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  • 1. UC2F1101 IBM Individual assignment on ODEC 2011Wal-Mart‟s Logo (Walmart,2001)IntoductionWal-mart was formed in 1962 in United States of America. The first Wal-Mart discount storewas opened in Rogers, Ark. The company broadened its business to 276 stores in 11 states by theend of 10 years time. They became an international company in 1991 by opening their Sam‟sClub near Mexico City.The CEO of Wal-Mart Stores is Mike Duke (Wal-Mart annual report, 2011).Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 1
  • 2. UC2F1101 IBM Individual assignment on ODEC 2011Wal-Mart‟s global mission statement. (Wal-Mart annual report, 2011). Wal-Mart’s Objectives. To work with CEO of Wal-Mart US, Bill Simon and his team to achieve positive comparable store sales. To find tremendous opportunity to grow in US through supercenters and new formats, such as Wal-Mart ExpressTM in urban and rural markets. To attract new members through improved member experiences. To recruit, develop, and retain future leaders is important to Wal-Mart success and give importance for women leaders. To expand into new markets through web presence where Wal-Mart does not have physical appearance.Objectives taken from CEO’s statement (Wal-Mart annual report, 2011)Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 2
  • 3. UC2F1101 IBM Individual assignment on ODEC 2011They provide their services to customers 200 million times per week among 9667 retail unitssituated in 28 different countries. The company employee‟s 2.1 million associates around theworld. (Walmart,2001)The company introduced their online store Walmart.com in 2000 where customers could reachproducts easily in a more convenient manner. More than 1,000,000 products are available inWarlmart.com and they provide special offers during holidays (Wal-Mart,2001).(Walmart.com, 2011)Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 3
  • 4. UC2F1101 IBM Individual assignment on ODEC 2011Wal-Mart is a famous company among world that has been using Management by Objectivessystem-MBO for the past years until now (Flood& Flood,2000). The company‟s success alwayshad depended on the way the management handles the new challenging problems that arise in thebusiness world. The company top level managers and employees have been following to achieveset goals which are finalized to reach for the success of the organization. Hence, the assignmentwould be continued on a description of management by objective system with relating on howWal-Mart Company arranges their working system focusing on it. Moreover it would also lookinto some advantages and disadvantages of this system.Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 4
  • 5. UC2F1101 IBM Individual assignment on ODEC 2011SWOT Analysis of Wal-Mart. Wal-mart Strengths Wal-mart Weakness • Customer oriented • No formal mission statement • SAM’S Club customers able to buy in • Membership only for SAM’S Club bulk • Keep poor performing employees on • Supercenters offer one stop shopping hand • Satisfaction guaranteed programs • Old fashioned store policies promoting customer goodwill • Few women and minorities in top • Buy from local merchants when possible management • Stock ownership and profit-sharing with employees • Leads industry in information technology • Ongoing development of its employees • Strong community involvement SWOT Analysis Wal-Mart Opportunities Wal-Mart Threats • Consumers want ease of shopping • Internet shopping growing • Regulation of Wal-Mart pharmacies • Dollar value increasing • Small towns do not want entry of • Similar shopping patterns worldwide Wal-Mart • Retail sales expected to increase • Bad media exposure for Kathie Lee • Environment conscious consumers Brand • Elderly population growing • Variety of competition • Asian market virtually untapped by retail nationally, regionally and locally • European Market untapped by retail • Substitute products more easily because of intense competitionSource taken from (SooperTutorials,2011).Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 5
  • 6. UC2F1101 IBM Individual assignment on ODEC 2011As stated by DuBrin (2008, p.136), „Management by objectives (MBO) is a systematicapplication of goal setting and planning to help individuals and firms to be more productive‟. Itis a system where in which the organizations leading managers set the key objectives that need tobe achieve and those objectives are focused when setting individual goals, so that a noteworthyresult would come which leads to success of the organization (DuBrin, 2008). According toKoontz & Weihrich (2006, p.90), „Management by objectives is a comprehensive managerialsystem that integrates many managerial activities in a systematic manner that is consciouslydirect towards the effective and efficient achievement of organizational and individualobjectives‟. It is known that management by objectives is a widely used system in the world.However, still