Organisational Level of Analysis: Wal-Mart - Case Study Example

Organisational level of analysis Introduction The effectiveness and performance of an organisation depends on prevalent culture or organisational behaviour. The existing organisational culture affects all business operations like making strategic decisions, managing of workplace relations and change management among others (Wong, Alexander, & Venable, 2012). The above aspects of an organisation have direct effects on employee productivity, absence, citizenship and turnover. For instance, human resource practises have a lot to do with the performance of an organisation. The aim of human resource management is often to create caring, flexible and open management style (Guest, 2011). In this case, human resource management develops, motivates and manages employee effectively so that they can give their best for achieving missions of various departments. Nonetheless, issues like leadership have everything to do with the direction that the company is moving towards (Guest, 2011). Good leadership is a prerequisite for creating a perfect organisational culture. The approaches have found their uses in the modern organisational environments where companies are using them to gain competitive advantage. Most modern organisations focus their attention on performance and effectiveness of their overall strategies. Therefore, this essay seeks to carry out an analysis of Wal-Mart as one of the multinational companies that record good performance in the global economic market. An overview of Wal-Mart Wal-Mart is among the largest corporations in America that provide goods at relatively low prices (Lichtenstein, 2013). The corporation operates within the retail sales industry and has been recording tremendous growth as new stores continue to crop up in US and beyond under the same name. The corporation dates back a few decades ago when the Walton family founded it in Arkansas. The growth and expansion of Wal-Mart finds its basis from consolidation strategy (Kneer, 2009). The strategy implies that a business or a strong corporation focuses on dominating small businesses thus leaving residents with no option for their local retail markets (Kneer, 2009). Nonetheless, the outstanding growth of Wal-Mart is a classic example of a business entity thriving in the modern or global economic system as well as how customers react to operations of organisations. The retail market has many customers whose needs are difficult to satisfy. However, Wal-Mart has succeeded in the market thus it is imperative to discuss how the organisation has become very influential in the modern business environment. Reports indicate that Wal-Mart’s ultra-competitiveness would stem from mistreatment of associates, customers as well as abusing suppliers (Kneer, 2009). Nonetheless, Wal-Mart has been under fire many times for using grey-market merchandising and sweatshops. Therefore, it beats logic how a company that would abuse its worker’s rights, and engage in a serious of legal suits would dominate the world’s retail industry. The 1990s marked problems for the corporations as anti-Wal-Mart campaigns hit the streets (Lichtenstein, 2013). There was resistance from a large section of the society including workers, customers, shop-keepers as well as non-governmental organisations. Despite all the issues, the corporation was able to pull through, and is now enjoying a large market share in the retail industry. Maybe, the success is due the targeting of US neighbours like Canada, Mexico, Argentina, and Puerto Rico (Lichtenstein, 2013). Nonetheless, the corporation targets families that have large incomes like Germany, and Britain. Besides, Wal-Mart targets countries with dense populations like Brazil, Korea, and China. Nevertheless, the company adopted an aggressive policy towards acquisition of a series of big supermarkets which also explains the reason behind its dominance in the retail sector (Kneer, 2009). SWOT analysis of Wal-Mart In business management, SWOT analysis is a tool that outlines some of the strengths, weaknesses, opportunities and threats that are affecting a company’s operations. They are both internal and external factors. In the case of Wal-Mart, there are many internal and external factors affecting its strategic business operations. Strengths Wal-Mart boasts of operating in a large scale; this strength has made the company the leading and largest retailer worldwide (Kneer, 2009). The company has approximately 10, 130 stores around the world and records up to $400 in revenue collection (Lichtenstein, 2013). The large scale operations imply that Wal-Mart corporation can use the strong buyer power to influence the prices that suppliers charge. The other strength of the corporation is Wal-Mart’s competent information systems which have always enabled the company to save its cost by ensuring effective tracking of records such as sales, inventories, and other relevant information. Nonetheless, the company has diverse products ranging from grocery, health and fitness, entertainment, home appliances and apparel. Besides, the company uses cost leadership strategy which enables the corporation to maintain the position as the low cost leader in the industry (Kneer, 2009). The strategy entails provision of services and products at very low prices while attracting as