Wal-Mart Case Study

1. What were the main elements of the control system that Sam Walton created?

It is evident that Sam Walton believed in the importance of control systems in an organization; as he established certain strategic control systems in the company. Walton wanted everyone within the organization to be committed to Wal-Mart's goal "total customer satisfaction", and the strategic control systems were set accordingly.

There are various elements of control systems used in Wal-Mart which are:

Personal Control

An example is when there is an underperforming store; top managers visit these stores in order to lend their expertise to the employees there. Moreover, they fly on monthly basis to various Wal-Mart stores locations to check their performance.

Output Control

The company managers and even associates can share financial information through a sophisticated companywide satellite system including store profits and inventory turnover rates.

Behaviour Control

There is a system of behaviour control in the company such as rules and budget in order to shape and predict employees' behaviour. Each store performs the same activities in the same way, and all employees receive the same type of training in order to behave in the same way with customers. This is how Wal-Mar was able to standardize its operations and therefore save a lot of extra costs.

Using Information Technology

IT control systems are integrated with almost with all the other control systems. For example, Wal-Mart has a sophisticated satellite system used for their output control systems.

Strategic Rewarding Systems

The company is using a linking performance to reward strategy in order to raise performance; where managers' performance and ability to meet goals and targets are linked to their pay raise promotion. Besides, employees in Wal-Mart have a share in the company's stock which encourages them to raise their performance level and set their objectives on the long-term.

Wal-Mart's control systems help achieve the basic building block and high competitive advantage:

Efficiency

One of the control systems in Wal-Mart is the financial control system that provided managers with day-to-day feedback about the business performance; where the financial performance of each store and even each department within each store can be tracked and monitored through a sophisticated companywide satellite system. This control system helps sharing profitability information and inventory turnover rate among associates; which as a result gives them an in depth insight into the retailing business and work on improving it.

Furthermore, the above control system helps identifying if there is an underperforming store in the business in order to take immediate action; where managers and associates meet to find solutions and raise performance. Besides, top managers pay routine visits to stores with lower performance to lend their expertise. Another interesting strategy is that every month top managers fly to different Wal-Mart stores in order to inspect their performance, and they meet on Saturdays to discuss financial results and future implications.

On the other hand, another control system the organization is their rewarding strategy; as they link their performance and abilities to meet goals and targets to pay raise and promotion. Another point is the fact that everyone in the company including associates get a share of the company's stock which can accumulate by the time to a large sum. This helps increase performance level and as a result efficiency in the organization.

Customer Responsiveness

There is control systems in Wal-Mart which include various strategies focused on providing quality customer service. Walton established strong cultural value in the company which included:

• The ten-foot attitude: this strategy encourages associates to act whenever they meet a customer within 10 feet they look him in the eye, greet him, and ask him if he needs help.

• The sundown rule: this states that customers' requests must be answered by sundown on the day they receive them.

• The Wal-Mart Cheer: "Give me a W, give me an A".

Moreover, Wal-Mart has a very good history in customer service as people tell several stories of Wal-Mart