Business Functions, Their Key Activities & Objectives and Performance Measures in the Walmart Organization
Walmart is an American-based multinational store that has many hypermarkets, discount points, and grocery stores, and it has its headquarters in Bentonville, Arkansas. The firm was founded by Sam Walton in 1962 and was incorporated under the Delaware business. It falls under the retail industry, and it has more than 11,000 stores all over the world (Zhang, 2018, p. 40). This paper analyses the innovation that Walmart has been doing in regard to the business portfolio.
Summary of the Organization
Walmart is known for engaging in retail and wholesale entrepreneurship by offering an assortment of services and merchandise at lower prices. Walmart operates through various business segments such as Walmart US, Walmart International, and Sam’s Club. The consumer products that Walmart operates include the eCommerce brands, Walmart market portfolio, and Walmart.com. The company’s international segments also manage warehouse clubs, cash, and carry, which may comprise members-only (Meeks and Chen, 2011, p. 6). Recently, the retail company has acquired virtual fitting room platforms as a step into fashion ways.
Walmart operates under four core values that have ensured there is a unique strategy that makes the company progress amidst many rival firms such as amazon. The four values include service to clients, respect for the person, striving for excellence, and integrity actions. Additionally, the company has a ser of other corresponding habits that enable a practice by every associate un helping to deliver business that makes the firm has a flexible working culture for the workforce (Meeks and Chen, 2011, p. 4). Walmart has been ranked as one of the developing retail industries due to the role it plays in product and service development in the US and the entire world.
Walmart’s Business Functions
The first function is marketing, which has been implemented through the setting of prices that have to ensure consumer satisfaction is achieved. (Chesbrough, Vanhaverbeke and West, 2017, p. 88). The second function is research and development (R&D), with the objectives of maintaining the crowd and utilizing social media tools. The third function is human resource management, and lastly, the function is supply chain management.
Marketing and Sales Function at Walmart
Walmart is known to be effective when it comes to marketing its products. The reason why the company has thrived beyond many rival firms is the ability to carry out market research that gives the company an actual share in the market. The main objectives of marketing are to ensure that there is awareness of the products offered to customers, to add to reputation, and to make the products segmented effectively (Christensen, Raynor, and Van Bever, 2013, p. 145). The key activities that are done concerning marketing for Walmart are product promotion. Walmart has perfected the art of running effective promotional strategies with a range of available discounts to buyers. The other activity under marketing is the use of low-price-based slogans such as ‘save money, ‘worry-free fresh’ are key measures that ensure the promotional aspect is done effectively. The third activity is marketing research which is evident through investing in shopper data, especially in grocery stores. The performance measures include the rate at which Walmart’s products are purchased in the market and also the extent to which consumers are willing to come back for the same products and services. For example, 45% of grocery buyers who like ordering online prefer to use Walmart’s mobile application (Wieland, 2020, p. 65). Additionally, Walmart has gained loyal clients such as Taco Bell restaurants who transact with them on a daily basis.
Human Resource Management Function at Walmart
The HRM function at Walmart is large scale due to the number of employees the company has. The objectives for HRM are to ensure that there is employee productivity, sales personnel efforts, and provision of resources that enable a smooth transition of the business. (Pateli and Lioukas, 2017, p. 236). The main objective is to give the stakeholders employees who are competent and who can bring new issues to keep the business thriving. The company uses retail industry criteria in the selection process (Ziegler, 2015, p. 187). The retention of employees is executed by having evolving compensation policies and career development aspects. The company ensures that staff is not humiliated by unruly customers or fellow staff members. Therefore, in case of such issues, there are resolving ways that the firm uses, for example, arbitration through the labor unions in respective countries (Ziegler, 2015, p. 186). The performance measures have been seen through low rates of staff turnover. For example, in the US, the rate of staff shifting to other companies has reduced from 17% to 9% in the last five years (Pateli and Lioukas, 2017, p. 229). Therefore, the company has confidence that the HRM function is working to ensure there are n working drawbacks within the company. The human resource function has ensured that the workforce is diversified by hiring workers from different ethnic groups in the world.
Research and Development at Walmart
The main objective why R&D is done by many firms is to get new strategies for working in the same product or service line. For Walmart, their R&D is focused on crowd management systems and the identification of digital microservices. The key activities done under the business function is a shift from retail route planning to augmented realities for sales assistance (Pride, 2017, p.56). The second way in which research and development are done is through collaborating with research institutes to bring new methodologies of working on business constraints. Social media is another way in which Walmart wanted to research the feasibility of the tool. The ideas serve to keep the company updated with methods of aggregating useful information and data for moving the business in the right way. The performance measures are evident through the increasing numbers of buyers who have adopted the company’s ways of doing business. (Pride, 2017, p. 66). The second performance measure is the level of excitement that customers have when they find satisfactory products that are negotiable. For example, Walmart’s R&D team has led to the development of digital marketing using channels such as YouTube and Facebook. The other example is that Walmart stores in the UK are known for letting customers express the price they are willing to pay when they realize more developed products in the stores.
