Wal-Mart's Impact on Local Economies

This assignment delves into the multifaceted effects of Walmart on local economies. It examines the influence of Walmart supercenters on sales at existing food stores, explores Walmart's impact on retail prices, and investigates its role in labor practices and community engagement. Additionally, the assignment considers the organizational structure of Walmart and its contribution to competitive strategy within the retail sector.

BUSINESS AND BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................2
A.............................................................................................................................................2
B. Short Essay........................................................................................................................5
1.3 The relationship between different organisational functions and how they link to
organisational objectives and structure..............................................................................5
TASK 2......................................................................................................................................7
A. Internal and external analysis............................................................................................7
2.1 Positive and negative impacts of the macro environment on the business operations.7
2.2 Internal and external analysis to identify strengths and weakness...............................9
B. Reflective statement........................................................................................................11
2.3 How these strengths and weaknesses are linked to the external macro factors.........11
2.4 Impact of micro and macro factors on how decisions are being made so that business
objectives are ultimately met...........................................................................................12
CONCLUSION........................................................................................................................13
REFERENCES.........................................................................................................................15

INTRODUCTION
A business performs in an open system that gets all needed resources from the
environment and offers its services and goods to the environment. There are distinct forces of
the environment, some are internal and close to the business, while others are external
factors. These external factors may be in relation to regional, national or global level. They
provide threats or opportunities to the business world. Every businesses tries to grasp the
current opportunities and put necessary attempts to combat threats that arise from the
business environment. Here, the report is briefing about internal and external factors affecting
the business operations of Sainsbury. The reader will also able to comprehend how the
internal strengths and weaknesses of the company links to the external factors. At last, the
reflective statement is elaborating the way in which business decisions are influenced by the
internal and external forces.
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TASK 1
A.
Slide 1
Slide 2
Slide 3
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Slide 4 Public organisations are owned and
operated by the government
including federal, provincial, state,
or municipal governments. These
organisations have the purpose of
serving the citizens and society’s
welfare. The capital is funded from
public revenue sources like tax,
duty, penalty etc. These
organisations generally operate in
Police, military, health, education,
electricity, banking and insurance
sectors.
On the other hand private
organisations are privately owned
by individuals or companies. They
have the purpose of earning profits
or maximising shareholder’s return
on investments. The funding is done
by the capital provided by owners
and partners or from loans, issuing
shares and debentures. Generally
operates in sectors like Information
Technology, Finance, Construction,
Pharmaceutical, Retail etc.
Slide 5
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Slide 6
Slide 7
Slide 8
4

Slide 9
Slide 10
B. Short Essay
1.3 The relationship between different organisational functions and how they link to
organisational objectives and structure
An organisation is a social entity that has a collective goal and is linked to an external
environment. The role of retailers like Walmart is to respond dynamic change related to its
stakeholders for example, varying customers’ expectations and the demands from the
suppliers and local communities. To meet the challenges and fulfil the expectations from
different groups of stakeholders, Walmart commits to be helpful in meeting the
responsibilities of the organisation and core values. Moreover, skilled Human Resources is
needed to fulfil these commitments of the company. It also has responsibility toward the
environment, which is maintained through the lower emission of carbon along with offering
the quality foods and grocery items toward the society (Robbins, 1990).
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Therefore, the structure of an organizational consists of activities such as allocation of
tasks, coordination and supervision of human resources and various activities, which are
directed towards the achievement of organizational objectives. Organizational structure
allows the expressed allocation of responsibilities for different functions and processes to
different entities such as the branch, department, workgroup and individual. An organization
can be structured in many different ways, according to its objectives. The structure of an
organization determines the mode of operation (Bedeian and Zammuto, 1991). The structure
defines the assignment of the roles, power and responsibilities, its control and coordination
and the flow of information flows between the different levels of management. A structure
depends on the organization's objectives and strategy. In a centralized structure, the top layer
of management has most of the decision making power and has
tight control over departments and divisions. In a decentralized structure, the decision making
power is distributed and the departments and divisions may have different degrees of
independence (Gerloff, 1985).
Walmart adopts a functional organizational structure where different functions go into
separate departments that report to departmental heads. These managers report to higher level
of management hierarchy. The adoption of functional structure provides several advantage to
the Walmart such as having clear lines of authority, and allows each employee to concentrate
on a particular task. However, there are certain drawbacks such as it may happen that
departments fail to talk routinely to each other or at cooperate well. A customer may get
bounced from department to department if his problem doesn't relate to one particular
function. The grouping of various departments is done on the basis of functions such as
production, finance, marketing, sales, purchase and human resource. These various
departments or functions can be further sub-divided for example, marketing function of
Walmart can be divided in to advertisement, sales and after sales service functional
departments (Robbins and Coulter, 2002). So the functions can be classified into two parts:
 Basic functions such as Production, Marketing, Finance and Personnel.
