Wal Mart organizational change management analysis

Wal Mart organizational change management analysis Organizational Change Management encompasses all activities aimed at helping an organization successfully accept and adopt new technologies and new ways to serve its customers. Effective change management enables the transformation of strategy, processes, technology, and people to enhance performance and ensure continuous improvement in an ever-changing environment. A comprehensive and structured approach to organizational change management is critical to the success of any project that will bring about significant change. Organizational change is a reality of the modern world, and that reality isnt likely to change anytime soon Organizational change is the implementation of new procedures or technologies intended to realign an organization with the changing demands of its business environment or to capitalize on business opportunities. Organizational change typically encompasses the introduction of new and perhaps unfamiliar processes, procedures, and technologies, which represent a departure from what affected individuals generally view as the established, practical, and familiar ways of doing their work. Thus, at the individual level, change can engender emotions and reactions that range from optimism to fear, including anxiety, challenge, resistance, ambiguity, energy, enthusiasm, helplessness, dread, motivation, and pessimism. Organizational change management is the process of recognizing, guiding, and managing these human emotions and reactions in a way that minimizes the inevitable drop in productivity that accompanies change. WAL-MART AT A GLANCE Wal-Mart, founded by Sam Walton in 1962, is one of the world largest companies by market capitalization and number of people employed and touching millions of customers everyday. There are more than 7,800 Wal-Mart stores and Sams Club locations in 16 markets worldwide and there are more than 2 million associates serving more than 100 million customers per year (About Us, n.d.) It is the largest grocery retailer in the United States with an estimated market share of around 20% of the retail grocery and consumables business. To be able to efficiently operate such a complex operation at such a large and do it consistently would only be possible by the huge effort by Wal-Marts associates as its employees are called. Companys Principle Wal-Mart Stores, Inc. (Wal-Mart) has enjoyed success by adhering to three basic principles since its founding in 1962. The first principle is the concept of providing value and service to our customers by offering quality merchandise at low prices every day. Wal-Mart has built the relationship with its customers on this basis, and we believe it is a fundamental reason for the Companys rapid growth and success. The second principle is corporate dedication to a partnership between the Companys associates (employees), ownership and management. This concept is extended to Wal-Marts Vendor Partners who have increased their business as Wal-Mart has grown. The third principle is a commitment by Wal-Mart to the United States and the communities in which stores and distribution centers are located. Wal-Mart strives to conduct its business in a manner that reflects these three basic principles and the resultant fundamental values. Each of our Vendor Partners, including our Vendor Partners outs ide the United States, are expected to conform to those principles and values and to assure compliance in all contracting, subcontracting or other relationships. Saving people money to help them live better was the goal that Sam Walton envisioned when he opened the doors to the first Walmart more than 40 years ago. Today, this mission is more important than ever to our customers and members around the world. Companys Profile: Wal-Mart: the worlds leading supermarkets. Founded in 1962 by the Walton brothers, former employees of Ben Franklin supermarket, Wal-Mart is now the leading supermarket group in the world. With what has become a real empire of more than 5,300 superstores, supermarkets and stores, Wal-Mart distributes every product we need in life (from food to beauty products, together with clothes, electronics, domestic appliances, sports equipment and so on) whether it be under the Wal-Mart name or under that of SAMs Club, a members-only store dedicated to SMEs and the general public, or that of ASDA in Great Britain. Not to mention its on-line sales service. Originally aiming to set up stores in medium-sized towns in the United States, Wal-Mart has since taken on the international market, from Mexico, Brazil, and Canada to Great Britain, as well as Japan with the 2002 take-over of Seyu, the fifth-placed Japanese supermarket chain, without forgetting Europe with the Great-Britain and the Germany. Companys Mission Through careful search, I have established that Wal-Mart does not officially have a mission statement. In retrospect, the mission statement is its slogan, Always low prices, always! The CEO of the company has said that people are not concerned with their mission statement as much as they are their prices. Companys Structure Sometimes I find myself reading through the court documents for lawsuits