Organizational Effectiveness at Walmart

INTRODUCTION:

In the intensely competitive and highly dynamic business era of today, few organizations survive and manage to garner sustained public support. Organizational Excellence (OE) is the framework that spells out measurable amount of high quality in the organizational processes and systems. OE is an effective strategy for survival in the market amidst competition.

In 2004, Wal-Mart was the largest retail chain in the world. Founded by Sam Walton (Walton) in 1962, Wal-Mart had grown into a global company with more than 1.3 million associates worldwide and nearly 5,000 stores and wholesale clubs across 10 countries. The "most admired retailer" according to Fortune magazine had just completed one of the best years in its history.

In 2004, Wal-Mart generated revenues of $256.3 billion and a net income of $9 billion. The retail chain had a distinctive culture shaped by Walton and subsequently by his successors. In 2003, Wal-Mart, the largest retail chain in the world was also the world's largest company with a turnover of $245 billion. Each year, roughly 80% of American households made at least one purchase at Wal-Mart. Starting off in a small way, under the leadership of the legendary Sam Walton (Walton), Wal-Mart had emerged as a global player with operations in North America, Asia, Europe and South America.

Wal-Mart symbolized operational excellence and cost leadership. Some economists even argued that the 'Wal-Mart effect' had reduced inflation and improved productivity in the US economy year after year. After Walton's death, a new leadership under David Glass (Glass) had taken charge. In October 1995, Glass had made way for Lee Scott. By all accounts, the succession planning at the top level had taken place smoothly.

CORE VALUES AND CORPORATE AFFAIRS:

The core of Wal-Mart’s strategy is equally about creating lean, cost-effective, and efficient operations as it is about helping the environment.

The core of Wal-Mart culture consisted of three basic beliefs:

• Respect for the individual

• Service to the customers and

• Striving for excellence.

Research shows that the major reflections of operational excellence in organizational entrepreneurship revolve around the care of customers, constant innovation, committed people and managerial leadership.

Wal-Mart's business model is based on selling a wide variety of general merchandise and marketing, at "always low prices."[19] The company refers to its employees as "associates." All Wal-Mart stores in the US and Canada also have designated "greeters", whose general role is to welcome shoppers at the store entrance, and play a role in loss prevention Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear in the store. Alternatively, they focus on selling more popular products and often pressure store managers to drop unpopular products in favor of more popular ones, as well as manufacturers to supply more popular products. More than 70% of the goods sold in Wal-Mart are manufactured in China

Three critical elements in Wal-Mart’s approach to customer service are

• The Sundown Rule,

• The Ten Foot Rule, and

• Every Day Low Prices.

The Sundown Rule means Wal-Mart sets a standard of accomplishing tasks in the same day that the need arises ѕ in short, responding to requests by sundown on the day it receives them. The Ten Foot Rule promises that if an employee comes within ten feet of a customer, the employee must look the customer in the eye and ask if the person would like to be helped. Every Day Low Prices is another important operating philosophy. Wal-Mart believes that by lowering markup, they will earn more because of increased volume, thereby bringing consumers added value for the dollar everyday.

WAL-MART’S strategy of operational excellence allows it to offer low prices, when customer come by choice that allows Wal-Mart to promise larger volumes to suppliers, who voluntarily agree to lower the price to make more stuff on an absolute basis even though relative profit margins may go down in growth mode, this can be a positive, specially if you are buying something like solar prices that need scale to drop the prices.

WALMART also have just in time inventory management system that maintains an optimum inventory level to meet true customer demand. Also to maintain good relationship with their customers they are using customer management