Walmart Company: Organizational Development

Wal-Mart Stores, Inc. is a worldly known and successful US multinational corporation that has operations in more than ten foreign countries. Wal-Mart was founded in 1962, and now it is headquartered in Bentonville, Arkansas (Brunn, 2006, p. 12). Wal-Mart is one of the largest global retailers working to increase annual revenues, and the secret of the corporation’s success is the effective organizational structure. The purpose of this paper is to identify possible differences and similarities in the organizational structure of the US Wal-Mart and the corporation’s operations in China, Brazil, Mexico, and India and to provide recommendations for increasing the effectiveness of these organizational structures.

The Organizational Structure of the US Wal-Mart

The governing body in Wal-Mart is the Annual Shareholders Meeting, and the executive body is the Board of Directors. Thus, there are 14 members representing the Board of Directors. The corporation’s organizational structure can be described as combining the elements of divisional and geographic structures (Roberts & Berg, 2012, p. 58). Wal-Mart Stores, Inc. includes such divisions as the US Wal-Mart Stores, Sam’s Club, and Wal-Mart International, which are characterized by the great autonomy in governing and operations (Brunn, 2006, p. 14).

In 2010, the US Wal-Mart Stores were also organized according to the principle of the geographic location into Wal-Mart West, Wal-Mart South, and Wal-Mart North (Walmart, 2014). Wal-Mart International includes such divisions based on the geographic location as Wal-Mart China, Wal-Mart Brazil, Wal-Mart India, and Wal-Mart Mexico, among others.

CEO and the representatives of the Annual Shareholders Meeting are responsible for providing the most important strategic decisions in the corporation. Senior Vice President and Regional Vice Presidents meet in Bentonville, Arkansas, in order to regulate the operations of the basic market divisions and geographic divisions in the United States.

Market Managers are responsible for controlling operations related to Wal-Mart International. In the US stores, local Store Managers are directly responsible for operations, and they work with Assistant Managers to control following the strategic plan in a district (Roberts & Berg, 2012, p. 24). Department Managers in stores are responsible for the direct control of the work of the store’s staff, including cashiers, sales assistants, and stockers.

The Organizational Structure of Wal-Mart Stores in China

The first Wal-Mart stores were opened in China in 1996. The organizational structure of individual stores in China does not differ significantly from the typical organizational structure followed in all the Wal-Mart stores globally. Local store managers demonstrate their authority while deciding on adjusting the product lines, setting prices, and allocating products on shelves in stores.

The strict organizational structure serves to maintain company standards in all local Wal-Mart stores in China. The main difference is the focus on the management teams’ work to control the operations in stores and the focus on the work of labor unions. Wal-Mart does not support organizing labor unions in stores, but this practice is a requirement related to operations in China (Gereffi & Ong, 2007, p. 47). The leadership issue is also actively discussed in Chinese Wal-Mart stores.

The main feature of Wal-Mart stores in China is the specific store format selected to adapt the organizational structure, culture, and principles to the Chinese environment. The first Chinese store owned by Wal-Mart was Shenzhen Supercenter that combined features of a supercenter and a warehouse club (Gereffi & Ong, 2007, p. 48). That is why Store Managers in Chinese Wal-Mart stores are also responsible for choosing Chinese producers for small local stores and for resolving transportation issues.

The Organizational Structure of Wal-Mart Stores in Brazil

Wal-Mart opened its first supercenters in Brazil in 1995. The corporation’s focus was on the expansion in the country, and a principle of a joint venture was selected to expand Wal-Mart stores further in Brazil. Wal-Mart became one of the largest retailers in Brazil in the 2010s with the focus on developing Bompreço’s stores as part of Wal-Mart Corporation’s chain (Brunn, 2006, p. 52).

In spite of the fact that Wal-Mart stores in Brazil are organized according to the traditional model followed in the United States, and globally, the local adaptations include the provision of more authorities to Store Managers in relation to the merchandise mix issues. Furthermore, Regional Vice Presidents control the work of Wal-Mart stores in Brazil in the context of their general plan regarding the expansion of Wal-Mart stores in South America.

