WalMart Stores Inc. Organizational Change

Published by James Taylor

Annotated Bibliography

Bose, N. (2017). Walmart is restructuring its US operations to speed ‘pace of change’ Available at: https://www.businessinsider.com/r-wal-mart-restructures-us-operations-to-speed- change-2017-9?IR=T

The website gives a detailed account of Walmart’s position in the retail market and outlines the restructuring process. Walmart intends to streamline its operations in the US for improved efficiency and to retain competitiveness in the face of the changing global forces. The number of regional managers will reduce from forty-four to thirty-six. The management has acknowledged that Walmart needs to be better prepared to deal with competition in different sectors including the food sector and e-commerce. The website gives an updated view of the restructuring process that Walmart will undergo to retain its position in the retail market. It provides essential details about the company that can be used to predict its performance in the future.

Coghlan, D., & Rashford, N. S. (2015). Organizational change and strategy: An interlevel dynamics approach. Routledge.

The book gives a comprehensive explanation of organization change that is shaped by strategies. The author asserts that organizational change and strategic management are mainly viewed as different concepts in the business world. It takes into account behavioral dynamics of strategy, changes and learning that apply to Walmart’s case. The edition gives information on the measures that organizations can take to facilitate strategy and pave the way for companies to acquire and attain meaningful change. The author covers case studies in different sectors such as digital businesses, the steel industry, and universities.

Burke, W. W. (2017). Organization change: Theory and practice. Sage Publications.

The author offers a compelling account of how leaders in modern times can deal with change. He addresses employees, managers, and leaders in different levels and provides them insight on how they can addresses unexpected and planned change. The text uses diverse perspectives, models, and theories to discuss organizational approaches. It skillfully links theory with contemporary case studies including Walmart. The book also studies government and healthcare organizations while giving practical lessons for entities in the non-profit sector.

Ferguson E. Walmart’s Vision, Mission, Generic & Intensive Strategies – Panmore Institute. Panmore Institute. 2017. Available at: http://panmore.com/walmart-vision-mission- statement-intensive-generic-strategies

The website offers valuable information and statistics that are used to understand the organizational change in Walmart. It gives an accurate account of the company’s vision and mission statement and evaluates the strategy use in its operations. The author details the company’s history and profile and this explains the changes that have taken place in the business over the years. The reason behind the company’s success is explained as being adherence to the company’s mission and vision. The authors give a brief look into the competition facing the company from other major retailers such as Home Depot, eBay, Costo Wholesale, Amazon and Whole Foods Market. The text offers insight on some changes that Walmart can make to improve its competitiveness and position in the retail market.

Roberts, B., & Berg, N. (2012). Walmart: Key insights and practical lessons from the world’s largest retailer. Kogan Page Publishers.

Roberts and Berg offer an inclusive of Walmart that is they acknowledge as being the leading retailer that has survived through changes in the global and national markets. The text delves into the success and failure of the business and predicts its market position in the next five decades. The authors acknowledge that Walmart has the best practices in store format logistics and procurement and is facing challenges in organizational change that might influence its success.

Walmart 2017 Annual Report.; 2017. Available at: http://s2.q4cdn.com/056532643/files/doc_financials/2017/Annual/WMT_2017_AR- (1).pdf.

The source offers insight into the current financial position of the company. The financial information available on the text shows that the company’s profitability has been on the decline in the recent past calling for a change in strategy. This is in light of the changes that have occurred in the retail sector shaping competition and business operations. The text shows that the company is committed to providing affordable and diverse products to its consumers that has been one of the strategies contributing to its success.

Wal-Mart Stores Inc. Organizational Change

Background Information

Profile and History

Wal-Mart Stores Inc. is a leading retailer in the US that was established by Sam Walton in 1962. It developed to become the most successful retail store in the global market and became public in 1970 (Walmart 2017 Annual Report). The growth pattern was sustained by the vast profit margins attained over the years. The profitability can be credited to the use of accurate strategies to achieve the mission and vision.

Vision and Mission

The business was launched with the vision of being the leading retailer according to employees and consumers. Wal-mart has achieved this vision in the years that it has been operational. The employees and consumers have gained in terms of affordable prices and salaries. Walmart’s slogan states, “Save money. Live better” which means that the company is focused on increasing peoples’ savings to improve their lives (Walmart 2017 Annual Report). Products are sold at reduced prices, and this boosts profitability while paving the way for consumers to save money.

Structure

The company has an intricate structure that has contributed to its profitability and expansion across the globe. It has forty-one regions that are headed by a Regional Vice President that is known as the RVP. These regions are made up of eleven districts that are made up eight to ten stores (Ferguson, 2017). The company has managers and executives in the headquarters. The support manager in the company holds the highest position based on an hourly position. There are management trainees that are taken through a five-month training program that paves the way for them to become assistant managers. Stores have a number of assistant managers depending on their size. Large stores have co-managers, and the highest position that is held by the store manager is known as the general managers that work in Sam’s Club.

