Walmart: Organizational Behavior

WAL-MART: Organizational Behavior Concepts

Introduction

Wal-Mart has been in business since 1962. Founded by Sam Walton, the company only showed major success in the 1980’s. Sam’s club was opened in 1983, and the first Supercenter opened in 1988. Through it all, the company has struggled to maintain a positive image while experiencing some opposition and bad press. This image is based on the principals of: respect for the individual, service to the customer, and strive for excellence. These beliefs are what help promote and build the illusion of integrity and ethical conduct that is the foundation of Wal-Mart. However, there is another side to this major multinational retail corporation. By examining Wal-Mart’s approach to decision-making, organizational structure, and organizational culture, one will see how this multinational company has succeeded and failed in some areas of business.

Decision-making

We will examine the role of perception in the decision-making process and examine how perception allows individuals to organize and interpret their sensory impressions. People have perceptions in order to give meaning to their environment. However, perceptions can be significantly different from reality. For example, one may see a person kneeling in an airport and hear them mumbling in a foreign language. After the September 11, 2001 attacks in New York and Washington D.C. by airplanes, one would probably perceive this man as a threat; however, this man is only performing his daily commitment to prayer.

Critical errors in perception can be extremely costly to any manager during his decision- making process. To understand the role of perception in the decision-making process, one must first understand how perceptions are shaped and formed.

There are several factors that shape and sometimes distort perception. These factors can lie within the perceiver, in the target or object being perceived, or in a situation where a perception is made. There are several personal characteristics of the perceiver that affect perception. Some of these characteristics include attitudes, interests, personality, and past experiences. If one perceives young people to be lazy slackers then one may perceive young people as lazy slackers regardless of actual personality and work habits.

Individual decision-making is an important part of organizational behavior. The method in which individuals in organizations make decisions and the quality of final decisions are mostly influenced by their perceptions. Generally, decision-making is a necessary reaction resulting from a problem. For instance, Wal-Mart wanted to get approval from the government to establish a bank; however, they failed to get approval for the bank. Opposition to its plans swelled with dozens of banking and corporate watchdog groups testifying at hearings in Washington D.C. As a result of this failure, top management was faced with a decision: give up their vision for a bank or find a way to establish banking services without needing government approval. The huge discount retailer found a way to build one without government approval. The company plans to provide money centers that offer check cashing, money orders, and bill paying services in at least 1,000 stores over the next year. Wal-Mart also plans to introduce a prepaid debit card, intended for low-income consumers. (Barbaro, M., Dash, E., 2007).

The decision makers within Wal-Mart clearly had a perception that they could make an end run around the federal government. Products like the debit cards will be offered through third-party partners, which will allow Wal-Mart to sell banking services without a government license. This decision by Wal-Mart executives clearly reflected a rational decision-making process. The executives made a consistent, value-maximizing choice within specific constraints. There are six steps involved with the rational decision-making model. (Robbins, S.P., 2005).

The model starts with defining the problem. Decision makers within Wal-Mart identified the problem with obtaining government licensing for operating a bank. Often poor decisions can be traced to decision makers identifying the wrong problem or overlooking the real problem. Executives clearly recognized the correct problem in this case then identified the decision criteria important in solving the problem.

Second, identifying the decision criteria brings the decision makers values, personal preferences, and interests into the decision-making process. The third step requires the decision maker to weight the decision criteria in order of importance to give the most important criteria priority in the decision-making process. The fourth step requires the decision maker to generate possible alternative solutions that could lead to successful resolution of a problem. After the alternatives have been listed, the decision maker must critically evaluate and analyze each option by rating each alternative on each criterion. Strengths and weaknesses of each alternative become clear as it is compared with the criteria and weights established in the second and third steps.

The sixth and final step in this decision-making model requires the decision maker to select the best alternative that yields the highest perceived value.

This is accomplished by evaluating each alternative against the weighted criteria then selecting the alternative with the highest total score.

Wal-Mart displayed another critical component to effective decision-making by displaying creativity in developing alternative solutions to their problem. Wal-Mart’s pricing power and daily foot traffic will be huge in comparison to most check-cashing outlets, credit unions, and convenience stores that offer similar services and products. Jane J. Thompson, the president of Wal-Mart financial services, said the new financial products will provide “healthy margins.” She also expects the overall business to grow 30 to 40% over the next year. (Barbaro, M., et. Al., 2007).

Peoples behavior is often based on what they see or believe their external environment to be rather than on their actual external environment. Executives and employees perception of a situation is the catalyst for her behavior and decision-making. Individuals normally use reason and think prior to acting on a thought. Understanding how people make decisions can be helpful in explaining and predicting behavior.

In order to improve decision-making in any organization, managers must first correctly analyze situations and adjust his decision-making style to the culture one is operating in. Second, one must be aware of biases then attempt to minimize their impact. Third,