Walmart's Organizational Performance: A Critical Evaluation

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UNDERSTANDING ORGANISATIONAL
PERFORMANCE

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TABLE OF CONTENTS
INTRODUCTION........................................................................................................................3
ABOUT WALMART....................................................................................................................4
ANALYTICAL APPROACH FOR UNDERSTANDING PERFORMANCE MEASUREMENT..................6
PERFORMANCE MANAGEMENT BY WALMART AND MEASURES OF PERFORMANCE
IMPROVEMENT...................................................................................................................... 11
CONCLUSION.......................................................................................................................... 15
RECOMMENDATIONS.............................................................................................................16
REFERENCES........................................................................................................................... 18

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INTRODUCTION
The performance of the organization can be measured by analysing the actual results of the
organization in relation to its intended results. This report is being made with the major
objective of critically evaluating organizational performance by using a range of
perspectives. The report would also be focused on analysing the activities undertaken by
Walmart and also the external environment within which the firm operates. The report also
aims to gain a critical understanding of the decision-making process adopted by Walmart
and on establishing its relationship with performance management.

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ABOUT WALMART
Walmart is one of the largest companies in the world. This multinational retailing
corporation functions as a chain of supermarkets, grocery stores, hypermarkets and also
departmental stores. The operations of the company are being carried out in three major
business segments namely the Walmart international, Walmart US and also Sam’s club
(Annual report, 2018). The organization majorly provides grocery products, floral and dry
grocery and also consumables to its customers. Along with this, the organization is also
engaged in providing its customers with electronics, stationery, apparel, automotive, home
furnishing and many other products (Thompson, 2017). In addition to this, Walmart is also
engaged in providing its customers with fuel and financial services and other related
products.
The company operates in 28 countries all across the globe and has established
approximately 11695 stores. The company also operates several e-commerce websites
under the 58 banners within 27 countries (Annual report, 2018). The majority of the sales of
the organization are a result of the operations of the US, where it has a strong foothold.
Walmart has been listed on the New York stock exchange. The company has also
successfully determined the importance of adopting digitalization and has, therefore, made
huge investments in technology (Thompson, 2017). Owing to this reason, the company has
established e-commerce websites in eleven countries.
VISION
The vision of Walmart is to become the one-stop destination for the customers where they
can save money on whatever purchases are being made by them. However, prior to 2017,
the vision of the company was to establish as the best retailer in the minds and hearts of the
employees and the customers (Ferguson, 2019). This strategic change in the vision of
Walmart is a sign that the organization is open to the adoption of the changes in the
competitive landscape of the retail industry.
MISSION

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The mission statement of Walmart has been focused on saving the money of the individuals
and the customers such that they can live better. This mission established by the
organization is being fulfilled by the lower selling prices for the products provided by the
organization (Ferguson, 2019). The customers can save the money by making the same
purchases from the stores of Walmart rather than its competitors.
COMPETITIVE STRATEGIES ADOPTED BY WALMART
The competitive strategies adopted by Walmart could be analysed by using Michael porters
generic strategies.
Figure 1 Michael porters generic strategies
(Nickols, 2016).
Walmart uses the cost leadership generic strategy for gaining a competitive advantage
within the industry. This strategy leads the organization to achieve cost minimization for
achieving financial advantages. This would be advantageous for the organization in terms of
lower selling prices and profit maximization (Gupta, 2018). For this reason, it is required by
the organization to achieve stringent measures for reducing the costs. This strategy is in line
with the vision and mission of the organization of using the lower prices for becoming the
one-stop shopping destination of the customers (Chowhan, 2016).

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ANALYTICAL APPROACH FOR UNDERSTANDING PERFORMANCE
MEASUREMENT
ORGANIZATIONAL CULTURE OF WALMART
The organizational culture of Walmart majorly has four main components, which guide the
behaviours of the employees and also aim at determining the organizational capabilities for
adding value to the retail services provided by Walmart (Lombardo, 2019).
Figure 2 Organizational culture at Walmart
(Lombardo, 2019)
The major components of the organizational culture of Walmart are:
 Respect to the individuals and also recognizing the contribution of each employee in
the success of the business.
 Providing services to customers and prioritizing them for conducting the operations.
 Performing actions with integrity by promoting honesty, impartiality, integrity and
fairness in the decision-making process (Spicer and Hyatt, 2017).
 Striving for excellence by focusing on the performance of teams, individual workers
and the entire organization.
ORGANIZATIONAL STRUCTURE OF WALMART

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Organizational structure is also of key importance in gaining an understanding of
organizational performance (Winnubst, 2017). The organizational structure of Walmart
could be understood at two different levels.
Figure 3 organizational structure at the top executive level
(Lombardo, 2019)
Figure 4: Organizational Structure at the Operational Level
(Lombardo, 2019)
From the above two figures, it is evident that Walmart has adopted a hierarchical functional
organizational structure. This structure consists of two distinct features which are the

