The Organizations Response to Change - Essay Example

Project Deliverable 4: The Organizations Response to Change

Whether The Company’s Industry Is Maturing Or Declining

Historically, the retail industry and more specifically the grocery industry continues to mature over the years. In fact, the retail industry remains at the helm of America’s growth story. The industry continues to mature and evolve considerably. From traditional fairs to push outlets and resplendent malls, the industry has been maturing from strength to strength. The most striking aspect that demonstrates how maturing the industry has been is the convenience of stores and channels within the industry. The growth in the industry is also demonstrated by aspects such as online grocery stores which are becoming a global trend (Fishman, 2006). In fact, shoppers are increasingly using this channel instead of the traditional shopping channels. There is also the aspect of greater competition within the industry which demonstrates that the industry continues to mature. Currently, the industry is using delivery subscription schemes enhance its delivery systems.

With at least three main channels that most companies within the industry are using, it means that the industry is growing. Already, there has been some bold thinking regarding store refurbishments and foodservice concepts within the industry. Across America, transnational corporations are setting up many retails chains (Fishman, 2006). Going forward, the organized industry’s growth potential is likely to continue maturing because of globalization, changing lifestyle and high economic growth. Moreover, high consumer spending and rise in disposable proceeds continues to drive America’s retail sector. Retail companies such as Wal-Mart continue to perform exceptionally hence demonstrating how the industry continues to change and mature. Currently, the Wal-Mart remains the largest private-sector company with an estimated 2.2 million employees which justifies how the company and the industry at large has matured.

Another clear indication how the retail industry is maturing is how Wal-Mart is expanding its product range into fashion clothing, groceries, online prescription drugs, music downloads and health clinics (Fishman, 2006). The fact that companies such as Wal-Mart that remain popular in the retail industry are currently accommodating other industries such as the banking and the health care sector, it demonstrates how far the industry has gone. Additionally, it means that the industry has developed. More companies within the industry are also increasing their size hence boosting their buying power (Fishman, 2006). In fact, most companies in this industry have rested their success upon their capability of combining huge size with remarkable responsiveness and speed. This speed at which most companies in the industry have progressed justifies the fact that the sector keeps growing. Additionally, most of these companies in the sector tend to have a consistent scope which enables them to grow (Fishman, 2006).

Advantages and disadvantages of vertical integration versus outsourcing for Wal-Mart

Vertical integration firms tend to undertake all tasks and practices in the vertical in-house chain. Unlike vertical integration, most companies prefer using outsourcing approach to reduce extra costs after contracting suppliers to perform specific tasks instead of completing the tasks within the organization. Most organizations outsource components and tasks from competitors hence making them more competitive (Burke, Lake, & Paine, 2009). Nevertheless, it might be in an organization’ interests to depend on their competitors with economies of scale and expertise instead of being vertically integrated. Using Porters National Diamond, it would mean that vertical integration remains a preferred strategy towards Wal-Mart growth and development. However, in reality, vertical integration strategy is usually time consuming and difficult to implement. Additionally, the strategy is expensive (Burke, Lake, & Paine, 2009). All these negative attributes makes outsourcing a favorable approach in which the company can use in most of its situations.

Large retailers such as Wal-Mart that have reasonable market power amount and tend to function in economic market place that are generally stable. In fact, the company is better off outsourcing part of its supply chain than using the vertical integration. In most cases, vertical integration remains practical or favorable when trade within the retail industry is less advantageous (Burke, Lake, & Paine, 2009). The biggest challenge and disadvantage of using the vertical integration approach in a company such as Wal-Mart is the fact that this approach remains costly especially during its integration. In as much as most retail companies tend to increase their production quality and save money using the vertical integration approach, using this approach would force Wal-Mart to use significant resources investment. It remains evident that outsourcing is usually effective and best choice for young or small organization which cannot afford vertical integration costs (Burke, Lake, & Paine, 2009).