filed against Wal-Mart. Usually those documents are filled with a bunch of garbage posing as factual information. Occasionally, though, some interesting information is found. Below is a description of Wal-Marts operating structure which was published in a court document in 2003. The only advantage to reading the text here is that I removed all of the legal cross references and footnotes to make the text readable. The following should be taken with a grain of salt in that this information was produced from an anti-Wal-Mart lawsuit and does not come from the companys official filings. There are a total of 41 regions: 35 Wal-Mart regions and six Sams Club regions. Each region is supervised by a Regional Vice President (RVP), who is based in Bentonville and travels for three weeks out of each month to the region. Because the regional management is based in Bentonville, Wal-Mart has an unusually high concentration of executives and managers based in the Home Office. Each region, in turn, contains approximately eleven districts; each district contains approximately six to eight stores. Each district is run by a District Manager, who lives in the field. The highest level hourly manager at Wal-Mart is Support Manager. The next step up is to management trainee, a four-to-five month program which prepares employees for positions as Assistant Managers. The first salaried management position is Assistant Manager. Each store has several Assistant Managers, varying with the size of the store. The next level is Co-Manager, a position used only in larger stores. The top store p osition is Store Manager, called General Manager in Sams Clubs. The stores contain 40-50 different departments. Companys Vision SAFETY EYEWEAR PROGRAM An estimated 1,000 eye injuries occur in American workplaces every day, caused by employees not wearing eye protection or wearing the wrong kind of eye protection for the job. Flying particles, flying or falling objects, or objects swinging from a fixed or attached position (like tree limbs, ropes, chains or tools) are just some of the hazards that lead to accidents. Most people dont realize that an eye can be destroyed in a fraction of a second. The smartest and most effective safeguard against these risks is always wearing suitable eye protection. Many workplaces today are required by OSHA to ensure their employees wear safety glasses meeting the new ANSI Z87.1-2003 standard for personal protective eyewear. OPTI- DIRECT VISION PROGRAM Discover a simple, cost-effective way for your company to provide vision benefits for your employees without the complexities of an insurance vision plan. The Opti-Direct program can mean an average savings of more than $70 per year, per employee in comparison to a traditional vision insurance plan. Companys Characteristics Wal-Mart is almost certainly not an example of pure competition. Pure competition is characterized by a very large number of sellers each with an almost infinitesimally small market share selling a non-differentiated product. Wal-Marts market share is immense (as you stated) and they differentiate their product through branding measures that include everyday low prices, convenient hours, etc. There can be tough competition in every market structure (except monopoly) but that does not mean that the market meets the definition of pure competition. Company Products Wal-Mart Stores, Inc., like most large retail and grocery chains, offers store brands, commonly referred to as house brands or generic brands, which are low-priced alternatives to name brand products. Wal-Mart has numerous store brands, each catering to a different consumer need or desire. Almost all products offered under Wal-Mart brands are private label products, and can be found in almost every category at Wal-Mart. Major Names: Sams Choice: Sams Choice originally introduced as Sams American Choice in 1991, is premium retail brand in food and selected hard goods. Named for Sam Walton, founder of Wal-Mart, Sams Choice forms the premium tier of Wal-Marts two-tiered core corporate grocery branding strategy that also includes the larger Great Value brand of discount-priced staple items. Most Sams Choice beverage products (excluding Grapette and Orangette) are manufactured for Wal-Mart by Cott Beverages. Other products in the line, including cookies, snack items, frozen meals, and similar grocery items are made by a variety of agricultural and food manufacturers. Great Value: Great Value was launched in 1993 and forms the second tier, or national brand equivalent (NBE), of Wal-Marts grocery branding strategy. Products offered at Walmart through the Great Value brand are claimed to be as good as national brand offerings, but are typically sold at a lower price because of minimal marketing and advertising expense. As a house or generic brand, the Great Value line does not consist of goods produced by Wal-Mart, but is a labeling system for items manufactured and packaged by a number of agricultural and food corporations, such as ConAgra, which, in addition to releasing products under its own brands and for Wal-Mart, also manufactures and brands foodstuffs for a variety of other supermarket chains. As Wal-Marts most extensively developed retail brand, covering hundreds of household consumable items, the Great Value line includes sliced bread, frozen vegetables, frozen dinners, canned foods, light bulbs, trash bags, and many other traditional groc ery store products. The wide range of items marketed under the Great Value banner makes it Wal-Marts top-selling retail brand. The new redesign also includes over 80 new items including thin crust pizza, fat free caramel swirl ice cream, strawberry yogurt, organic cage-free eggs, double stuffed sandwich cookies, and teriyaki beef jerky. Walmart changed the formulas for 750 items including: breakfast cereal, cookies, yogurt, laundry detergent, and paper towels. The new brand was tested by over 2,700 people.