Organization_Structure_Paper

University of Phoenix MGT/230 January 30, 2011 Organization Structure Paper Organizational structure and functions are the basis of any company whether small or large. Each structure benefits different styles of businesses and have different benefits and downfalls. When deciding which organizational structure a business is or should follow, executives and management must consider how they are going to delegate tasks to operate efficiently and core competence. A functional organization works well for a smaller sized company that is able to be monitored by a single executive or manager. Divisional organizations can be good for larger businesses that are located in different areas of the country and have the same functional operations throughout the divisions. A matrix organization can be for either a small of larger company since it incorporates both functional and divisional structures. This paper will discuss the different organizational structures and functions and how they affect one of the largest corporations in the country; Wal-Mart. Wal-Mart was founded in 1962 by Sam Walton who opened up the first store in Arkansas. The first store was a basic discount store providing its customers with low cost products. In 1983, Sam Walton expanded the Wal-Mart brand name to include its first Sam’s Club, a member’s only store warehouse that offers bulk items from everything to clothing to household cleaning items to food. In 1988, Wal-Mart opened its first supercenter store that offers a functional grocery sector as well as its general merchandise area. Sam was able to establish more Wal-Mart stores when stock for the company was offered on the New York Stock Exchange, providing him with enough capital to offer his discount superstore across the country. There are over 633 stores open nationwide and in 28 countries around the world (Walmartstores.com, n.d.). Wal-Mart has successfully met the demands of its customers by adding products to its stores. Clothing, household items, pharmacy, garden, and a full scale grocery area have contributed to Wal-Mart’s continued success. The Wal-Mart Corporation is divided into numerous departments and divisions based on geographic location. The company functions under the divisional structure which consists of geographic, customer, and product divisions. The company focuses largely on its customer’s satisfaction in its products and services. Wal-Mart’s goals and strategies are to provide families with affordable items with a one stop shopping experience. Wal-Mart’s’ divisional organizational structure differs from any other organizational structure. The divisional structure of Wal-Mart is divided into three operating divisions and those are logistics, real estate, and store operations. These three divisions are unified under a single leadership team. By combining these three operating divisions under one leadership, the company is able to make transformations to continually improve its delivery of products and services to its customers, associates, and shareholders. Wal-Mart also is dividing into geographic business units that are Wal-Mart West, Wal-Mart North, and Wal-Mart South (Walmartstores.com, n.d.). The company also has expanded to incorporate a Wal-Mart Asia, Wal-Mart US, and Wal-Mart Latin America. The benefits of being a divisional organizational structure are that it allows Wal-Mart to focus on the customers’ needs and provide better and faster service. The divisional structure also allows the company to be flexible and respond to change quickly, this is due to each unit focusing on its own environment. Wal-Mart’s main concern is not just their bottom line and how much profits they make, but rather how to provide customer satisfaction by saving their shoppers money and offering top quality products at a reasonable price than other companies. There are also downfalls to being a divisional structure and that is that costs could be higher than that of functional and matrix structures (Bateman, 2011). Organizational functions such as financing, marketing, human resources, and operations affect the way Wal-Mart’s organizational structure operates. Since Wal-Mart is a divisional organization, each division has its own financing, marketing, human resources, and operating department. Wal-Mart is divided into geographical areas and each divisional area is overseen by a chief executive officer that makes executives decisions for the best of the corporation, employees, and customers. The company has a vertical structure that has the chief executive officer as authority and followed by the board of directors and flows down into a hierarchical system. Wal-Mart has worked hard to implement their strategic methods. The company examines and monitors strengths and weaknesses in its financial, marketing, operations, and human resources departments as these functions can drastically affect changes within the organization. Without the proper monitoring of these functions, it can affect the overall competitiveness and performance of the organization. Analyzing the financial area of the company can determine the trends to historical and current industry figures. This information can determine what steps need to be taken to improve profit gain or reduce expenses. Marketing analysis keeps tracks of marketing activities in the company and can ensure that Wal-Mart remains competitive in its market. Operations analysis monitors the production and provides management with the ability to make any changes to improve in speed or quality. In the human resources department, monitoring all employees and ensuring that each new and existing employee has the proper training and skills to provide quality service and reach company goals (Bateman, 2011). In order for Wal-Mart to sell its products at such a low competitive rate, the large size of its company has caused it to incorporate a distribution system that is highly efficient and works with suppliers to keep purchase prices low. The company purchases large amounts of products in a single transaction that therefore allows Wal-Mart to resell those same products to customers at a lower cost than others in the retail business. This reflects Wal-Mart’s logo, “Always low prices, always.” The company’s goal is to help boost the economy by providing all customers with affordable products and therefore saving them money. Wal-Mart has remained successful in offering consumers low price products and is continually looking for new innovative ways to help customers save money as well as finding ways to contribute to communities. The low-cost strategy has helped the company to remain competitive in its market and contributes to its enormous success. The structural design of the company makes it flexible to changes in the environment, economy, and needs of shareholders, and consumers alike. The company has taken advantage of the technology revolution by advancing and changing barcodes on their products, providing fast and quality service to its consumers, and offering wide varieties of products. References: Bateman, T. S., & Snell, S. A. (2011). Management: Leading & collaborating in a competitive world (9th ed.). New York, NY: McGraw-Hill Irwin. Wal-Mart Corporate (n.d). Retrieved from www.walmartstores.com