Walmart - Organisational Structure Service Strategy

Wal-Mart: organisational structure service strategy

Today, Wal-Mart Stores serves more than 30 million customers and members everyday at more than 8,600 retail units under 59 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs more than two million associates worldwide. It is not an easy case to manage and coordinate the staffs in order to achieve the largest profit within the entire organisation. This report will lay emphasis on analyzing the Wal-Mart organisational structure, and how the organisational structure works to support the strategy.

Wal-Mart Stores, INC. cut 300 headquarters to complete a year-long series of changes to its corporate structure that including layoff of thousands workers(Taylor, 2010), CEO Mike Duck(2010) said the world's largest retailer trimmed its labour force to advance its strategy of improving its "growth leverage and returns". Restructuring organisation through layoff, it leaves us a lot to think about it. Is it good for achieving strategy as well as the operating of the organisational structure?

With increasing complexity and size, Wal-Mart is opting for a mixed structure in different hierarchy, which combines the benefits of two or more forms of organization. For example, the functional structure on the basis of reducing product cost and the Geographic Area structure based on the geography (Hitt et al. 2009). From the head office to every store, Wal-Mart operates with a flat-organisation structure that has very few layers of management between the head office and store managers, and there is no regional headquarters (e.g. Chart 1). This reduces the administrative expense. Wal-Mart can operate with such a flat structure because its information system allow the company's top managers to monitor and control individual stores directly rather than relying on intervening layers of subordinates to do that for them(Spotts, 2005).

Chart 1:

Vice President

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Wal-Mart applies the functional structure to implement cost leadership strategies in each of its three segments, Wal-Mart Stores Divisions, Sam's Club, and Wal-Mart International. In the largest business subsidiary, Wal-Mart Stores, which generates the largest share of the firm's total sales, the cost leadership strategy is used in the supercentre, discount, and neighbourhood market retailing formats. Wal-Mart successfully applies a functional, centralized organisational structure in its homogeneous domestic