Understanding Organisation Theory and Practice - Case Study Example

Understanding Organizations: Theory & Practice (21512) Assignment Coordinator & Lecturer: Dr. Walter Jarvis Mr Tayyab Waqas Amjed Student Name: Student ID: Tutorial Time: Submission Date: March 31, 2015 1. Description of Organization The Wal-Mart. is a reputable retail chain store that has grown over time to become a worldwide giant in the retail stores business industry. After inception the company adopted a low pricing strategy to penetrate the market so that it would attract consumers to its retail chain outlets globally (Roberts and Berg, 2012). The organization also adopted a lean strategy that was meant to enhance efficiency while at the same time minimizing the wastage of resource. Currently, the organization operates about 8,900 outlets. Statistics indicate by 2010, the firm commanded about 60% of the industry’s revenues. In this paper I am going to analyze the Wal-Mart using the systems and contingency theories by examining their relevancy and limitations in analyzing the company using the theories and the seminal papers. 2. Selected Theories for Analysis of Wal-Mart Stores Inc. Systems theory The systems theory agitates for the interrelationships of all components of the organization in achieving its goals and objectives (Jones, 2010). The theory states that any small changes that occur in one section will have a corresponding reaction in another part of the business. Thus, the operations of the organization should be coordinated in a manner that interconnects the entire organization to work as one system in the market environment. Since the business environment is dynamic, a firm should develop adaptability strategies to enable it respond to the changes that comes up from time to time (Jones, 2010). The Wal-Mart as a global retail chain business, faces many challenges both domestically and globally. Therefore, I believe the theory is a perfect lens for analyzing the Wal-Mart since the retail chain industry is often faced with numerous changes ranging from inflation, changes in consumer preferences and tastes, competition, etc. Therefore, the theory is a crucial tool for analyzing the Wal-Mart because it can facilitate enable us to do an in-depth analysis to elaborate on how the Wal-Mart responds to these changes and how it has managed to maintain a competitive advantage over years in the industry. Conversely, the systems theory can enable us to understand how the Wal-Mart coordinates its various departs and outlets both locally and globally to achieve the high efficiency it enjoys in the industry, which has enabled it to generate significant amounts of revenue. Contingency theory The contingency theory primarily deals with conflicts in the business environment. Previous methods indicates that conflicts are avoidable but with the modern ramifications in the business environment, it is undeniable that conflicts are unavoidable and organizations have to formulate strategies to deal with them. In that light, I believe the contingency theory can enable us to understand how the Wal-Mart has been able to counter conflicts both internally and externally to stay afloat as a global retail chain giant in the industry for over twenty years. Moreover, the company has the largest pool of employees globally. Thus, the contingency theory, is an imperative tool that can provide us with a deeper understanding of how employee conflicts are managed in the organization to avoid civil unrests and go-slows (Black, 2003). 3. Seminal Papers and Analysis of Wal-Mart Stores Inc. Miles (2002) affirms that ‘conflicts of divergence between primary and agent desires are real and intractable.’ The article asserts the ideas of the contingency theory that conflicts are inevitable successful organization. Thus, I believe it is the duty of the Wal-Mart management to harmonize the operations of the firm by uniting the employees, suppliers and management to steer off conflicts that may threaten or hinder performance. Puyvelde et al., (2011) in their paper reinstates the importance of good working relations with various parties within an organization because of their influence on the overall organization’s behavior. Therefore, to create a cohesive company, the Wal-Mart management need to balance the interrelations among the different elements that make up the system as a whole such as the HRM units globally. Priesto and Easterby Smith (2006), asserts that given the dynamism of the market, conflicts are bound to come up. The paper elaborates the relation between the knowledge of management and its vitality in the context of particular firms. I think the Wal-Mart has been in business for a considerable period and thus has gained significant market knowledge that can enable it make informed decisions to ensure it efficiently adapts to the dynamic business environment and enable it to maintain a competitive edge in the industry. 4. Organizational Issues with the Lens of Selected Theories I think the systems theory can primarily be utilized by the Wal-Mart’s management to gauge whether their management practices addresses matters such as employee involvement and motivation. Employees are the most valuable asset of any firm and thus need to be motivated and incorporated in the formulation of strategies to enhance the company’s efficiency. However, with interests in global expansion, the Wal-Mart tend to outsource some of their personnel operations to third party firms that do not ensure the employees are motivated and engaged properly. Thus, I believe such strategies are the causes of drastic dwindling of employee morale in the organization that has continues to hinder performance and productivity. Conversely, internal wrangles are proving to be an emerging source of business failure because disengagement with personnel in the case for Wal-Mart due to global expansion. I believe this has resulted from the disjointed internal systems in the organization (Robbins et al., 2003). The Wal-Mart, for instance, faces strong criticism because of its strong stance on trade unions, exploitation of workers, and inadequate health care provision in various outlets globally, which has resulted low attention to the workers and failure to honor the minimum low wage requirements (“The Good”, n.d.). I can use the contingency as a cross check to analyze how best the Wal-Mart relates to its external environment to overcome the external threats. The theory can provide us with an in depth analysis of the Wal-Mart unethical practices such as the employees working for long hours with little wages; the failure to fulfil its corporate social responsibilities; criticism from labor unions for racial discrimination policies and practices; outsourcing