Organizational Behavior at Walmart if

¶ … Organizational Behavior at Walmart

If we work together, we'll lower the cost of living for everyone…we'll give the world an opportunity to see what it's like to save and have a better life. -- Sam Walton, Founder of Walmart

As the world's largest retailer, Walmart has been both lauded and vilified for its marketing practices over the years, but it is hard to argue with success and Walmart has enjoyed a great deal of this in recent years. From its truly humble beginnings in 1962 with a single store in Rogers, Arkansas, Walmart has become a multi-billion dollar empire that spans the globe today, with operations in 15 countries. To determine how the company achieved this spectacular growth and level of success, this paper provides a review of the relevant literature concerning Walmart and its organizational culture to identify factors that have contributed to its competitiveness and success. A summary of the research and important findings are presented in the conclusion.

Review and Analysis

Even a visionary such as Sam Walton would probably be amazed at what his original concept has transformed into in just under a half a century. According to Walmart's corporate Web site, "Walmart serves customers and members more than 200 million times per week at more than 8,650 retail units under 55 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Walmart employs more than 2 million associates worldwide" (About us, 2010, para. 2). The retail giant also generated revenues of more than $450 billion in 2009 (About us, 2010), indicating they are clearly doing something right while many of their competitors are struggling to even survive amidst the ongoing global economic downturn. Although the first Walmart store opened in Rogers, Arkansas in 1962, this was not Sam Walton's first venture into low-price retailing. According to Schneider, "In 1950, Sam Walton moved to Bentonville, where he opened the first Walton's 5 & 10" (1999, p. 292). Based on his experiences in this venture, Walton became convinced that he had an idea for retailing that would revolutionize the industry -- and he was right. As Fredericks points out, "Walton opened his own -- the first WalMart-in Rogers, Arkansas, in 1962. The store's formula of low prices and customer satisfaction proved immediately successful, and by the end of the decade, 17 more Wal-Marts were established" (1999, p. 574).

Given the growth rate of Walmart stores in America in recent years, It is reasonable to suggest that practically everyone in the United States has visited or shopped at a Walmart store at least once, and the company's presence has become almost ubiquitous in other countries as well. Indeed, Fredericks credits Sam Walton's original corporate philosophy for engendering the organizational culture that is in place today. According to Fredericks, "His emphasis on low prices, customer service, and maintaining staff loyalty created a winning corporate culture. Meanwhile, Walton's ability to read retailing trends and successfully capitalize on them propelled Wal-Mart's phenomenal rise" (1999, p. 575).

The organizational culture at Walmart also embraces Sam Walton's original views about people and emphasizes the importance of all employees at every level to helping the company remain competitive. For example, according to Schneider, "Wal-Mart blurs management-labor distinctions by referring to employees as associates, by the austerity of executive offices, and by the lack of any offices at all for store managers" (1999, p. 293). Moreover, Foote and Krishnamurthi (2001) describe Walmart as "a combination of responsible leadership, effective communication and a unique corporate culture" (p. 13). The unique organizational culture at Walmart is overwhelmingly focused on competitiveness, both to control operational costs as well as to provide customers with the lowest possible prices. As Foote and Krishnamurthi point out, "Wal-Mart is the fastest growing atypical retailer who is fiercely competitive, constantly watching its competition, and aggressively copying and improving on what competitors are doing" (p. 14).

Although lower prices are the main marketing pitch used by Walmart marketers, the organizational culture that is in place ensure that this philosophy is actually translated into real cost savings for the company's customers. In this regard, Harris and Dennis report that, "Much of Wal-Mart's success has been ascribed to its stockless warehouse just-in-time distribution system. Goods delivered to the regional distribution depots are immediately picked for reshipment and sent on to stores" (2002, p. 225). This type of organizational culture has been described as being "cost oriented." According to Chen, Daughterty and Landry, "Cost orientation is a type of corporate culture that focuses on seeking and exploiting all sources of cost advantage" (2009, p. 27). Therefore, by focusing on using more efficient supply chain management practices as part of its organizational culture, Walmart is able to gain a competitive edge. For instance, Harris and Dennis add that, "Economies of scale mean that Walmart can purchase full truckloads from suppliers, gaining a critical 3 per cent cost advantage over competitors" (2002, p. 225).

The focus on achieving costs savings at every possible point, then, while passing as much of these savings as possible along to its customers is also reflected in Walmart's supply chain management practices. In this regard, Chen and her associates note that, "Walmart's superior supply chain process integration may be the result of emphasis on both cost and customer orientations. On one side, Walmart offers everyday low prices (customer orientation) and on the other side it relentlessly focuses on driving down costs across its supply chain processes" (p. 28). This approach to saving money to reduce operational costs so that the savings can be passed along to customers is also reflected in Walmart's organizational culture wherein "the company sees itself as customers' agent, going out to the market to find the best deals on what the customer wants" (Cocheo, 2003, p. 29).

The company, though, is not without its critics and detractors and Walmart has been targeted by various groups for its human resources practices as well as their store's adverse effects on local businesses (Kennedy, 2000). Some critics charge that it is the same organizational culture that has driven the company's success that has translated into challenging working conditions for its employees. For example, Walmart does not provide all of its employees with health insurance, is staunchly anti-union, and the company has been accused of a possessing a "pervasive and powerful corporate culture" that "exalted profits" based on a "win-at-any-costs" mentality (Mokhiber & Wiessman, 2006, p. 11). In addition, Walmart recently lost a class action suit brought by former and current female employees who charged that the company routinely paid female workers less than their male counterparts; the class action suit also maintained that the plaintiffs had been denied promotion opportunities in favor of their male counterparts at Walmart (Spangler, Britt & Parks, 2008). Although Walmart has vigorously defended itself against such lawsuits in the past, Spangler and her colleagues (2008) suggest that, as the world's leading retailer, it is time for Walmart to start living by the good community neighbor advertisements it sponsors and lead the way in fair compensation and promotion practices.

The company has also been criticized by various environmentalist groups for what they perceive to be its ecologically unsustainable business model. For instance, Mokhiber and Wiessman also note that, "The firm's heavy dependence on global supply chains and the superstore approach that requires consumers to drive long distances are structural problems that cannot be cured without a fundamental change in what Wal-Mart is" (2006, p. 12). Given the company's success in recent years, though, it is unlikely that any "fundamental changes" in "what Walmart is" will be forthcoming in the near future, but it is apparent that both critics and admirers alike point to Walmart's organizational culture as the driving force behind its success -- and failures.