Organizational Structure of Wal-Mart
Timothy Frost
MGT230
May 24, 2012
Howard Kersey

Abstract

Wal-Mart, the world’s largest retailer, can be viewed as a model of success upon reviewing the internal structure of its organization from within. Comparing the various types of organization structures gives an insight regarding the type of structure Wal-Mart is composed of. As we take a closer look at this company’s structure it enables us to understand better the management functions and elements of control and coordination in place to achieve strategic planning and goals and to implement those into specific actions. We will also explore how this structure affects the relationships among the various departments. I will discuss three objectives throughout this paper. First, I will describe Wal-Mart’s organizational structure and make a comparison to that of other organizational structures used today so as to clarify differences and similarities. Second, I will evaluate how the organizational functions influence and determine its structure. Third, I will explain how organizational design helps determine the best structure.

Organizational Structure of Wal-Mart

Wal-Mart operates under three divisions, which are Wal-Mart US, Sam’s Club, and Wal-Mart International. Its global operations expands over several continents with numerous subsidiaries geographically located in several countries. These subsidiaries operate under different business names to include ASDA, Sam’s Club, Seiyu, Massmart, Wal-Mart US, Wal-Mart Canada, Wal-Mart China, Wal-Mart Brazil, Wal-Mart Argentina, Wal-Mart Mexico, and Wal-Mart Chile with more than 8,000 locations currently in operation. These divisions operate within their geographical boundaries so as to more efficiently offer the products, services, and customer support that today’s customers demand, which is also a direct result of its growth, complexity, and diversity. With each division and subsidiaries we can establish that Wal-Mart is a horizontal structure. We can further view departmentalization within as it pertains to the various departments, such as purchasing, marketing, finance, operations, manufacturing, information technology, and human resources. This further allows us to understand that Wal-Mart is a divisional organization. This divisional structure and approach have several advantages as it allows Wal-Mart to manage a wide variety of products, customers, and geographic regions. It also enables Wal-Mart to group all functions into a single division and duplicate each of the functions across all the divisions. Let us take a brief look at other organizations and how their structure compares to that of Wal-Mart’s. The first is Target. Target is the second largest retailer behind Wal-Mart with a United States and Canadian division. Target also has several subsidiaries, which includes retail, financial services, sourcing, commercial interiors, target.com, and target brands. It operates close to 2000 locations. Departmentalization of its operations are similar to that of Wal-Mart; however, Target consists of highly specialized units that perform very specific business functions (e.g., financial services). It is these specializations that enables us to determine that it is a functional organization. This is because of its need to manage its efforts on specific products, services, and customers. We will also look at the structure Bloomberg. Bloomberg is a multinational media corporation based in New York and provides financial software tools, data tools, and financial news to companies and organizations worldwide. It operates a financial services, venture capital, and news division, including television, radio, Internet, and print publications. Its hierarchy structure consists of the owner Michael Bloomberg, President, CEO, and Chairperson, all of which have a hands-on approach to the company’s operations and have direct reporting from lower-level executives. Employees within each division are responsible for reporting directly to individual project or production managers. These managers report directly to key executives within the organization. This gives us a view to illustrate the matrix structure that exists within Bloomberg as its primary focus is on efficiency and accountability. The organizational functions, such as marketing, finance, and operations are the influential factors that contributed to the structure of Wal-Mart today. From its beginnings Wal-Mart used strategic marketing in the planning and development of locations based on customer needs and placement of stores in areas not served by other competitors (e.g., rural areas and small towns). Wal-Mart’s approach to finance allowed them to determine the profitability of their existing locations and slowly enabled them to reinvest profits in the establishing of additional locations. This had a direct impact on their operations because this expansion allowed them to duplicate its efforts and planning in the development of locations statewide, countrywide, and worldwide. They were able to maintain the level of control and flexibility needed inorder to make changes or adapt to changing market trends and customer needs. Human resources have had a strategic impact on Wal-Mart’s operations in many ways. It have enabled them to plan and allocate needed resources, offer opportunities, and encourage continued individual development, and created an environment that places value on diversity and employee contributions. The organizational design of Wal-Mart has also been developed as a result of carefully designed goals and plans. This led to successful strategic planning that was implemented to ensure that Wal-Mart offer products and services of all different types and in many geographical areas inorder to satisfy the vast array of customer needs and demands. Convenience and affordability were two major factors (e.g., online shopping, site-to-store pickup, low product pricing, huge discounts) along with quick shipping and delivery times were also put in place to ensure continued growth.

In conclusion as we view the organizational structure of Wal-Mart we can get a view of departmentalization within the organization and better understand the role of each department as it relates to how it affects the organization. This also enables us to compare the various other structures in existence today to evaluate the advantages and disadvantages of each, and the duplication involved among the various divisions within the company. This stands to reason that if Wal-Mart can succeed by serving the needs of customers in small and rural areas any company can duplicate the same efforts. This can mean the difference between mediocre and extreme success.

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