Walmart Company Change Management

Introduction

Walmart is one of the most successful companies which have demonstrated the use of the Nadler &Tushman’s congruence model to explain how inputs are successfully transformed into outputs in a competitive business environment. The model shows how organisational performance can be successfully achieved by putting inputs the functions of the organisation and outputs into the business environment.1 The model provides an excellent framework for Walmart’s successful transformation of inputs into outputs and the management’s responsibilities in directing the activities of the company to achieve her strategic goals.

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The transformation processes provide new ways of thinking about Walmart. One way is to think about Walmart as an open system which accommodates different configurations to ensure that the transformation of inputs into outputs makes the performance of Walmart one of the most effective in the USA. The management of the company has integrated different elements of the congruence model into the organisational structure of the company by aligning the elements to the performance of Walmart’s chain of supermarkets. 2

The company continuously studies the environment in the context of the required inputs and the expected outputs to create strategies for adapting to environmental changes to remain competitive in the market. The system property of interdependence in the congruence mode is important in determining the performance of the company. 3According to the congruence model, system interdependence specifically reflects the organisational components which interact with each other and exist in the state of relative balance.

Walmart has been successful because the internal and external organisational components function well making the company to achieve the strategic objectives laid down effectively. The driving force is to give customers what they want. Typically, customers want a wide assortment of items at the lowest possible prices. 4The ides is defined in the core strategy of the company. In this case, the management has the primary job to make the organisation operate efficiently in pursuing the strategy of the company.

However, it is difficult to make organisations operate efficiently and effectively with absolute certainty to achieve the organisation’s strategic objectives. In this case, Walmart’s management has put in place the necessary elements that are critical to put in place the behavioral patterns which are critical in influencing the performance of the organisation. According to the model, Walmart recognises the importance and value of inputs to the performance of the organisation. Inputs are in the context of the material that is necessary for the organisation to function effectively and are taken from the environment.

Environmental variables play a critical role in determining the performance of the organisation and ultimately influence the way the company formulates its strategy. Other components that are critical to the performance of Walmart include individuals who play different roles in the organisation. Typically, the nature and skills of individuals who work within the organisation, the perceptions of the individuals, and the formal organisational elements make critical contributions to the performance of the organisation. This study will focus on the practical implications of the Nadler &Tushman’s congruence model on Walmart’s strategic operations and the influence the variables have on the performance of the organisation.

The main objectives of the study include:

  1. To analyse Walmart about Nadler & Tushman’s Model
  2. To evaluate Walmart’s strategy about environmental inputs
  3. To evaluate and identify issues that Walmart should address
  4. To determine the resources needed to address the problems associated with the difficulties identified in understanding the organisation.

Research questions

  1. What are the key environmental variables that influence Walmart’s strategy?
  2. What is Walmart’s strategy about environmental inputs?
  3. What issues should be addressed
  4. What resources are needed to address the difficulties experienced in analysing the organisation?

Analyzing Walmart Using Nadler & Tushman’s Model

Inputs

According to Nadler &Tushman’s congruence model, inputs constitute the elements the organisation accepts and works with and the contextual business elements that define the strategic thinking of the organisation. In this case, inputs can be categorised into environmental factors that influence the behavior of the company about the way the company responds to the demands placed on it. That is because Walmart, like any other company, exists in the context of a larger environment consisting of individuals, organisations, groups, and other social forces that influence the behavior of the company. 5In the context of the company, the social forces are defined in the business environment and include legal and political issues such as government regulations, competitors, special interest groups, financial institutions and so on as discussed below.

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Environmental variables

According to the Nadler &Tushman’s congruence model, Walmart’s strategic direction is defined in the vision and mission statements of the company and provides the basis for defining the organisational inputs. The strategic thinking of the organisation is detailed in the company’s core strategy which requires the company to wholly own distribution points in countries such as Brazil and Canada and to create joint ventures in China and India. The strategic objective is for Walmart to become the leading company in retailing activities. However, such an opportunity does not exist in some countries like Germany, a factor that has compelled the company not to invest in Germany. Typically, environmental factors shape the strategic direction of Walmart and are critical elements that define the strategic approach the organisation uses in transforming inputs into outputs.

