Organizational Function

Bobby Davis

MGT/230

January 4th, 2014
Professor Vermuth

Organizational Function

The organizational structure of a company is the structure of business it plans to operate with and is typically estimated to be the most efficient for the company’s objective. The point of this organizational structure is to allow the company to collaborate on different levels to operate as a one entity or multiple entities. When a company is looking at a structure, it looks for the most efficient ways to categorize the company’s divisions, departments, and partnerships in a way to produce the most return on investment.
Walmart and More Walmart was founded in 1962 by Sam Walton. He opened the first Walmart in Rogers, AK. Walmart incorporated in 1969 under the name Walmart Stores, Inc. With more than 245 million customers, the most efficient organizational structure may not be obvious. Today Walmart has over 11,000 stores in 27 countries. Employing 2.2 million people worldwide and generating revenue above $466 billion ("Walmart.com", 2013). Walmart has three separate divisions, two of which are in the United States; Wal-Mart and Sam’s Club. The third division is the international division which operates stores internationally. Examples of some companies that use a different approach are Starbucks and Dunkin Donuts. These two use a matrix style organization; there are multiple U.S. divisions, broken up into different geographic territories. Matrix structuring maximizes communication lines so the delivery of a fast changing product can be achieved. Also, the advantage of a matrix-style structure is the ability to accommodate Human Resources needs in all the different areas that service and products are provided. The divisional structure that Walmart uses has proven effective in today’s economy with thousands of different products in each store. Walmart is very large and the divisional structure supports its size. Walmart is one of the largest retail stores in the world, and became this large in less than 65 years.
International Entry There are numerous ways to enter a market, but for each company, the experiences will vary greatly. For example, Walmart partnered up with a company to open its first international store in Mexico City in 1991. Cifra was a partner that helped Walmart test out some of the differences in the market including cultural differences ("Walmart.com", 2013). The products will be different in each area of the country; the geographical location of each location will have a different level of demand for different products. This concept is also realized internationally. Partnering with a host company is an ideal way to feel out a market while sharing liability with the local host. For companies that are based on brand-name products, entering into a new state or country can be quite challenging, especially internationally. Effects of the different Organizational Functions. There are many different effects and side-effects of each organizational structure. With Walmart, considering the massive array of branding, marketing, and culturally sensitive material this multi-billion dollar a year company manages, the structure will determine how efficiently the company handles it. Walmart’s divisional structure helps it maintain a vast array of products to suit people of all classes, incomes, and types. Although Walmart tends to sell to the lower and middle class, Walmart also builds stores in areas pre-dominantly upper-class which confirms the benefit of the divisional structure. The ability to get low prices on multiple lines of products that are of moderate quality is one of the benefits. One disadvantage of the divisional structure is the inability to tend to different geographical areas and demographical mixes. Additionally, this structure also makes it hard to tend to the different cultures of some of its international locations. This also affects the hiring and firing process. Not knowing some of the sensitive HR demands in different geographical areas and cultures can cost the company a lot of money. Walmart was sued by the Equal Employment Opportunity Commission for firing a disabled employee ("U.S. EEOC", n.d.). The Wall Street Journal sees the uprising in discrimination lawsuits for Religious reasons (“Religious-Discrimination Claims on the Rise,” 2013). The importance of tailoring to specific issues in each area that your business is located is paramount; the divisional structure is not setup to accommodate these types of issues. Since the divisional structure does not divide itself into functional areas, it has a hard time tailoring to the ubiquitous exposure that Walmart has. The products, markets, and location of each division is far too complex and unwieldy. The matrix structure that Starbuck’s uses has both aspects of structure. Both divisional and functional yet is far too diluted to handle the massive product line that Walmart manages. The functional structure has a group-based function often based on skills required to complete a special type of work. Companies utilizing this structure divide into functional fields like engineering, accounting, human resources, customer service, and more.
Functional Design Organizational design can benefit or compromise the clarity in operations such as reporting, decision making, and work processes. A company with the right design can take advantage of growth and be better prepared for the growing pains that are associated with that growth. The design should include an infrastructure that gives the company the capacity to hire employees. Problems can be burdensome for even the most well designed companies, so a company will need to put a lot of work into the design to minimize the risk of inefficiencies. One benefit from a company that has the right design is a company that can adapt to many different scenarios. Any company that achieves growth will face adversity within the engine of business, adaptability will serve a company in a way to make it flexible and ready to conquer obstacles that it faces. A well-structured design is not only for the customers of the company, but the employees as well. A company that has the upside potential for an employee to be promoted and has a formal advancement structure will motivate employees to excel in their fields to be advanced to the next level. The design of a company is like the DNA in a human being, it must function according to the objective it has set. A professional football player would not be a good one if it had the DNA of a slower, obese individual. Just as a company with a poor design will fail or struggle to achieve its goals.

References Religious-Discrimination Claims on the Rise. (2013, October). Wall Street Journal , (), . Retrieved from http://online.wsj.com/news/articles/SB10001424052702304682504579153462921346076

U.S. EEOC. (n.d.). Retrieved from http://www.eeoc.gov/eeoc/newsroom/release/9-19-11a.cfm

Walmart.com. (2013). Retrieved from http://corporate.walmart.com/our- story/?povid=P1171-C1093.2766-L6

Walmart.com. (2013). Retrieved from http://corporate.walmart.com/our-story/heritage/history-timeline