Wal-Mart Organizational Structure Essays

This week we are going to look at Walmart and their organizational structure. We will be comparing and contrasting their organizational structure with a couple other different types of organizational structures to show why the structure they use is best for their corporation. Next we will evaluate how the organizational functions like operations, finance, human resources and marketing influence and determine the organizational structure and how it progresses their corporation.

Lastly, we will explain how the organizational design, such as product, matrix, customer-based, departmentalization, functional and geographic, helps to determine which structure will best suit Walmart’s needs in their different departments and with the consumer.

Walmart is a very large corporation in which they have a wide variety of geographic areas, products, customers, divisions, and departments to discuss, evaluate, research, and come to a resolution to the different matters at hand to ensure a strong and promising future for their corporation and employees. Walmart operates on a line of business (or divisional) organizational structure which has helped them to move to the top and stay at the top of the retail division. As we can see in the example A-1 below, there are many levels and branches of the Walmart corporation organizational structure that are almost like a family tree.

Example A-1 (“Fly2pic”, 2011) This type of organizational structure is best for the larger organizations as they have many departments to run and manage whereas a small business has a limited amount of departments and does not require the amount of management staff that a larger business requires. Walmart is a very large company that operates in a wide variety of geographic areas from the United States to China and even India.

The corporation has divided the areas up into what is called districts. Each district has a District Manager who over sees all the stores within that district. They have many different stores around the world with a top manager at each store. Each department within the corporation and within the stores handles a different type of product to satisfy the variety of consumers. With each department they have a manager to over see that department.

This chain of command is going from the top, or CEO, down to the lower level managers in each department in each store. The accountability is going from the lower end managers at each store to the top executive or CEO. The functional structure would not work for Walmart because it is an organizational structure that is designed for smaller businesses with little to no chain of command and communication within it’s company. The matrix structure “is a hybrid of divisional and functional structure.” (Writing, 2014). This particular structure can create power struggles because there are different managers working in one area with the same level of authority.

How does the organizational functions like marketing, human resources, finance, and operations influence and determine the organizational structure? With the many different products that Walmart sells along with the variety of areas around the world that they operate in they have to have a department for just marketing and research. This department will study the area and determine the best way to market and advertise their stores to get the most out of the geographic area they are located in.

Their human resources department handles a wide range of situations from employee problems to consumer problems, they, in themselves, are the department to investigate and put forth the solutions to problems within the corporation. The accounting department handles all the finances within the corporation and ensures that the profit-loss margin is adequate. They manage the budget for the corporation to allow the corporation to expand their locations, products, advertising, services, and even their employees. Without the operations of the corporation there would be no stores to sell products out of and no foundation for the employees or the executives to stand on.

To determine which structure best suits Walmart’s needs we will look at the geographical part of the structure first. The Walmart corporation has several thousands of stores within the United States alone. According to Kamboj and Kalia (2011) “The company operate 8,416 stores worldwide; with over 4,000 of them in international markets.” (p. 1). With so many stores in both the United States and in other countries the corporation has to hand the power within them down the chain to lower level management due to the top end managers cannot be at all the stores at one time.

The matrix of Walmart is very important to the structure as it provides corporate affairs, finance, legal, characteristics, and merchandising and product development among other things to the structure and corporation. They have a very wide product line that allows them to accommodate all of there consumers around the world. The corporation uses departmentalization when they base the product to stock in their stores on the geographic area that the store is in, if the store is in a beach community they stock more beach activity products than a store that is in the desert areas like Nevada. This can also be identified in the functions within the corporation’s structure.

The customer-base within the Walmart corporation is a very versatile part of the corporation. Due to them having stores worldwide, they have many different cultures and nationalities shopping at their locations for a variety of things. With this, they have to base their product on their location so that they can provide for the local consumers and keep them coming back.

Out of all of the organizational structures, Walmart would not have gotten where it is today if they used a functional structure or a matrix structure. Using the line of business (or divisional) structure has been very profitable for the Walmart corporation. It has allowed them to divert power among the different store managers and district managers and to build and maintain a customer-base that is devoted to them.

Providing a diversity of products, geographic locations, departments within the store, and the advancements of the “superstore” they have enabled themselves to be a power king in the retail industry. The many organizational functions within the corporation, such as marketing, finance, human resources, and operations has allowed them to form a positive line of business structure.

The geographic, functional, customer-based, product, service, matrix, marketing, and departmentalization of the organizational design has helped to determine that the line of business (or divisional) structure is the best suited organizational structure for the Walmart corporation.