Walmart’s Supply Chain Management
Effective supply chain management has led to several ways in which sustainable business can be achieved. Through the business function, there have been sustainable competition strategies such as low prices and reduced inventory carrying, among other issues (Wade, 2014, p. 780). The main objective of supply chain management at Walmart is to ensure there are sufficient supplies in the stores, a step towards ensuring effective customer service and hence higher levels of satisfaction (Reimann and Ketchen, 2017, pp. 3-6). The other reason why the function is implemented at Walmart is to prevent any functional challenges within the departments. The performance measures that can be drawn from the function are the communication and relationship networks with suppliers to make sure there is improved material flow with lower stock. As a result, the network of suppliers in the world has been said to act as one single firm. Activities, in this case, include stocking where Walmart’s truck fleet delivers goods to the stores hence ensuring there is frequent and stable supply. Other activities are bookkeeping, and stock takes to monitor the rate of usage of the products. In the performance measure, for example, fresh products such as kales are delivered in low quantities to ensure that there is no waste due to perishability. For example, the network of suppliers at Walmart has led to Funai Electric Company getting 50.8% of overseas sales (Noble, Griffin, and Durmusoglu, 2014, pp. 112-116). The other example is that Green Dot Corporation has partnered with Walmart to Tailfin Labs accelerators.
The Concept of Innovation and the Application of Innovative Change in the Context of the Walmart Organization
Innovation and Application of Innovative Change
The meaning of the term innovation is the development and utilization of ideas that are meant to improve the way issues are performed and achieved (Pride, 2017, p. 67). Through innovation, there are new products, processes, and improved changes that make the business progress linearly (Aguinis and Lengnick-Hall, 2012, p. 284). The benefits of innovation include improved skills in doing business which raises the ROR and leads to competitive advantage (Alam et al., 2013, p. 59). Additionally, innovations develop the capabilities hence making employees relevant to the market (Reimann and Ketchen, 2017, pp. 6). Drawing from Tidd, Bessant, and Pavitt’s line of argument, innovation is a combination of ideas that propose something new and which has a different approach to what exists already (Reimann and Ketchen, 2017, pp. 5). Therefore, the construction of the ideas into something significant makes an invention because the aspect is out of the abstract field and comes to the practical realm.
Walmart’s Innovation Strategy
Walmart uses incremental innovation instead of radical innovation. In this case, incremental innovation means Walmart is dedicated to making minor changes gradually, which later impact a huge transformation of business (Bocanegra Gastelum, 2019, p. 97). Walmart is an example of disruptive innovation because it appeals to the customers who are less demanding and ay want convenient and low-priced solutions (Barth and Sau, 2014, p. 12). The other way in which incremental innovation in Walmart is evident is through entry into the market with a simple structure that is based on low prices. For instance, Walmart has made a step in new features such as integrated store maps that have been enabled in more than 160 locations. Secondly, the new feature in Walmart application enables the buyers to enter the items in a more natural language, such as ‘chips,’ ‘popcorns,’ and ‘coffee maker’ (Barth and Sau, 2014, p.30). Incremental innovation has led to Walmart’s shift to the modern ways of doing business.
Disruptive Innovation at Walmart
Disruptive innovation refers to the process by which a company transforms an expensive and comprehensive product or service to make it simpler and more affordable to many people in the market (Chatterjee, 2017, p. 18). Walmart is using disruptive innovation by destroying the current model to reshape retail. First, the company has a door-to-door delivery program for self-driving cars. Secondly, customers can order online and pick up their items at a kiosk. Lastly, groceries can be delivered to the customer’s car doors (Barth and Sau, 2014, p. 12). Disruptive innovation has led to higher levels of customer satisfaction because buyers can order what they like and access it at the Walmart kiosks that are built at various points in the world. The challenge with disruptive innovation is that there are cases of wrong delivery and lateness (Chatterjee, 2017, p. 22). It may happen if the customers sent to deliver to other clients have other plans along the way.
Open Innovation at Walmart
Open innovation refers to the idea of creating a specific theme by different companies under a defined theme. In the case of Walmart, open innovation uses customers as couriers. That means customers would be delivering goods to the doors of other customers rather than the retailer (Barth and Sau, 2014, p. 12). The approach works by hiring space in people’s vehicles which would take the orders to the respective groups. (Chatterjee, 2017, p. 17). In that way, there are new methodologies that may come to have an impact on the business performance. The benefits of open innovation to the company are that it has increased the revenue due to the high rate of deliveries using other buyers (Bocanegra Gastelum, 2019, p. 120). The challenges include the security of the products and late deliveries. Security is a major issue because some customers may not be straight, and they may have malicious attempts.
