International HRM: Wal-Mart Stores - Case Study Example

Name : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Tutor :xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Title : Institution : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date :xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx @ 2012 International HRM Introduction Wal-Mart Stores has retail stores a round the globe that exists in many different formats. It is the largest retailer in the United States and the world over and has been spreading its branches globally since its founding by Sam Walton back in 1962 (Coleman 2005, 87). This company has made a name in the retail world by offering customers some of the lowest prices but maintaining a growing market share (Jacalyn &James 1997, p27). The mission of Wal-Mart is to help all its customers to save money as they purchase from its stores. This was the vision that Sam Walton had when he founded the company. The company’s operations are based on a robust culture called “The Wal-Mart Way” which is adhered to in all the branches of the company worldwide. The company employs the Low Cost Leadership Strategy which ensures that customers buy cheaply. This increases the sales of the company hence its profits and market share. The customer is treated as the most important person and managers provide servant leadership to employees. The company has goals that focus on sustainability through energy efficiency, proper waste handling and purchase of local produce among other things. The company relies heavily on its culture for uniqueness and success. This paper examines International Human Resource Management in relation to Wal-Mart. Background of the organization The organization being analysed is Wal-Mart Stores, Inc. It was founded in 1962 by Sam Walton. It is the largest retailer in the world and its international operations started in 1991. Under the Wal-Mart umbrella there are discount stores, SAM’s Club Warehouses, Wal-Mart supercenters and Neighbourhood Markets. The company’s operations are based on the pricing philosophy of Everyday low prices (EDLP) (Stores to Wal-Mart p32). It has operations in 3 segments which include the United States segment, the Sam’s Club segment and the international segment. In the fiscal year 2012 the US Wal-Mart segment accounts for 60 percent of the company’s net sales. Wal-Mart has stores in 50 US states which operate in different formats. It has stores in Puerto Rico and also has retail operations online through walmart.com. (John & Jean 2011 p25). The international segment of Wal-Mart operates in twenty six countries around the world. The Sam’s Club segment has warehouse Clubs as members in 47 states in Puerto Rico and the US. Sam’s Club also has retail operations online. International operations are done in the Puerto Rico and Canada discount stores. Wal-Mart supercenters exist in the UK, South Korea, Puerto Rico, China, Germany, Mexico, Brazil and Argentina. Bodegas discount stores, Vips restaurants, superamas supermarkets and suburbia specialty department stores are the company’s stores in Mexico (Darrell 2009). Other outlets belonging to the company include Brazil based Todo Dias supermarkets, Neighbourhood markets Supermarkets in China, Amigo Supermarkets in Puerto Rico and ASDA combined grocery and apparel stores in the United Kingdom. Wal-Mart employs different effective concepts of human resource management which ensure that the company remains successful. All these concepts are designed to ensure a streamlined relationship between the employees and managers and that the employer treats the employee in a reasonable manner. Wal-Mart makes its employees feel affiliated to the company. Employees in the company are known as associates and not workers. The company has perpetually been successful because of ongoing instruction and training, proper staffing, good schemes for compensation and rewards and professional and motivation practices and ethics (Mark & Daniel 2000, p369). Organizational mission, vision, values, goals and strategies Mission Wal-Mart’s mission is to help its clients to save money which can enable them to have a better life. Wal-Mart leads in sustainability issues, provision of employment opportunities and corporate philanthropy. Values The company is based on ethics and values and this has also contributed a lot to its success on the United States and global market as well. There are three main beliefs that guide Wal-Mart. These are: service to customers, striving to excel and respect for individuals. The company insists on acting, leading and expecting other people to work with integrity, following the law always, observing honesty and fairness and avoiding discrimination while enhancing diversity. Employees are advised to report and reveal information in a truthful manner with no misrepresentation or manipulation. There should no conflict of interest in work, relationships and activities out of the company. Violation of ethics is strongly prohibited and anyone is free to report those involved in ethics violation (Jonathan 2010, p37). Strategies The strategy of the company is to offer products to clients and low prices that can enable them to buy more or save. This is a low cost leadership strategy. With this strategy, the company increases its market share by moving from low cost production to low cost supply. Through this Wal-Mart has been able to change its cost advantage