Organizational and Environmental Pressures
Modern companies face numerous organizational and environmental pressures that make them change and evolve. It is possible to point out six major pressures (see Table 1). Thus, environmental pressures include reputation, mandated, and fashion pressures, while organizational pressures include growth, collaboration, and new broom pressures (Palmer, Dunford & Akin, 2009).
Table 1. Major Organizational and Environmental Pressures in the Order of Priority.
|Environmental Pressures||Organizational Pressures|
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It is necessary to point out that the pressures mentioned above have evolved over time. As far as reputation pressure is concerned, it is one of the major issues the company has to address. Wal-Mart is one of the world’s biggest retailers in the world, and it has to pay a lot of attention to its reputation as it often becomes a target for loads of environmentalist groups. The company has set a number of goals to earn the reputation of a green business (Hitt, Ireland & Hoskisson, 2008). Wal-Mart has an aim to reduce consumption of energy in its stores, and it also invests $500 million “in environmental technologies to be used in its stores” (Hitt et al., 2008, p. 34). Admittedly, these measures are likely to create a favorable image for the company, and it will attract more customers.
Mandated pressures are also significant issues to be solved. Wal-Mart is a global company, and governments of many countries set a variety of environmental regulations companies to have to comply with. Thus, companies are bound to follow stricter rules concerning gas emissions, waste recycling, and the use of green technologies. As has been mentioned above, the company invests money into developing green technologies. More so, it has started an initiative to establish “a US program that gives preferences to suppliers who aggressively reduce emissions” (Dixon, 2010, p. 5).
Fashion pressures also affect the development of the company as environmental incentives were not typical for Wal-Mart. In the 2000s, the company started focusing on its image and environmental responsibility (Environmental sustainability, 2014). This was the time of increased attention to this issue, and major companies declared that they are committed to increasing social and environmental responsibility.
When it comes to organizational pressures, they are quite common for any large business. One of the most serious pressures is the company’s growth. Wal-Mart is expanding steadily, and this expansion is often associated with certain issues. For instance, entering new markets has not been successful in all cases. Thus, the opening of some European stores was not successful as management was rather poor since cultural peculiarities and competitors were not taken into account (Hitt et al., 2008). The company has overcome difficulties, but since it is still expanding, managers have to pay a lot of attention to coping with these organizational pressures.
Identity pressure is another serious issue the company is facing. Thus, it has always been a business with a particular identity. Wal-Mart was a place with lower prices. Nonetheless, modern customers do not think this is enough for a contemporary retailer. They want high-quality and friendly services as well as social and environmental responsibility of the company (Hitt et al., 2008). Therefore, the company is facing a need to shape its identity.
Finally, Wal-Mart is also facing, the so-called, new broom pressure. Doug McMillon became the company’s CEO in 2014. McMillion stresses that he will continue to deliver the company’s mission “saving people money so they can live better” (as cited in Doug McMillon, 2014). Nonetheless, the CEO understands the importance of reshaping some of the company’s tools to achieve major goals.
Impact of the Pressures
It is necessary to stress that all pressures mentioned above financially affect the company. The company has to invest more into the change, which is quite difficult since Wal-Mart’s motto is to sell at lowest prices. Thus, the company invests into launching environmental and social incentives aimed at improving the organization’s image. This strategy is rather effective as Wal-Mart is still a leading company in the global market and it has millions of loyal customers even though it faces a lot of criticism. It is possible to assume that the company’s profits will reduce significantly due to additional investment into a variety of social and environmental projects.
The Impact on Employees
The pressures mentioned above also have certain impact on employees of the company. Such pressures as reputation and identity are closely associated with employees’ motivation. Clearly, the human society is now more concerned with social and environmental responsibility. Millions of people share similar values and strive for a better society. Clearly, employees are more motivated when they get fair salaries, have certain perks and understand that their company is one of those responsible organizations which make (or, at least, try to make) a difference. I would be ready to earn a bit less or get fewer perks if I knew that my company is contributing to development of the human society.