References:

  • Fly2pic. (2011). Retrieved from http://www.pic2fly.com/Organizational+Structure+of+Walmart.html
  • Writing, A. (2014). Different types of organizational structure. Retrieved from http://smallbusiness.chrono.com/different-types-organizational-structure-723.html
  • Kamboj, R., & Kalia, S. (2011). Walmart-India vs. China. PRIMA, 2(1), 19-30. Retrieved from http://search.proquest.com

Walmart’s organizational structure determines the company’s business activities. Its organizational structure also imposes limits on how the business addresses its problems. In relation, Walmart’s organizational culture determines the way people respond to challenges in the workplace. The resilience of the human resources of the company partly depends on the mindset supported through the organizational culture. Nonetheless, the long history of Walmart in succeeding and continually growing internationally shows that the firm’s organizational structure and organizational culture have been helpful in bringing competitive advantage and success. Such organizational structure interacts with the organizational culture to maintain the significant competitive advantage of Walmart.

Walmart’s leadership position in the retail industry and its potential long-term success are linked to the beneficial combination of the company’s organizational structure and organizational culture.

Walmart’s Organizational Structure

Walmart has a hierarchical functional organizational structure. This structure has two features: hierarchy and function-based definition. The hierarchy feature pertains to the vertical lines of command and authority throughout the organizational structure. For example, except for the CEO, every employee has a superior. Directives and mandates coming from the top levels of Walmart’s management are implemented through middle managers down to the rank-and-file employees in Walmart stores. On the other hand, the function-based definition feature of the company’s organizational structure involves groups of employees fulfilling certain functions. For example, Walmart has a department for the function of human resource management. The company also has a department for the function of information technology, and another department for the function of marketing. These are just some of the numerous function-based departments in Walmart’s organizational structure.

The main effect of Walmart’s hierarchical functional organizational structure is the ability of corporate managers to easily influence the entire organization. For example, new policies and strategies developed at Walmart’s corporate headquarters are directly passed on to regional managers down to the store managers. In this way, effective monitoring and control are achieved through Walmart’s hierarchical functional organizational structure. However, a downside of this organizational structure is that it has minimal support for organizational flexibility. The lower levels of the organizational structure cannot easily adjust business practices because of the lengthy communications and approval process involving the middle managers and corporate managers at Walmart’s headquarters.

Walmart’s Organizational Culture

Walmart’s organizational culture has four main components. These components guide employees’ behaviors. The components are also identified as Walmart’s beliefs:

  1. Service to customers
  2. Respect for the individual
  3. Strive for excellence
  4. Action with integrity

In terms of service to customers, the company prioritizes customers in its operations. Walmart also recognizes the contributions of each employee to the success of the business. In addition, the firm strives for excellence in the performance of individuals, teams, and the entire organization. In terms of maintaining integrity, Walmart promotes the virtues of honesty, fairness, and impartiality in decision-making.

Recommendations on Walmart’s Organizational Culture and Structure

Walmart’s organizational structure is ideal for the company’s type of business and global scope of operations. However, Walmart can improve in applying its beliefs in the context of its organizational culture. These beliefs are ideal. Still, the company is frequently criticized about its failure to address employees’ concerns regarding low wages. Such criticisms point to the difference between the belief of respect for individuals in the organization’s culture, and the actual treatment of the employees. Thus, a suitable recommendation for Walmart is to implement more effective measures for fulfilling the respect for the individual component of the organizational culture.

References
  • Alvesson, M. (2012). Understanding organizational culture. Sage.
  • Csaszar, F. A. (2012). Organizational structure as a determinant of performance: Evidence from mutual funds. Strategic Management Journal,33(6), 611-632.
  • Csaszar, F. A. (2013). An efficient frontier in organization design: Organizational structure as a determinant of exploration and exploitation. Organization Science24(4), 1083-1101.
  • Heskett, J. L., Sasser, W. E., & Wheeler, J. (2008). 10 Reasons to Design a Better Corporate Culture. Harvard Business School.
  • Lichtenstein, N. (2011). Wal-Mart’s Authoritarian Culture. The New York Times.
  • Naranjo-Valencia, J. C., Jiménez-Jiménez, D., & Sanz-Valle, R. (2011). Innovation or imitation? The role of organizational culture. Management Decision49(1), 55-72.
  • U.S. General Accounting Office (1992). Organizational Culture: Techniques Companies Use to Perpetuate or Change Beliefs and Values.
  • Wal-Mart Stores, Inc. Working at Walmart.
  • Wal-Mart Stores, Inc. Walmart Form 10-K.
  • Wal-Mart Stores, Inc. Walmart Human Resources.
  • Wal-Mart Stores, Inc. Walmart’s Official E-commerce Website.
  • Yanrong, L. I. U. (2013). Strategy Adjustment of Walmart China. Management Science and Engineering7(4), 88-93.

Case Study & Case Analysis, HR Management, Organizational Culture, Organizational Structure, Retail Industry, Walmart

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