[1] Other retailers are following suit with their private label packaging as well. MARKETING ENVIRONMENT The Wal-Mart and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. There are six major forces Demographic Environment Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Economic Environment The economic environment of Wal-Mart are those factors that affect consumer purchasing power and spending patterns Natural Environment The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labeled the specific areas of concern were: Shortages of raw materials. Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion. Increased pollution is a worldwide problem. Industrial damage to the environment is very serious Government intervention in natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world. Technological Environment The technological environment includes forces that create new technologies, creating new product and market opportunities. Political Environment The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business. Marketing Strategy of Wal-Mart Wal-Marts marketing strategies are based upon a set of two main objectives that have guided the firm through their growth years. The customer is featured in the first objective; Customers would be provided what they want, when they want it, all at a value. Team spirit was emphasized in the second objective, Treating each other as we would hope to be treated acknowledging our total dependency on our associate partners to sustain our success. I agree with Wal-Marts two main objectives. The customer objective includes giving the customer what they want at a reasonable value. The second objective covers the foundation of the company; its employees. Employees are the basis for success of the company and drive the day-to-day operations. Wal-Marts employees, feeling like associate partners, gives them a feeling of empowerment and pride that drives the companys culture. Wal-Mart has launched successful marketing strategies that considered factors like social and environmental causes.. CHANGE PROCESS IN THE ORGANIZATION Change is a complex process, and also included with a time of anxiety and uncertainty for the workforce. Organizations need to clearly articulate the merits of change and present a clear process for achieving change, if they are to win the commitment and enthusiasm of people. Wide involvement in and communication of the change project can assist with employee understanding of the what and how of change. ORGANIZATION LIFE CYCLE Before planning a management strategy is important to carry out organizational life cycle to identified in which stages the organization are. After analyzing it if identified that Wal-Mart are in Elaboration of structure phase because it ensures Managers seek ways to streamline any excess bureaucracy that has cropped up during the previous phase. Decisionmaking becomes de-centralised, allowing individual departments to get organised along specific product/services lines or projects. Often the need at this phase is to revitalise the organisation. Innovation Fig: 1: The Organizational Life Cycle of Wal-Mart BUSINESS PROCESS TRANSFORMATION MODEL Business process modeling is a technology aimed at modelling business processes and analyzing them with the objective of using the analyses to drive process transformations. Business process modeling tools have underlying capabilities such as simulation that helps business analysts to understand and quantify the impact of different process transformations on process Key Performance Indicators (KPIs). Even though business process modeling is widely used, analytic capabilities such as simulation are used to a much lesser degree because developing and running simulation models and interpreting their results is seen as a complicated activity by a majority of business analysts. As a result, many business analysts consider such tools as only suitable for experts in the field and are hampered in unlocking the full potential of business process modelling for identifying and assessing business process transformation options. Hence, there is a need for researching approaches that enable busine ss analysts to use quantitative analysis methods easily towards the overall objective of business process transformation.. Business process transformation is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed Business process Transformation is a top-down approach. It is not about projects carried out in isolation to examine a specific activity. Business process