Loops at Wal-Mart Relies on Research Proposal

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This means that problems are dealt with quickly, before they become a drag on performance. The singling out of underperformers for the week helps in the problem identification process. By bringing different store and regional managers together (between 400 and 600 each week), Wal-Mart also eliminates the possibility that problems can arise independently in different stores. Instead, problems are identified and rectified while they are still minor is scope.

The Saturday Morning Meetings also have several long-term impacts on Wal-Mart's organizational effectiveness. One of their most important roles is to reinforce the organizational culture. The culture of Wal-Mart is essential to its cost leadership strategy and its ability to deliver a high level of customer service despite the focus on cost reduction. The meetings also reinforce key messages regarding strategy. One component of the Saturday Morning Meeting is the use of media presentations regarding merchandising. These presentations in part represent short-term, week-to-week, merchandising lessons, but they also represent a consistent pattern of knowledge transfer. Each manager becomes stronger with regards to their knowledge of the business and this knowledge is then disseminated throughout the company.

The real times sales data is used to support many short-term tactics. It supports the purchasing process at the store level, by providing manager's with on the spot knowledge of what is moving, what isn't. This feedback can be used to evaluate different managerial initiatives as well, such as a recent alteration to the store's layout. At Wal-Mart the store level ordering system also supports the company's inventory reduction initiatives. Wal-Mart has consistently derived competitive advantage from its high inventory turnover and low inventory costs relative to its competitors. The real-time sales data supports this by providing managers the tools needed to make inventory and merchandising decisions in real time.

The real time sales data also functions as a long-term support mechanism for organizational effectiveness. Long-term trend analysis can be used to make major shifts in product mix, product placement and other merchandising decisions.

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The purchasing department uses the data for long-range planning and supplier negotiation. The company also uses this data for long-range planning of seasonal product requirements. Additionally, the real time sales data supports the organizational culture in that it focuses attention on the minutiae of merchandising and cost reduction, key tenets of Wal-Mart culture.

In light of this analysis, it is apparent that the opportunities for organizational learning are nearly limitless. Wal-Mart uses its feedback loops to derive all types of knowledge, to synthesize that knowledge and then to disseminate that knowledge back throughout the company. These loops emphasize the value of organizational learning both in terms of sweeping, long-range knowledge and the minutiae of merchandising. Wal-Mart has demonstrated an aptitude for learning from both of these knowledge types.

This shows that organizational learning does not just come from one place or one system, but is a continuous process. At Wal-Mart the feedback loops have very short cycles. The Saturday mornings provide weekly feedback, mainly on broader issues; the real time sales data provides a feedback loop that never ceases.

Though there are thought to be no true learning organizations (Larsen et al., 1996), Wal-Mart certainly comes close. Their use of very tight feedback loops provides for constant learning and adjustment. This allows Wal-Mart to react very quickly to environmental changes, competitive challenges and new ideas. Wal-Mart could, however, improve its learning capacity by tightening some of the feedback loops. For example the Saturday Morning Meetings, because they are conducted in person, only include regional managers. The result of this is that an extra layer of communication exists between the store managers and this meeting. The regional managers ultimately must hold their own version of the Saturday Morning Meeting in order to incorporate their subordinates into this feedback loop. Incorporating more people into the feedback loops and tightening those that can be tightened represent the main opportunities for Wal-Mart to improve its degree of organizational learning.

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