Paper Outline
Geographic design
Functional design
Customer-based design
Product design
Service design
Hybrid design
Matrix design
Marketing channels
Wal-Mart organizational structure
Question 1:
Explain how organizational design such as geographic, functional, customer-based, product, service, hybrid, matrix, marketing channels, and departmentalization determine which structure best suits your selected organization’s needs.
Wal-Mart has a Hybrid design because it has integrated all the designs.
Geographic design
Wal-Mart is one of the world’s largest retailers with stores in the US and other parts of the world. It is one of the largest employer in the world through its numerous outlets in the United States and other nations. The history of Wal-Mart dates back to the early 1960s when the discount retail industry was emerging. In 1962, Sam Walton risked all his property to secure finances to establish a new venture in the discounts retail industry. In the same year, three other discounts retail stores commenced their operations. These stores included Kmart, Target, and F.W. Woolworth (Wal-Mart, 2012).
Functional design
The store offers products including clothes, groceries, car accessories, and cell phone services. The organization has diversified its operations to sell almost everything that can be offered. The store is regarded as a one-stop-shop. The shop mostly offers discount on all products, and this has been the cutting edge to remain competitive and attract more customers who help to keep the sales of the company on an upward trend. Wal-Mart’s organizational structure has been well diversified and this has led to its success over the years when compared to its competitors (Wal-Mart, 2012).
Customer-based design
Wal-Mart operates in the discount retailing industry within the United States. The discount retailing industry in the United States has experienced unmatched growth in the recent past. The periods before 1950s was characterized by departmental stores that sold a wide variety of general merchandise. Customers were never allowed to pick products by themselves from the shelves. Discount traders started emerging in 1950s, and were characterized by low commodity prices, limited credit to customers, and low return privileges. During these early stages, the retail stores were categorized into general and specialty chains. In most cases, specialty chains dealt with narrow product lines such as sporting and office products. On the other hand, the general chain carried a wide assortment of product range. Discount stores enjoyed much success due to low prices and their emphasis on customer convenience, value, and quality (Wal-Mart, 2012).
Product design
The store offers products such as clothes, groceries, car accessories, and cell phone services. The organization has diversified its operations to sell almost everything that can be offered. The shop offers discount on all products, and this has enabled the company to have a competitive advantage hence attracting customers (Daft, 2010).
Service design
The store has diversified its operations to include services in its operations. Wal-Mart has been able to offer cell phone services and event motor vehicle management such as oil and tyre change at a fee. These services have helped to increase the sales of the organization over the years (Hill & Jones, 2013).
Hybrid design
The store management has tried to sell the brand name to overseas countries, and this has facilitated the growth of the organization both in the American market and on the international market (Daft, 2010). Wal-Mart has applied a hybrid design because it has developed various subsidiaries within the country and in other countries.
Matrix design
The organizational structure of Wal-Mart is headed by a board of directors who govern and set the business strategy for the multinational organization. The board is formed by a 15 member committee who are responsible for the control and governance of the organization worldwide. The management team is hierarchical in nature with top management, middle management, and the low management team. The head of the organization is Sam Walton, whereas the CEO is Mike Duke (Hill & Jones, 2013).
Marketing channels
Wal-Mart store’s head, Sam Walton issued Wal-Mart shares to the public. This led to a tremendous upturn in stock offerings during the early 1990s. Additionally, the store decided to build its own warehouse to enable purchase of voluminous merchandize at attractive prices. This reduced costs considerably, and by the year 1985, the company had expanded and increased its stores from 32 in 1970s to 859. In the year between 1985 and 1990s, Wal-Mart had expanded from small towns in the South and had a strong presence throughout big cities and towns in the United States. In the late 1990s and early 2000s, Wal-Mart was the leading discount retailer in the United States. During this period, Wal-Mart reduced the number of stores by converting them to super-centers, which increased by almost six times to about 2,843 stores by the year 2006. At the same time, Wal-Mart also operated 607 Sam’s Clubs by the year 2010 (Wal-Mart, 2012).
Question 2:
Classify the structure as vertical, horizontal, or integrated, by describing it in terms of differentiation and integration.
The history of Wal-Mart can be traced back to the early 1960s when the discount retail industry had started picking up. In 1962, Sam Walton risked all his property to secure finances for starting a new venture in the discounts retail industry. In the same year, three other discounts retail stores commenced their operations. These stores included Kmart, Target, and F.W. Woolworth (Wal-Mart, 2012). The first Wal-Mart was started in Rodgers, Arkansas. It seemed less likely to succeed as compared to the other discount retail stores. Aware that the business was bound to face stiff competition from new entrants in the industry, Sam sought to expand and growth Wal-Mart as quick as possible to seize the available opportunities. For this reason, Wal-Mart expanded to other towns such as Oklahoma, Missouri, and Kansas. By the year 1967, Wal-Mart had 19 stores and sales of $9 millions. On the other hand, Kmart, which was the industry leader, had 290 stores and a sales volume of $800 million in the same period (Wal-Mart, 2012). Nowadays, Wal-Mart has over 8500 stores and operates in more than 55 countries with a workforce of over 1.4 million people. The store offers products from clothes to groceries to car accessories and cell phone services. The organization has diversified its operations to sell almost everything that can be offered. The shop offers discount on all products, and this has been the cutting edge in the competitive market. Wal-Mart’s organizational structure has been well diversified, and this has led to its success over the years when compared to its competitors. The growing organization can attribute its success to its well managed and focused management team that include directors appointed by the board. The organization has managed to stay on top by making extremely high returns from its sales of diversified products and services to its loyal customers. The company’s marketing strategy has been instrumental in generating a large amount of revenue, which is in turn used for its growth projects. The company has been expanding its market by opening up new stores all over the world (Daft, 2010).
The organization structure of Wal-Mart is headed by a board of directors who govern and set the business strategy for the multinational organization. The board is formed by a 15 member committee who are responsible for the control and governance of the organization. The management team is hierarchical in nature with top management, middle management, and the low management team. The head of the organization is Sam Walton while the CEO is Mike Duke. The two lead the organization to reach high levels in business. The directors have a duty to manage the whole enterprise including Target store and Kmart store. The management team can delegate their work to the middle level management who are also professionals and carry out their work diligently without fail. The management team has been instrumental in guarding the operations of the organization. They make sure that the company remains the most successful store in the world. Power and responsibility have been well distributed across the management team starting from the top to the bottom level of management. Both Kmart and Target have a vertical structure with a board of the director to manage the enterprise. The two stores’ corporate strategy is well communicated to the lowest level employee as communication in an organization is crucial in decision making. The culture of Wal-Mart has been followed and accepted by all, and it can be defined to offer and provide high quality and well designed goods and service that will satisfy their customers. The company aims to provide a unique experience that comes from all the departments of the stores (Hill & Jones, 2013).
The organizational structure of Wal-Mart can be explained as a divisional structure due to its separate units of governance, which are divided into semi-autonomous divisions that work under one organizational head who is the chairperson of the multi-national organization. Wal-Mart is divided into several autonomous divisions under the control of respective managers. Thus, each manager should have excellent leadership and management skills to run the big enterprise and focus on its operations. The boards of directors at the top management are always concerned with the services the whole organization offers to its client and the willingness of its employees to protect its culture as being the best in the business (Daft, 2010).
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