See the case scenario illustrated below:
Drawing from the attached, discuss the relationship between your organization's skills and staff characteristics. The following questions need to be answered:
1. What is the organization's chief skill (core competency)?
2. What are its key staff characteristics and how do they operate?
3. How do these elements fit with the organization's structure, strategy, style, and systems?
4. Recommend ways (if there are any) that its skills and staff characteristics could be improved to improve organizational performance.
Case Scenario:
Wal-Mart, affectionately known to some as “Wally World” has become the place to go for quality service and products at the best prices. We have all done it. You find something at a department store that is overpriced and say, “I can get that cheaper at Wal-Mart.” I know I say that all the time. Wal-Mart has just about everything you need or want all in one big store.
The man that is originally responsible for becoming the place we go to buy everything is Sam Walton. He began his humble beginnings of this billion dollar empire we call Wal-Mart today back on May 9, 1950 when he purchased and opened Walton’s 5th &10 in Bentonville, Arkansas.1 Eighteen years later in 1968 the company grew to 24 stores across the state of Arkansas and reached over twelve million in sales along with them opening two stores outside the state. 2 In the twenty first century Wal-mart has become a billion dollar empire with over sixty two hundred stores/facilities around the world along with employing over one million people.
Wal-Mart’s slogan changed from “The Lowest Prices. Guaranteed!” to “Always low prices. Always.” as the first slogan was challenged by the National Advertising Review Board.2 Regardless of the slogan they choose it seemed to me they emphasized the mission and value of the company. It has now become a way of life to use the store to pick up anything from the spices you need to cook with to buying that oversized gas grill you have always wanted for the backyard. Wal-Mart offers the lowest prices possible under one roof because they get great prices from their suppliers. The shelves are always full stocked to keep the customers happy. Eventually Wal-Mart began to take over urban areas, giving their competitors a run for their money. Not only does Wal-Mart have great prices but there is one in almost every town, they are convenient, and they have great customer service. Having consistency in pricing, the general layout of Wal-Mart, and a reputation for top-notch customer service are other ways Wal-Mart keeps customers coming back to Wal-Mart. For example, in my personal experience with customer service, Wal-Mart is excellent. I took a vacuum cleaner back to Wal-Mart after 3 months. One day when I powered the vacuum on, it sounded like a foghorn and like it would explode at any moment. My wife and I took the vacuum back to Wal-Mart with no receipt or box. Wal-Mart gladly exchanged the vacuum. I have made many other returns with no questions asked. This policy keeps me going back to Wal-Mart and spending my money because I know whenever I have a problem with a product, I can return the item without a hassle. Like the Wal-Mart mascot yellow smiley face used in the past depicts, the customers are satisfied and the employees are happy to work in a great environment.
Wal-Mart is a publicly traded company that is owned by its shareholders. The Walton families are the leaders of Wal-Mart and have a large stake of it. When Sam Walton passed in nineteen ninety two he left Wal-Mart to his wife and children. 2 Wal-Mart is one of those companies you hope to eventually have land in your lap so you can retire comfortably. When I read about the beginnings of Wal-Mart it is hard to believe that Sam Walton took one small convenient store and grew it into the billion dollar industry it is today. Wal-Mart has been a part of my life since I was eight years old when my mother began working there to help make ends meet. It would be unimaginable to see it go the way of K-Mart or other stores that have really come and gone. It seems to have everything under one roof. You can get your oil changed and while you wait you can walk around there Mecca of products in which you will be bound to leave with a bag or two.
Wal-Mart will make a great section long product as it has endless information available on it. I am currently deployed to Afghanistan and my internet is limited with restricted search ability so I wanted to choose a company that would have an endless supply of information available on it. I considered using the Marine Corps being a Marine however I realized it is harder to find the financial records on it since the military does not operate for a profit. It seemed logical to choose an organization that operates as for a profit basis because of the pressure, expectations and generous articles that will be available to me about Wal-Mart. Inputs are the money, people and ideas that fulfill the mission. For Wal-mart the inputs would be the stockholders (money), employees (people & ideas). The expectations put on Wal-Mart by its stockholders to ensure its employees produce ideas to ensure they keep a strangle hold on the market must be overwhelming. The outputs are the product and services which for Wal-Mart would be the thousands of products that line the selves of its distribution centers and storefronts (Sam’s Club & Wal-mart stores). The output have to be strategically placed and constantly stocked to ensure customers never leave thinking that Wal-Mart is like other stores that are constantly out of stock. I see Wal-Mart transformation process being how it constantly reinvents itself to be the company and icon it has become. I see Wal-Mart as the gold standard for which other companies especially American strive to be a small company that grew into a world wide enterprise. This is why I feel they will be a good organization for me to evaluate.