While vertical integration can sometimes be advantageous especially in the retail industry, outsourcing is also a beneficial and an advantageous business strategy. In this case, outsourcing would allow Wal-Mart Company to focus mainly on its fundamental processes including its daily operations (Burke, Lake, & Paine, 2009). Additionally, outsourcing tends to encourage international trade and business opportunities. This means that outsourcing tends to carry much lower initial investment and less risk. It therefore makes it a preferred approach and practice for Waal-Mart retail given its stability in the industry. Unlike the vertical integration, outsourcing would allow Wal-Mart Company to give away part of its responsibilities. This would allow the company to focus extensively on some of its core activities hence better productivity (Burke, Lake, & Paine, 2009).

Outsourcing also allows the company to perform faster some of its roles especially in meeting its client’s demands. One major advantage of vertical integration is the fact that the approach tends to take more control over distribution and supply unlike outsourcing. In fact, there are more reservations when an organization outsource from other organizations especially when the company is a competitor (Burke, Lake, & Paine, 2009). In most cases, when a company controls most of its supply chain, the company can enhance its supply sufficiently. Therefore, this aspect favors vertical integration while choosing an effective approach within the organization. It is difficult to tie down outsourcing to specific industries since the strategy remains applicable across different sectors. This strategy would effectively work in Wal-Mart since it incurs capital resources and huge labor costs.

Use the Boston Consulting Groups growth-share matrix to evaluate the company’s strategic position as of 2013.

In evaluating the company’s 2013 strategic position, it can be noted that BCG is used in determining the exact products that the company takes priority over other products depending on the company’s product life-cycle. As part of its strategy, the company’s BCG will be adapted with Wal-Mart’s divisions and not its product lines. Wal-Mart’s 2013 strategic position focused on placing itself as a low-cost leader within the industry. Unlike its competitors, Wal-Mart seem to perform effectively given that it tends to apply this specific strategy in all its business pursuit. By 2013, the company had already partnered with other organizations including TruConnect in offering low-cost internet services. This means that Wal-Mart’s strategic position was generally strong by 2013 since the company focused more on low-cost leadership (Burke, Lake, & Paine, 2009).

Suggest one (1) approach for the CEO to adopt in order to implement the strategies that you recommended in Project Deliverable 3. Include the main changes in decision-making style, main changes in planning structure, and measures of success in your recommendation.

Approach to changes in decision making style in organization

As aforementioned, changes in decision-making style within the organization remain a crucial aspect since it affects all employees within the organization. In fact, the organization needs to be extra careful while handling this area (Burke, Lake, & Paine, 2009). First, the CEO needs to be rationale during any changes in his decision. The best approach in implementing any changes in decision-making is by simply applying the conceptual approach during the decision making. This style mostly concerns with the organization’s long term results. The fact that the approach also involves brainstorming of other alternatives and creative approaches especially during problem solving, it means that the approach remains effective for the organization.

Changes in planning structure

As previously indicated, the company has been planning various structural changes in order to position the company effectively in the market. In fact, the company’s structural changes tend to impose limits on how Wal-Mart will address some of its problems. On the other hand, planning the structural changes tends to determine how Wal-Mart employees respond to various challenges in the workplace. Some of the structural changes that were mentioned include change in the hierarchical functional organization structure. Currently, the organization has at least two features in its structure (Beer & Nohria, 2001). They include the function-based and the hierarchy definition. On the other hand, change in the structure planning means that the company has changed its main tools for managing demands and effects of development of larger areas that were previously held in multiple ownership. In simple terms, the company needs to change its effective means in achieving sustainable management especially in its physical and natural resources.

During the change, the CEO can use both the proactive and the reactive approach depending with extent of the problem in the company’s planning structure. In this case, the proactive approach entails making alterations at the organization’s practices. This approach is justified considering the organization has been experiencing some issued in its structure. Therefore, a general change is recommended (Beer & Nohria, 2001). On the other hand, the C.E.O can also use the reactive change approach given the company’s opportunities and threats that tend to affect the organization. However, the most recommended approach to the company’s change is by enacting the proactive approach since this approach is usually made in anticipation of both the company and customer demand. The fact that this approach mainly targets the customers, it means that it remains suitable in such a situation. It remains evident that the company works towards meeting its customer’s targets. Therefore, most of its business operations revolve around the company’s clients (Burke, Lake, & Paine, 2009).