 Secondary Functions as further sub-parts of basic functions according to the
organizational requirement for example the Production function may have sub-
departments such as Product planning, R&D, Quality control and material handling
(Khandwalla, 1973).
The interrelationship between these functions is an important aspect as it helps to
provide advantage of integrating the specialization of individual functions for the overall
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achievement of the organisational aims and objectives. Also, easy control over functions and
pinpointing training needs of manager can be ascertained. The lack of interrelationship
between these functions may lead to increase conflicts and coordination problems among
departments (Mullins, 2007).
The most important feature of functional organization is that the entire organizational
activities are divided into specific functions such as operations, finance, marketing and
personal relations in such a way that identical functions of various departments in the
organization are performed by specialists. Each functional area is put under the charge of
functional specialists and he has got the authority to give all decisions regarding the function
whenever the function is performed throughout the enterprise. Moreover, specialists often
operate with considerable independence which increases the efficiency of employees.
Specialisation also helps to better divide the labour according to the related function (Zeki,
et.al., 1981). Management control is simplified as the mental functions are separated from
manual functions. Checks and balances keep the authority within certain limits. Specialists
may be asked to judge the performance of various sections. In this way, greater efficiency is
achieved because of every function performing a limited number of functions. Specialization
compiled with standardization facilitates maximum production and economical costs. Expert
knowledge of functional manager facilitates better control and supervision (Jones, 2010).
However, the lack of interrelationship is disadvantageous for the organisation like
Walmart. Although, the functional system is enough complicated to be carried out at low
levels. Lack of co-ordination weakens the disciplinary control as worker is not commanded
by one person so there will be no unity of command which creates confusions. Multiple
authority also pose difficulties in fixing responsibility. Because, there may be increasing
conflicts among the supervisory staff of equal ranks (Galbraith, 2008).
TASK 2
A. Internal and external analysis
2.1 Positive and negative impacts of the macro environment on the business operations
By using the following PESTLE analysis, the managers and leaders at Walmart can
identify negative and positive impacts of the business environment and factors that needed to
be prioritised in developing the business strategies (Gillespie, 2007):
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Political factors – Walmart takes into consideration the retail market political aspects,
generally related to government policies. The below are potential impact of political
environment on the Walmart:
 Politics high stability (Opportunity)
 Politics support to global activities (Opportunity)
 Pressure for hike in wages (threat)
The macro environmental aspects show that the company should adequately address the
high wages threat. The particular factor is a threat, as it goes in against of cost minimisation
concept of the company (Frank, 2006).
Economic factors – The organisation is under important pressure of changes in the economy.
The economic changes directly results in the business revenue fluctuations. The following are
some economic factors impact on the Walmart:
 Major economies stability (opportunity)
 Developing nations regular growth (opportunity)
 Decreasing level of unemployment at the global level (opportunity)
All the above factors reflect that the Walmart should exploit the economic opportunities
around the globe. The emphasis must be given on the emerging nations that have increased
level of demand for the retail products and services (Chang, 2005).
Socio/cultural factors – These factors mainly affect the preferences and perception of the
company’s potential customers. It includes the following:
 Trend of healthy lifestyle (opportunity)
 Urban migration (opportunity)
 Cultural diversity trend (opportunity)
Hence, it can be said that the socio/cultural factors present several opportunities for the
company. Walmart can enhance its portfolio in more healthy and nutritional products. Also,
the organisation can improve its products range to satisfy the several cultural preferences.
Furthermore, the firm can adjust its tactics to exploit the rising demands of customers around
the globe (Clayton, and Hilz, 2015).
Technological factors – The new trends of technology should be adequately considered by
the Walmart. The company’s competitive landscape is affected by the technology. The
following are technical factors potential impact on the business:
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 Increasing automation of business (opportunity)
 Available of wide information and business analytics (opportunity)
 Increasing use of mobile device among the customers (opportunity)
The organisation can raise its overall investment in all above factors. Moreover, the
Walmart can grasp the opportunity of offering online services by developing mobile apps.
The online selling and marketing activities will definitely enhance the revenue of business
(Yao, 2005).