many consumers as possible through quality assurance. Finally, Wal-Mart has focused on international operations since the company does not rely entirely on the US market. In the year 2013, for instance, the company recorded an outstanding $135 billion in its sales from the international operations (Lichtenstein, 2013). In addition, the company’s international growth has been faster than the development in home market. Weaknesses Wal-Mart remains in history as some of the companies with many lawsuits concerning labour rights (Kneer, 2009). Each and every year, the company engages in lawsuits that force the corporation to spend millions in settlements. Wal-Mart is home to low wages, poor working conditions, gender discrimination, and labour exploitation. The issues have negative impacts on the company’s reputation. Poor working conditions have always led to high turnover in the corporation. Employee turnover increases expenditure since the company has to spend on training new employees. On the other hand, there is little differentiation in Wal-Mart’s products relative to the competitors (Kneer, 2009). In future, the company may suffer if average consumers improve their income status or when commodity prices will go up. Conversely, all questionable practices have created negative publicity for Wal-Mart. Opportunities Retail marketing is growing in the emerging economies. The emerging markets like Brazil and Mexico are some of the targets of Wal-Mart. Plans are underway to increase presence and influence in such markets as a way of sustaining future growth. Reports indicate that there is an increasing acceptance for private labels or brands in the market (Kneer, 2009). Many consumers now prefer chain products from the supermarkets that have their own labels. Therefore, there is an opportunity for increasing private labels as a way of earning high profit margins, and increasing competitiveness. Nonetheless, there has been a growing awareness on healthy eating that marks the rising demand for groceries. Thus, there is an opportunity to expand grocery stores. Another obvious opportunity is the growth of online shopping (Kneer, 2009). There is an opportunity to many online stores as a way of increasing dominance in the retail industry. Threats One of the threats that Wal-Mart faces is the eminent competition from online companies as well as mortar, and brick competitors (Kneer, 2009). There is high competition coming from companies like Target, Tesco, Amazon, and Costco. Wal-Mart only has low pricing as its strategic advantage, but does not differentiate itself from other retailers using the same strategy. On the other hand, there has been an increase in the opposition from the local communities (Lichtenstein, 2013). The corporation opened up superstores without considering the influence it would have on the local retailers. When Wal-Mart opens, the locals close their retails, and this affects their families. Finally, prices of commodities are also rising which may squeeze the company’s profit margins as well as do away with its competitive advantage. Recommendable strategies for improving performance One of the problems facing Wal-Mart is the poor relationship management among its employees, suppliers, the community, and even the customers. Therefore, performance of the organisation can only improve if the management puts more emphasis in managing relationships. Management of relationships starts from the human resource department. In this case, the company must adopt sound human resource practices. A perfect way to go about human resource management is using skilled-based approach (Wong, Alexander, & Venable, 2012). The human resource management strategy or approach is still new in the modern business environment. Nonetheless, skill-based human resource management strategy entails focusing on rewarding employees for their achievements, and efforts. Wal-Mart has a track record of mistreating its employees with low wages. However, it is the role of the human resource manager to ensure that the reward system is fare, and compensates employees based on their skills. Guest (2011) suggests that failure to administer fairness in rewarding employees has a negative effect on their morale. Therefore, the corporation should aim at motivating its employees by adapting human resource management strategies that focus on workers, and their rights. Another useful strategy that can improve Wal-Mart’s performance in the global market is differentiation as an approach that businesses use to develop unique products (Cummings, & Worley, 2014). Since the company focuses on household appliances and other small scale products, there is no differentiation of Wal-Mart’s products from other competitors. The only strategic advantage is the cost leadership that enables the corporation to use low costs in production. However, competitors may come up with better strategies implying that the company should focus on its core competencies for designing new products to survive the competition. Nonetheless, the company has a good share of the retail market (Kneer, 2009). If Wal-Mart differentiates its products from competitors, then the revenue collection or profit margins will increase. Product differentiation goes in hand with value creation which entails attaching more benefits to a brand. The executive management at