Analysis of Woolworths Ltd and Wal-Mart Stores, Inc - Case Study Example

Comparison and Analysis of Woolworths Ltd and Wal-Mart Stores, Inc By Name Course Instructor Institution City/State Date Comparison and Analysis of Woolworths Ltd and Wal-Mart Stores, Inc Introduction The aim of this essay is to compare and contrast Woolworths Limited and Wal-Mart stores, Inc. in terms of Leadership, organisational culture, corporate social responsibility, ethics and innovation. Leadership, as it will be demonstrated later, has been a crucial function of management at Woolworths and Wal-Mart since it has facilitated efficiency maximisation as well as attainment of organisational goals. In terms of organisational culture, the work culture at both companies allows for the integration of workers from different backgrounds and with varying mentalities and attitudes. Both Wal-Mart and Woolworths engage in CSR initiatives mainly because of its value towards the purchase intentions of the customers. Wal-Mart and Woolworths’ CSR activities demonstrate that the added values rely on the CSR strategy that the firm decides to pursue and implement. Innovation is the main force that has rejuvenated the change process at Woolworths while at Wal-Mart it promotes novel ways of thinking. Without a doubt, innovation results in added value and improved productivity. The reason for choosing Wal-Mart to compare with Woolworths is because both brands offer almost similar products and services, but their leadership, culture, and CSR initiatives are completely different. Overview of Organisations Woolworths is one of the largest supermarket chains in Australia, with over 961 retail stores across Australia and over 180,000 employees. The company works closely with the Australian farmers and growers so as to ensure that the customers get the best products. The majority of the company’s products are sourced from Australian growers and farmers (Woolworths Limited, 2012 ). Although the company is performing very well in the grocery market, competition from other retailers such as Coles has been increasing leading to the battle for more market share and reduction of prices (Arli et al., 2013, p.28). On the other hand, Wal-Mart is currently the world’s largest retailer with over 11,500 stores across the globe and operational e-commerce sites in close to 11 countries. The company has employed more than 2.3 million employees globally. In the U.S alone, the company has over 1.5 million employees. Wal-Mart has continually exhibited its commitment to creating opportunities as well as bringing value to both the communities where it operates and also its customers globally (Walmart, 2016 ). Comparisons and Analysis Leadership Leadership according to Boedker et al. (2011, p.32) is the process through which the behaviour of a people are influenced by one person with the objective of achieving a certain goal. Normally, the theory of transformational leadership is considered the principal contemporary paradigm of effective leadership. At Wal-Mart, transformational leadership has always remained the core of all its business operations. Wal-Mart founder, Sam Walton was not only a transformational leader but also visionary. Transformational leadership at the company can be evidenced by the frequent visits made by the top officials and managers to the Wal-Mart stores (Peterson, 2015). Such visits have changed how way things are handled at the company. Furthermore, the leaders at Wal-Mart understand the value of being ready to make tough decisions as evidenced by the company’s decision to close its stores in Germany after experiencing difficulties. On the other hand, Woolworths has been experiencing some leadership issues, which led to the simplification of management structures and costs slashing with the objective of restoring sales as well as revenue growth. Under the new leadership of Grant O'Brien, the company has reduced its workforce by a significant margin. Still, a number of senior executives at the company have resigned while the new management team try to cut costs by over $500 million so as to improve sales and recover their lost market share (Mitchell, 2015). As compared to Wal-mart, Woolworths lacks true leadership who can effectively communicate the organisation’s vision and also focus on the customers. At Woolworths, customer-focussed leadership has been theory instead of a practice. Field (2008) asserts a leadership that focuses on customers is more effective than a good customer service. Woolworths’ leadership is in many ways behind that of Wal-Mart; therefore, a customer-focused role should be established for the top leadership. Organisational culture Boedker et al. (2011, p.33) has defined organisational culture as a shared set of practices as well as values created over time in reaction to the influences and values of the external and internal environments of the organisation. The organisational culture of Wal-Mart is completely different from that of Woolworths. Wal-Mart’s culture has a number of components, which guide the behaviours of the employees: acting with integrity, pursuing excellence, respecting one another, and serving the customers effectively. Therefore, aside from prioritising its customers on all its operations, the company also acknowledges employees’ contributions to the business success. According to Lombardo (2015), Wal-Mart culture focuses on the performance excellence of employees and the whole organisation. The company also encourages the virtues of impartiality, fairness, and honesty in the process of decision-making. Akin to Wal-Mart, Woolworths’ culture is strongly based on values and considers the employees as the foundation and heart of the business because they facilitate the implementation of the company’s business strategy. More importantly, the company has improved the commitment and focus of the employees through values-based leadership. As mentioned by Madu (2011, p.2) a strong culture is a crucial tool that can enable leaders to communicate the organisation’s values and beliefs to the employees effectively. Promoting ethical culture enables the leader to successfully maintain business growth and be able to solve problems early before becoming catastrophic (Ahmad, 2012, p.52). Approach to Ethics and CSR According to Woolworths Limited (2014) the company earns the trust of the customers by not acting in a responsible way but also being ethical to the employees, customers, as well as the communities. The company upholds human rights by respecting its employees as well as individuals involved in the supply chain. Woolworths’ ‘Ethical Sourcing Policy’ comprehensively covers issues of labour rights, corruption, environmental compliance, and secure and fair working conditions. Furthermore, the policy has included every important ILO conventions as well as UN’s human right principles. The policy protects the corporate reputation and