Two entries should concern the strategy of your organization:
Wal-Mart’s winning strategy in the U.S. was based on selling branded products at low cost.3 When I was a young child I knew that Wal-Mart was the place to go where you could find a wide variety or products at low prices. Even when K-Mart was at its best Wal-Mart seemed to completely out do them in every facet of product availability and customer cost on small or large items. In order to keep low prices, the company reduces costs by the use of advanced electronic technology and warehousing. It also negotiates deals for merchandise directly from manufacturers; eliminating the middleman. In 2002 Wal-Mart was having 100 million customers walk in and out of its doors leaving some of their money inside the store.
In Afghanistan it is Thanksgiving and I know without a doubt a good percentage of my family will be standing inline in a day at a Wal-Mart waiting for the Black Friday Sales. I have been to a Wal-Mart Black Friday myself and I will say that not every product they sell that day will be the cheapest you could buy it anywhere though we as a culture have grown to think and accept that if we go to Wal-Mart we will get the lowest prices on all of our products. Wal-Mart has a policy on basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year.
A good example of how Wal-Mart is able to reduce cost is a gallon-sized jar of Vlasic's whole pickles is something in itself is something to behold. It weighs 12 pounds, too big to carry with one hand. The gallon jar of pickles is a display of abundance and excess; it is entrancing, and also vaguely unsettling. This is the product that Wal-Mart fell in love with: Vlasic's gallon jar of pickles. Wal-Mart priced it at $2.97--a year's supply of pickles for less than $3.00. The positive for this is that consumers can buy such a large quantity for such a low price. The negative is that competitors who do not buy Vlasic pickles at the same quantity as Wal-Mart will not be able to compete. This is one example on a single product; Wal-Mart has the ability to force lower prices on all of its supplies as they sell such a large volume. Wal-Mart strategy on low prices will continue to be successful with the volume they buy they are able ensure suppliers meet their demands or look at the possibility of losing sales if Wal-Mart chooses a competitor or leaves their product of the shelves.
Two should provide information about the structure of your organization:
A company’s individual organizational structure is a formal composition of task and reporting relationships that allows the company to control, coordinate, and motivate employees so a common goal can be achieved.
Wal-Mart also employs a structure that works with the systems to empower the low price strategy. Wal-Mart has planned warehouses and integrated them with systems in order to achieve “cross-docking” so that supplies coming in never touch the warehouse floor before going out to stores, which greatly reduces inventory cost.
Wal-Mart structure ties directly into its strategy by ensure that they do not hold onto inventory to ensure they are able to keep prices low. When I was growing up my mother worked as a Customer Service Manager for Wal-Mart in the nineteen nineties. Then as it is now Wal-Mart pays very close attention to its on hand inventory, the system they use ensures that when start to run out of products those products are placed on order to reduce the risk of customers finding empty isles for products in which they search for. Could it be a bad thing that the structure is so closely tied into the strategy? You could say yes. Wal-Mart could be seen as placing too much emphasis on ensuring lower prices. However Wal-Mart success is unparallel in comparison to its competition and against any business in America. Wal-Mart is a unique company in that it has the ability to pressure any supplier into reducing prices as many others are in line to try and get their products on the shelves of the mega superstore. Wal-Mart success will continue with the married strategy and structure though I feel at some point the continue profit margin will have to eventually level out as they will not be able to grow the stores they have anymore. The only option at that point will be to force supplies into even lower prices.
Prepare four (4) new entries for your annotated bibliography. Two entries should concern the key systems of your organization, two should provide information about the style of your organization. These sources will serve as the basis of your case analysis for this module.
In “All those Numbers: Logistics, Territory and Wal-Mart” this article analyses Wal-Mart’s logistical systems that have made the company a paragon in the global commercial landscape and across various business territories.
Mr. Lecavaluer shows how Wal-Mart relies on a multilayered distribution and logistics systems to reduce costs of its operations. Wal-Mart keeps track of every customers purchases storing this information in its data centers and using this information to monitor consumer behavior and in effect develop efficient predictive purchasing and distribution models. This data is transmitted via Wal-Mart’s intra-net, RetailLink and its large satellite network.
The company also has a Universal Product Code system that has been adopted by its suppliers that tracks the depletion and repletion of products in its shelves. This has strengthened Wal-Mart’s logistics and has allowed the companies to ensure inventory costs are reduced to almost none and the consumption of energy by the company is kept at the lowest possible levels. It also allows Wal-Mart to communicate quickly, directly and efficiently with its suppliers. Wal-Mart has developed a global data base with lifecycle information for all its products and using these, customers are able to access information on any of the products they want, their sources and production. This article is applicable to understanding the key systems at Wal-Mart as it provides information on how Wal-Mart uses information system to ensure cost efficient logistics in its operations.