The Organizational Structure of Wal-Mart Stores in Mexico

The first Wal-Mart international store was opened in Mexico in 1991, and today the retailer’s chain, which develops in the country, is known as Walmart de México y Centroamérica. The organizational structure of Wal-Mart stores in Mexico during the early part of the 1990s was influenced by the fact that Wal-Mart focused on a joint venture with Cifra, a Mexico-based company (Hitt, Ireland, & Hoskisson, 2012, p. 245). The organizational structure in stores included the elements associated with the approaches used by the Cifra management and by Wal-Mart management.

In order to become the most powerful retailer in the Americas, Wal-Mart focused on developing the expansion strategies, and managers concentrated on the local market requirements because the first years of operations in Mexico were not successful for the company. Intending to adapt the Wal-Mart corporate strategies to the market in Mexico, the managers selected to focus on the local customers’ demands, and local Store Managers were provided with more authorities to select products to present on the shelves in the Wal-Mart stores (Walmart, 2014). The next step was the development of the leadership in Wal-Mart stores in Mexico according to the US patterns.

The Organizational Structure of Wal-Mart Stores in India

Wal-Mart developed a unique organizational structure and strategy for operating stores in India. The first Wal-Mart store was opened in India in 2009. In spite of the fact that the Store Managers in India who operate Best Price stores face the same problems associated with selecting products for selling, contacting suppliers, and transporting products as managers in Brazil and Mexico, the situation in India is more complicated (Walmart, 2014).

Thus, Assistant Managers in India’s stores are responsible for developing the supplying chains with local producers and farmers. The problem is in the fact that India is diverse, and there are negative conditions for transporting products from different states (Roberts & Berg, 2012, p. 112). Thus, Assistant Managers work to develop effective relations with suppliers and farmers to receive fresh, high-quality products, and Store Managers are focused on adapting the Wal-Mart corporate strategies to the local realities.

Recommendations for Management to Increase the Effectiveness of the Organizational Structure

Wal-Mart managers promote the same organizational structure and principles of managing the work of stores in all the countries where Wal-Mart stores were opened in the 1990s and 2000s. However, the used model of the organizational structure cannot be discussed as effective in controlling operations in all the stores because of the local differences and cultural challenges (Hitt et al., 2012, p. 246). As a result, local Store Managers should be provided with more authority to control the operations in the Wal-Mart stores in China, Brazil, Mexico, and India.

The organizational structure used in stores in Mexico and Brazil reflected the basic principles of management followed in the United States. However, the organizational structures in China and India should be improved according to the realities of the Asian markets. From this point, more attention should be paid to providing Store Managers with rights in controlling the merchandise mix issues. Furthermore, it is possible to propose a position of the Logistics and Distribution Managers in stores in India and Mexico where there are problems with supplying and transportation.

Conclusion

Wal-Mart is a leader in the retailing industry, and the secret of the corporation’s success is in developing an effective organizational structure that is effective for controlling the divisions and local stores. The attempts of the company’s leaders to introduce the elements of the organizational structure and culture in such countries like China, Brazil, Mexico and India resulted in developing the profitable chain of the Wal-Mart stores which resemble each other and have the same organizational structure.

However, the problem is in the fact that Wal-Mart faced an issue of adapting the developed structure to the local realities in Mexico, China, and India. As a result, a new hybrid form of the organizational structure was developed, and Store Managers received more rights to control the operations of stores. Nevertheless, to contribute to the retailer’s development, it is necessary to focus more attention on creating the positions of managers responsible for resolving the supply and transportation issues.

References

Brunn, S. (2006). Wal-Mart world: The world’s biggest corporation in the global economy. New York, NY: Taylor & Francis.

Gereffi, G., & Ong, R. (2007). Wal-Mart in China: Can the World’s Largest Retailer Succeed in the World’s Most Populous Market? Web.

Hitt, M., Ireland, D., & Hoskisson, R. (2012). Strategic management: Concepts and cases: Competitiveness and globalization. New York, NY: Cengage Learning.

Roberts, B., & Berg, N. (2012). Walmart: Key insights and practical lessons from the world’s largest retailer. New York, NY: Kogan Page Publishers.

Walmart. (2014). Web.