into a price advantage for the sake of its clients hence the greater market share. An increased market share gives the company a good opportunity to leverage economies of scale together with reduction in costs. By occupying a bigger competitive space, it eliminates more competitors hence more effective economies of scale which helps to bring the costs down. Wal-Mart reduces its prices to customers and its image as a supplier is that of a company offering products at the lowest prices. Through the low price strategy, Wal-Mart has been able to capture the market and do away with competitors as market share and revenue improves. Efficiency in its operations and economies of scale are the basis on which Wal-Mart works out its strategy. It targets mass markets in order to raise its market share (Kellie & Claire 2007, p25). Wal-Mart’s employs focus on providing value for the money of their customers by lowering costs. Employees and leaders receive regular training, learning, improvement, empowerment and ownership which are aimed at creating effective teamwork. Decision making has brought down with associates and local managers empowered to come up with the best decisions for customers in the shortest time. The company observes the principle of reducing expenses as a percentage of sales as much as the sales are rising. In order to get the right talent for company growth, Wal-Mart recruits its employees from more than 100 colleges that own Retail Institutes. People at the company are the number one asset. Customer fanaticism is upheld since the days of Sam Walton and therefore all the customer service aspects are monitored closely. Successful employees help the company to minimize risk (Mark & Daniel 2000, p370). Risk management is depended on the success of employees. Wal-Mart employees all over the world receive credit from company leaders because they serve customers, attain sales objectives and control the company’s expenses. Company goals Most of Wal-Mart’s goals are geared toward sustainability. The company has various goals which are expected to keep it growing. Among these goals is the use of clean energy in all of its US stores (Stores to Wal-Mart, p37). The company has a goal of installing solar panels on all its stores. This is a high mark that the company has set for itself and if successful it would mean that the company raises prices to make more profit. Of all the retailers in the US the company is the second largest purchaser of clean energy. Another goal is diversion of wastes. Wal-Mart is almost becoming a company with zero waste production. Currently Wal-Mart US avoids taking 80 percent of its wastes to landfills. The company has reduced the use of plastic bags by 35% since 2007. In Japan, 100 of its stores have a 100% recycle status. Stores in the UK and China cut down their food wastes by giving to charities or composting them. The company runs a zero landfill waste program that has managed to bring back to the company $231 million (John & Jean 2011, p23). The company also has a goal of reducing its characteristic food hauling activities in favor of purchase form small farms. The company has good logistic capabilities. In the recent past, the company has increased tremendously its purchase of produce sourced locally and sold in the US (Jonathan 2010, p39). This accounts for 10% of the produce purchased form Wal-Mart stores. The company aims at being more sustainable, philanthropic and corporately responsible in the future. Wal-Mart has made a commitment to source goods worth $20 billion from businesses owned by women. The company has a foundation which has already begun giving out million dollars to advocacy groups belonging to women among them Vital Voices (Mark & Daniel 2000, p370). Analysis of IHRM The Wal-Mart Way Wal-Mart has been successful in the international market partly because of its strategic Human Resource Management. “The Wal-Mart Way” of operation is the biggest secret the company uses in its international operations (Michael 2010, p50). The culture of Wal-Mart which was started by Sam Walton has made the company to have competitive advantage for long. Sam Walton and even the current leaders insist that anybody coming in should learn to do things according to the culture of Wal-Mart or leave. The Wal-Mart culture many practices as discussed below. At Wal-Mart the employee is regarded as a business associate. All employees are empowered to make decisions and behave like the owners of the business. All employee associate partners are allowed to share in the profits of the company as long as predetermined goals, profit goals and expense are met (John & Jean 2011, p27). Managers are treated as coaches and servant leaders at the same time. By being coaches, the managers lead by example by interacting in the best way with customers. Sam Walton set the pace on how customers should be treated. Store managers are expected to understand more about store workers especially at a personal level and by their names as well. Company managers are servant leaders because they serve those under their leadership. Through their caring attitude, the managers create trust, teamwork and synergy. In its operations, Wal-Mart uses three basic values of leadership which Sam Walton left behind. These values define the culture of the company. These values are; “serve your customers, respect for the individual and strive for excellence.” Throughout the