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MNG3702 ASSIGNMENT 2 OF SEMESTER 1
UNIQUE CODE: 575654
Question 1 What is Walmart and what is its vision and mission? Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. The company was founded in 1950 by Sam Walton in Bentonville, Arkansas. Today, Walmart is the largest retailer in the world. Walmart's vision is to be the best retailer in the hearts and minds of consumers and employees. Its mission is to save people money so they can live better lives. The company achieves this by selling commodities at reduced prices, which helps consumers save money. Walmart's values are service to the customer, respect for individuals, striving for excellence, and action with integrity. The company fosters a culture of integrity and upholds policies for ethical behaviour everywhere they have operations. Walmart's leadership is committed to sustainable practices and has taken measures to become more ethical, socially, and environmentally responsible. In 2010, Walmart acquired majority shareholding (51%) in Massmart Holdings Ltd, a South African retail group that owns brands such as Game, Makro, Builders, and Cambridge Foods. Walmart's business strategy is based on cost leadership, with the aim of offering the widest choice of products for the cheapest price while giving customers the opportunity to choose the most convenient channel to facilitate the purchase. Organizational culture is the shared values, beliefs, and assumptions that shape how people behave and interact within an organization. There are typically three layers of organizational culture that shape how an organization operates:
culture can help leaders to identify areas where culture may be creating challenges, and develop strategies to strengthen and leverage the positive aspects of their organization's culture. Answer option two: P. Venter (2022) explained the three layers of organizational culture as follows:
- Visible artifacts: This is the outermost layer of organizational culture and refers to the visible and tangible aspects of the organization, such as its physical environment, dress code, rituals, symbols, language, and behaviour. These artifacts are easily observable and provide a glimpse into the organization's culture, but they are not necessarily representative of the underlying values and assumptions that guide behaviour.
- Values and norms: The second layer of organizational culture refers to the organization's shared values and norms, which guide behaviour and decision- making. These values and norms are often communicated through stories, myths, and legends, and are reinforced through reward and punishment systems. This layer of culture is less visible than the artifacts layer but is more deeply embedded in the organization's identity and can be difficult to change.
- Taken for granted assumptions: The third and deepest layer of organizational culture consists of the taken-for-granted assumptions and beliefs that are so deeply ingrained in the organization's members that they are often unconscious and unquestioned. These assumptions form the basis for how the organization understands and interacts with the world and are often linked to its core purpose and mission. Changing these assumptions is extremely difficult and requires a significant shift in the organization's identity and worldview. Overall, these three layers of organizational culture are interconnected and influence each other. Understanding and managing organizational culture requires an awareness of all three layers and a willingness to engage in a long-term process of change and transformation. Applying it the Walmart case:
- Operating processes layer: Walmart's operating processes layer involves the company's daily operations and processes to fulfil its mission and vision. Walmart's focus on offering low prices and providing customers with the convenience of choosing the most convenient channel for purchase has driven the company's business strategy. Walmart's operations are efficient and highly effective in providing low prices to its customers, which is enabled by economies of scale.
- Culture and values layer: Walmart's culture and values are essential to its success. The company has a culture of integrity, and its values are based on respect for individuals, service to the customer, striving for excellence, and action with integrity. Walmart has policies for ethical behaviour, which are upheld globally.
- Leadership and strategy layer: Walmart's leadership and strategy are built around sustainable leadership principles, where the company has been implementing measures to become more ethical, socially, and environmentally responsible since 2005. Walmart's strategy is based on cost leadership, which involves the constant improvement of assortment, price, and access to offer the widest choice of products for the cheapest price, along with giving customers the opportunity to choose the most convenient channel to facilitate the purchase. The strategic level management consistently aims to associate Walmart's competitive advantage with price, access, assortment, and experience. Question 2 2. Absorptive capacity is the ability of an organization to recognize, assimilate, and apply new knowledge or information. It involves the organization's ability to acquire,
Additionally, the company has a strong culture of data-driven decision- making, which allows it to quickly process and understand new information.
- Transformation: Walmart has shown a willingness to make significant changes to its operations based on new information. For example, the company's sustainability initiatives have involved significant investments in renewable energy and more efficient supply chain practices. These efforts demonstrate a willingness to fundamentally transform the way the company does business.
