Wal-Mart Evaluate How Organization Functions Term Paper

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The retailer has the same business strategy of low prices in every country it operates and its marketing activity supports this strategy. Basically, the company has a global control over this function, but it is also aware of the importance of the local content for this type of activity, which is why regional managers are given freedom within limits when it comes to marketing.

The logistics function is strongly connected to the it function as the company's level of automation for the supply chain is very high and writes the best practices in its industry. Suppliers know on permanent basis where there merchandise it and the company know at any point in time the location of any item, the inventory level, etc.

The creation of an it department that works closely to R&D allowed the company to make intensive use of high technologies and be able to reduce costs massively. The great performance achieved by the company couldn't have been possible with dispersed, uncoordinated it and R&D activities.

The recent expansion to Europe and Asia determined the company to implement changes at functional level, which influenced its organizational structure. For instance, marketing maintain its main strategy, but the promotional strategies had to be adapted to the host markets (EU and Asia), which are completely different markets. The financial function suffered changes due to the different accountability system in the host markets.

Overall, the globalization process brought many changes in the company. These changes had to me made for the retailer to be able to compete in foreign markets and they had a significant impact on every level, including the organizational structure.

Organizational design at Wal-Mart

Wal-Mart's strategy is focused on cost reduction. To support that, the retailer maintains its corporate overheads at a low level, has its suppliers tightly integrated, leverages scale economies and has leadership in use of technology (Chapman & Berman, 2006).

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These tasks are not easy especially now that the company competes globally and it is more difficult to coordinate its different activities/departments. However, the retailer manages to chose a mix of strategies with respect to organisational design that allows it to maintain the leadership position in both the home market and some of the host markets.

A scorecard analysis on the company's organizational "architecture" made by Kampas Researched pointed out that the retailer focuses a lot on technology leverage and speed and leanness to maintain its competitiveness and scores quite low on workforce actualization.

FIGURE 1 - WHOLE SYSTEM SCORECARD - WAL-MART 2006

Source: Kampas Research

Key to ratings: 5 = Excellent, 4 = Good, 3 = Average, 2 = Fair (Warning), 1 = Poor

The retail industry is fast developing in the emerging markets, which determined the retailer to stress on the importance of automation to be able to control overseas operation. However, not that the company operates on a different dimension, the management had to loosen the control and increase flexibility. This led to disruptions later on (e.g. workforce problems), which required changes. Wal-Mart is a company that permanently changes to adapt to market conditions and many changes are yet to come.

Reference List

Pohle, G. & P. Korsten & S. Ramamurthy. 2006. "The specialized enterprise - a fundamental redesign of firms and industries" in Chapman, M. & S.J. Berman. 2006. "Innovative approaches for sustainable growth." IBM Busines Consulting Services.

D'Annunzio, L.S. 2005. "Challenges and strategies of matrix organizations: top-level and mid-level managers' perspectives. www.allbusiness.comHuman Resource Planning, Vol. 28(1): pp. 39-48.

Kampas, P. 2007. "Mastering Organizational Architecture." www.kampasresearch.com.

ORGANIZATIONAL STRUCTURE PRESENTATION

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