of products from foreign suppliers; mistreatment of suppliers and unethical social and environmental policies (“The Good”, n.d.). Limitation of Theories for Analysis of Wal-Mart Stores Inc. The systems theory advocates interrelations among the components of the organizations; however, in some incidences the various departments of a firm need to outdo each other for the overall benefit of the company to be realized. Wal-Mart has differentiated its services into three main categories namely; Wal-Mart International, Sam’s stores, and Wal-Mart stores. All these segments are in constant competition with each other to ensure they maintain their relevance within the entire organization. The theory limits its empirical research to only selected operation without taking into consideration other ramifications from the external environment and other unforeseen factors that are likely to impact the course of action of various elements within a firm. Similarly, the contingency theory has been criticized of not been elaborate enough since it limits its results to dealing with conflicts and how businesses need to relate to external factors. On that note, the external environment presents both threats and opportunities to any given organization. The theory focuses on the risks that are responsible for potential conflicts and ignores the opportunities that can be capitalized to create competencies and enable the firm to obtain a competitive advantage in the market (Hill and Jones, 2012). 5. Different Stakeholders’ Perspectives It is imperative to note that despite being successful, the Wal-Mart has not been able to solve issues concerning employee motivation and unethical practices and policies that have been levelled against the company. However, customers believe the operations at Wal-Mart are at their best, and they wish the company to expand and differentiate its services so that they can continue enjoying low costs as well as convenience in accessing the stores. However, I believe the consumers and society at large have recognized the need for environmental protection and overall CSR and have started demanding that the company complies with its moral obligations, failure to which, then it should not deserve to have them as its customers (Hitt, Hoskisson & Ireland, 2013). Conversely, the employees at Wal-Mart argue that the profitability and expansion strategies of the Wal-Mart are the root of their tribulations in the company. The more profitable the company gets, the more it expands its services and thus the more it detaches itself from them. For instance, the employee argue that the kind of motivation and engagement they used to get while working for Wal-Mart ten years ago is very different from the current experience. I believe the management should thus become conscious to employee needs before they alienate themselves from the company’s objectives and goals, which can result in to collapse of the company like the case of the Circuit City. Douglas McMillon, the company’s CEO argues that the challenges facing Wal-Mart are not isolated since they are common to all organizations that have expanded immensely over a period of time. Thus, he acknowledges the existence of the problems but maintains the company is doing its best to solve them at the earliest opportunity (Mills, 2007). 6. Understanding of Different Stakeholders’ Perspectives Although shareholders wealth creation is the primary objective of any firm, CSR activities and a conducive working environment for employees is imperative (Schein, 2010). The management structure of Wal-Mart currently being implemented depict all manner of neglect for the employees and the society. The Wal-Mart management should, thus reconsider the manner in which it treats employees, suppliers and other stakeholders (“The Good”, n.d.). Thus, I think the Wal-Mart should identify other options to its growth strategy, by being sensitive to its CSR obligations and realize that productivity is a function of morale and growth is society based (Witcher and Chau, 2010). Conclusion It is evident that Wal-Mart’s drive to achieve high growth prospects has resulted in the neglect of employees’ welfare due to disjointed internal systems. Conversely, the management has taken a hard stance on trade unions with aim to conceal its inefficient structures that do not consider the plight of the lower level workers. I think the Wal-Mart’s management should, therefore, consider creating flexible HRM functional units for the various outlets globally, which are well coordinated to foster communication and employee engagement within the organization as a whole. Ultimately, with better and supportive workers policies and organizational structures, I believe the management can foster employee motivation, which in turn can translate to growth in revenues and size of the organization. 7. Reference List Black, R. J. (2003). Organisational culture: creating the influence needed for strategic success. Sydney, SY: Universal-Publishers. Donaldson, L. (2006). The contingency theory of organizational design: challenges and opportunities. In Organization Design New York, NY: Springer. Hill, C. W. L., & Jones, G. R., 2012. Strategic Management. Boston, MA: Cengage Learning. Hitt, M. A., Hoskisson, R. E., & Ireland, R. D., 2013. Strategic management: competitiveness & globalization: cases. Mason, OH, South-Western: Cengage Learning. Jones, G. R. (2010). Organizational theory, design, and change. New York, NY: Pearson. Miles, J. A. (2012). Management and organization theory: a Jossey-Bass reader (Vol. 9). Hoboken, NJ: John Wiley & Sons. Mills, A. J., 2007. Organizational behaviour in a global context. Peterborough, Ont: Broadview Press. Prieto, I. M., & Easterby-Smith, M. (2006). Dynamic capabilities and the role of organizational knowledge: an exploration. European Journal of Information Systems, 15(5), 500-510. Puyvelde, S., Caers, R., Bois C., & Jegers, M. 2011, ‘the Governance of Nonprofit Organizations: Integrating Agency Theory with Stakeholder and Stewardship Theories’. New York, NY: Sage Publications. Robbins, S. P., Odendaal, A., & Roodt, G., 2003. Organisational behaviour: global and Southern African Perspectives. Cape Town: Pearson Education South Africa. Roberts, B. R., & Berg, N., 2012. Wal-Mart: key insights and practical lessons from the worlds largest retailer. London, LA. Kogan Page. Schein, E. H., 2010. Organizational culture and leadership. San Francisco: Jossey-Bass. The Good, The Bad, and Wal-Mart. (n.d.). Available at: http://www.workplacefairness.org/reports/good-bad-wal-mart/wal-mart.php [Accessed 26 march 2015]. Witcher, B. J., & Chau, V. S., 2010. Strategic management: principles and practice. Boston, MA: Cengage Learning. Read More