- Exploitation: Finally, Walmart has been successful in leveraging new knowledge and information to create business value. For example, the company's sustainability initiatives have not only improved its environmental performance but have also led to cost savings and increased customer loyalty. Additionally, Walmart has been able to use its size and scale to influence suppliers and partners to adopt more sustainable practices, creating additional business value. Overall, based on these four dimensions, it can be concluded that Walmart has a relatively high level of absorptive capacity. The company has demonstrated an ability to acquire, assimilate, transform, and exploit new knowledge and information to create business value. Question 3 3. According to Practising Strategy by P. Venter (2022), there are six levels of commitment that organisations can move through in response to the challenges of responsibility and sustainability:
- Compliance: At this level, organisations are simply meeting the minimum legal requirements and industry standards. They are doing what is required of them, but no more.
- Efficiency: Here, organisations are taking steps to reduce their environmental impact and operate more efficiently. This might include initiatives to reduce waste or energy use, or to improve supply chain management.
- Risk management: At this level, organisations are taking a more proactive approach to identifying and managing sustainability risks. They are looking beyond their own operations to consider the impact of their entire value chain.
- Reputation: Organisations at this level recognise the importance of sustainability to their reputation and brand. They are implementing sustainability initiatives not just to mitigate risks, but to build positive relationships with stakeholders and enhance their public image.
- Innovation: This level involves actively seeking out new opportunities to create value through sustainability. Organisations are looking for ways to use sustainability as a driver for innovation and growth, and are investing in research and development to support these efforts.
- Leadership: At the highest level of commitment, organisations are demonstrating leadership in sustainability. They are setting ambitious goals, driving systemic change across their industry, and using their influence to advocate for sustainability on a broader scale. By moving through these levels of commitment, organisations can progressively deepen their engagement with responsibility and sustainability, and create greater value for stakeholders over the long term. 3. Based on the actions taken by Walmart, it can be argued that the company has moved through different levels of commitment towards responsibility and sustainability. In the early years, Walmart's commitment to sustainability was limited and mostly driven by cost savings. However, in recent years, the company has significantly increased its commitment to sustainability and has made several ambitious goals, such as achieving 100% renewable energy and zero waste.
to assess whether its assumption that it can increase its imports into the country without causing job losses or declines in local manufacturing is still valid.
- Implementation control: This type of control involves ensuring that the organization is effectively executing its strategy. It focuses on monitoring the progress of the organization's plans and taking corrective action when necessary. In the case of Walmart's acquisition of Massmart, implementation control would involve monitoring the company's performance in South Africa and making adjustments as needed to ensure that its strategy is effectively executed.
- Strategic surveillance: This type of control involves continuously scanning the environment for changes that could impact the organization's strategy. It focuses on identifying new opportunities and threats and adjusting the organization's strategy accordingly. For example, Walmart would need to engage in strategic surveillance to identify any changes in the South African retail market that could impact its operations.
- Special alert control: This type of control involves taking immediate action in response to unexpected events or crises that could threaten the organization's strategy. It focuses on quickly identifying and addressing problems before they escalate. In the case of Walmart's acquisition of Massmart, special alert control would be necessary if unexpected events, such as political instability or natural disasters, were to occur in South Africa that could impact the company's operations. Walmart's acquisition of Massmart in South Africa raised concerns from the SACCAWU labour union, which feared the potential loss of jobs and decline in local manufacturing and production due to the entrance of Walmart into the country's retail market (Van den Heever & Steyn, 2013). To address these concerns, Walmart could use the four types of strategic control as outlined by Venter (2022). Premise control involves regularly reviewing and assessing the assumptions and beliefs underlying the organization's strategy. Walmart could conduct assessments of its assumptions and beliefs about the South African retail market to determine potential impacts on local businesses and jobs.