Wal-Mart, therefore, should look of ways of adding value to their products. The negative stories about Wal-Mart may be in existence due to poor leadership that the corporation has had over the years. Previous regimes tolerated mistreatment of employees, suppliers, and customers (Kneer, 2009). They also adapted some strategies that would affect their relationship with the communities. A good leadership approach during rough times is transformational leadership (Cummings, & Worley, 2014). The leadership approach focuses on initiating change in an organisation despite the costs it takes to realise the benefits. A competent executive team understands that the role of businesses in the modern society has changed. Businesses have the obligation to engage in socially responsible behaviours, and respect to the community as a whole. The way Wal-Mart is opening stores in local retail markets is hurting their economic survival. However, with good leadership, the company can find alternative solutions to local retailers as a way of building good relationship. The same applies the legal suits and cases of human rights violation. Models and theories of organisational performance The situation at Wal-Mart also requires a deeper understanding of various models that outline how organisation can improve their performance. Kotter’s 8 Model finds its use in many organisational and management situations when businesses are initiating change (Griffin, & Moorhead, 2011). The model is an eight-step procedure that can take an organisation through the change process. Wal-Mart requires some changes especially on organisational culture and relationship management. According to porter, change begins with creation of urgency where an organisation identifies the areas that require changes. Another useful model is the Causal Model of Organisational Performance and Change that some experts refer to as Litwin & Burker Model (Griffin, & Moorhead, 2011). The model is useful in a scenario like the Wal-Mart’s since it revolves around crucial organisational dimensions like external environment, leadership, structure, management practices, individual skills and tasks, motivation and overall organisational and individual performance. Recommendations for improvement The recommended strategies put more emphasis on relationship management (Cummings, & Worley, 2014). Therefore, the executive management at the company has the obligation to ensure that there is a good word in the street about the company. However, this calls for improvement in the organisation’s public relation strategies which comes from the human resource department. Good workplace relationship has direct impacts on the overall performance in the organisation since it translates to high morale, and motivation among the employees. Another area that requires improvement concerns the company’s approaches to business operations. There are many ways of attaining competitive advantage apart from low pricing (Guest, 2011). Nonetheless, the company has only one competitive advantage but the future is always uncertain since competitors may influence the market with unique approaches to customer service or product development. Having more than one competitive advantage implies that the business can survive competition. Conclusion The intensifying competition in the modern business environment is forcing companies or businesses to adopt strategies that place them miles ahead of their competitors. However, organisations have the slightest ideas on various dimensions that influence their performance. A good approach for improving organisational performance should focus on leadership, organisational culture, and sound human resource management practices. Failure to consider any of the dimensions may reduce competitiveness. Wal-Mart, for instance, has struggled against all odds to dominate the retail industry. The company is famous for poor working conditions, low wages, and poor relationships with all the stakeholders. A SWOT analysis of Wal-Mart reveals an organisation that is operating in a large scale, and has many opportunities to tap like the emerging markets (Kneer, 2009). However, there are eminent threats from competitors, and it is still unclear if Wal-Mart will stand the competition. Therefore, the essay recommends some strategies like skill-based human resource management, and product differentiation as some of the alternative means of improving the organisation’s performance. All approaches focus on products and relationship management thus Wal-Mart must focus on these areas to sustain its dominance in the global retail market. References Cummings, T., & Worley, C. (2014). Organization development and change. Connecticut: Cengage Learning. Guest, D. E. (2011). Human resource management and performance: still searching for some answers. Human Resource Management Journal, 21(1), 3-13. Kneer, C. (2009). The Wal-Mart Success Story. Munich: GRIN Verlag. Lichtenstein, N. (Ed.). (2013). Wal-Mart: The face of twenty-first-century capitalism. New York: The New Press. Wong, H., Alexander, P., & Venable, J. (2012). An Investigation of the Managerial Practices and Attitudes toward Organisational Culture Management in Western Australia. Journal of Human Resource Management, 2(1), 23-31. Griffin, R., & Moorhead, G. (2011). Organizational behavior. Connecticut: Cengage Learning. Read More