there is no fixed definition for it. There are various ways in which people definethis system. People see it as a motivational technique, some think it is an appraisal tool andothers refer to it as controlling device. Prior to this it is known that this system is defined andapplied in various ways (Koontz & Weihrich, 2006).Management by objectives consists of four main processes which are known to be establishinggoals, participation of employees in goal setting, creation of plans to achieve objectives andperformance feedback (McMillan,2011). The first process starts when the top management setclear goals and objectives which are regarded to the mission and vision of the organization. Themiddle managers then work with lower level managers to set different departmental goals. Thelower managers or unit managers share this with employees to set individual goals. These goalsare focused to complete the mission and vision. In order to enhance the goals to be effectiveSMART acronym is used to set goals. Where „S‟ indicates specific, „M‟ indicates measurable,„A‟ indicates agreed/achievable, „R‟ indicates realistic and „T‟ indicates time related (MindTools,2011). Specific Measurable Achievable Realistic Time Framed.Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 6
  • 7. UC2F1101 IBM Individual assignment on ODEC 2011Sometimes the goals are not that clearly set that we are not sure when it is achieved. Therefore,Goals need to be specific which means it has to be clearly defined and understood so that theemployees would be able to make sure when it is achieved. Measurable means that the goalsmust contain the amount needed to be achieved. For example for a store they need to specify thepercentage they want to target for sales. The company should target for goals that they arecapable enough to achieve. It is very important that the goals we set should be realistic whichmeans before we set we must make sure whether we have enough energy or talent that is neededto achieve the goal. In other words the company must be a bit honest while in setting up theobjectives or goals. The last one is the time frame given to the goal to be achieved. It acts as amotivating factor so that the people would try to achieve the result within the time given timelimit (Richmond, 2011).In such a way, Wal-Mart has been setting their objectives for the pastyears which made them successful around the world. Their objectives do follow thesecharacteristics that they are being able to achieve those in the time limit given.(Wal-Mart annual report, 2011)The second process is employees participation in the decision making process. This is theprocess where employees and managers work together so that they clearly set the work to bedone in a much effective and efficient manner. Thus making the employees feel satisfied andthey feel they are being valued to share views within the decisions made to the future progress ofthe company. Wal-Mart gives importance to participate their employees in the meetings to sharetheir views. In fact, the company does have „open-door policy‟ where employees can share theirMariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 7
  • 8. UC2F1101 IBM Individual assignment on ODEC 2011view and suggestions to the managers (Wal-Mart, 2011).The founder of the Wal-Mart SamWalton said, „It‟s more important than ever that we develop leaders who are servants, who listento their partners-their associates-in a way that creates wonderful morale to help the whole teamaccomplish an overall goal‟ (Wal-Mart,2011).Suzan Chambers Executive Vice President chatting to associates right before a meeting(Wal-mart,2001).The next process is implementing plans which mean the objectives and set goals are changedinto action. The departmental manager‟s assign employees the task to complete which arealigned to the organizational objectives. This includes the necessary resources being provided toperform the task. Thus a time limit given to perform the task so that the goal set would not go fora waste ( Rahman, 2009).In Wal-Mart even they does the same thing and their managers hadproved that their plans are worth enough. Cathy day a pharmacy manager of Wal-Mart provedthat her plan of action worked best to reach their goal. The pharmacy employees wore pins withthe saying, „Why wait an hour someplace else?‟ Through this phrase being focused their teamworked serving for customers which improved customer service to an excellent level. Thusincreasing the sales by nearly 300% and build customer loyalty too (Wal-Mart, 2001).Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 8
