Using your current work organization (or an organization of interest) and a second organization in the same industry as the subject matter, research the elements of business, compare and contrast the two selected organizations, and prepare an APA formatted paper that:
- Analyzes the basic legal, social, and economic environment in which the organizations operate
- Analyzes the managerial, operational, and financial issues impacting the organizations including: ?Company Culture and Performance
Strategic Decisions Making
Use of SWOT Tool
Operations Strategy Framework
Assesses how the overall management teams perform in terms of the four functions of management.
Identifies and explains the strong points of the managers.
Identifies and explains areas in which improvements are needed.
Analysis of Wal-Mart and Target
The macro environment consists of factors such as social, economic, legal and political factors that fundamentally impact firms. Firms have limited options when it comes to dealing with the macro environment factors. Other factors which may fundamentally impact the firms relates to the micro environment. These are factors for which the firm has total control. Some of these factors relates to management, operations and financial decisions that managers make. The management style and the leadership style employed impacts the firms’ performance. Managers are critical in determining the performance of the organization. This paper will assess the elements of leadership and management at Wal-Mart and Target Corporation.
Legal,social and economic environment factors that impact Wal-Mart
A number of basic legal, social and economic environment factors impact Wal-Mart. Retail companies such as Wal-Mart operate within a macro environment which encompass factors that the firm cannot alter or change in any way. The retailers’ legal environment is mainly comprised of food safety regulations, employment regulations, and tax laws. Walmart and Target are also required to abide by state as well as federal laws governing companies. For instance, the retail stores must conform to state and federal minimum wage requirements. The retailers’ social environment comprise of consumers from different social backgrounds. This is because the U.S. is a cosmopolitan nation, comprising of shoppers from different ethnic backgrounds. The prevailing economic conditions impact consumer spending and consequently the demand for goods at Wal-Mart (Walmart, 2013). This also applies for Target.
Wal-Mart’s culture four beliefs
Wal-Mart’s culture is based on four beliefs which include: “service to customers, respect for the individual, striving for excellence, and acting with integrity” (Walmart, n.d). In 2015, Wal-Mart’s performance stagnated compared to 2014. The company made a profit of 16.36 billion compared to 2014 when it made a profit of 16.02 billion (Walmart, 2015). Target’s maintains a corporate culture that values and respects “the individuality of all team members and guests” (Target, n.d). Both retailers maintain a culture that values individuals and respects their differences. Target made a net revenue of 2.45 billion in 2015, a slight decline in profits recorded in 2014 as 2.69 billion (MarketWatch, 2016). Wal-Mart promotes employees based on the following three criteria. First, an employee should have earned an above-average performance rating. Second, an employee must have worked at the retailer for a minimum period of one year. Third, the employee must be willing to work in a different location. Target Corporation promotes employees based on their performance.
Strategic decision making at Wal-Mart
Strategic decision making at Wal-Mart is carried out by division managers which is similar to Target’s strategic decision making process. Wal-Mart employs a hierarchic decision making style whereby those in higher positions exclusively make decisions. At Target Corporation, the decision making approach used is integrative in nature. In this type of decision making style, employees contribute towards making decisions. The company may also analyze customer’s opinions in making decisions. Wal-Mart employs a transactional management style. This is characterized by the tendency to promote high performance employees and the strong relationship it maintains with suppliers. The management style at Target can be described as participative style.
Authoritarian leadership Wal-Mart
Authoritarian leadership is evident at Wal-Mart. Those in higher positions have exclusive decision making powers. Division managers at Wal-Mart decide the direction each division takes. Target Corporation embraces participative leadership where each employee is entitled to voice his or her own opinion. At Target Corporation, there is more horizontal communication since employees at different levels maintain close relationships. Vertical communication also exists between the employees and the senior management. Vertical communication is dominant at Wal-Mart especially between employees at different levels. Horizontal communication occurs among employees at the same level. Both retailers employ SWOT Tool to evaluate the strengths, weaknesses, opportunities, and threats facing them. The operations strategy framework for Wal-Mart involves selling at low prices while moving large volume of merchandise. Target’s operations strategy framework employs an integrated cost leadership approach.
Four areas of management at Wal-Mart
The overall management team for both retailers has had exemplary performance in the four areas of management which include: planning, organizing, leading, and controlling. Planning involves making preparations to accommodate future events that may impact the business. Organizing means getting the available resources ready to cater to any present and future events. Directing involves establishing an effective work environment as well as developing opportunities for supervision, disciplining, scheduling, and motivation of employees. Both retailers have developed opportunities for these. Controlling is the fourth function which entails establishing performance standards and reviewing the past performance against set targets. Both retailers have established control mechanisms.
The strong points of managers at Wal-Mart can be described as unmatched scale of operations. The company has risen to become the largest in the world in terms of revenue. The large scale of operations for Wal-Mart enables it to obtain huge trade discounts. Wal-Mart is known for its cost leadership strategy which has popularized it across various countries. The retailer maintains strong influence over its suppliers. Another strong point for the managers is the application of information system and a strong presence in the international market. One of the strong points for managers at Target is strong brand name for the company that is highly respected by the customers. The company has a positive image among customers which is good for the future. The managers present Target as a fun place where families can go for shopping. This translates to strong brand loyalty.
Wal-Mart retailer’s business model need changes
Wal-Mart can improve in several areas. First, there is need to change its business model. The retailer’s business model is based on low pricing and moving high volume of merchandise. Wal-Mart also needs to improve its investment strategy. This comes after it retreated from some of the markets it had entered such as Germany and South Korea. This business model has been copied by online retailers such as Amazon which sell merchandise at a much cheaper price. Target needs improvement in several areas. First, its business model needs to be restructured from the supercenters concept to smaller convenience stores. Currently, majority of shoppers prefer neighborhood stores which are smaller in size. Target is yet to fully reap the benefit of online retailing. The retailer has been slow compared to others such as Amazon and Wal-Mart. Target should also expand operations to cover different segments such as financial services.
MarketWatch. (2016). Target Corporation. http://www.marketwatch.com/investing/stock/tgt/financials
Target. (n.d). Culture. https://corporate.target.com/careers/culture
Walmart. (2013). Walmart economic and customer insights report – Q1 2013. Retrieved from http://corporate.walmart.com/_news_/walmart-facts/customer-trends/
Walmart. (2015). Walmart 2015 annual report. Retrieved from http://s2.q4cdn.com/056532643/files/doc_financials/2015/annual/2015-annual-report.pdf
Walmart. (n.d). Working at Walmart. Retrieved from http://corporate.walmart.com/our- story/working-at-walmart