Organizational Development and Change Management, the Storms That Are Hurting Walmart's Sales and Development - Term Paper Example

Organizational Development and Change Management. Introduction. The current business world is increasingly projectory with stakeholders demanding to know their expectations on investments made, managers struggling to cut operational costs and how to maximize output from the available limited resources. Economic analyst show that 85% or more performance-based problems are brewed from ineffective organizational structures, retrogressive enterprise culture, and system failure. It is undoubtable that most corporations are recording declining returns since they are putting the right inputs in bad systems which yield poor performances. Corporate managers-just like medical doctors- are expected to use precision instruments and expertise to diagnose problems faced by organizations and recommend measures to restore organizational performance. Most managers opt for tried and tested conventional intervention methods such as reorganization, instituting new employee training, changing leadership, but when all these measures are taken without rigorous diagnosis of the entire organization’s system, culture and structure, managers are likely to cure some problems while unintentionally crafting others (Agrawal & Smith, 2015). In order to appreciate the role of problem diagnosis in organizations, we will consider Walmart as prototype. According to the Fortune Global 500 list 2018, Walmart is the world’s largest retailer with over 11000 stores operating in 237 countries under different franchises. Globally, the store employs 2.2 million people-a number larger than the American military personnel. In 2014, the company hit a whopping $482.1 billion in total revenues. This paper seeks to run a problem diagnosis of the chosen organization-Walmart and try to disinter some of the symptoms that hinder its effective functioning. Current position of Walmart. The success of any retail business in the world is deeply embedded in the manner of engagement between the different players. Retail business has four major players, that is, manufacturers, wholesalers, retailers and customers at the final end of the chain. However, giant retail stores like Walmart have successfully scrapped the wholesalers effectively transact with the manufacturers thus reducing transactional cost. This is the first functional advantage that Walmart has taken to increase operational efficiency as a means of cutting cost and ensuring quality of its products. It is unquestionable that customers are the most essential unit and as such customer relation can make or break a retail business. For example, whenever you enter into one of their stores, there is a degree of warmth right from the reception who will inform you of the current available promotions and take you round the store to ensure that you take advantage of good deals. It does not matter whether you needed the assistance or not but the attention given to the client instills a sense of importance and adoration. Walmart’s Human Resource team have put considerable effort to attract the best talents in various fields of operation. Further they have a training program that fosters standardization and quality of services offered. The company uses the need analysis to assess how jobs suit their employees in the different environment they operate. Store managers regularly conduct the need analysis to ascertain if the employees are compatible with the jobs and relay the report to the company’s corporate HR who analyzes it and determines the changes to be instituted in the workforce (Tamini, 2018). Such analysis has ensured that Walmart employs a diversified workforce that suit their stores in different locations globally. Further, the analysis has seen them settle for a more technologically savvy workforce hence improving performance. Another functional unit that influences the running of the organization is the management. Over the years, Walmart’s leadership has made attempts to preserve values instilled by the founders that championed for constant improvement of employee morale. When Doug McMillon took over the helm of management at the company in 2014, he instituted a range of initiatives that gave priority to customer satisfaction, employee training, and improvement of workers’ welfare through better remuneration. Another important aspect brought about by the quality management at the store is job description. All employees at the store understand their roles thus reducing redundancy of work. The president is tasked with the responsibility of reporting to the stakeholders the position of the company while seeing the overall operation of the company. The marketing team is charged with ensuring best public relations, promotions and visual display of the products. Walmart has managed to keep few leadership tiers regardless of its massive size thus hastening the process of decision-making. Most importantly, the management has instilled a sense of teamwork that sees every employee pulling towards the same objective of the company. The management keeps reminding their employees the importance of working as a cog in the machine, with each cog performing a different task but contributing to the overall success (Samli, 2015). Lastly, Walmart takes keen consideration on its locational strategy and the design of products offered. Before Walmart opens shop in any location, it conducts a survey on the ease of movement of materials and human resource. Walmart’s locational strategy is designed to optimize on customer reach thus capitalizing on urban centers. Moreover, the company has a comprehensive online information system that enables them to digest real-time reports on market trends thus informing them on the best decision areas for their stores. On the design of product offered, the company focuses on cutting