  • 9. UC2F1101 IBM Individual assignment on ODEC 2011The last process is where the employees are given feedback for their performance. Theyfeedback time would be set to an agreed time period which means for example at the year endingperiod. If the feedback is good it would be based on the efficient work, time, and energy givenby the employee to achieve the goal or objective. If the feedback is not good and objective andset goal is not achieved as planned then managers and group member would sit and find out thereason and what was the thing that cause the result like this. They would analyze the case and setnew clear objectives to be attained within a given time period. Through this process theemployees are being informed about their own progress and what else they need to achieve(DuBrin, 2008). Company Wal-Mart also follows the process and it has been shown very clearlythat they provide the employees with required training specifically designed to the particular areawhich the employee works in and also there goal is to provide way for employees to improvetheir ability through giving them the opportunity to gain knowledge from various trainingprograms. Wal-Mart Company make note of that developing their employees is the keyadvantage they gain for the improvement of the service given from the organization (Wal-Mart,2011).Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 9
  • 10. UC2F1101 IBM Individual assignment on ODEC 2011Advantages of using MBO system.No matter which system a company uses they gain some advantages and disadvantages from it.Likewise, Management by objectives also gives some advantages to companies. The systemprovides a very fair way of evaluating the performance of employees. As everyone is given theirindividual goal set with time limit provided to achieve and that particular employee‟sperformance would be judged for the actual completion of goal. Through this the employees inthat organization would feel satisfied for the way them being judged and find that all of them aretreated in the same manner (Archer North,2010).Therefore for a company like Wal-Marthandling a diversified group of employees gain this benefit by using the MBO system.Another benefit is that the system itself forces to bring out clear objectives which make theparticipation and ideas from all levels of the organization. Moreover, all the staffs starting fromhigher to lower management would have a broader knowledge of what to be focused on andachieved (Hahn, 2007). In addition, the high employee involvement makes the employees to besatisfied and committed to the organization. They are happy that they are being involved indecision making to the organization which they feel their work being valued.“We are a stronger team when we include different perspectives and ideas at everylevel and across all areas of our company.”– Mike Duke, President and CEO, Wal-Mart- (Wal-Mart diversity and inclusion report, 2011).Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 10
  • 11. UC2F1101 IBM Individual assignment on ODEC 2011Prior to this, the discussions that are held to set goals would enhance better communication andunderstanding between the managers and employees. Thus, making the employer and employeerelationship better and which make them much easier to solve problems that arise in the workingenvironment (Rahman, 2009).Many huge companies such as Wal-Mart could gain manyadvantages from the management by objectives system. Wal-mart Company that consists morethan 2 million employees worldwide (Wal-Mart,2011), would find this system beneficial forthem in order to maintain the employee satisfaction and commitment.Mike Duke, President and Chief Executive Officer chatting with associates (Wal-Martannual report,2011).Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 11
  • 12. UC2F1101 IBM Individual assignment on ODEC 2011Mostly it also helps the whole organization to have a clear understanding of what is requiredfrom them. Moreover, this system encourages the organizations output in a way that everythinggoes in an organized manner to bring out good revenue for the year. Wal-Mart gains profit byfollowing the MBO system.(Wal-Mart Annual report, 2009)Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 12
  • 13. UC2F1101 IBM Individual assignment on ODEC 2011Disadvantages of using MBO systemHowever, Management by objectives system makes company to face some disadvantages aswell. It makes the whole organization to be more focused in achieving the goals and objectiveswhich sometime makes them to lack behind other important issues unfocused. For example theobjective to be focused can be to „In FY12 we reduce cost to 2% to 4%‟, and to achieve thiscompany might lack behind the maintenance work. Managers being human beings they makemistakes while evaluating the performance in a favored manner. This could be a common issuethat could be seen from the system. There might be a chance where the managers who evaluateemployee performance are not well trained and they just do it without paying much attention asthey are not fully motivated by giving knowledge about the system. This whole problem can leadto low satisfaction level among the employees and may result failure at the end (Hahn,2007).AsWal-Mart being a big successful company they need to focus on minimizing such issues in theirsystem in order to remain competitive and to gain customer loyalty. There might come timeswhen managers fail to give enough knowledge about the philosophy of Management byObjectives. In this case it would lead to a failure of the system as it involves high level ofemployee involvement. While in the process employee‟s performance is being evaluated, theymust know what is required by them and what are the benefits gained from such a system. Thefailure in these steps would not bring the best outcome from the system to theorganization.