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Team Leadership Memo

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Organizational Planning

Mario S Surla

MGT/521

April 9, 2014
Donald Ratliff

Organizational Planning

Wal-Mart is an American multinational retail corporation and the top retail store with the lowest prices in the world. It is the biggest private employer and the largest public corporation with over two million employees worldwide. There are approximately 245 million customers and members that visit Wal-Mart each week, globally. It has stores in 27 countries and sales in 2013 were $466 billion. Wal-Mart’s mission statement of having the lowest prices is consistent with controlling cost, innovation and continuous improvement (Fortune 500, 2014). One of the strategic plans of Wal-Mart is to bring back “Made in America” products (“Time”, 2014). One of the reasons for having low prices is because Wal-Mart’s global out-sourcing. Goods and products that are made and bought overseas are cheaper. However, higher and increasing shipping costs, high global oil prices and wages overseas, translated to costlier fuel for ships and airplanes. There are also supply interruptions overseas as the middle class is growing and local demands are increasing in developing countries. This prompted Wal-Mart to re-evaluate its sourcing ways on variety of products. As you know, Wal-Mart does not produce goods or products but this giant retailer is playing a part in the manufacturing rebound in the U.S. It promised to buy $50 billion of U.S. goods over the next 10 years and is committed in keeping lower prices through renewed economic and manufacturing strategy (“Time”, 2013).
The operational plan to lower costs is through the distribution system. An operational feature that Wal-Mart championed is its cross-docking inventory system. A process of moving material from the receiving dock to the shipping dock, bypassing storage. This process reduces inventory costs, transportation expenditures, and costs that are associated with material filling, labeling and packaging. It was an efficient and effective way to transport goods that ultimately reduces costs. Cross docking goods can be transported to stores rapidly, bypassing stock account, cutting cost and eliminating extra expenses ("Arkansas Business", 2012). The cost savings is pass down to the consumers. Wal-Mart will still rely on foreign suppliers for some that have a high labor input such as clothing. What Wal-Mart is analyzing is what U.S. made products will benefit this strategy? The company decided to procure products that are big and bulky such as furniture and products that can be quickly produce to meet demand. Apple is now producing computers and I Pods in the U.S. Camping and outdoor goods are also participating in this strategy. Other companies have joined in the Made in America program. What effects of planning decisions on the internal and external stakeholders?
The stakeholders both internal and external have strong influences on

the organizational planning (Frooman, 1999).

The strategy will provide more stable jobs for the employees in the U.S. Their wages and benefits will increase that makes the economy stronger and a low unemployment rate. Additionally, Wal-Mart started a campaign in putting veterans to work. It is noble and this initiative will put our hard working veterans who have outstanding work ethics, teamwork and dedication. This helps the company provide outstanding customer service, attract new customers and retain existing ones. The shareholders will experience both positive and negative effects on the strategy. The positive is increase in savings and lower costs that may motivate them to invest in other companies to open new businesses. This will also have a positive effect on unemployment and a strong economy. For the external stakeholders, the customers can expect good value for their dollar, high quality products, great service and continued and consistent low prices. Producers and suppliers, given this opportunity, will be driven to produce quality products, promote best practices and respect environmental conditions such as using sustainable energy and dealing with waste responsibly. The communities that Wal-Mart serves will benefit tremendously. More jobs are created and from a customer stand point, more choices in products, low prices on brand names compared to other stores. This lower prices attracts competition with other retailers, resulting in lower prices, overall (Noblit, 2014). Wal-Mart is a powerful retail brand. It has a reputation for value for

money, convenience and a wide range of products all in one store.

It has grown substantially over recent years, and has experienced global expansion. The culture of hard-work, innovation and continuous improvement in this dynamic global economy makes Wal-Mart a successful organization. A sophisticated distribution system that tracks inventory has tremendously improved its efficiency and productivity, It continues to shift the low cost advantage and availability of products to the customers at lower prices and in the number one Fortune 500 company (“Fortune 500”, 2013).

References
Arkansas Business. (2012). Retrieved from

http://www.arkansasbusiness.com/article/85508/wal-mart-used-technology-to-

become-supply-chain-leader?pae=all

Fortune 500. (2013). CNNMoney, (), .

Retrieved from http://money.com/magazines/fortune500/2013/full_list/

Frooman, J. (1999, April). Stakeholder's Influence Strategies. Academy of Management. The Academy of Management Review, (), 191- 205.
Noblit, J. (2014, April 9). Experts say Wal-Mart delivers both positives, negatives.

This Week Community News. Retrieved from http://www/thisweeknews.com

Time. (2013). Retrieved from http://business.time.com/2013/01/16/is-walmarts-buy-americans-veterans-initiative
Time. (2014). Retrieved from http://business.time.com/made-in-the-u-s-a/

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