cost of production on their brands. They also take advantage of large discounts due to the bulk purchases hence allowing them to sell at competitive prices. Symptom impeding better functioning in Walmart. One of the most conspicuous symptoms that inhibit better functioning of Walmart is the constant battle for E-commerce glory by rival companies such as Amazon. There is a constant fight for e-commerce supremacy between the two giant retail stores to steal the heart, mind and wallets of potential clients. On one end is Amazon, a renowned technology heavyweight, and Walmart on the other trying tirelessly to dethrone the other. Tom Greenberg, a senior director of Product Innovation & Business Development at the Hawkins group, describes the battle by saying that “ The battle between Amazon and Walmart id the most exiting stories in retail and business, and so much of the ultimate outcome will depend on the Amazon’s ability to move offline and vice versa. The key for Walmart on the online front is to identify a place to close the gap (Brunn, 2006). Currently, they are investing heavily in the search as the route, though conversion data may point to referral traffic as the Key Avenue.” If Walmart is to compete effectively in the e-commerce market then it has to close the technological gap Amazon has created. Closing this gap may have heavy financial implications. For example, Walmart has invested heavily into e-commerce and is currently testing a delivery subscription channel alike to the one adopted by Amazon prime. Further, Walmart acquired jet.com to effectively compete with Amazon for the fashion millennial online shoppers. In response to this vicious attack, Amazon acquired Foods Market with an intent to eat up on the grocery market share which is largely controlled by Walmart. This symptom is an indicator that Walmart through the massive e-commerce investment is paying for under-investments. This is hindering its functioning in terms of profits realized since most of the profits are ploughed back into technological investments to match its rival-Amazon. The basis of any diagnostic model is systematically following and evaluating the reasons for organizational change. Managers need to constantly check for changes in the company’s internal and external environment and adjust promptly to the changes. For example, both Amazon and Walmart have realized the huge increase in online shoppers and need to take advantage of the flux. Walmart’s current incentive to fight for the digital market is a clear indication that their diagnostic model calls for a refocus in order to catch up with the market leaders. Walmart’s Primary problem. Walmart faces a myriad of operational related problems both within and outside the organization. Stiff competition is one of the key challenges that affects the profitability of the giant store. However, it is interesting to say that the interventional measures deployed to curb the stiff competition it faces have culminated to be problems too thus creating a scenario of a problem within a problem. Walmart’s competition strategy for online dominance with Amazon is the most conspicuous. Walmart has realized that their biggest undoing is limited investments in e-commerce and as such are trying to bridge the gap by investing heavily into technology (Hill, 2014). For example, Walmart has invested huge sums of money to expand its ordering services that allows clients to place order on groceries and have real-time tracking on the delivery process. This move could be viable but has negative financial implications on the profitability of the company since it channels funds that would have been invested in other profit-oriented activities. The second storm that is hurting Walmart’s sales is the limited disposable income of their customers. The company’s core clients are facing stagnating incomes which translates to less retail spending. Charles O’shea, Moody’s vice president agrees by saying that “Walmart is facing an almost perfect storm when it comes to top-line growth. Until the health of the lower-to-middle income consumer improves, Walmart will continue to face macroeconomic headwinds in the US.” This is a clear manifestation that the low and middle income earners- who are the bulk of Walmart’s customer base, are experiencing deflation that affects their appetite to shop. One month ago, Walmart owned to this problem and said that it virtually expecting no sales growth in the next fiscal year forcing them to abandon their 3%-4% growth projection for the year. In an attempt to counter this menace, Walmart further reduced their prices as an incentive to boost sales. However, this seems not to be bearing the desired fruits especially in the US. Greg Foran, Walmart’s US CEO, admits to this by saying, “While we have pockets of leadership (on price), in more competitive markets, our gain is small.” This is a clear manifestation that the counter measure is yielding low marginal returns hence not ineffective in boosting their profitability. In conclusion, problem diagnosis within an organization acts as a compass that points at where the company is heading towards. It gives an organization a sense of bearing in that it can relook at its operation and detect the key areas that diverts it from its true cause of efficiency and profitability. References. Agrawal, N., & Smith, S. A. (Eds.). (2015). Retail Supply Chain Management: Quantitative Models and Empirical Studies (Vol. 223). Springer. Tamini, L. (2018). Re-activation of vacant retail spaces: Strategies, policies and guidelines. Cham: Springer. Brunn, S. D. (2006). Wal-Mart world: The world's biggest corporation in the global economy. New York: Routledge. Hill, C. W. L. (2014). International business: Competing in the global marketplace. Samli, A. C. (2015). Coping with retail giants: Gaining an edge over discounters. New York City, NY: Palgrave Macmillan Read More