improves the employees’ working conditions (Woolworths Limited, 2014). Woolworths is widely recognised for its CSR initiatives both at the domestic and global levels. The company provides opportunity and security to the over 180,000 employees and offers its customers and communities sustainable and long term value creation. Wal-Mart through its ‘Global Ethics’ approach has successfully promoted its culture of integrity through the development of policies that promote ethical behaviour. The ‘Global Ethics’ acts as a resource and guide for making ethical decisions and offer an anonymous and confidential reporting system (Walmart, 2016). Hitherto, Wal-Mart has implemented a numerous CSR initiatives that focuses on four areas: local responsibility (disaster reliefs and other local issues); social responsibility (women empowerment, facilitating access to healthy food); environmental responsibility (promoting sustainability, reducing carbon footprint); and company responsibility (engaging the stakeholders, promoting worker safety) (University Alliance, 2013). As opined by Ismail (2009, p.207), CSR initiatives’ success depends on the external factors (such as technological influences, legal requirements compliance and national culture) and internal factors (such as organisational culture, ethical influences and economic considerations). Obstacles That May Have Been Overcome For Wal-Mart, the Chinese market has posed numerous challenges attributed to the unpredictable government policies and regulations as well as the somewhat underdeveloped China's infrastructure. Furthermore, the disposable income of the middle-class Chinese is very lower as compared to the Americans. Additionally, the majority of the Chinese purchase goods in small quantities and language differences created the need for Wal-Mart to tailor its marketing approaches for brand names as well as product labelling. Therefore, Wal-Mart solved these challenges by carrying out numerous experiments; for instance, the company tested different store formats in order to determine the format that would appeal the customers (Govindarajan & Gupta, 2002). Besides that, Wal-Mart started experimenting smaller satellite stores, which appeared to fit well with the China’s shopping, and transportation trends as well as purchasing habits. Woolworths has recently recorded major losses amounting to $972.7 million after the failed venture in the home improvement market (Hyam & Ong, 2016). For this reason, the company decided to exit the home improvement market so as to focus its resources and energy on executing and strengthening its core businesses plans. Furthermore, the company made changes in the leadership positions and the organisational structure. Approach to Innovation More recently, Woolworths started approaching innovation in a different way; for instance, the company decided to use one of its stores as an innovation laboratory in order to test technology-related solutions that could help improving shopping processes (Roper, 2014). Some months after experiences losses, the company unveiled a centre for Food Innovators, whereby customers will take part in the product development process (Harris, 2016). Wal-Mart has also been relentless in pursuing innovative ways to reduce prices; therefore, the company has invented a way that the store inventory can be tracked and restocked in the shelves. Besides that, Wal-Mart IT infrastructure has enabled the company to predict and track the levels of inventory, forecast demand accurately, as well as manage service response logistics and customer relationships (Lu, 2015). Clearly, both Wal-Mart and Woolworths are innovating with the objective of maintaining and protecting their competitive position and also achieve an additional competitive advantage. Learning From the comparison and analysis of the two retail giants, I have learned that leadership is a crucial function of management that could either result in organisational success or failure. Leadership effectiveness depends on the ability to show care, communicate the organisation’s vision, and encourage participation in decision-making and action-planning, as well as promote creativity. Values associated with organisational culture are fundamental priorities and beliefs concerning particular outcomes and states that have an effect on the discernible practices like institutional structures as well as behavioural norms. In consequence, these values influence the organisational outcomes like equality, employee engagement, innovation, and productivity. I have also learned that innovation is important because it enables the organisation to utilise out-of-the-box thinking and also exploit new technology, which consequently brings about new value and changes within the society. Recommendations Wal-Mart’s firm performance can be improved by ensuring that the product quality standards have been improved. Importantly, the company should continue expanding its business operations in order to exploit the existing opportunities, especially in the developing markets. In addition, Wal-Mart should improve its customer experience by improving its inventory efficiency and staffing levels. On the other hand, Woolworth can grow faster and improve its core competencies by opening a subsidiary company that would sell international foods to the diverse communities living in Australia. The new venture will attract customers from different multicultural backgrounds and also would stimulate innovation, improved performance, and growth. Conclusion In conclusion, this essay has compared and contrasted Woolworths Limited and Wal-Mart stores, Inc. in terms of Leadership, organisational culture, corporate social responsibility, ethics, and innovation. Transformational leadership at Wal-Mart has been important because it has led to organisational success and improved reputation. Woolworths, on the other hand, has been experiencing leadership challenges, but there is a glimpse of hope after the change of leadership and organisational structure. Culture has offered employees in at both Woolworths Limited and Wal-Mart stores a sense of unity and has also promoted a healthy relationship while innovation has enabled them to maintain and protect their competitive advantage and also improve their productivity. Both firms are using innovation as a tool to capitalise on the existing opportunities. Innovation has enabled Wal-Mart to look for new opportunities, which is not associated with the current line of operations and also to introduce new products. Woolworths also use innovation to strategically eliminate operations such as home improvement market, which has been less profitable. Wal-Mart has penetrated a number of markets such as Europe through acquisition; therefore, Woolworths should espouse the mode of entry so as to expand its operations not just domestically but globally. 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