Wal-Mart’s technological unit that is responsible for the company’s various ecommerce innovations and applications such as Smartphone payment system, twitter influenced product selection systems, mobile shopping systems, among others in ensuring effective marketing, security, privacy and reliability of its online sales operations.9 Systems in Wal-Mart such as the Kosmix systems which were recently acquired from Kosmix tailor’s the interests of twitter users to various twitter contents. @Walmartlab unit is responsible for overseeing effective ecommerce and promoting marketing of Wal-Mart products online and ensuring security of online Wal-Mart customers. This article is applicable to understanding the key systems at Wal-Mart as it provides information on the applications developed by Wal-Mart to enhance its ecommerce platform.
Denning analyses how Wal-Mart’s traditional style of doing business is slowly eroding its core customer base especially with the development of online shopping platform that have made goods even cheaper.
A good example is Amazon’s very low prices that are giving Wal-Mart a real challenge in online sales and thereby challenging the style of business operations in Wal-Mart which are still inflexible to the changing business environment which is going online and continually evolving. Since Wal-Mart business model is mainly based on low prices, if other companies can be able to provide goods at similar lower prices but at a higher convenience with the changing business climate then Wal-Mart’s business model is broken and no longer a strategic advantage. Denning recommends a change in business model for Wal-Mart that takes into account of what customers want, eliminates queues in the shops, delivers products to its customers, allows a participative management where employees are treated as strategic resources for innovation and has a strong augmented online presence. This article is important as it highlights the style of business operations at Wal-Mart, its strategies and management style which is important in understanding Wal-Mart’s style.
Wal-Mart elaborates the three basic values and beliefs that make them great and define their style and culture.
The three beliefs and values are respect for individuals, service tot heir customers and striving for excellence. This three core values defines the relationships between employees and management, between colleagues, between the company and its customers and through this define the style that the company adopts with regard to all these which defines the company’s culture. This article is important as gives insight into values that shape the company’s style.
Prepare four (4) new entries for your annotated bibliography. Two entries should concern the key staff elements of your organization; two should provide information about the skills of your organization. These sources will serve as the basis for the next assignment I have to do.
In the article Picking Wal-Mart’s POCKETS, Bergdahl analyses the seven strategies that Wal-Mart uses to compete effectively in the markets identifying them as POCKETS, that is “P=price, O=operations, C=culture, K=key item product and promotion, E=expense control, T=talent, and S=service”. In the two of the strategies, that is culture and talent, key elements with regard to how Wal-Mart views or treats it staff are noted. Wal-Mart’s staffing strategy has three key elements: hiring the best, providing the best training to its staff and providing the best environment for its employees to work in treating them as associates to the company rather than just mere employees.12 The store has about 2.1 million employees with it being the biggest private employer in the U.S and globally. With a single store having as many as 600 employees, managing this large workforce requires about nine assistant managers working under two co-managers who are overseen by the store manager. Though people are the greatest assets in Wal-Mart as they are the ones who take care of customers in the stores, they are also the biggest liability due to the large staff turnover every year. This article is important in this research topic as it clearly shows various elements that define staffing at Wal-Mart.
In Bergdahl’s book, The ten rules of Sam Walton: Success secrets for remarkable results, Bergdahl analyses various success factors that have made Wal-Mart such a big success in the business world. In the book he notes ways in which Wal-Mart combines the use of various motivational techniques to be successful. In essence, Wal-Mart’s motivational techniques can be placed into three groups: equity and satisfaction, achievement, and growth. Wal-Mart evaluates the performance of employees once every year and this provides a change to promote those who are performing exceptionally well.13 Employees are rewarded according to how they have performed in the performance appraisal and are also allowed to buy into the company stocks prices in employee stock options. Redesigning of jobs with changing business climate over the past ten years in the company has also been a major player of motivation of employees in this company with the new better structures of work improving employee satisfaction and productivity. The combination of social levers such as mutual responsibility, intensive dialogue and high levels of group identity within Wal-Mart staff is a unique core competency in the company’s motivation strategy. This article is important in this research topic as it evaluates important motivational elements that Wal-Mart uses to ensure higher employee performance and success.