The environmental variable put pressure on the strategic operations of the company to provide customers with good quality products at the required prices and in the right quantities. The critical environmental variables are the market variables which influence the behavior of the external environment. It is critical to note at this point that environmental variables can place some constraints on the performance of an organisation. Walmart operates throughout the United States and in many countries in the world. Each country presents unique challenges and variables that place constraints on the performance of the company.

Legal/political variables

Legal constraints differ from one country to the other and provide the basis for influencing the demand for the products supplied by the company in the target markets. The strategic approach Walmart uses is to analyse the legal constraints in its operating environment to determine the impact such legal constrains have on the demand for her products. The company studies the opportunities that are available in the market such as the sale of organic foods, coffee bundles, snacks and cookies, and a variety of other products to determine if the variables affect the company collectively or singly.

A critical analysis of the e environment shows that the company has been embroiled in legal suits including multiple accusations, environmental accusations, child labour law violations, poor working conditions for associates, and use of illegal immigrants. The results have been financial penalties for the company. In addition to that, the political/legal environment is defined by antitrust laws, foreign trade regulations, the presence of property protection laws, attitude towards foreign countries and companies, labour laws, and the stability of the target country. Other legal issues include the policies of political parties in the target country.

Socio-cultural variables

According to the model, the environment places certain demands on the organisation in the context of socio-cultural issues which have shaped Walmart’s strategic thinking. Consumer needs are critical in shaping the strategic direction of the company and has compelled Walmart to embark on an environmental sustainability initiative which was developed in 2004 in response customer demands to sell organic and environmentally friendly products. Walmart focuses on the efficient utilisation of company trucks and facilities, which results in more efficient use of energy and constitutes the strategic thinking and direction of the company. That is in addition to the growth rate of the population and lifestyle changes.

Global variables

Globalisation is an environmental demand that has compelled Walmart to consider responding to the forces created by globalisation. The company has opened international warehouses and has aggressively expanded its operations in response to new market opportunities. The environment has placed critical demands on the company to respond to the rapid increase in sales competition from other companies offering similar services and products in a variety of stores and supermarkets throughout the world.

Strategy

The founder of the company and the company executives knew how to position Walmart in the market and make the company’s operations achieve a competitive advantage. The main strategy was for the company to become the cheapest supplier of products in the market. The strategy is to ensure that the company offers products at the lowest prices to beat her competitors. The company has strategies which are created to address the strategic needs of customers at individual levels. Another strategy is based on a social and political model which compels the supermarket giant to provide customers with products at the lowest possible prices, a strategy which has made the company to become the champion of little persons. The strategic thinking of the organisation is to create strategies and categorise them according to the environment of operation. The company embraces the location strategy as one of the variable inputs that influence the profitability of the company.

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Other strategies which uniquely identify the company include innovation, human resource management, and logistics, which have made significant contributions to the strategic process of lowering product costs and generating higher profits for the company. The strategic direction of the company is defined in the international strategies which define the direction to be taken by the company in its nternational operations. Walmart’s other strategy is to make her retail stores available in countries with business opportunities.

Another strategic thinking of the organisation is to determine the appropriate product offerings for each location where the company has business operations. That is because each location has unique characteristics which place different demands for different products which are unique to each market segment. The other strategy is to pursue sustainability efforts such as the localisation of her charitable activities, making the company be a responsible cooperate entity in the local environment.