Assessment of Wal-Mart’s Response to the Pressures
It is necessary to add that the company has reacted to pressures mentioned above quite effectively. For instance, reputation pressures have been a really serious issue for the company and even jeopardize its operations in some areas. Nevertheless, Wal-Mart persuaded people that they are socially and environmentally responsible by launching a number of corresponding incentives. Importantly, they highlight each step in this direction and make people see and hear about their attempts to make the world better.
When it comes to mandated pressures, Wal-Mart always complies with regulations. This is the only acceptable way to react for a responsible company. The organization has developed its own culture on the basis of existing regulations (Environmental sustainability, 2014). In this way, the company will avoid a variety of legal issues which could negatively affect its image.
As far as fashion pressures are concerned, the company has also been successful as it follows existing trends. It is possible to note that mandated pressures are concerned with legal issues while fashion pressures are based on cultural conventions, which are often even more important as they reflect changes taking place in the society. Trying to be socially and environmentally responsible, Wal-Mart is responding to major trends and complies with rules set by the society.
The organization is less successful when dealing with organization pressures though it needs to shape its strategy. Growth pressures are especially hazardous as they can lead to the company’s bankruptcy. The organization successfully expands nationwide but new markets are still associated with certain risks as the company does not invest enough into research and development of new strategies applicable in particular markets (Hitt et al., 2008). Wal-Mart needs to improve this direction.
Identity pressures also impose certain risks as the company may fail to implement successful change which is necessary. The new top management has acknowledged the need to change its focus on lowest prices and provide something more (Doug McMillon, 2014). Clearly, this will be a lasting change and the company will have to develop a new strategy and, perhaps, vision.
The pressure which is addressed most successfully is the new broom pressure. The new CEO is aware of the company’s peculiarities as he has worked for the company for a long time and was involved in numerous projects. More so, McMillon has already stressed that he is committed to deliver the company’s mission and, hence, the company will not see significant change. Though, the CEO may try to change the company’s focus on prices by extending it (adding high quality services and responsibility).
Even though the organization responds to pressures quite successfully, it is possible to come up with a strategy to reduce such pressures as mandated and identity pressures. As far as the environmental pressure is concerned, the company has to incorporate major regulations as a part of its culture. It is not enough to invest into development of green technologies but it is essential to make sure that the company acts in a responsible way.
Thus, it is possible to implement a comprehensive research on latest trends in environmental regulations worldwide (or rather in the countries where the company operates and intends operating in recent years). It is important to develop a strategy which would comprise all major standards. These standards have to become integral into operations of each store in every country. Clearly, this may require additional funds but it is also important to understand that these standards will soon turn into strict regulations as societies develop various environmental laws which are quite similar as they are aimed at improving the quality of people’s lives. This will be truly comprehensive environmental responsibility which will positively affect the company’s image and attract more customers.
As for identity pressures, the company has to react quite urgently. The new strategy has to have two major directions. It is crucial to make sure that the prices are very low and quality of service is high. The company has been famous for its low prices but customers are more demanding now and they are ready to pay a bit more but they want to get more. Customers often note that quality of service in Wal-Mart stores is very low and one of major reasons for that is insufficient motivation of stores employees (Hitt et al., 2008).
The organization has to be more socially responsible and make sure that employees get fair salary, have enough rest and are able to get promotion. Motivated employees will provide high quality services and the company will be able to attract new customers and preserve loyal ones. The strategy will also include a wide scale campaign aimed at raising awareness of the new identity. People should know that Wal-Mart is not only lowest prices but high-quality of services as well as environmental and social responsibility which contribute to the development of the society. Of course, the company will invest funds in development of this strategy but it will benefit from its implementation.
Dixon, F. (2010). Individual assignments and academic dishonesty: Exploring the conundrum. Oxford Leadership Journal, 1(2), 1-6. Web.
Doug McMillon. (2014). Web.
Environmental sustainability. (2014). Web.
Hitt, M., Ireland, R.D., & Hoskisson, R. (2008). Strategic management: Competitiveness and globalization, concepts. Mason, OH: Cengage Learning. Web.
Palmer, I., Dunford, R., & Akin, G. (2009). Managing organizational change: A multiple perspectives approach. New York: McGraw-Hill. Web.