The key skills required for an employee working at Wal-Mart not only entails people skills since most of the employees deal with customers but also entails cutting edge data analysis skills and an understanding of how the retail business works. Davidson shows that not only do Wal-Mart’s employees needs these skills but also key strategic partners who are connected by the hi-tech supply chain and logistical IT system at Wal-Mart, need to have skills on how to use sophisticated software programs that allow them to access and view online in real time the company’s sales data. In essence the manager’s skills in Wal-Mart entails understanding how to work with programs such as Prospace and RetailLink as well as having analytical skills for comprehending data collected in the information systems. In recognition of these needs Wal-Mart has gotten into partnership with the Northwest Arkansas Community college which is to be responsible for designing specific education programs tailored to meet Wal-Mart’s need for skilled retail analysts and marketing analysts.14 This article is important as it shows the key skills that Wal-Mart seeks in its employees through its collaboration with the business college in Arkansas.
A notable example into the inside workings of Wal-Mart and the skills that managers cultivate in the employees is noted in biztrains article where, Tim Gebauer, a Wal-Mart store manager at Mason city explains how the employees working under him have been a great source of great ideas. In this sense good interpersonal and communication skills are noted as important in the store where the employees are easily able to interact with each other and communicate their ideas to better customer services in the store. This article is important as it provide as example of skills at work in the stores and how employees in Wal-Mart are able to meet customer needs by being innovative, creative and communicating.
References:
1 https://walmartstores.com/
2 https://en.wikipedia.org/wiki/History_of_Wal-Mart#cite_note-2
3 Govindarajan, Vijay and Lang, Julie B.Wal-Mart Stores, Inc. Retrieved on 25 November 2011 from:
mba.tuck.dartmouth.edu/pdf/2002-2-0013.pdf
(Strategy source 1)
4 Hayden, Lee, Mahon, Pereira. Wal-Mart: Staying on Top of the Fortune 500. Retrieved on 25 November 2011 from: https://mike-pereira.com/subpage/docs/walmartcs.htm
(Strategy source 2)
5 Fishman, Charles. (1 December 2003). The Wal-Mart You Don't Know. Retrieved on 25 November 2011 from:
https://www.fastcompany.com/magazine/77/walmart.html
6 Hitt, Melynn (28 May 2008). The Organizational Structure of Starbucks, Unilever, and Wal-Mart. Retrieved on 25 November 2011 from:
https://www.associatedcontent.com/article/782963/the_organizational_structure_of_starbucks.html
7 Carlson, Shawn. (29 August 2004). Wal-Mart Case Study. Retrieved on 25 November 2011 from:
https://www.rarethoughts.com/walmart.html
8 Lecavaluer, J. (2010, May 24). All those Numbers: Logistics, Territory and Wal-Mart. The Design Observer Group. Retrieved from
https://places.designobserver.com/feature/walmart-logistics/13598/
9 Neff, J. (2011). Wal-Mart seeks boost from tech with Labs. Advertising Age. Retrieved from:
https://adage.com/article/news/walmart-seeks-boost-search-e-commerce-labs/229700/
10 Denning S. (2011, February 2). Wal-Mart and the Futility of Traditional Management. Forbes. Retrieved from
https://www.forbes.com/sites/stevedenning/2011/02/23/wal-mart-and-the-futility-of-traditional-management/
11 Wal-Mart (2012). 3 Basic Beliefs & Values: Three simple things that make us great. Retrieved from
https://walmartstores.com/aboutus/321.aspx
12 Bergdahl, M. (2009, October). Picking Wal-Mart’s POCKETS. Retail Networks. Retrieved from
https://www.retailnetworks.org/images/article_pdf/Bergdahl4_-_Picking_Wal-Mart%27s_POCKETS.pdf
13 Bergdahl, M. (2006). The ten rules of Sam Walton: Success secrets for remarkable results. Hoboken, New Jersey NJ: John Wiley & Sons. Retrieved from
https://books.google.com/books?id=iUm_y4JZLvQC&pg=PA85&lpg=PA85&dq=Walmart+motivational+techniques&source=bl&ots=quqtRALPyh&sig=B7yJTeLrkt3Q2TT2nJBegfoEOuQ&hl=en&ei=iYiVTqXqL8mrrAfm1MGnBg&sa=X&oi=book_result&ct=result&resnum=4&ved=0CDQQ6AEwAw#v=onepage&q&f=false
14 Davidson, L. (2011). Wal-Mart Gets Into the B-School Biz. Business School Journal. Retrieved from
https://www.businessschooljournal.com/wal-mart-gets-into-the-b-school-biz/
15 Biztrain (2010). Wal-Mart manager explains ways his employees (associates) are a greater idea factory. Retrieved from https://www.biztrain.com/motivation/stories/walmart.htm