Implementation control involves monitoring the progress of the organization's plans and taking corrective action when necessary. Walmart could establish KPIs to track its progress in South Africa and ensure that its strategy is effectively executed. Strategic surveillance involves continuously scanning the environment for changes that could impact the organization's strategy. Walmart could engage in ongoing monitoring and analysis of the South African retail market to identify new opportunities and threats. Special alert control involves taking immediate action in response to unexpected events or crises that could threaten the organization's strategy. Walmart could establish contingency plans and response protocols in the event of unexpected events or crises in South Africa, such as supply chain disruptions or labour disputes (Hill, Jones, & Schilling, 2021). Answer option two: When Walmart acquired a majority stake in Massmart in 2011, it faced opposition from the South African Commercial, Catering and Allied Workers’ Union (SACCAWU). The union's concerns included potential job losses and the negative impact on local manufacturing and production. Specifically, SACCAWU believed that Walmart's entry into the South African market would lead to the closure of local businesses and an increase in imports by Walmart, which would result in the loss of jobs for South Africans. In response to the concerns raised by SACCAWU and other stakeholders, Walmart implemented various strategic controls to mitigate the potential negative impact of the acquisition on the South African economy. These strategic controls include:
- Operational controls: These are designed to ensure that day-to-day operations are aligned with the company's strategic goals. Walmart implemented various operational controls to ensure that it maintained its commitment to providing affordable products to customers while also supporting local suppliers and manufacturers. For example, Walmart set up a program called "Supplier Development" that provided training and support to local suppliers, helping them improve their product quality, increase their production capacity, and meet Walmart's global sourcing standards. This
The type of strategic control applicable to South African businesses that were threatened by Walmart entering the local market is premise control. This involves regularly reviewing and assessing the assumptions and beliefs underlying an organization's strategy, and in this case, Walmart could have conducted regular assessments of its assumptions and beliefs about the South African retail market to determine the potential impacts on local businesses and jobs. This would have allowed the company to proactively address any concerns and implement appropriate measures to mitigate negative effects on the local market. Venter (2022) provides a framework for the four types of strategic control, which includes premise control as one of the key types. This approach emphasizes the importance of monitoring and reassessing assumptions and beliefs to ensure that a company's strategy remains relevant and effective in the face of changing circumstances. The type of strategic control applicable to South African businesses that were threatened by Walmart entering the local market is a defensive strategy. Defensive strategies are designed to protect a company's market share, profitability, or competitive advantage against external threats. In the case of Walmart's entry into the South African market, the threat was the potential loss of customers and revenue for local businesses. Here are some examples of defensive strategies that Walmart used to mitigate the potential negative impact of its entry into the South African market:
- Price competition: One way Walmart competes is through its pricing strategy. It is known for offering low prices to customers. To mitigate the potential negative impact of its entry into the South African market, Walmart continued to offer competitive prices to South African customers. This helped it to attract customers who were looking for affordable products.
- Supplier Development Program: As mentioned earlier, Walmart set up a Supplier Development Program to provide training and support to local suppliers. This program helped local suppliers improve their product quality,
MNG increase their production capacity, and meet Walmart's global sourcing standards. This enabled local suppliers to compete with Walmart's suppliers and maintain their market share.
- Local Advisory Board: Walmart set up a Local Advisory Board made up of South African business leaders, labour representatives, and other stakeholders. The board provided advice and guidance to Walmart on how to best support local suppliers and manufacturers. This enabled local businesses to have a voice in how Walmart operated in the South African market and ensured that Walmart's entry into the market did not harm local businesses. Defensive strategies were applied by Walmart in response to the potential negative impact of its entry into the South African market on local businesses. Defensive strategies are designed to protect a company's market share, profitability, or competitive advantage against external threats (Stonehouse et al., 2018). Walmart's pricing strategy is well-known for its low prices, which helped it to attract customers who were looking for affordable products in South Africa (Makgetla, 2011). Additionally, Walmart set up a Supplier Development Program to provide training and support to local suppliers, which helped them improve their product quality, increase their production capacity, and meet Walmart's global sourcing standards (Massmart Holdings Limited, 2014). This program enabled local suppliers to compete with Walmart's suppliers and maintain their market share. Moreover, Walmart established a Local Advisory Board comprising South African business leaders, labour representatives, and other stakeholders, who provided advice and guidance to Walmart on how to best support local suppliers and manufacturers. This approach ensured that Walmart's entry into the South African market did not harm local businesses (Massmart Holdings Limited, 2014). Overall, Walmart's defensive strategies helped it to mitigate the potential negative impact of its entry into the South African market on local businesses. By continuing to offer competitive prices, supporting local suppliers, and engaging with local stakeholders, Walmart was able to maintain its market share while also contributing to the local economy.
In conclusion, Venter (2022) outlines the five different types of strategic change, namely incremental change, transitional change, transformational change, developmental change, and turnaround change. Each type of change is aimed at achieving different objectives, and the appropriate type of strategic change will depend on the organization's specific circumstances and goals. 5. In the given passage, Doug McMillon, the President and CEO of Walmart, discussed the company's growth strategy and various types of strategic changes that Walmart plans to introduce in order to meet the evolving needs and preferences of its customers. Based on the passage, the following are the various types of strategic change that Doug McMillon introduced:
- Investment in new capabilities: Walmart plans to invest in new capabilities to improve the customer experience at all Walmart stores. This may involve introducing new technologies, processes, or tools to better serve the changing customer and create a next-generation customer proposition.