Environmental/ecological factors – These factors are important to be considered by the
Walmart and includes the following:
 Trend of business sustainability (opportunity)
 Environmentally friendly development of product (opportunity)
In order to achieve the sustainability of business, Walmart should enhance the
operational effectiveness. The technological innovation will support in increasing business
efficiency. The improved standards and policies on products offered at the stores can also
strengthen the organisation capacities in addressed the ecological factors (Min and Galle,
2001).
Legal factors – These are in relation to the requirements of regulations and laws. The
following legal aspects creates threat and opportunity for the business:
 Employment regulations (opportunity)
 Food safety regulations (opportunity)
 Reform of tax law (threat)
The tax reforms are the possible threat that results in high rates of tax. Walmart should
focus food safety regulations and other policies of government in relation to food supply,
with an aim to maintain its quality standards. The organisation can also exploit the
opportunity of effective human resource management practices to comply with employment
legislations and gain better image in the market (Larkins, 2015).
2.2 Internal and external analysis to identify strengths and weakness
Strengths - Walmart is one of the leading retailers with more than 10,000 stores generating
$400 billion revenues. The company is able to exercise the power of its customers on the
suppliers to lessen the prices. The retailer has value for the convenience, money and wide
products range all in one outlet. The organisation has grown sustainability in past some years
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as well as has experienced the internal expansion. It also has key competency in using
information technology that perfectly supports its global logistic system. For instance, it can
analyse how the particular product is performing store-by-store and country-wide. It support
in the effective procurement for the company (Mata, Fuerst and Barney, 1995).
Walmart has also put a focused strategy for the adequate management and development
of human resource. People are main player in the operational and business success of the
organisation and it invests money and time in training and retaining competent staffs. Being
the largest retailer in the world, the company has major advantage of economies of scale as it
can share the fixed costs over several locations and many product lines so that it becomes the
cheapest destination to shop. Moreover, due to its size, Wal-Mart can exercise the negotiation
power over suppliers by asking for lower prices from them. The company can also affect the
competition by selling some of the selected items at no-profit, thus driving competitors out of
the market (Davies and Ormosi, 2013).
Weaknesses – The organisation in its intentions of saving costs has been disrespectful with
staff members and thus, involved the labour related cases or lawsuits. The firm is also
criticised for its unpaid overtime work, poor conditions, female discrimination and low
wages. Walmart does not adopt the differentiation strategy, which is followed by its rivals,
due to which it loose the potential customers. Moreover, the employee’s high turnover is one
more weak point in the retail sector (Rosen, 2005). The organisation loses quality staffs, as
they find better labour conditions and high skilled jobs at rivalries. Also, the negative
publicity tarnishes the organisation reputation of Walmart that is criticised for the poor
working conditions and the practice of bribery (Ravi, 2015). Since, Walmart sell products
across several industries like clothing, food, home furnishing etc. it may not be having the
flexibility and specialisation as some of the more focused competitors.
Opportunities – The Company can merge with, takeover and develop strategic alliances with
other international retailers concentrating on particular markets, like the Greater China
Region and Europe. Currently, the outlets only perform its business in a relatively in few
nations. Thus, there are many further business opportunities in the consumer markets of India
and China. New store and locations offer the company an opportunity to exploit market
development. The retailer has an opportunity to expand its line of products. It is because there
is a rising awareness among people related to health issues. The customers are also willing to
buy healthy food in outlets, so that the company can enhance the range of health and
nutritional grocery, in order to earn more (Rajput, Kesharwani and Khanna, 2012).
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Threats – Being an international retailer, the Walmart is exposed to several political issues in
the nations where it operates. The company is facing intense price competition on the global
level. The retailer has room to improvement but due to its business identity and size of low
cost retailer, it is hard for the company to think how far it can go. Some of the rivals like
Tesco, Amazon and Costco are putting great efforts on eliminating the differences in prices,
which is enjoyed by the company. Moreover, there are some fierce resistance faced by the
company at local level. Further, combating with the pressure of labour union is pressuring the
organisation to raise its benefits and wages (Cummings, 2007).
B. Reflective statement
2.3 How these strengths and weaknesses are linked to the external macro factors
The major strength of Walmart is its large number of stores located at widespread
locations and covering a huge geographical area. The company operates in 28 countries
around the world. The success of carrying out operations in such a large number of countries
depends upon the economic stability of these countries, which relates the company’s strength
to its economic environment. Even the changing culture around the world has helped
Walmart to expand its business in new territories. For instance, the modernization of Asian
countries and the adoption of European culture and lifestyle by these countries have allowed
Walmart to successfully capture the market share in these countries (Basker, 2005). Lifestyle
of the customers is a part of social cultural environment of the business. Another strength of
the company is the company’s efficient global distribution system. The remarkable efficiency
of the global distribution system depends upon the use of information technology by the
company. The company always adopts the newer innovations in the Information Technology
sector. Keeping itself updated with the technological advancement has allowed the company
to build an efficient global distribution system which has become company’s vital strength
and the key to success (Artz and Stone, 2006).
