatives, which began with the philosophy that the company’s founder inculcated right from the very start. The chain is regarded as a discount retailer because it has succeeded in offering products at the cheapest prices, which essentially derives from the numerous cost cutting measures that are undertaken at all levels and phases of the supply chain. Profit maximization thus relies predominantly on the volume of sales (William H. Marquard, Bill Birchard, 2006). Every unit is further vigorously encouraged to compete in the market with the only intention of gaining an outright dominance, which has constantly succeeded owing to the company’s size as also its massive buying power. The company employees over 2 million employees in different capacities and operates more than 1400 units worldwide. its international expansion has been quick and aggressive and it has done this successfully by entering a new market through takeovers of existing national retailers in the market. In a span of 10 years, Wal-Mart has over 100 stores in Germany, which was possible through the purchase of Wertkauf. In the UK, the total buyout of ASDA has helped it reach a similar figure of 265 outlets (Nelson Lichtenstein, 2006). This approach of corporate takeover has paid off in the long run and relieves the market of any serious competition. Wal-Mart has also worked towards generating a positive impression through advertising where it prefers to use its employees as its brand ambassadors. Further, the concept of co-branding with other popular brands such as McDonalds has provided exclusive revenue. The company has also branched out into new sectors thereby helping it challenge many other businesses (Sandra Stringer Vance, Roy V. Scott, 1994). This has helped it provide products in sectors such as electronics for much cheaper prices thereby helping it capture several segments giving a sense of an incursion. By maintaining quality and transparency in its operations and working towards offering products at the cheapest prices, Wal-Mart has used its financial might, immense resources as well as its size to dominate the retail industry. These elements have enabled it to do so with a sense of ruthless efficiency. Since the strategy is quite open and been followed and time tested, it seems to work wonders and has proved to be an effective component of the corporate model of Wal-Mart. References 1. Stanley D. Brunn (2006), Wal-Mart world: the worlds biggest corporation in the global economy. New York: CRC Press. 2. Greg Spotts (2005), Wal-mart: the high cost of low price. London: Disinformation Company. 3. Charles Fishman (2006), The Wal-Mart Effect: How the Worlds Most Powerful Company Really Works--And How Its Transforming the American Economy. London: Penguin. 4. William H. Marquard, Bill Birchard (2006), Wal-Smart: What It Really Takes to Profit in a Wal-Mart World. New York: McGraw Hill. 5. Nelson Lichtenstein (2006), Wal-Mart: The Face of Twenty-first-century Capitalism. London: New Press. 6. Sandra Stringer Vance, Roy V. Scott (1994), Wal-Mart: A History of Sam Waltons Retail Phenomenon. London: Maxwell Macmillan. 7. Wal-Mart (2009), Board of Directors. Found at URL: http://walmartstores.com/Investors/7622.aspx 8. Kelin E. Gersick (1997), Generation to generation: life cycles of the family business. Harvard Business Press. 9. Marshall B. Paisner (2000), Sustaining the Family Business. Boston: Pegasus. 10. Bob Ortega (1999), In Sam we trust: the untold story of Sam Walton and how Wal-Mart is devouring the world. New York: Kogan Page. Read More