transformation is about looking at entire processes, rather than at specific activities or functions. It also needs to be customer-centric and look at the chain of activities leading to the customer output (whether that is service or product). Wal-marts mission statement: Wal-mart mission is to enhance and integrate our supplier diversity programs into all of our procurement practices and to be an advocate for minority- and women-owned businesses. To give ordinary folk the chance to buy the same thing as rich people BEHAVIOURS THAT NEEDED FOR ACHIEVE THE MISSION AND AIM Optimize resource capacities This pattern results in potential reduction of operating costs, by reducing resource capacities in different roles. Optimize resource scheduling policies This pattern results in potential improvement in service and reduction in cost, by refining the scheduling policies governing the allocation of resources to different activities. Combine roles This pattern results in potential reduction in operational costs, by creating new roles in the process, by aggregating multiple existing roles. Change branching probability This pattern results in potential operational improvements, by modifying the probability that a specific branch is chosen by a token. The change in probability may in turn be realized by different means, such as employing improved technologies for managing flows, etc. Introduce business integration solutions, IT (InformationTechnology) systems This pattern results in potential improvement in operating costs, by automating the process using business integration and other information technology STAKE HOLDER ANALYSIS The purpose of stakeholder analysis is to inform the Project Board and Project Manager who should contribute to the project, where barriers might be and the actions that need to be taken before detailed project planning. Key stakeholders of Wal-Mart A Key stakeholder is a stakeholder whose interest in the project must be recognised if the project is to be successful. In particular, those who may be positively or negatively affected during the project or upon successful completion of the project Shareholders The management authority of the BPL Employees Physicians / Doctors Related banks Participants The retailer The distributor Supplier The non key stakeholder A Non-key stakeholder is a stakeholder who does not need to be recognised in order for the project to be successful, but will be identified as s result of the process of identifying all stakeholders Pressure group Taxation authority The Standard testing Institute Local community Political influences International policy SYSTEM MODELING The 7-S-Model The 7-S-Model is better known as McKinsey 7-S. This is because the two persons who developed this model, Tom Peters and Robert Waterman, have been consultants at McKinsey Co at that time. Thy published their 7-S-Model in their article Structure Is Not Organization (1980) and in their books The Art of Japanese Management (1981) and In Search of Excellence (1982). The model starts on the premise that an organization is not just Structure, but consists of seven elements: Strategy Actions a company plans in response to or anticipation of changes in its external environment. Structure Basis for specialization and co-ordination influenced primarily by strategy and by organization size and diversity. Systems Formal and informal procedures that support the strategy and structure. Style / Culture The culture of the organization, consisting of two components: Organizational Culture: the dominant values and beliefs, and norms, which develop over time and become relatively enduring features of organizational life. Staff The people/human resource management processes used to develop managers, socialization processes, ways of shaping basic values of management cadre, ways of introducing young recruits to the company, ways of helping to manage the careers of employees Skills The distinctive competences what the company does best, ways of expanding or shifting competences Super ordinate goals These represent the aspirations of the organisation, the beliefs, the principles and aims which should pull it towards success. A shared view of this within the organisation is a powerful competitive advantage for an organisation to develop Resources: Recourses needed for achieving the new markets Established a new plant for production Ensure better quality Set up new marketing channel specially for the international markets New management and trained staff Finance Political support Marketing environment IMPLEMENTATION Implementing the Change A practical understanding of how people and organizations respond to change. This is received by a exporters to understanding how change unfolds helps reduce the amount of unproductive behavior that may accompany the implementation of a new technical solution by reducing the amount of uncertainty involved in change. Reduced uncertainty alleviates surprises and better equips people to focus time and energy on the technical solution. The manner in which change unfolds can be broadly grouped into seven key concept areas. These areas are: Nature. The impact of change on the individual. Process. The typical flow of change. Roles. The positions that are