company’s stores worldwide, executives use and teach these values to employees (Kellie & Claire 2007, p26). At Wal-Mart, company managers emphasize on the acronym H.E.A.T.K.T.E which to the 2.3 million people working at the company it means that high expectations are the key to everything. The managers believe that continuous improvement and learning should be adhered to by all in the company (Jacalyn &James 1997, p27). At Wal-Mart, Sam Walton established the thinking that all the company managers are responsible for Human Resources. He never wanted to have a department of HR that ensures proper treatment of employees by the mangers of the company. Because of this the company has a department that deals with people issues. This department which is the equivalent of Human Resources Department is called The People Division. At Wal-Mart they say “It is our people who make the difference.” The company leverages the minds and hearts of its employees. Sam Walton developed a program to obtain ideas from employees on how the company could save money. At the company, people believe that solutions to problems originate with those employees involved in the work. These employees generate ideas for improving methods. The company shares with its employees the Profit and Loss Statement in its 8300 stores all over the world (Marquez, 2006, p30). This in other companies is held confidential. By starting this system, Sam Walton had a desire for his employees to share in the passion for profitability. Associates at different stores are informed of this through the managers’ stand up meetings. Wal-Mart takes its associates as its most crucial sustainable competitive advantage. The company hires the best, gives them the best training and provides them with the best conditions for work. The managers and employees of Wal-Mart are basically average people but their results are always above average. Theories and concepts Strategic HRM theory This theory relates to resources and the power of employees. Based on this theory, the performance of the organization depends on the dedication of employees, the skills they have, their dedication, commitment, and productivity (Coleman 2005 p86). At Wal-Mart employees are encouraged to work with dedication especially when they are attending to customers. Everybody in the company is required to show commitment and high productivity. The company allows its associates to share in the profits but this is only allowed when goals and targets have been met. When hiring new employees, the company emphasizes on the skills and those with a background in retailing are given priority. Employee Training & Development theory The theory of employee training and development is very much applied at Wal-Mart. Through human resource development, the skills of the company associates or employees are increased training and development done on group basis. At Wal-Mart, employee training and development is given very high priority. Employees do not go through training just once at Sam’s Club and Wal-Mart. It is taken as an integral part of the associates that is done continuously. Each associate starts with orientation at a personal level. Through this the associate interacts with the culture and history of the company and gets to know the roles and responsibilities a head. When the orientation is over, different divisions have particular detailed programs for training and development (Michael 2010, p47). Wal-Mart offers many opportunities for training managers so that their leadership skills can be sharpened, rise through the organization and help their teams have high morale. For example, the company offers the Assistant Manager Training for managers. The Walton Institute give people an environment suitable for education where Wal-Mart leaders drawn from all over the world go to learn about the culture of the company and how they can foster it. There is also a Manager in Training (MIT) programs that runs for 12 weeks at Sam’s Club. It is meant to make trainees understand the different operations in the company. Trainees rotate within the company and when they finish they are eligible to apply for the position of Assistant Manager (Michael 2010, p47). Organizational Culture Development theory Development of the culture of Wal-Mart is the preoccupation of all in the company. “The Wal-Mart Way” defines the culture of Wal-Mart. This culture was started by Sam Walton, the founder of the company and the current directors maintain it to date. Every new employ is taught “The Wal-Mart Way” and he or she is expected to adhere to it in whatever part of the world he is stationed. This culture helps the employees to be efficient in their service to customers and other stakeholders. The Wal-Mart company culture guides the company on how to operate in order to grow and expand. Managers and directors at Wal-Mart strive to uphold this culture by teaching it to all the new employees (Jonathan 2010, p38). Any employee who is not ready to adopt and practice the various principles, values and practices within the culture is asked to leave. Wal-Mart in its personnel department makes use of concepts such as proper staffing methods, applying professional ethics, motivation through various ways, good remuneration and re-training of employees. Professional ethics have a pre-determined code of conduct that serves as a guide to the conduct and behavior of associates in the place of work. Motivation