Products

Walmart offers generic or household brands in a similar fashion with large grocery and retail chains. It has different store brands that meet varying consumer needs. The products can be divided into four major categories which are apparel brands, significant brands, additional brands and former brands (Ferguson, 2017). The apparel brands include Wonder Nation, Time and True, Terra and Sky and George that different target consumers. Major brands include Sam’s Choice that entails selected products and foods and Great Value that is made up of low priced goods of high quality. Additional brands offered in the company include Your Zone, Hometrends and Better Homes. Examples of former brands offered at Walmart include Price First, Canopy, Casemate, and Faded Glory.

Markets

Walmart operates in a macro environment that threatens its operations and offers business opportunities. The demographic environment is diverse with regards to occupation, location, sex, and age and the retail company has to keep up with the changing demographic trends. The economic environment entails the factors that affect spending patterns and consumers’ purchasing power (Ferguson, 2017). The natural environment involves resources that need to be harnessed as stipulated by the existing environmental laws. The political environment affecting the business touches on the rules that shape the industry and the pressure that affects business operations from the government and society.

Organizational Challenges

Walmart has been streamlining its activities in the US market and plans to merge its business from 6 to 4 divisions (Ferguson, 2017). The change comes in light of the changes in the global business environment. The company recently acquired jet.com with the aim of expanding its online presence and improving its competitiveness.

SWOT Analysis

Strengths

Walmart’s profitability and success can be attributed to the brand image. It follows that Walmart remains one of the leading brands in retail. Its financial position is stable as seen from the revenue generated over the years (Ferguson, 2017). The company’s total revenue in 2016 was $482 billion gained from Sam’s Club, Walmart International, and Walmart stores. Further, the company has an outstanding informational and technology (IT) structure that grows the customer base and supports rapid growth.

Weaknesses

Walmart has various weaknesses that have adversely affected its profitability and performance in recent years. There has been a decline in sales that has been caused by reduced retail spending (Coghlan & Rashford, 2015). Walmart faces immense pressure from a reduction in demand for major products such as food. The decrease in the value of the dollar has also influence Walmart’s operations in the international market. Its over-reliance on manufacturing in China exposes it to changes in currency rates in the global market. Walmart faces criticism due to paying their workers’ low wages. It has also been faulted for the importation of large scale hazardous and cheap products in the US market. The management has been questioned for failing to connect with customers. The company has a high number of managers, and this hurts customer service.

Walmart has been failed to keep up with changes in the retail environment as transformation, organization change and management have become key features in the business environment. Businesses should keep up with these changes in their activities to keep up with rivals in their markets (Coghlan & Rashford, 2015). Walmart has not kept up with these changes that have adversely affected its operations and been left out of the managerial revolution that experienced in the US. Leading business segments such as e-commerce and Sam’s club have been struggling against the competitors. The e-commerce sector is rivaled by Amazon that has succeeded in this area.

Opportunities

Walmart can improve on its management strategy to attain improved results. While the company has enhanced employee salaries, the management issues have not been addressed adequately. Additional changes should be made to improve staff morale and working conditions. The management should also discuss the customer experience to improve the profit margins. Emerging Asian markets offer significant opportunities for Walmart to establish strategic links with local brands. Exploring new markets is seen to be the best approach to support the underperforming segments such as Sam’s club and e-commerce.

Threats

Competition in the local and international market has increased significantly. As previously mentioned, the e-commerce sector faces a high level of competition from Amazon. The other retailer that poses a significant threat to Walmart is Costco. The organization’s dependence on China for manufacturing has led to decreased profits as they are affected by currency trends. It follows that the dollar has gained strength in the global market resulting in a decline in Walmart’s revenue.

Organizational Change Analysis

Walmart’s organization structure can be characterized as functional and hierarchical. It follows that hierarchy is the authority and vertical line of command. Orders that are given by managers at the top level are executed by middle-level management and employees in lower ranks. On the other hand, the function based feature entails employees that work in different sectors such as information technology and resource management. The organizational change affects different systems in a business structure. It is expected that organizational change will affect Walmart’s workforce and management structure. Restructuring in the company is expected to reduce the number of regional managers, and departmental leadership will also be restructured with the goal of improving competitiveness (Bose, 2017). It can be noted that a large number of employees will be fired during the restructuring process.

Leavitt’s Model

According to the theory of organizational development, specific variables within a business are accountable for the functioning and development of the entity that they are interdependent. These variables entail human, technological, tasks and structural aspects. Technological advancement has facilitated competitiveness in retail, and this influenced Walmart to develop its organizational structure to remain competitive (Roberts & Berg, 2012).

Open Systems Theory

The model asserts that businesses are social systems that are reliant on the environment mainly for inputs. As such, Walmart’s success in the retail sector can be attributed to the efforts made b employees (Roberts & Berg, 2012). The environment has overpriced commodities, and this improves Walmart’s profitability as consumers prefer its affordable products.