Walmart’s Complementary Innovation
The Abernathy and Utterback Model argues that many product innovations occur during the initial stages, and it may include the specific design that is realized for a given product to targeted customers. Walmart practices such innovation by offering a wide range of products such as grocery, hardware, health products, and entertainment equipment (Bocanegra Gastelum, 2019, p. 97). To have the business aspect in place, Walmart combines all the product lines to make it one hence ensuring there is a competitive advantage. The benefits are that the company ensures there is business sustainability which is key in ensuring people have work to do (Jens, 2021, p. 4). That is important to keep employees working for the company while developing their skills in the customer service line (Chatterjee, 2017, p. 18). The challenge may be a lack of unique specialization where competition may be disadvantaged due to other key firms in a similar business.
Although Walmart has made many specific approaches toward innovation, there is still a need to have more strategies to promote organizational conditions toward innovation. For instance, Walmart can make efforts to give staff flexible time to explore more effective ways that can improve the services (Chatterjee, 2017, p. 18). Employees can have shifts of six hours while two hours are dedicated to realizing other strategies to promote the business. Furthermore, Walmart needs to incorporate cloud software that uses microservices architecture in doing business. For instance, financial reporting can be done in a central system that does not alter from other programs (Kim and Min, 2015, 40). In that way, there would be a transition from monolithic ways of transactions to more modern ways of business.
The Key Characteristics of an Innovative Organization and the Main Organizational Conditions to Promote Innovation
Innovation and Business Performance
An innovative organization incorporates new ideas, methods, and processes into the organizational product or service line. The major benefits that an organization may get from innovation are improved methodologies of conducting business, an increase in revenue, and expansion of the business portfolio (Chatterjee, 2017, p. 22). Organizations that are innovation-centric share various characteristics, such as focusing on communication at all levels of the organization. Walmart has adapted to the culture of the innovative organization because it has been employing people with managerial experience to manage the stores globally. Additionally, it has centered its work on technology by having mobile applications and also researching current trends in consumer behavior (Jens, 2021, p. 4). The challenges along the way are that Walmart has faced issues such as customer dissatisfaction when orders are delayed or get lost.
Training and Development at Walmart
Innovation comes with new ways of doing business, and therefore, it requires employees to have new skills. Walmart has not been left behind when it comes to training and development as it has invested in training programs for its workers (Kim and Min, 2015, 37). For instance, the new change in product development has occurred through seminars that are made to sensitize workers on how to adapt to new working methods. The company has used both on-the-job and off-the-job to train workers (Kim and Min, 2015, 38). Walmart is known for using Business Leadership Series (BLS) as a unique training program. Due to training and development, staff has been more motivated to work on their lines, and they have led to higher productivity. Dabble time refers to the portion of time that is approximated to be 15%, which is dedicated to new ideas and initiatives (Kim and Min, 2015, p. 45). Walmart can have workers work for six hours while two hours are dedicated to their research. The benefit would be that different procedures would be realized, enabling more growth.
Competition Between Project Teams
The third characteristic of Walmart, an innovative company, is through allowing competition within the departments. To make sure that the company has innovative objectives, the staff are given the liberty to compete in terms of who can have a better methodology in working on various issues (Jens, 2021, p. 4). For instance, the marketing team can have inner divisions to enable people to develop unique strategies for winning the hearts of consumers (McGee, 2020, p. 19). Research and development tea can take part in exhibitions in the industry, which enable them to gain new ideas.
Walmart’s Organizational Structure
Walmart has adopted a flatter organizational structure that enables achieving various environmental approaches to business. Walmart did that by cutting staff to effectively collaborate and incorporate frequent reassessment of tasks (Jens, 2021, p. 4). More than 450 members at the headquarters have retrenched, a move that was said to enable fast entry to the marketplace (Morillo, McNally and Block, 2015, p. 401). The remaining employees were willing to adapt to the changes that would come on their way. The benefit that is gained from agility is that functions such as retailing are not affected since more emphasis is laid on purpose.
Walmart shares most of the features of innovative companies because of the market structure. People who buy products are the same for all organizations, and hence, there would be no huge gap in the methods (Morillo, McNally, and Block, 2015, p. 399). The organizational conditions that enabled innovation to occur were the need to have a competitive advantage, the quality of leadership, and a culture of improved functions every time (Jens, 2021, p. 4). The company has benefited through getting a firm consumer line and also the increased profit margins. The leadership has encouraged staff to have personal development in regard to product design. As a result, many employees form workgroups to identify the specific measures that they have to take to realize a unique line that would be added to the portfolio.