and training are meant to reduce cases of employees quitting to look for greener pastures. Findings and Conclusions This research found that Wal-Mart being the biggest retail store in the United States and one of the largest in the world, it continues to uphold the strategy, values and principles developed by its founder Sam Walton. These basic practices form the foundation of the company’s culture called the “Wal-Mart Way.” The company has managed to remain at the top and maintain its increasing market share because of its strong culture and values. The culture of Wal-Mart is easy for competitors to learn but executing it in their businesses is never easy. Wal-Mart relies heavily on its strategy of low cost leadership. In this strategy, customers get goods at lower costs in all the stores worldwide. This strategy gives the company a competitive advantage over its competitors (Sheehy 2006, p57). Wal-Mart has had to increase its market share because of the increased profits owing to its workable strategies. Most of the traditional practices at the company originated with Sam Walton when he founded the company. The company values customer satisfaction, proper leadership, hard work and dedication and excellence. It is important to note that Wal-Mart has set its eyes on expansion into other areas of the globe. It therefore takes ideas from its rivals in order to outdo them. The company has found new strength in the use of Information Technology for education and training of its associates. Wal-Mart is the largest retailer but its weaknesses are evident as well. It is not as flexible as its competitors who deal with only one line. It will need a lot of better strategies to be able to keep competitors behind it. For Wal-Mart, the stage is set for great things. Its foundation as laid by its founder has been very instrumental in helping the company to succeed. The current and future directors will only need to preserve the company’s culture and add new ideas to it with time for the company to keep moving into higher levels of success (Coleman 2005, p65). Recommendations This paper recommends that Wal-Mart maintains its current strategy and culture since it has enabled to company to achieve a lot. However, as times change, current directors should be looking for latest technology and ideas to apply in the running of the company. The company should speed up into expansion activities into other potential markets such as Australia, Africa and New Zealand. This will give the company the true global image it is looking for since its presence will be felt on all continents. Reference List Coleman H.P. (2005). Employee Retention: The Secrets behind Wal-Mart’s Successful Hiring Policies. Human Resource Management, Vol. 44, Issue 1, Pp85-88. Darrell B. (2009). HR Can Help Ensure the Success of Family Businesses—From Mom-and-Pop Stores to Wal-Mart. Employment Relations Today, Vol.22, Issue1,Pp31-38. Jacalyn S. &James S. (1997) HR's role in culture change. HR Focus, Vol. 74 Issue 4, p27. John O. & Jean D. (2011). Cross-cultural training and expatriate adjustment: A study of western expatriates in Nigeria. Journal of World Business, Vol. 46 Issue 1, Pp22-30 Jonathan C. (2010). Devolving decision making: implications for leadership development. Strategic HR Review, Vol. 9 Issue 4, Pp34-40. Kellie G. & Claire W. (2007). The business of cultural transformation. Strategic HR Review, Vol. 6 Issue 3, Pp24-27. Mark C. B. & Daniel C. F. (2000). Increasing The Skill Utilization of Expatriates. Human Resource Management, Vol. 39 Issue 4, Pp367-380. Marquez, J. 2006. Wal-Mart puts on a new face. Workforce Management. Vol. 85 Issue 15, p28-32. 4p. 1. Michael B. (2010). How Wal-Mart Minimizes Risk by Aligning Business Strategies with HR Practices. Human Resources, Vol.1, Pp44-53. Sheehy, B. 2006. "Corporations and Social Costs: The Wal-Mart Case Study" Journal of Law & Commerce 24: 1. Woods P. R., Barker M. C. & Troth A. C. (2012). Cross-culture Management Performance Elements in the Expatriate Context. International Journal of Business Research, Vol. 12 Issue 3, Pp95-108. MARKING CRITERIA Please attach this sheet on your submission REPORT / PAPER Name of student: _________________ Student Number: _________________ Items Out of 100% F P CR DI HD Background Background of the case study organisation Organisational goals & strategy on international operation Degree of internationalization (i.e. what type of MNE is it) Industry analysis 10 Review of the literature References demonstrate good research Use of academic journal articles (min. 8 ) as well as suitable scholarly texts Logical and succinct review of the literature that provides a basis for supporting the identification of key IHRM practices in the case study organization (i.e. more than 1) 10 Analysis Analysis of the firm and the industry Analysis of the key IHRM issues and link to case study organization’s goals, strategies Analysis of the link between the case study organization’s practices and theory/concepts Findings, conclusions and recommendations based upon analysis and literature review 70 Structure of paper Logical and clear structure Introduction Conclusion 5 Written presentation Clarity of expression Correct grammar Spelling & punctuation Correct in-text references and preparation of list of references 5 Word count 3000 words (10% either way) General Comments (i.e. relative strengths and weaknesses of the report) Read More