Organizational theorists agree that organizational change and transformation can be both adaptive and disruptive (Amburgay 51), not mentioning that it often leads to organizational effectiveness or failure. According to Probst & Raisch, “…prior research has shown that organizational changes lead to an immediate increased risk of organizational failure due to the disruption and destruction of existing practices and routines” (93-94).
The researchers believe that a certain organizational identity is fundamentally required to undergo change and transformation effectively, and organizations cannot endure without developing a concrete basis that provides guidance and direction during changing times. Indeed, some rudimentary changes, such as sweeping transformation, change of business model, mergers and acquisitions, entering into a different industry or initiating expansion, always lead to the certain destruction of an organization’s identity, thus increasing the risks for failure.
Other factors come into play in determining the effectiveness or failure of a change process. A study conducted by Haveman on diversification in the savings and loans industry found that a large proportion of organizational change efforts turns out to be ineffective due to lack of adequate harmonization of fundamental components within the organization that ingeniously act as the foundation for the implementation of the change process (50). It is against this backdrop that this study purposes to identify these components within the framework of organizational theory and discuss how these components act to facilitate change and transformation for growth and expansion in Wal-Mart.
Background
Founded in 1962 by American entrepreneur Sam Walton, Wal-Mart has grown to become the behemoth of departmental discount stores not only in the U.S. but also in other locations globally. The company is undoubtedly the world’s largest retailer and public corporation by revenue, with over 4000 stores in the U.S alone, employing an estimated 1.4 million workers (Ailawadi 577). Overall, the company operates 8500 discount stores in 15 countries around the world, with 55 different flagship names.
It is estimated that more than 127 million customers visit Wal-Mart supermarket chain each week, and the company’s 2005 U.S. sales surpassed the next U.S. discount stores combined. Although the company has received more than its fair share of criticisms, particularly from labour groups for its low wage bill (Turock 28), and from small business owners for its tendency to overshadow market competition and driving competitors out of business (Ailawadi et al. 577), its business acumen, competitive advantage, and economic impact are critical factors that cannot be wished away.
Wal-Mart’s operations are largely organized into three divisions and nine different retail formats. The divisions include ‘Wal-Mart Stores U.S., Wal-Mart International, and the value-added Sam’s Club, while the retail formats include super-centres, food and drug stores, small markets, general merchandise stores, cash-and-carry stores, restaurant chain, membership clubs, apparel exhibitions, and soft discount stores’ (Parnell& Lester 14).
Objectives
Taking into account Wal-Mart’s enormous size, increased differentiation and expansion strategies, business analysts have always been at a loss to explain how the company successfully changes its business processes and practices to fit the current situation in the environmental context, remain profitable, and maintain its competitive advantage against a backdrop of intense organizational complexities (Turock 29).
According to Howard, organizational change is a difficult task to undertake, even in organizations with minimal layers of authority and differentiation (23). Yet, Wal-Mart has remained at the forefront of undertaking changes and structural restructurings to meet the needs of the current economic environment and remain relevant to customers in terms of fulfilling their expectations, especially in maintaining the low price model. More importantly, most of the changes and transformations initiated by the company have been successful against a backdrop of numerous failures in other companies (Parnell& Lester 16). This paper, therefore, aims to:
Literature Review
Organization theory concerns itself with a bro
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