Business Management HL CUEGIS
Business Management HL CUEGIS
11B
Submission date-17/Jan/19
Words-1146
Company-Walmart Inc.
Answer
The organization that has been chosen in order to address this question is Walmart.
Walmart Inc. is a American multinational retail corporation that operates a chain of
hypermarkets, discount department stores, and grocery stores. Headquartered in
Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated
on October 31, 1969.Walmart is like any other retail company, it conducts a business
activity to turn inputs into outputs, but what sets Walmart apart from other retailers is it's
affordable price ranges and great flexibility. Walmart stores are larger then it's competitors
and they also provide exceptional variants for each of their products, and are able to sell
them at affordable prices. The corporation achieved extraordinary success and growth in its
home country before choosing to expand into international markets. While most of
Walmart’s efforts to expand into the international market were successful, there were still
some exceptions such as South Korea and Germany as it eventually chose to exit this market
due to high loses. In 2016 Walmart announced that it will be planning a closure for 269
store worldwide. Most of the retailers stores exist outside of the United States Of America,
but do not perform as well as stores do in the USA. The vital factor for this defeat was that
Walmart simply could not deliver and persuade it's audience with the “Everyday low price”
approach. It was important for Walmart to allocate time in order to understand the
cultural difference and meet the demands for the unfamiliar market before
moving forward.
1The concept that Walmart could not perfect was studying the international markets before
moving into them. We can see in figure 1 that the
Ansoff Matrix clearly shows that the approach
Walmart chose was market development, in this
approach the company enlarges and becomes
involved in newer markets. We can see from figure
1 that this approach is of relatively low risk, this is
due to the fact that the company chooses to enter
new markets while selling the same products. Nevertheless, the company takes a relative
1
Business Management IB textbook edited by Paul Hoang
amount of risk as other factors such as culture and change and very prominent in the retail
industry.
Change is the ability to become different, in the case of Walmart it's the fact that Walmart
had undergone change by entering new markets. Culture is the ideas, customs and social
behaviour of a person or society. We know that when Walmart entered the new markets, it
faced issues such as marketing problems (the business fails to meet customer needs) and a
unestablished customer base which is when a business is facing problems attracting
customers as there are well established rivals that already operate in the market. Customer
loyalty is built over a long period of time, other businesses in the new market already had a
well-established customer base and this made it even more harder for Walmart to thrive In
the new market. But the main issue for Walmart was the fact that some employees were
not used to the new culture and the rapid change, and rather were against this change. We
can see this in figure 2 where the company chose to take the decision due to the driving
forces. This force field analysis
clearly shows the restraining
and driving forces, and is an
example of why Walmart
would have taken the decision
of expanding into the new
market while knowing the
impacts on it's employees.
Now that we know why
Walmart had taken the
decision to expand into the
new market, we can evaluate
how it affected a key function of the business, which is the human resources. The human
resources is one of the most key functions of any business , this department is responsible
for managing personnel of the organization. They deal with workforce planning, dismissal,
recruitment, training, appraisals and redundancies. This department is interconnected with
all the other departments and cannot function in isolation. It is important to understand
that this department is affected due to the change and culture in the organization. Due to
Walmart’s huge expansion plan into other new markets, it's employees face great change
from time to time. For instance, many employees were relocated when there was a deficit
in the new locations. Due to this reason the older employees experience a rapid change,
most employees reacted negatively to this change. This affected their motivation to work.
Cultural norms also means that some people are better suited to a system of scientific
management. It is hence evident that change and culture does play a huge role in
motivation of employees, the motivation of employees determines their productivity and
efficiency, thus determining if the expansion would be a success. Walmart has noticed that
the cause of it's failure in the new markets and recently chose to increase the morale of it's
workers by providing education to the workforce in the field of either business or supply
chain management. According to the Washington post, 2“The retailer is partnering with
three universities to offer associate’s and bachelor’s degrees to 1.4 million part-time, full-
time and salaried Walmart and Sam’s Club employees — a pitch to improve employee
retention rates and engagement at work, while also drawing new workers. Walmart will
cover the costs of tuition, books and fees, while employees will be required to pay $1 a day
for the duration of their studies.” This decision follows American psychologist Abraham
Maslow (1908-1970) who focused on the psychological (emotion and mental) needs of
workers. In his theory he mentions that self-actualisation is the highest level in Maslow’s
hierarchical of needs. It refers to the forces that drive people to be the best they can be.
Business can encourage this by providing opportunities to employees. It is evident that
Walmart is following this motivation theories by giving the employees an opportunity to
pursue higher education and to have the freedom over what they do to exploit their talents
in a way that they know best. Using this motivation theory to its complete benefit, Walmart
was able to provide the employees with opportunities so that they may cope well with
change, hoping that they will embrace it.
It is hence evident that change and culture does impact motivation of employees.
Walmart’s plan to expand into newer regions and grow has certainly been a period of rapid
change that the company had to face. This change also included a change in corporate
culture, this aspect of change does have an affect on productivity and motivation of
employees. Walmart has tried to reduce the negative impact that has caused it's failure in
many regions that it hoped to grow. Nevertheless, it is important for Walmart to pay close
attention to it's human resources.
2 Bhattarai, Abha. “Walmart to Offer Employees a College Education for $1 a Day.” The Washington Post, WP Company,
30 May 2018, www.washingtonpost.com/news/business/wp/2018/05/30/walmart-to-offer-employees-a-college-
education-for-1-a-day/?noredirect=on&utm_term=.bbaf77f1548b. (Accessed 12/Jan/19)