Organizational Design, Growth, and Challenges - Case Study Example

Organizational design, growth and challenges Organizational design, growth and challenges It is noble and lofty idea for any organization to have a better understanding on the environment in which it operates. In this regard a thorough reasearch and understanding of the environment in which an organisation operates is a prerequiste for its succeess. Knowledge of both the internal and external environment helps an organization in developing lucrative strategies that could benefit it. The most salient way of researching the environment in which an organization operates is through the use of SWOT analysis (Miles, 2003). This is an acronym used to depict the Strengths, Weaknesses, Opportunities and Threats of an organization. The four components are separate yet integrated; in this regard, the best way to carry out SWOT analysis entails identifying the strengths and weaknesses of any organization prior to tackling the opportunities and strengths. This paper analyses the strengths, weaknesses, opportunities and threats of Wal-Mart Stores. Wal-Mart Stores Inc. is a renowned American multinational retailer corporation operating chains of large discount warehouse and departmental stores. It is currently the biggest private employer in the world with slightly over 2 Million employees. Wal-Mart was founded in 1962 by Sam Walton. It was incorporated in 1969 and began to publicly trade in the New York Stock Exchange in 1972. Wal-Mart’s headquarters is based in Bentonville, Arkansas, USA. It has eminently expanded over the years. Currently, Wal-Mart runs 8,416 stores located in 15 different countries. With the view of understanding the entire environment of Wal-Mart, it is important to critically analyze its strengths, weaknesses, opportunities and threats (Oldham, 1980). As evidenced by its incredible success, Wal-Mart has abundance of strength. For instance, Wal-Mart offers a wide variety of merchandise at very competitive prices. Due to their large purchases they receive exorbitant discounts from their suppliers, which is passed down to the customers. Strength of Wal-Mart is in fact that they manufacture their own brands and supply goods from local suppliers to retailers. Wal-Mart’s large size and high purchasing power is also strength on its own. It has an incredible team of executives who form its leadership. This has equipped Wal-Mart with a management of high caliber. The company spends its resources carefully with the aim of maximizing their margins (Burton, 2012). With regards to weaknesses, Wal-Mart, being a large multinational company, has a large pool of employees. Managing all these employees is never an easy task. It, therefore, poses a major challenge to Wal-Mart’s management. Quality of goods sold is another major concern. Owing to its low prices, customers sometimes question the quality of goods. Customer satisfaction is, therefore, not guaranteed. As with opportunities, Wal-Mart has been able to expand into other countries and has formed partnerships with other companies. However, there are still some markets that are yet to be reached by Wal-Mart. Another opportunity is that of taking over some overseas companies, such as ASDA in the United Kingdom. With the escalated trend of internet shopping, Wal-Mart has the opportunity to develop strategies that will enhance home delivery of goods whose orders are placed via the internet. Another opportunity is that of creating convenience stores. This could enable Wal-Mart to overcome local restrictions, as well as travel costs. The most prevalent threat facing Wal-Mart is competition. Local, as well as international competition, has posed a major threat to Wal-Mart. Wal-Mart has been vulnerable to attacks regarding ethical issues as well. In this purview, they have been accused in providing low pay and poor working conditions to its workers. Environmental issues also threaten Wal-Mart’s success. Company/Organization Name: Wal-Mart Stores STRENGTHS WEAKNESSES Large market share Discounts by suppliers Price leader Large variety of goods Good leadership Operational effectiveness Poor management of employees Lack of a detailed mission statement Low wages and poor working conditions Low quality goods Lack of customer satisfaction OPPORTUNITIES THREATS Internet shopping International expansion Digital markets Technological advancement Partnerships Commercial Banking Opposition groups Environmental issues Unhealthy competition Reliance on suppliers products At this juncture, it is important to critically analyze the environment within which Wal-Mart stores operate in order to have an ameliorate understanding of the foregoing strengths, weaknesses, opportunities and threats. Thus, it is necessary to carry out both an internal analysis and an external analysis. In regards to internal analysis, we shall look at the Wal-Mart’s corporate culture, company mission, company image, organizational structure, environmental goals and operational efficiency (Grashaw, 2011). With reference to culture, Wal-Mart has values and beliefs which were established through its management and employee relation. The culture is based on various policies and rules. The Open Door Policy, for instance, is an established culture by which Wal-Mart’s management values open communication as a way of having a better understanding of the Customers’ and associates’ needs and coming up with a better way of meeting these needs. Grass Roots Process on the other hand is a belief that ideas and concerns emanating form the associates and customers are very important and are dealt with in a serious way. Teamwork is another well-established culture in Wal-Mart stores to mention but only few of these values define Wal-Mart’s strengths to large extents. Wal-Mart’s mission statement is: “To help people save money so they can live better”. A mission statement usually defines an organization’s purpose. A good mission statement delineates why the organization is in business and how it conducts its business. It also addresses what the organization intends to do for its customers. According to these criteria Wal-Mart’s mission statement could be said to be commendable as it tends to capture most of these concepts. It is also apparent that Wal-Mart has enhanced its competitive advantage by adhering to this mission. This is also Wal-Mart’s distinct strength. Regarding company image, Wal-Mart believes in its mission of helping its customers to save money and help them live better. In this regards, Wal-Mart endeavors to deliver on this promise. The stores operate with integrity of a high caliber. It has established ameliorate values and culture which perpetuate the achievement of their mission. This way, Wal-Mart has continued to bring palpable differences in the lives of its members, associates, as well as customers. In relation to the organizational structure Wal-Mart’s leadership is comprised of a board of Sam Walton’s family and leaders of multiple