- Improvements in customer dimensions: Walmart plans to improve on four key customer dimensions – price, assortment, experience, and access. McMillon explained that customers make their shopping decisions based on these dimensions, and Walmart needs to compete across these dimensions by changing what they can offer customers.
- Redefining the ways customers access Walmart: McMillon noted that the ways customers access Walmart is being redefined, and that the future of retail is not just in-store and not just online. Walmart plans to integrate digital and physical retail to give customers the choices they want and need.
- Enterprise-wide approach: Walmart plans to take an enterprise-wide approach to its growth strategy. The internet, mobile, data, and technology present opportunities across the world and across Walmart's businesses to better
serve the changing customer. Walmart plans to take a fresh look at where it wants to play, what businesses, markets, formats, and services it needs, and how to win with a customer value proposition.
- Capital discipline: Walmart plans to change the mix of its capital spend through reductions in areas it has historically invested in to fund investments in new growth opportunities. Specifically, Walmart will moderate the growth of investments in stores and increase its investments in e-commerce. In summary, the strategic changes that Doug McMillon introduced include investment in new capabilities, improvements in customer dimensions, redefining the ways customers access Walmart, an enterprise-wide approach, and capital discipline. 5. One best-practice model of planned change that could be used to implement the strategic changes identified by Doug McMillon is Lewin's Change Management Model. This model is a three-stage process that involves unfreezing, changing, and refreezing.
- Unfreezing: This stage involves creating a need for change and preparing the organization for change. McMillon has already identified the need for change, but this stage involves communicating the need for change to stakeholders, identifying potential resistance to change, and creating a sense of urgency.
- Changing: This stage involves implementing the change. This may involve introducing new processes, systems, or structures, as well as providing training and support to employees. McMillon's changes may involve restructuring the organization, introducing new technology, and changing the company culture to be more customer centric.
- Refreezing: This stage involves reinforcing the change and making it a permanent part of the organization's culture. This may involve embedding the
Overall, these changes were aimed at making Walmart a more competitive, customer-focused, and sustainable company. They required significant investment and a willingness to adapt to changing market conditions. Question 6 6. The purpose of corporate governance guidelines (King III Code in South Africa) is to enable organisations to manage themselves more sustainably and accountably. It provides a structure through which corporations set and pursue their objectives , while reflecting the context of the social, regulatory and market environments 6. The King Report on Corporate Governance in South Africa has identified three value dimensions that contribute to good corporate governance. These three value dimensions are as follows:
- Ethical Leadership: This value dimension emphasizes the importance of ethical and responsible leadership to ensure that an organization operates in an ethical and socially responsible manner. It requires that leaders set the tone for the rest of the organization by leading with integrity, being transparent, and demonstrating a commitment to ethical values. Ethical leaders are accountable for the performance of the organization and ensure that it is sustainable in the long term.
- Sustainability: This value dimension recognizes the importance of creating a sustainable business that balances economic, social, and environmental factors. It requires that organizations consider the long-term impact of their decisions and actions on stakeholders, including employees, customers, suppliers, and the environment. Organizations must take a responsible approach to their use of natural resources and ensure that they are not compromising the ability of future generations to meet their own needs.
- Corporate Citizenship: This value dimension emphasizes the importance of businesses being responsible corporate citizens by contributing to the social and economic well-being of the communities in which they operate. This requires that organizations engage with their stakeholders and act in a way that benefits the wider community, as well as the organization itself. It includes supporting social development, education, and environmental sustainability, and contributing to economic growth and job creation. In summary, the three value dimensions of the King Report on Corporate Governance emphasize the importance of ethical leadership, sustainability, and corporate citizenship, as essential components of good corporate governance. These value dimensions encourage organizations to operate in a responsible and sustainable manner that creates value for all stakeholders. Alternative answer: The King Report on Corporate Governance, first published in 1994 by the King Committee on Corporate Governance, has become a global benchmark for comprehensive corporate governance. The report has undergone three revisions and is renowned for its inclusive approach. The report identifies three value dimensions that are essential to corporate governance: (1) the ethical foundation of governance, (2) the economic foundation of governance, and (3) the social foundation of governance. These three dimensions are interrelated and contribute to creating a sustainable governance framework that considers the interests of all stakeholders involved. (Venter, 202 2 ). The King Report on Corporate Governance identifies three value dimensions, namely, transparency, accountability, and fairness.