Strategic Leadership and Organisational Transformation of Walmart

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Table of Contents

Performance of the Company in eCommerce
Driving Force Behind the Company’s Interest in eCommerce
Appraisal, Evaluation and Justification of Change within Walmart
Conclusion
Reference List

Strategic leadership refers to a practice whereby executives use various management styles and develop a vision intended to allow them to sustain competitiveness in an evolving economic as well as technological climate. There are various leadership theories, including transformational leadership, Goleman’s six leadership styles, and French and Raven’s five forms of power. On the one hand, transformational leadership refers to an approach whereby leaders work with followers beyond their instant self-interests to recognise the needed change. Additionally, they establish a vision and direct them via inspiration. This is similar to how management operates Walmart, as the employees are inspired to perform to accomplish both organisational and personal goals (Boddy, 2014, p. 5). They project an authoritative leadership style that visionary leaders adopt. The style is among those mentioned by Goleman, as others include coercive, whereby someone is commanding and needed when dealing with a problem, for example, a rude employee. Affiliative is another where the manager will create a conducive environment for the employees, and good work is highly acknowledged.

Goleman mentions democratic as a style of leadership whereby all members have a valued opinion that management wants to embrace. This is impossible in many firms, including Walmart, as it is known to delay decision-making (Mullins and Christy, 2013, p. 560). The fifth style is pacesetting, where managers or leaders set the example to be followed by employees, for instance, reporting early to work to encourage punctuality (Pitelis and Wagner, 2019, p. 235). The sixth coaching style focuses on developing the members, followers, or employees. This is used in Walmart in various departments to help new employees (Naylor, 2004, p. 11). Lastly, according to French and Raven, there are five forms of power, legitimate, reward, expert, referent, and coercive (Shao, 2019, p. 98). The main source base of power at Walmart is expert, whereby someone is accorded a leadership role based on their capabilities (Fulop, Linstead, and Lilley, 2009, p. 414). Legitimate and coercive have failed many businesses and have resulted in lawsuits filed against the firms as they reach the extent of violating human rights (Galli, 2018, p. 125). Referent and reward have been applied more in many organisations as executives claim that it is easier for people to take directions from those they connect with or respect.

In 2005, Terry Lundgren, the C.E.O. of Federated Department Stores, in an interview, detailed that listening skill and accepting that one does not possess the answer to every problem is essential (Kalyani, 2018, p. 7). A manager can listen, understand and then implement, which increases the success rate (Jindal et al., 2021, p. 270). This creates a level of respect that prompts employees to be guided by particular individuals.

Performance of the Company in eCommerce

In the first quarter of the 2020/2021 fiscal year, the company recorded a financial performance that exceeded the projections of analysts who had predicted poor performance due to the COVID-19 pandemic. Thus, Walmart was a big winner during this time, resulting in many companies struggling. It is believed that customers stocked greatly on home supplies and other products since a majority had to remain at home for a long period (Dzwigol et al., 2019, p. 5). Alongside organisations that have reacted to evolving consumer shopping habits, for example, Amazon, the business maintained a strong market position (Birasnav and Bienstock, 2019, p. 142). This is particularly for buyers who continued to shop in person while the pandemic was still at its peak. In a recent report, the company claimed that similar store sales had increased by ten percent for the quarter due to more sales of food and wellness goods (Fincham and Rhodes, 2005, p. 5). The success can be attributed to one key factor: the company’s eCommerce sales, which rose by seventy-four percent due to strong results from Walmart.com, grocery pickup, and delivery services. The statistics from other earnings reports are ridiculous, but the organisation’s current growth seeds existed even before the pandemic.

Driving Force Behind the Company’s Interest in eCommerce

A few years ago, Walmart invested greatly in its eCommerce capacity to improve its competitive position in the market, especially against a company such as Amazon. Many retail firms opted for a digital way of trading as they discovered they could reach more people within a shorter time. Additionally, the rapid advancement of technology enabled easier transformation for the majority of them. This forced Walmart to act quickly and acquire Jet.com, a company that was primarily an eCommerce platform. The acquisition boosted the company’s virtual business, making it a multidimensional retailer that could compete in both the online and in-person markets. By investing in Jet.com, the firm quickly learned and deployed a basket economics strategy (Fulop, Linstead, and Lilley, 2009, p. 412). This technique in eCommerce depends on packing and delivering products to consumers efficiently, locally, and transparently. By embracing the online delivery outlook with the capability of local shops to offer pickup, the business began to establish a winning strategy.

Even though eCommerce did not serve Walmart’s interests immediately, during the COVID-19 pandemic, they reaped the benefits as fewer people were interested in in-person shopping. At a time of unimagined challenge, business leaders do not often need to depend on extraordinary ideas (He, Ding, and Liu, 2021, p. 353). It is important to consider the strategies or methods they have developed and used over time to counter any market problems (He, Ding, and Liu, 2021, p. 355). While not all businesses have the capacity, such as Walmart, to establish approaches such as acquiring Jet.com, all leaders can still succeed.

Reflecting on my leadership style, I have realised I have been using coercion in every situation, which explains why I have been unsuccessful at leading others to accomplish a common goal. I have learned that it is important to trust members of a team or followers after giving them direction and a goal, similarly to an authoritative leader. This leadership style is key to creating a bond and good relations between a leader and the individuals under them. From Walmart’s leadership, I have learned that everyone in an organisation needs to be on the same page to accomplish a required change. Understanding what a company is trying to attain is essential as it reduces the waste of resources such as time and money on activities that do not matter. From the theories of Goleman’s six leadership styles, French and Raven’s five forms of power, and transformational leadership, I have learned that inspiration and being relatable are important. It empowers followers to perform better in their given roles.