central to change. Resistance. The reactions that accompany change. Commitment. The process by which individuals and organizations align with change. Culture. The organizations past and present ways of doing things and the influence of these behaviours on the change. Synergy. The impact of teamwork on the change. Making Good Decisions Decisions are the alignment of an organizations current and planned changes with the resources available for implementing the initiatives. For an organization to be successful in implementing change, it must ensure that the demands created by its change initiatives do not exceed the organizations capacity for executing the changes. When change demands exceed the organizations capacity for change, key resources become overwhelmed by the number of changes competing for their time. The result is an increase in dysfunctional behavior that detracts energy from the implementation effort and, in many cases, impedes its process. Ensuring adequate capacity for existing and planned change demands generally involves: Inventorying current and planned changes and evaluating them to determine their potential value, impact, and resource requirements. Prioritizing changes according to this evaluation. Determining current capacity to implement changes. Trimming current and planned changes as necessary according to capacity limits. Developing and implementing strategies to increase overall change capacity to expand organizational adaptability. Structured Implementation Architecture: The structured plan for achieving the desired goals through implementation of the perceived change solution. Following a structured, yet flexible, implementation framework reduces errors and oversights and allows a team to proactively address issues that are routinely associated with the failure of organizational changes. Such a structured framework consists of seven phases which, when applied as a system, facilitate successful implementation of an initiative. The seven phases are: Clarification. Development of a comprehensive vision and measurable outcomes that are wholly shared by key leaders. Announcement. Development and execution of a detailed communication plan. Diagnosis. Assessment of critical risks and key levers associated with the change. Planning. Development of comprehensive strategies to mitigate risks and use levers identified in the diagnosis phase. Execution. Implementation of developed strategies. Monitoring. Continuous assessment and augmentation of an implementation sequence. Evaluation. Assessment of a complete implementation sequence, and documentation and transfer of key learnings. Recommendations I feel that Wal-Marts most challenging issue involves the publics resentment. Wal-Mart has wiped out numerous retail establishments (too many to count) and will continue to do so unless stopped. So far, some big box opponents have stopped Wal-Mart from specific expansions but Wal-Mart is definitely fighting back. From Wal-Marts point of view, I think more focus should be spent on global expansion. If specific areas are so against having a Wal-Mart that they pass laws to stop Wal-Mart from building in their area, I think Wal-Mart should stay away. For example, Wal-Mart would have a terrible time expanding into Oakland. I would assume that with the laws that were passed, a great deal of negative press also took place. The time and effort to get a Wal-Mart built in Oakland may not be worth the trouble. This is one of the reasons I feel Wal-Mart should focus on international expansion. There were 1,355 international Wal-Marts in 2004. I definitely feel that expanding this number sounds l ike it could be very lucrative. Another issue facing Wal-Mart is the federal lawsuit regarding sex discrimination. From the numbers quoted in the case study, it sounds as though Wal-Mart is clearly discriminating against females. This is somewhat surprising but will hopefully be fixed. Wal-Mart is very thorough in their strategy, maybe they need to be more thorough and/or detailed in their compensation and incentive policies. Wal-Mart definitely needs to end the discrimination. In order to avoid future discrimination, monitoring of wages and salaries should be established. This is especially true for upper management employees, where females are paid significantly less than males in similar positions. Last, I feel that the compensation and benefits offered to Wal-Mart employees are somewhat of an issue. If only about 60 percent of employees have health coverage (compared to 72 percent in the retail industry as a whole), I think their benefit package needs to be revaluated. The case study claims that the reason many employees did not sign up for health coverage is because they obtained it through a member of their household. Im sure that is the case for some, but not all. Furthermore, Wal-Mart does not pay any health care costs for retirees. I feel that both examples are methods Wal-Mart uses to cut costs and both need to be reconsidered. CONCLUSION Management change in the organization is the key to adopting with new technologies. Though it a complex and continuous process but every organization should practice this new techniques to manage and operate he organization successfully.