Strategic Leadership

Leadership is another critical component that defines the strategic role of the leadership of the company in providing direction in the company. Strategic leadership has been critical in the successful implementation of the company’s business processes of converting inputs into the desired outputs. The company’s strategic leadership provides the required support when selecting strategies that fit into the business environment of the company, which has several competitors.6

The management of the company knows how to put strategies into action by pricing the company’s products as low as possible and by ensuring that no competitor can offer similar prices and remain competitive in the market. In addition to that, the company’s strategy-making process is to increase the performance of the company and ultimately make the company yield benefits to the customers and the shareholders. One element that has been critical in the performance of the company is to maximise the shareholder values by increasing the profitability of the company based on the increase in the growth of the profits of the company.

The strategic approach used in the company is to increase the number of customers in each of the target markets by providing them with competitively low priced products. Walmart uses the approach of replacing retail-based services with self-services to reduce the cost of doing business. Also, the retail giant provides customers with a wide range of products at its footprint stores that contain very small fixtures and fittings. The savings made using the strategic approaches are passed on to the customer in the form of low priced products, which in turn increase the number of customers and revenue growth of the company. 7

The strategy has made the company competitive in the market by beating her rivals. An analysis of the strategic approach of providing low priced products and the use of the self-service model, which was developed in 1950 and later on refined to fit into Walmart’s business model shows the advantages of the congruence model in making the company more competitive. In addition to that, the company’s management was able to implement the business model effectively, which was the foundation of her competitive advantage.

Tasks

The tasks performed at the company level have been identified to be critical in determining the type of inputs, outputs, and the strategic advantage gained at the company level to exploit the opportunities available in Walmart’s operating business environment which is conceptualised figure 1 below. Tasks are critical in supporting the day to day organisational support activities, which include supervisory tasks, job-related tasks, norms, and group pressure, reward systems, data warehousing, and contextual similarities. On the other hand, individual factors include outcome expectations, job involvement, knowledge acquisition abilities, choice in attending training that is relevant to the skill needs of individuals, and self-efficiency.

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On the other hand, it is critical for the management of the organisation to consider tactical activities which include limited use of marketing promotions, financial efficiency, and deployment of technology to improve the operational efficiency of the company, extend all stores internationally, ensure capital efficiency, grow sales, and aggressively develop offshore vendors.

Technology

According to the congruence model, technology plays a critical role in improving the efficiency of the operations of the company. The company functions on a real-time information system that allows it to control and accurately analyse the processes in different branches of the country. Findings show that Walmart uses technology as a tool to leverage its supply chain activities to become the leader in the global market. Also, the firm uses vendor managed inventory, which makes manufacturers take the responsibility of managing their products in the company’s warehouses. In addition to that, the company provides direct transfer of inbound and outbound truck trailers to avoid incurring extra costs. In addition to that, the company uses technology to collaborate with suppliers and other companies. The strategy is to match the company resources, in this case, technology to the environment. In this case, the environment consists of customers, competitor, the supply chain, and other company resources that provide a competitive advantage for the company.

Formal System

Walmart uses a formal system to operate in the business environment. The company’s formal structure is based on a division of structures. The structures are categorised into the market, geographic, and product structures. The market structure works by grouping customers by the functions needed to be performed to address the needs of the customers efficiently. In this case, some of the functions include haircuts, grocery, electronics, and clothing. The company operates in bureaucratic structures which are placed into the categories mentioned above. The formal system consists of employee advancement programs that are designed to provide employees with the opportunity to advance in their careers. Also, the company has a good employee retention rate, training, and development programs, and provides opportunities for personal leadership, and teamwork.

Key Individuals

Key individuals within the organisation include the management at different levels who are responsible for formulating strategies to position the company in the market competitively. The founder of the company was one of the most important key individuals. The company was founded by Sam Walton, who was critical in providing leadership for the managers he had appointed to the leadership positions to provide leadership. The leadership, in this case, was able to perform their strategic leadership roles effectively. The approach used involved selecting a corporate strategy which was, in this case, to provide target customers with competitively low priced products and to be the leading supermarket in the world. In addition to that, the managers take it upon themselves to analyse the external and internal environments when formulating strategies.

