Analysis of the Operational and Financial Issues - Essay Example

MGMT499 of the of the Analysis of legal, social, and economic environment Walmart Inc. and Target Corporation Inc. havebeen selected for this study. These two companies are USA based multinational retail hypermarket chains. Both of the firms hold a strong position in USA retail industry. Therefore, both the organizations operate in similar external conditions in terms of legal, social and economic environment. The disposable income of US consumers has been decreasing because of declining GDP growth rate which again leads to increasing unemployment. This in turn is increasing revenue margins for all discount retailers such as Target and Walmart. In terms of legal environment, strict environmental legislation results into higher costs for both discount retailers. This factor even encompasses rising awareness amongst customers which increases costs for retailers such as Walmart and Target who follows green movement (Zentes, Morschett & Klein, 2012, pp.102-103). On the other hand social environment comprise of varying income levels of customers which give an opportunity to both the retailers in relation to lowering prices and acquiring large market share. Analysis of the managerial, operational, and financial issues Company Culture and Performance The culture prevailing in Walmart is to work in collaboration and increase efficiency of the overall team. They even focus on reducing overhead expense so that better prices can be offered to customers. The performance rate of Walmart is higher in comparison to other retailers and hence it ranks as topmost retailer across the globe. On the contrary Target has a performance ratio lower than Walmart and occupies second position amongst all discount retailers based in America. Its low performance is due to limited product range being offered in all its retail stores. However the company culture is similar to that of Walmart where team members are considered to be an integral part of the system. Promotion Policies The promotion policies of Walmart are such that it gives more emphasis on increasing responsibilities and retaining experienced workers in the system. There were 170,000 promoted by the company in previous year with more benefits and higher pay scale. These policies are based on average performance of employees and impact of their respective performance in growth and success of the company. On the other hand Target has a different set of promotion policies as it focuses on time period which has been spent by an employee with the organization. Promotion in this company is given to those employees who possess more experience in comparison to other individuals. However the promotional benefits are similar to that of Walmart. Strategic Decisions Making Walmart is a big retail chain and being the topmost company it needs to continuously modify its strategies so as to sustain in the highly competitive industry. The company has sufficient flexibility in its work process and encourages team members to come forward with their innovative ideas. Strategic decisions in Walmart are taken by the top management but on the basis of ideas or opinions given by the overall team. On the contrary Target has too many hierarchies in its organizational system which makes it difficult to encompass all the group members in strategic decision making. This company follows strict regulations and norms where decisions are only taken by the top authority and orders are passed on to team members to perform as per set strategies. Decision-Making Style Decision making style of Target group is completely different from Walmart in terms of following an individualistic approach in the system. It can be stated that the top management of Target has adopted directive decision making style in the work place where management possess sufficient information to make effective decisions and does not rely on information provided by other group members. On the contrary Walmart outlines an analytical decision making approach where top authorities gather required information from team members and then perform thorough analysis on data. The information obtained is properly evaluated by the leader in order to make appropriate decision. Management Style Management style can be considered to be similar to the leadership styles. However the management style of Target is different in relation to Walmart. Autocratic management style is incorporated by the former retail chain. In this management style the higher authority believes in taking unilateral decisions and not including employees in the decision making approach. In certain crisis situations this style proves to be effective as top authority only relies upon information known to them while making strategic decisions. Walmart has adopted democratic management style. Through which it indulges all the team members to contribute towards framing strategic decision (Aswathappa, 2012, pp. 77-78). Work performance and job satisfaction of employees increase due to such management style as the team members consider themselves to be a vital component for the organizational productivity. Leadership Style Leadership style is an important factor for the success of an organization. This is because the overall productivity of the group highly depends on the skills and knowledge which is possessed by a leader. Walmart follows democratic leadership style whereby leaders are not considered to be just supreme authority but a part of the group. The leaders are not only in charge of making decisions but they work in collaboration with other team members. On the other hand Target follows autocratic leadership style where employees are given certain job responsibilities and are not involved in decision making process (Torrington, Hall & Taylor, 2005, pp. 57-58). The management of this retail company believes in delivering orders which needs to be executed properly for sustaining overall operations. Communication Style Both the organizations possess similar communication style and this is the reason of their low employee turnover. Target and Walmart believes in retaining its employees due to highly competitive environment. Both the retail firms have incorporated assertive communication skills where managers do not use aggressive approach in order to handle its team members. The top management and other individuals in managerial position opt for getting close with all the team members and follow relationship oriented as well as task oriented work culture in the system (Jackson, Schuler & Werner, 2011, pp. 90-91). Assertive communication style is considered to be the best approach as it helps to prevent aggressive or passive behavior in the workplace. SWOT Analysis As per SWOT analysis, the strengths of Walmart are its large scale of operations, wide product range, cost leadership strategy, international operations and competency in the form of information systems. On the other hand strengths of Target Corporation are celebrity endorsements, innovation and design, employee retention, operational and business strategies, and strong brand recognition and awareness. The weakness of Walmart are its negative publicity, lawsuits related to labor, little differentiation and high employee turnover. Target Corporation possesses weakness of litigation, low international presence and quality obsession. Opportunities are the same for both the retail firm in terms of retail growth in emerging markets, more focus on private label products, increasing trend of online shopping and more of customer’s inclination towards healthy products. The threats for both the organizations are in terms of fierce competition, resistance from various local communities and rising prices of commodities. Operations Strategy Framework Target Corporation and Walmart being renowned retail companies has adopted best framework for operational strategies. The management of the company though follows different styles but is focused towards generating high revenue margins for the company. Both the firms have adopted the strategy of Plan, Do, Act and Optimize framework. In this technique each of the firms decides upon the required strategy to improve overall productivity and then implement it along with constant monitoring and control. This helps to incorporate the necessary changes as and when required as per changing conditions in the external environment. Both the firms encompass those set of operations which have low cost in order to pass savings in the form of best prices to its customers Analysis of the impact of potential change factors Changing External Conditions The changing external conditions are majorly in the form of rising demand in consumer market in relation to healthy food at best prices. Economic conditions being uncertain have posed a lot of challenges for both the organizations. The rising commodity prices make it more difficult for such retail chains to maintain its low prices. In order to offer competitive prices to its customers the firms are cutting down its overhead expenses which are leading to high employee turnover and negative publicity of the firms. References Aswathappa, K. (2012). International HRM. New Delhi: Tata McGraw-Hill Education. Jackson, S., Schuler, R., & Werner, S. (2011). Managing human resources. Stamford: Cengage Learning. Torrington, D., Hall, L., & Taylor, S. (2005). Human resource management. Edinburgh Gate: Pearson Education Limited. Zentes, J., Morschett, D., & Klein, H.S. (2012). Strategic retail management: text and international cases. Netherlands: Springer Science & Business Media. Read More