Force Field Analysis

Walmart has been focusing on retaining its competitiveness as the leading retail organization in the light of global forces in business (Roberts & Berg, 2012). Consequently, it is required to change its organizational structure that is expected to alter management in the company and the labor force. The restructuring will also lead to the establishment of new positions.

Likert Organization System Analysis

According to Likert, there are four systems of management and asserted that the organizational development shapes the organization management system in an entity. The management system in a business can be an exploitative-authoritative, benevolent-authoritative, consultative and participative group (Roberts & Berg, 2012). He addressed different organizational dimensions including goal-setting, decision-making, interaction, communication, and motivation. Walmart’s goal has been improving peoples’ lives by helping them to save. However, the retail giant has failed in the past as evidenced by the lack of motivation in the workforce and poor interaction between the management and employees.

Burke-Litwin Theory of Organizational Change

The concept is used to understand the nature of change that businesses undergo. It states that organization development strategies that are aimed at systems and structure management practices lead to transactional change. On the other hand, policies that address organization culture, leadership, strategy, and mission lead to transformational change (Roberts & Berg, 2012). Walmart should aim at restructuring to attain transformational and transactional changes. The management practices in the company should be focused on growing the global customer base and improving customer relations. Walmart has been working on its weaknesses to address the decline in sales and profitability.

Organization Development Interventions

Strategies aimed at organization development should be practices on different levels. It follows that three primary approaches are used in organizational development. These include behavioral, technical and structural changes that are critical in organization development and change. Structural reforms are comprehensive and touch on the hierarchy of an entity. As such, they may involve eliminating or adding layers to the hierarchy of an organization (Roberts & Berg, 2012). It also requires centralization or decentralization of an entity’s activities and downsizing the taskforce. Structural changes in Walmart are necessary as they will promote its development and help in the restructuring.

Organizational development is a comprehensive process that involves technical changes within a business and is not limited to the management. Technical changes in job design, automation, methods, and machinery can promote performance in Walmart. Additionally, technical changes in operation in the light of restructuring will promote productivity that is required to help the company retain in its position in the retail market (Burke, 2017). A behavioral system of change focuses on the improved use of human resources and facilitates employee inclusion through empowerment, motivation, and participation (Roberts & Berg, 2012). Employee empowerment, motivation and participation lead to an improvement in performance. Further, a teamwork approach can pave the way for solutions that promote development in business. Teams establish synergy and teamwork between leaders and employees results in the establishment of solutions that promote the growth of the organization. Walmart should employ behavioral change along restructuring to achieve improvements in profitability and operations.

Walmart should employ a parallel learning model to facilitate the restructure and promote its operations. It has been found that parallel learning systems encourage organizational development and innovation that is necessary for the contemporary competitive business environment (Roberts & Berg, 2012). Teams representing different functions and levels work in cohesion to establish new communication channels that go hand in hand with the hierarchical structure. Parallel structures will support the capturing of the collective expertise within the business.

Resistance and Engagement

Introducing organization development and changes within Walmart is expected to be faced with a high level of resistance as it is a familiar concept in business. This resistance will be experienced at the employee and management levels. Changes should be introduced in both levels to enhance engagement of organizational development and change and fight resistance. These measures ensure that the employees and leaders get used to the change. It follows that communication and education are imperative in minimizing resistance. The employees and leadership structure should be well versed with the nature of organizational change (Roberts & Berg, 2012). Further, they should have a comprehensive understanding of the logic behind it through individual discussion, presentations, group presentations, memos, and reports. Rewards and negotiations can be employed to control resistance and promote engagement during the implementation of organizational change.

For Walmart to promote engagement, it is essential for employees and the leadership to understand the present state of the business (Roberts & Berg, 2012). The employees and managers in the organization should be aware of the fact that the company has been undergoing a decrease in sales. Walmart should also be mindful of the desired position of the business. Stability is imperative for business as it minimizes anxiety. As a result, Walmart should ensure that it is aligned with the guiding principles, core values, culture, mission, and vision. Organizational change should be employed systematically, and the transition should be managed efficiently.

Recommendations and Conclusion

Organization development is seen as the best strategy in achieving change in the labor force and leadership in Walmart. Leadership and management on the company have been in the limelight for decreased sales and poor organization. On the other hand, the labor force has been observed to have been poorly compensated leading to poor motivation in the workforce. It is the appropriate time to implement organizational change in Walmart due to changes in the retail market. It is expected that Walmart will maintain its competitiveness in all areas that it has failed to excel in the past and continue dominating the retail space.

References

Coghlan, D., & Rashford, N. S. (2015). Organizational change and strategy: An interlevel dynamics approach. Routledge.

Burke, W. W. (2017). Organization change: Theory and practice. Sage Publications.

Roberts, B., & Berg, N. (2012). Walmart: Key insights and practical lessons from the world’s largest retailer. Kogan Page Publishers.

Walmart 2017 Annual Report.; 2017. Available at: http://s2.q4cdn.com/056532643/files/doc_financials/2017/Annual/WMT_2017_AR- (1).pdf.