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function based and the hierarchy. The hierarchy feature adopted by the organization
requires the command and authority over the vertical lines within the organization. The
functional based structure is aimed at categorizing the employees in different groups based
on their functions (Spicer and Hyatt, 2017). The company has established numerous
function based departments such as for human resource management, information
technology, marketing and others. By adopting this organizational structure, the
performance of the organization has been improved to a larger extent as the corporate
managers become capable of easily influencing the entire organization (Lombardo, 2019).
The hierarchical structure also helps in exercising efficient monitoring and controlling
process, which in turn ensures enhanced organizational performance.
PERFORMANCE REVIEW PROCESS OF WALMART
The performance of the employees at Walmart is being accessed by using the SMART
acronym. This means that the employee's performance is measured on five parameters
namely specific, measurable, action-oriented, realistic and time-bound (Kajalo and
Lindblom, 2015). The organization strongly believes in the fact that undertaking a regular
performance review for the employees would make them conscious about their
performance and would be helpful in measuring their performance against the established
standards (Ho et al., 2019).
Walmart also uses a unique strategy called management by walking around. This strategy is
useful for management in managing its operations and enhancing employee engagement.
The managers interact with different employees personally for addressing the concerns
faced by them during the job, if any. The organization has also strongly believed that the
mere pay is not sufficient for engaging the employees, rather the company should focus on
other positive reinforcement techniques (Nygaard et al., 2017).
FINANCIAL PERFORMANCE MEASUREMENT
From the annual report of the company, it is evident that the financial performance of
Walmart is enhancing year on year. In the financial year 2018, the organization was in a very
strong financial position. For the first time in history, the revenue of the company had
crossed USD 500 billion. Also, the e-commerce sales of the organization grew by 44% with

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an operating cash flow of USD 28.3 billion. The enhanced financial performance of Walmart
can also be seen from the decision of the organization to return the revenues amounting to
USD 14.4 billion to its shareholders in the form of share repurchases and revenues.
476294
485651
482130
485873
500343
460000
465000
470000
475000
480000
485000
490000
495000
500000
505000
2014 2015 2016 2017 2018
Revenues of Walmart (USD million)
(Annual report, 2018)
BALANCE SCORECARD METHOD
With the objective of gaining a critical understanding of the performance measurement of
Walmart, the balanced scorecard method would be utilized. The balance scorecard method
takes into consideration four major perspectives which are:

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Figure 5 Balanced Scorecard
(Shen et al., 2016).
The balance scorecard method adopted for Walmart is as follows:
FINANCIAL CUSTOMERS
 The major objective of increasing
revenues for per unit of total assets
and employees and also increasing
the overall return on investments
 Adopting cost leadership strategies
with the aim of accomplishing the
established objectives(Shamekhi et
al., 2018)
 Focus on controlling the costs
 Walmart has been successful in
providing a seamless experience to
the customers through all channels
such as mobile applications, in-store
experience and others (Turner et al.,
2016).
 The objective of increasing the
customer base and customer rating
and reducing the total number of
customer complaints
 Providing products at low cost to
customers for satisfying them
ORGANIZATIONAL CAPACITY INTERNAL PROCESSES
 Aims at providing training to
employees and reducing the overall
employee turnover rate
 The employees will be motivated
 Focus on reducing the total
administrative experience, lead time
for online orders and waiting time for
customers at the billing counter by

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which would further help Walmart in
controlling the overall costs
(Shamekhi et al., 2018).
adopting the cost leadership strategy
(Turner et al., 2016).
 Smooth and efficient processes help
Walmart in gaining the trust of
customers by providing them with
timely services

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PERFORMANCE MANAGEMENT BY WALMART AND MEASURES OF
PERFORMANCE IMPROVEMENT
INTRODUCTION OF SUSTAINABILITY INDEX PROGRAM
In Walmart, a need was felt for developing an index, which would be capable of improving
the sustainability of products which are being served to customers by integrating
sustainability with the core business operations. The organization is constantly focusing on
broadening and accelerating the commitment towards sustainability all across its supply
chain and by means of the products merchandised by the company (Walmart’s
Sustainability Index Program, 2018). For this reason, Walmart has introduced a sustainability
index, which is helpful for the organization and its suppliers in understanding the strengths
and gaps for the identification of the potential opportunities within the supply chain. Under
this performance management tool, the following is being included currently:
Figure 6 Components of Sustainability Index Program
(The Walmart Sustainability Index, 2013)
With the objective of further improving this process, the results obtained from the index are
being integrated with the core business process of merchandising. This helps in reinforcing
sustainability to the image of the company as a merchant. The scores of the sustainability
index serve as a tool which aids the discussions between the suppliers and the buyers,
majorly in the key business processes (The Walmart Sustainability Index, 2013).