What Outputs Are Desired

The desired outputs of the company range from the desire to increase the market base attain the company’s goals, effectively utilise organisational resources which support the operations of the company, competitively position the company in the market, achievement a favorable position in the global business environment, and provide the customers with products at the lowest prices. Employees and the top-level management at Walmart recognise the importance of individual behavior by providing employees with incentives to work hard at each level of the organisation towards achieving the high-level strategic objectives of the company. Another desired output is a sustained competitive advantage, profitable growth, and an increase in the market share. It has been argued that the founder of the company wanted the supermarket chain to be the largest supplier of low priced products in the world. Another output desired from the environmental inputs discussed above is an increase in the global market share, effective employee performance, excellent market share, and good human relations.

Are They Achieved

While Walmart is seen as one of the most successful companies that have integrated and used the congruence model in the day to day operations, the company has achieved some of the expected outputs based on the inputs and processes mentioned above. Some of the outputs that have successfully been achieved include a significant market share in the United States, where it started its operations and significant global expansion.

Is the strategy in line with the organisation’s environmental inputs?

According to the study, Walmart’s strategy is in line with environmental inputs. The environmental inputs, in this case, are customers who are the most significant and fundamental component of the strategy. Customers have made significant contributions to the development and growth of the company into being one of the most profitable and largest companies in the world. The strategy has played a significant role in the performance of the organisation and is the reason why the firm’s superior profitability reflects the competitive advantage of the organisation.

The competitive advantage is in line with the strategy of the organisation, which is based on a strategy of pricing products lower than other retail outlets. Also, the organisation has integrated the use of innovative information systems to run its operations. Walmart recognises the need to use human resources effectively and efficiently by sharing accruing profits with the employees to make them part of the organisation. The increase in profitability and the strategic approach of integrating employees into the profit-sharing scheme aligns the organisation’s strategy with the people who are the strategic inputs of the environment.

A critical analysis of the company’s strategy shows that the organisation has responded positively to the needs of the customers by providing them with a wide range of products that suit the needs of the target market. The strategic approach of evaluating the alignment of the strategy to environmental inputs is to study the returns that are made on the strategic investments of the company. There has been a consistent growth of the net profit of the company for several years, showing a strong indication of the positive growth in earnings that the company is making.

That is also in the context of the approach the company uses to select her customers, differentiate her products, deliver the products to the target markets, and to grow and sustain a high level of profitability at all levels of strategic management. In conclusion, the strategy is aligned to the inputs which have enabled the organisation to operate in a competitive environment and to provide customers with the required product quality and quantity. Each environment has unique characteristics which critically influence the type of inputs that the company accepts to provide the desired outputs.

Are the transformation process all aligned well with your organisation’s strategy?

The transformation processes, in this case, includes the processes critical to the transformation of inputs into the desired outputs. Employees at different levels of management work towards achieving the organisational goals of the company by executing the formal and informal tasks and activities that are critical to the successful performance of the organisation. 8A critical analysis shows that strategic managers undertake the responsibility of formulating the strategies which provide direction for the company and in setting the strategies into action. Typically, the performance of the strategic roles of the managers enables the company to become successful in executing its operations in the market.

The company constitutes two strategic types of managers. Those include general and functional managers. Functional managers play a significant role in using formal structures which are critical for the day to day tasks and activities. 9Walmart operates in many divisions in the world and requires a clearly defined strategy to manage the different divisions and to address the competition that arises as a result of its operations. On the other hand, the general manager is responsible for performing the task of probing the strategic thinking of the other managers to make sure that they are pursuing the strategies of the organisation effectively to improve the performance of the organisation.

The informal organisation involves the interlocking of people in the social settings to guide them on how to operate within the organisation. In this case, Walmart’s interlocking social structure consists of an aggregate of norms and practices and professional connections with different people to ensure success.