industries. The core executives of Wal-Mart include: Aida M. Alvarez, Gregory B. Penner, James W. Breyer, Michele Burns, Roger C. Corbett, Gregory B. Penner, Steven S. Reinemund, Arne M. Soreson, Jim C. Walton, Linda S. Wolf, Michael T. Duke and Christopher J. Williams. The mentioned persons possess high profile credentials in the corporate realm. Their efforts in making Wal-Mart a successful company are apparent (Jacobsen, 2011). However, the large number of employees and activities under them pose a major weakness to Wal-Mart as in most cases they are accused in providing poor pay and working conditions to their employees (Halliman, 2011). In terms of operational efficiency Wal-Mart puts more emphasis on the growth of its returns on investments. This is achieved through proper inventory management, strict capital allocation process and development of gross margins improvements. In addition, it has established lucrative ways of enhancing labor productivity with the aim of scanting operating cost. Consequently, Wal-Mart has recorded escalated operating incomes in comparison to sales. The company has also been able to increase its market share. Thus, Wal-Mart commands a large market share. Over the years Wal-Mart has embarked on a move to establish brands within its stores. It has, therefore, developed eminent brands in various merchandise lines including home fashion, hardware, house ware, electronics, apparel, sporting equipment, automotive repair, grocery, maintenance items and many others. Some of the brand developed by Wal-Mart include: Sam’s Choice for food and other goods, George for formal clothing, Equate for pharmaceuticals and beauty products, Parent’s Choice for baby products, Ol’Roy for dog food, Great Value for grocery, Jesse James for Industrial Work ware, No Boundaries (NOBO) for teenage apparel, Color Place for paints and painting equipment and a lot more. Besides the brands, Wal-Mart has also strived to register a number of patents and trademarks. For instance, the company has trademarked its name Wal-Mart. The Company also values a myriad of trade secrets which helps in advancing its competitive advantage. With regards to partnerships, Wal-Mart has an exclusive collaboration with VUDU. It is a company which rents and sells movies and TV shows. This contract, therefore, enables Wal-Mart to provide its customers with movies and TV shows. Through a partnership with T- mobile Wal-Mart intends to launch a Family Mobile service aimed at providing unlimited calling plans. This will enhance Wal-Mart’s competitiveness against other established phone service providers in the United States. In addition, Wal-Mart owns 2 million shares of a prepaid-debit card seller known as Green Dot. Through this Wal-Mart has gained dominance in commercial banking, thus, exploiting new opportunities. Analysis of Wal-Mart’s external environment entails the customers, competitors, technology and social issues. With regards to customers, Wal-Mart has a large base of customers. For example, Wal-Mart is visited by at least one hundred million customers per week. This can be attributable to the low prices with which Wal-Mart offers to its customers. Wal-Mart also offers a wide variety of merchandise in comparison to the other retailers (Cummings & Worley, 2004). In regards to competition, Wal-Mart veneers stiff competition form Target in the United States. Other competitive threats to Wal-Mart include K-Mart, Sareway Groceries, Best Buy and Macy’s. Wal-Mart’s Sam’s Club receives a cut-throat competition from Costco and BJ’s Wholesale club. In addition, it faces much competition from various stores. For instance, in North America Wal-Mart competes closely with Target, Meijer and ShopKo. In Canada Wal-Mart’s primary competitors include Real Canadian Superstore, Giant Tiger and Hart. There are some instances in the foreign lands where Wal-Mart could not sustain the unwavering competition and had to withdraw from such markets. These include the South Korean market where Wal-Mart was compelled to sell all its sixteen outlets to a local Korean outlet in 2006 due to unsustainable competition. In July of the same year Wal-Mart also withdrew from Germany and sold its store to Metro, a local German retailing company. With regards to technology, Wal-Mart invests handsomely in technological development and innovation (Galbraith, 2001). For instance, Wal-Mart has distinctively adopted satellite technology which is geared towards improving its supply chain, as well as inventory processes. This new technology enhances quick and real time updating of its database. Inventory tracking technology was also developed, which helps in tracking movement of goods with the purpose of determining any missing items or the level of goods. It is, therefore, evident that despite strength and opportunities in Wal-Mart it is vulnerable to a number of threats and weakness. There are, however, many recommendations which could help the company to improve, thus, enabling it to continue expanding, maintaining its good name and reducing social-related back lash. With regards to quality, Wal-mart has received much criticism relating the quality of goods it sells to customers. Wal-Mart management needs to develop better brands and improve the existing brands so as to match those of their competitors. Wal-Mart should encourage formation of social welfare groups which would enhance better pay and working conditions for workers. This is a result of concerns that have been raised about Wal-Mart neglecting the social welfare of its employees. Wal-Mart should also consider increasing its participation in community events. For instance, it could establish a foundation to assist local people in educational, religious and other areas of concern. In addition, Wal-Mart management needs to consider establishing stores in markets which they have not reached yet. Those include Europe, Asia and some parts of Africa with potential markets for Wal-Mart’s new exploitation. More so, owing to its large margins it is recommendable that Wal-Mart help in empowering small business so as to sustain them despite the threat it poses to small businesses by offering goods at low prices. Summarily, despite its palpable success as a result of its strengths and opportunities, Wal-Mart still faces various weaknesses and threats. This, therefore, calls for its management to develop strategies on the basis of recommendations given to ensure that these opportunities and threats are overcome. This would ensure that Wal-Mart remains a reputable company with a large share of the market whilst still making large profits. References Argris, C. (2010). Organizational traps: Leadership, culture, organizational design. New York: Oxford University Press. Burton, O. (2011). Organizational design. Cambridge: Cambridge University Press. Cummings, T.G., & Worley, C.G. (2004). Organizational development and change. Sydney: South-Western College. Galbraith, J. R. (2001). 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