One of the major weaknesses of Walmart is the high employee turnover rate. The
company has been disrespectful with its staff which has resulted in legal actions taken by the
employees against the company. These cases filed against the company are related to the
legal environment in which the company operates. Another weakness of the company is its
inability to discriminate amongst its customers, which is very effectively done by its rival.
Different categories of customers are a part of the socio-cultural environment of the business.
The company should discriminate amongst its customers and must make specific strategy for
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different categories of customer in order to gain competitive advantage over its arrival in the
industry (Parnell and Lester, 2008).
2.4 Impact of micro and macro factors on how decisions are being made so that business
objectives are ultimately met
After analysing the Macro environment of Walmart it was found that there are many
opportunities that exist for the business. PESTEL analysis was adopted to assess the external
environment of Walmart and it was found that most of the environmental factors which are
related to the business and impacts it are providing various opportunities for the business.
SWOT analysis was also performed in order to assess the internal environment of Walmart
and certain strengths and weaknesses of the company were ascertained in the process. It was
discovered that the company can effectively use its strength to avail the opportunities that
exist in the macro environment (Hicks, 2009).
Moreover, the elements of internal and external environment are having a far reaching
impact on the decision making of the business. It is according to these factors that the
decisions are made in order to achieve the ultimate objective of the organization. For
instance, in the political environment, the stability of political relationship between nations
and the political stability within a particular nation provides an opportunity to a multinational
company like Walmart, to expand its business, by making it easier for the company to enter
new markets in different countries. In the same way the economic prosperity of the
developing nations around the world also provides the opportunity to the company to take on
its business to the territories of these developing countries. The macroeconomic environment
thus provides the opportunity to the company to expand its business. This opportunity was
very well availed by Walmart and has extended its business in 28 countries around the world
(Chen, 2007).
On analysing the social environment of Walmart it was found that the change in trends
and cultural diversity has resulted in the increase in use of super markets by people around
the world, especially in the emerging economies. This is an encouraging sign for Walmart as
this change in trend can result in increased number of customers. On further analysing the
social factor of the macro environment it was also found that there has been a trend of urban
migration in the developing economies where the people tends to migrate towards urban
regions. Urban migration increases the population of the area where Walmart’s stores are
generally located, which increases the number of potential customers for the company. This
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has helped Walmart to decide their areas and locations at which it has to open its store so that
it can attract maximum number of customers and can capture reasonable market share (Jones
and Hill, 2010).
On analysing the technological factor of the Macro environment in which the business
operates it was discovered that the technological advancement provides vast opportunities for
the business to grow. Moreover, while assessing the strengths of the company, the extensive
use of technology by Walmart in its operations was discovered. The extensive use of
advanced technology in its operations has gradually become the strength of the company and
has also made the company efficient and cost effective (Broadbridge, 2008).
The increasing use of mobile phones by customers these days has also worked in the
favour of the company as the company can extend its marketing through mobile phones; and
by doing so it will reach a large number of potential customers. The company has started to
send promotional messages to its regular customers so that they are made aware of the
promotional schemes at their nearby stores. The company was found indulged in some
disrespectful activities with its staff members in the recent times, in order to save cost (Evans,
D., 2010). On analysing the legal factor it was found that there are many employees
regulation which exists in the law. Employees have taken full advantage of their rights
provided by the employees regulations and have sued the company for its unlawful acts. The
Walmart has to understand the regulations and must act according to the laws of the land and
may have to compensate the employees for its misconducts (Yu and Shao, 2007).
CONCLUSION
In the first part of the project, the different types of organisation according to the
purpose, size, scope and nature have been explained. Furthermore, the concepts of
organisational structure and relations have been discussed. To understand these concepts
better, Walmart and its subsidiary in the UK – ASDA has been chosen in order to understand
the structure and relations prevailing in the company. It has been found that the organisation
follows a structure similar to that prescribed in the modern theory of organisations. Moreover
it possesses flexibility and a wide span of control. In this way, the understanding of the
impact of structure and relations on the success of an organisation has been attained. The
second part of the project provided in-depth investigation of positive and negative impacts of
the macro environment on the business operations. The reflective statement demonstrated the
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effect of factors of micro and macro environment upon the decision making of the business
towards achievement of its ultimate objective.
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