Organizational culture refers to the distinct ways of doing business by the use of proper ways to behave within an organization. Organizational culture can necessitate innovation due to the specific motives that come along the way. Walmart has perfected the art of organizational culture by having cross-functional work and taking risks within the business line. For instance, the company has ventured into selling well-being products such as gymnasium equipment (Ollila and Yström, 2016, p. 367). Although many people may know Walmart for groceries, having such a portfolio included shows there is a culture of the invention in the company. As a result, Walmart has been the largest company by revenue in the world hence beating other rival firms such as Amazon and others.
Walmart is also known for making entrepreneurship strategies that are more about taking risks and targeting profits. There are many uncertainties, but Walmart has not been dragged around by what many entrepreneurs fear in business. The company has ensured that people work in teams to find whether there may be any issues that give constraints when working (Ollila and Yström, 2016, p.366). The risk management team has played 65% of the responsibilities related to business feasibility. The impacts of Walmart in taking such a step are that there has been the emergence of many chains in the world having the same methodology, which increases competition. Walmart has kept the efforts to find better ways to practice business in competitive markets.
Walmart has been on the frontline to encourage transformational leadership that is concerned with more liberty to grow the company from an employee perspective. Leaders do not need just defy what is expedited to be done. Rather they include the junior staff in developing a framework that will enable the proper realization of goals. In the US, for example, leaders are expected to get reports from staff on where there are opportunities that may benefit the company (Padmanabhan and Zhang, 2018, p.93). Through such initiatives, Walmart has experienced progressive business with low staff turnover. The challenge of staff turnover has been settled by having employee incentives in the form of flexible time. Furthermore, the workforce has shown skills in acting like leaders when they are not.
Potential Causes of Failure of Innovation Activities in the Context of the Walmart Organization
Innovation and Business Performance
Even though Walmart has committed to ensuring that there is effective transformation, there are issues that, if not managed, innovation can fail to occur. Innovation failure refers to the condition when new processes and steps do not have any value to an organization (Jens, 2021, p. 4). The major drawback is that failing innovation leads to loss as revenue must be invested in the process (Silva, Styles, and Lages, 2017, p. 400). The four potential causes of failure in innovation include poor communication from the management to employees, lack of financial resources to maintain the new approaches, lack of effort to understand the customers, and fear of failing. When the issues are not approached for rectification, innovation failure can occur.
Major Causes of Innovation Failure
For Walmart, the innovation failure cause is likely to be the lack of alignment between the proposed product or service and the needs of the market. When the product design is not fit the market, it can lead to low purchases (StankeviÄiĆ«tÄ, Grunda, and Bartkus, 2012, p. 6). In this case, if Walmart introduces methods such as autonomous delivery, which may have issues of security and promptness, many people will not utilize it, and the machines designed to effect the change would be less useful (Chatterjee, 2017, p. 18). In that case, it would be caused by a lack of research on the practicability of the process in the real market. The impact would be a loss of revenue which would render the machines useless. To correct this, Walmart may be recommended to take market research on how to improve the process for profit realization while considering linear workflow within the firm.
Poor communication is another key issue that may lead to innovation failure at Walmart. It can apply when the employees do not know how to leverage the new changes hence making the process have drawbacks. Employees need to see where the changes should apply and why there is the essence to shift to the new process (StankeviÄiĆ«tÄ, Grunda, and Bartkus, 2012, p. 7). Most of the time, when the human workforce lacks the motivation to make changes in their product and service lines, they will not take part in the training and development programs. The impact would be damages that may come when people are not accurate on what they do concerning a certain process. For example, if the information and technology department does not have a correct way of tackling the cyber kill chain, customers’ data will be accessed by malicious people (Chang and Hu, 2020, p. 18). That would lead to liabilities when Walmart is subjected to legal obligations.
Lack of financial resources may render Walmart’s innovation strategies fail. Any change in an organization requires implementation by having resources that will push it. (Zhang, 2018, pp.34-37). On that note, the company needs to have money to sponsor the training for the new production steps. Without resources, the effect would be felt on the company’s revenue generation (Chatterjee, 2017, p. 18). To prevent such issues, Walmart can rely on loans from international banks such International Monetary Fund (IMF). In circumstances when resources are limited, work is down half-complete, and there might arise collisions that may lead to staff turnover. For innovation to continue in the right manner, Walmart management must work diligently to get avenues of getting substantial cash in from the stakeholders. The drivers of changes in the firm must consider the sources of funds before recommending a new way of doing business within the organization across all the chains in the world.
Any potential failure in innovation can be prevented by weighing risk levels that would result in any step made. Risks can be forecasted and prevented from happening (Ziegler, 2015, p. 186). One of the ways to bar risk from occurring is by stopping a certain course of action, such as the need to develop services or products (Ziegler, 2015, p. 189). Walmart, upon introducing a hard to realize innovation, can apply the fail early, fail cheaply ethos by withdrawing from the venture earliest time possible.
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