How do they interact to produce the outputs?

The interaction of the inputs to produce outputs is expressed in the conceptualised model shown below. Environmental variables act as inputs into the system and are supported by the formal an informal structure of the company. The tasks performed by different employees, and the formal structure of the organisation support the activities done at different levels of the organisation.

Strategy

The model clearly shows how the inputs from the environment interact with the processes in the formal and informal structure of the organisation to produce the required outputs. The strategy is directed and implemented by the top-level management to ensure that it is aligned with the needs of customers. Typically, the processes include tasks performed by the individual at different levels of the organisation to convert inputs into outputs.

Identified issues that your organisation should address?

Yes, some elements can identify the issues that the organisation should address. The company has difficulties generating large sales volumes in countries such as China and Germany, decentralisation of the management of the company, weakening brand image, controlling inbound logistics, and marketing and sales services. At the individual level, some employees who perform poorly in the company are still retained to the detriment of the name of the company.

Are there some aspects of how your organisation works that you have difficulty understanding?

Yes, there are some aspects of the organisation that are difficult to understand. One of the aspects which is difficult to understand is the low product pricing policy of the company. An example is where the company offered to sell generic drugs at 4 $, while other outlets were selling the same drugs at 29 $ per prescription. It is difficult to understand how the company sells the drugs at a profit because the margins in the price between named drug brands and generic drugs are very wide. The company operates several discount stores across the United States and in many countries. The difficulty is in understanding how the company uses the congruence model to manage a large number of grocery stores it operates throughout the world.

If so, identify the resources you can access to help this analysis.

The most critical resources that can be integrated into the organisation to solve address the issues raised above include effective strategy formulation and leadership management.

Conclusion

In conclusion, Walmart is one of the most successful supermarket giants in the world. An analysis of the operations of the company shows that it has integrated the elements of the congruence model in processing environmental inputs such as political, social, and cultural issues into outputs which are critical in the operations of the company. The company provides an excellent example of the strategic processes which are initiated by the top-level management who guide the implementation of the organisation’s strategies. The success of the company is based on the alignment of the organisation’s strategies by top-level management to the strategic goals of the organisation. There is a need for the company to consider emerging competitors, including firms from China when formulating new competitive strategies by integrating Porter’s model into the study.

Bibliography

Anderson, Donald, L. Organization Development: The Process of Leading Organizational Change, Sage Publications, 2012.

Morrill, Richard L. Strategic Leadership: Integrating Strategy and Leadership in Colleges and Universities, Greenwood Publishing Group, New York , 2007.

Nadler, David, A. Tushman, Michael L, & Hatvany, Nina G. n.d Managing Organizations Readings and Cases, Frameworks for Organizational Behavior, Little, Brown and Company, Boston, Toronto , n.d.

Footnotes

  1. Donald, L. Anderson, Organization Development: The Process of Leading Organizational Change, Sage Publications, 2012.
  2. Ibid., 1
  3. Ibid., 1
  4. Nadler, David, A. Tushman, Michael L, & Hatvany, Nina G. n.d Managing Organizations Readings and Cases, Frameworks for Organizational Behavior, Little, Brown and Company, Boston, Toronto, n.d
  5. David, A. Nadler, Michael L, Tushman, & Nina G. Hatvany, n.d Managing Organizations Readings and Cases, Frameworks for Organizational Behavior, Little, Brown and Company, Boston, Toronto, n.d
  6. Morrill, Richard L. Strategic Leadership: Integrating Strategy and Leadership in Colleges and Universities, Greenwood Publishing Group, New York, 2007
  7. Ibid., 7
  8. Donald, L. Anderson, Organization Development: The Process of Leading Organizational Change, Sage Publications, 2012.
  9. Donald, L. Anderson, Organization Development: The Process of Leading Organizational Change, Sage Publications, 2012.
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