Table of Contents
- Walmart Organizational Structure
Walmart is one of the largest retail corporation operating a chain of grocery stores and hypermarkets around the world. Walmart’s mission is to save customer’s money for a better living with the slogan “Save money. Live better.” The company’s current strategic plan focuses on growth in value, convenience, geographies, appeal, and merchants. Walmart plan is to deliver fast and easy seamless shopping with a target of approximately $60 billion in net sales by 2022. Walmart utilizes both innovation and low-cost strategies to compete with big players such as Amazon. The low-cost strategy entails a pricing mechanism of delivering cheaper products in the market whereas innovation involves developing products that fit the current market demand. Innovation has been driven by technology with the firm investing in robots, automation of processes, and online sales of products and services. As a result, the strategies helped Walmart experience a tremendous increase in net sales with a record of net sales worth $481 billion in 2018.
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Walmart’s target market has always been lower end middle-class customers which represent over 90% of its customers. Their pricing strategy aims at delivering convenient and bargainable products that can be afforded by lower income households. This is because poor and lower-class consumers are common in many countries Walmart operates hence targeting them will not only improve their sales but also assist customers to meet their daily demands. However, the organization faces stiff competition from established corporations such as Amazon, Alibaba and Home Depot among others. To achieve a competitive edge, Walmart has developed an endless aisle system which involves integrating their in-store and online shopping to strengthen customers’ experiences. They have also implemented a smart portfolio strategy aimed at merging with competitors to minimize distribution and marketing costs. Other methods include investment in e-commerce and more experimentation of innovative products in the market.
Planning has been a critical aspect that plays a key role in Walmart’s global growth. The company has been engaging in strategic and tactical planning processes to compete with other key players in the industry. The planning processes start with carrying out research on products and services that meet consumers demand. Next is designing new goods and services focusing on quality, location, and prices. This is followed by improving supply chain and inventory management and finally developing global stores in areas having a huge demand for their products and services.
Walmart has a functional organizational structure. The structure involves a hierarchical design having a vertical chain of command with the CEO being the topmost leader in the company. The structure contains executive level, management level, and a lower level having different roles and responsibilities. The staff in each department or level is responsible for a single person to enhance quick communication and decision making in the company. Walmart has a tall organizational structure due to the number of departments and management levels due to the bigger nature of the company. The taller hierarchy has been instrumental in achieving substantive supervision of employees and clear responsibilities. The structure enables Walmart to use a top-down management style where the CEO is responsible for developing the organization’s culture, objectives, and strategies. The information is subsequently communicated to middle-level staff and finally to subordinates. Walmart’s organizational structure is represented below.
Walmart Organizational Structure
Walmart’s organizational structure portrays a centralized type of structure. This entails a hierarchy decision-making system where decisions are undertaken at executive levels. The CEO and the board of directors are responsible for decision making and communicate to the junior level staff of key decisions. Daily operations, processes, and policies are strictly decided by departmental managers without key involvement of subordinate staff. Centralization is key in supporting Walmart’s vision and fast execution of activities within the industry. In the structure, the executive members occupied by CEO and board members are tasked to carry out to make key decisions touching on the growth and operation of the company. The middle level occupied by departmental managers and supervisors is responsible for managing staff and implementing the policies and strategies. The workers or subordinates on the lower level are tasked to carry out day-to-day activities in production, distribution, and market of goods and services.
Walmart is headed by Carl Doug McMillon who acts as the president and chief executive officer (CEO). McMillon is an American businessman who has worked for Walmart for a larger part of his career. McMillon joined Walmart in 1984 as a summer associate in unloading trucks at the Walmart’s Distribution Centre. He was slowly promoted into the management level before becoming Sam’s club CEO in 2005. In 2009, McMillon became the CEO of Walmart’s international division before being replacing Mike Duke as Walmart’s fifth CEO in 2013. McMillon is known for his leadership capabilities in managing global Walmart’s stores, implementing effective e-commerce, and bringing up an effective supply chain. Under his tenure, the company has experienced tremendous growth in sales globally. As such, he has received many accolades include being listed in Forbes as one of the most powerful individuals for three consecutive times from 2014 to 2016.
McMillan has unique and exemplary leadership philosophies that have turned around Walmart into a giant retailer globally. Firstly, McMillan has been focusing on investing in people to drive up the company’s growth. This involves increasing Walmart staff pay, continuous training, and developing products that fit consumers’ tastes and preferences. The CEO is remembered for raising the minimum wage to the current $9 per hour. Secondly, McMillan has strengthened communication within the company by developing an effective hierarchical structure that ensures all the stakeholders play a key role in the success of the company. This is coupled with his leadership in embracing technology by developing apps and online sites to improve accessibility and consumers’ convenience.
McMillan is regarded as one of the most successful CEO who transformed Walmart during the period when the company was facing slow growth and stiff competition. He is the youngest CEO who transformed Walmart into a leading organization on the Fortune 500 list for several consecutive years. In 2018, McMillan was ranked in number 23 as one of the most powerful people in the world and further being listed in HBR’s top-performing CEOs in 2018. According to the Fortune Walmart, McMillan is the most respected leaders among the stakeholders due to his role in championing or improvement of workers reward. He is also viewed as a rare executive who successfully manages daily operations and subsequently engineering innovation in Walmart Inc.
To achieve its goals, Walmart has been engaging in market penetration as a primary strategy of penetrating complex industry. With competitors developing innovative products, Walmart shifted to the utilization of Igor Ansoff’s model of selling a huge amount of goods and services in diverse markets. Similarly, Walmart has been engaging in intensive product development to meet its financial and product goals. For instance, the firm has invested in sales and marketing to achieve diversification of its products. To operate efficiently and track their progress, Walmart has been using data mining to analyze information on its operation, customers’ needs, and market demands. Data mining has been effective in making Walmart stores efficient, improving supply chain, and optimizing products which ultimately improves the shopping experience.
In the recent past, Walmart has received a positive reputation for the production of high-quality products. After years of bad reputation, Walmart invested in innovation and technology to produce quality goods and services. Much more investment was put in the research to implement effective strategies aimed at understanding consumers’ tastes and preferences. In instances of quality problems, Walmart recalls the affected products and carry out investigations to understand the quality standards needed in the market. They realistically carry out product samples and conduct experimentation in the market of new quality products. In the end, they put corrective measures that ensure production of superior and competitive products. To improve its global growth, Walmart has been engaged in the planning of several activities within the 5 years. Among them includes adding over 2000 staff in technology group, increasing data mining, and track financial performance through setting out an effective supply chain. Furthermore, Walmart has been launching insurance products to improve their employees’ health care. The activities aim at enhancing service delivery and improve employee performance which ultimately results to increase in sales and profitability levels.
- Fortune.com. (2019). Doug McMillon: The Man Who's Reinventing Walmart. Retrieved from: http://fortune.com/2015/06/04/walmart-ceo-doug-mcmillon/
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- Walmart. (2018). Walmart 2018 Annual Report. Retrieved from: https://s2.q4cdn.com/056532643/files/doc_financials/2018/annual/WMT-2018_Annual-Report.pdf