(Koontz & Weihrich, 2006). Sometimes managers set goal and objectives that aretoo high which makes employees demotivated which may affect the whole work of organization(Hahn,2007). Likewise, there are situations where managers fail to be flexible enough in goalsetting and in performance judgment process which makes employees to progress to the workslower. Thus, management sometimes hesitates to give rewards or promotion to the achievementof goals (McMillan,2011).These common issues should be focused by the management of suchcompanies like Wal-Mart as they follow MBO process.Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 13
  • 14. UC2F1101 IBM Individual assignment on ODEC 2011ConclusionTo conclude, I would like to say that management by objective is an effective system to be usedwhich could bring out various benefits to the organization. However, those companies who usethe system must focus to those issues which may lead to conflict and try as much to minimizethose issues.Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 14
  • 15. UC2F1101 IBM Individual assignment on ODEC 2011ReferencesArcher North, 2010. Results Method: Management by Objectives (MBO). [online] Available at:http://www.performance-appraisal.com/results.htm [Accessed 18thAugust 2011]ArticlesGratuits.com, 2007. Management by Objectives. [online] Available at:http://en.articlesgratuits.com/article.php?id_article=1443 [Accessed 20th August 2011]Career-intelligence.com, 2011. Setting SMART Goals: A better way to track your progress.[online] Available at: http://www.career-intelligence.com/management/SmartGoals.asp [Accessed15th August 2011]Daffodil International University Forum, 2009. Management by Objectives. [online] Availableat: http://forum.daffodilvarsity.edu.bd/index.php?topic=305.0#top [Accessed 16th August 2011]DuBrin, A. J., 2008. Essentials of Management. [e-book] Cengage learning. Available at:http://books.google.com/books?id=dNThzoekGQcC&printsec=frontcover#v=onepage&q&f=false[Accessed 17th August 2011]Flood, P. & Flood, P.C., 2000. Managing strategy implementation: an organizational behaviorperspective. [e-book] Wiley-Blackwell. Available at:http://books.google.com.my/books?id=4xe2ZmFpSrgC&pg=PA33&lpg=PA33&dq=walmart+uses+mbo&source=bl&ots=24OVq_2MgZ&sig=DoCJwEcW8G3qp3NO4ZOeBzTADPc&hl=en&ei=y61OTvmWCYvxrQfG0-GZAw&sa=X&oi [Accessed 15th August 2011]Koontz, H. & Weihrich, H.,2006. Essentials of Management: an international perspective.Available at:http://books.google.com/books?id=OSAkMZ3SMQ0C&pg=PA90&dq=management+by+objectives+examples&hl=en&ei=omY6Tvy4HM-qrAef6JAh&sa=X&oi=book_result&ct=result&resnum=#v=onepage&q=management%20by%20objectives%20examples&f=false [Accessed 15th August 2011]Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 15
  • 16. UC2F1101 IBM Individual assignment on ODEC 2011Mind Tools, 2011. Management by objectives (MBO): motivating people by aligning theirobjectives with the goals of the organization. [online] Available at:http://www.mindtools.com/pages/article/newTMM_94.htm [Accessed 14th August 2011]Reference for business, 2011. Management Styles. [online] Available at:http://www.referenceforbusiness.com/management/Log-Mar/Management-Styles.html [Accessed14th August 2011]SooperTutorials, 2011. Wal-Mart Swot Analysis. [online] Available at:http://www.soopertutorials.com/business/strategic-management/1846-wal-mart-swot-analysis.html[Accessed 15th August 2011]Walmartstores.com, 2001. Walmartstores.com. [online] Available at: http://walmartstores.com/[Accessed 15th August 2011]Wal-Mart-Sustainability Progress to Date 2007-2008, 2011. Wal-Mart-Sustainability Progress toDate 2007-2008. [Online] Available at:http://walmartstores.com/sites/sustainabilityreport/2007/index.html [Accessed 17th August 2011]Walmart, 2001.Annual report 2011. [Online] Available at:http://walmartstores.com/sites/AnnualReport/2011/financials/Walmart_2011_Annual_Report.pdf[Accessed 16th August 2011]Walmart,2001.Annual report 2009. [Online] Available at:http://walmartstores.com/Search/?q=employee%20satisfaction&t=a&p=1&s=r&fd=a&fa=p [Accessed16th August 2011]Walmart,2001.Diversity and inclusion report 2011.[Online] Available at:http://walmartstores.com/Search/?q=diversity%20and%20inclusion%20at%20walmart&t=a&p=1&s=r&fd=a&fa=p [Accessed 17th August 2011]Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 16
  • 17. UC2F1101 IBM Individual assignment on ODEC 2011Mariyam Ulya Asim/TP021480/ University College of Technology and Innovation. Page 17