Appraisal, Evaluation and Justification of Change within Walmart

In business, change is inevitable, and considering the improvement in technology and increase in competition for market share, companies have had to alter their approaches and develop new ones. For instance, eCommerce emerged, which looked to dominate the retail industry from the start of the 2010s, forcing retailers to adopt new methods. This is indicative of Lewin’s force field theory, which claims that change can be driven or opposed by forces (Yang et al., 2021, p. 5). In this case, the advancement and incorporation of technology into business have allowed the new trading method.

The rationale for introducing eCommerce as part of the business operations at Walmart was that the whole retail industry was moving in that direction. This meant that remaining with only physical stores would be a disadvantage for the company. Statistics show that in 2016, Amazon was the biggest online retailer in the United States, selling to over five million weekly (Jindal et al., 2021, p. 270). Others such as eBay, Etsy, and Home Depot followed closely. Using Lewin’s Forcefield analysis, it is clear that the change in how other businesses operated in the industry was the main force driving the change at Walmart.

Change Process

The management’s first step in implementing the change was acquiring another firm, primarily an eCommerce organisation. This would allow them to compete easily and faster with other top firms in the sector. Based on Lewin’s change model, the company had to create favourable conditions, which at the time established the impression that they needed change (Yang et al., 2021, p. 5). After that, the management continued with efforts to move digitally, and when the COVID-19 pandemic started, it became the new norm for the business operations. The move affected shareholders, managers, and employees who had envisioned remaining with the conventional approach in retail. According to the Bridges transition model and the human side of change, people undergo three phases when facing change, including ending, losing and letting go, neutral zone, and the new beginning (Wilson, 2004, p. 7). Most of them remained at the first two stages as the change brought discomfort to them, while a few moved on quickly to the third stage as they embraced a new challenge.

Strategies to Handle Resistance to Change

To deal with the resistance of most stakeholders, the leadership opted to implement the transformation in stages. Although it was a priority to operate digitally, they allowed the use of physical stores and gradually reduced their number. In addition, another strategy used was communicating effectively about the change to them and engaging those in resistance. This allowed everyone to understand the importance of the transformation and the implementation process. They were permitted to share their thoughts and how management could make it easier for them during the process.

Strategies to Support Organisational Direction and Transformation

Walmart’s leadership applied two strategies to support the transformation: defining the change, aligning to business objectives, and offering proper training. It was discovered that among the reasons some individuals were resisting the change was due to lack of technical skills. The management identified that it was essential to offer structured training to impart knowledge and skills needed for efficient operation. Another strategy involves implementing a support structure (Jindal et al., 2021, p. 272). This is vital to aid stakeholders, particularly employees, to practically and emotionally adjust to change and build the skills required to attain the best results. A mentorship program or open-door policy might be ideal in such a scenario.

The success of the Change

It is safe to state that the change has been successful as the company has gained much, even to the extent of rivalling Amazon in total sales in 2021. In his model, Kotter mentions consolidating gains as his seventh step, something the firm has achieved after the change. The acquisition of Jet.com, which eventually proved a successful move, happened for three billion and three hundred million dollars in cash and stock (Jindal et al., 2021, p. 272). Under the terms during the transaction, Walmart paid three billion dollars in cash and would part with an extra three million dollars worth of shares over time. The price was a record as there had not been any such as that for e-commerce startups. Since its founding in 2015, Jet.com has grown to a marketplace for thousand and six hundred sellers providing ten million products (Jindal et al., 2021, p. 272). The organisation registered one billion dollars in Gross Merchandise Value at the moment of acquisition and added four hundred thousand shoppers every month (Jindal et al., 2021, p. 273). According to fiscal metrics, it is clear that Walmart paid much to acquire Jet.com.

Despite the meteoric growth metrics, Jet.com was still not profitable at the acquisition time and had a high cash burn rate. It has been valued at one and a half billion dollars or less than half the value that Walmart paid about nine months earlier by a group of existing as well as new investors. Nevertheless, a larger driver of the act was a desire to obtain the management personnel (Jindal et al., 2021, p. 273). Through experience at Diapers.com and Quidsi, Marc Lore and other executives have shown that they were able to grow and scale e-commerce businesses. This proved to be a key piece of information that led to Lore’s hiring as in charge of the e-commerce department at Walmart (Jindal et al., 2021, p. 274). Even though the company management initially planned to establish Jet.com as a separate line, this still happened.

The success of a talent acquisition relies on an organisation’s capability to retain it. As part of the transaction terms, Walmart provided three and a half million shares to Lore, to be given within five years (Ballestar, Grau-Carles, and Sainz, 2018, p. 409). The limited stock units were part of the three hundred million dollars of equity consideration associated with the deal (Ballestar, Grau-Carles, and Sainz, 2018, p. 410). According to various clauses of the contract, Lore would need to give a significant amount of his share of the cash payment and forfeit unvested interests if he left before his five-year time. Walmart organised the three hundred million dollars pay-out vesting over four years. Lore’s three and a half million alternatives vested ten percent at closing, fifteen percent in the first year, twenty percent in the second, twenty-five in the third and thirty percent in the fourth year. Walmart developed a fast-tracking vesting plan to generate incentives for him to remain for five years.

To set its e-commerce wing for success, the organisation discussed organic growth, acquisitions, or joint ventures with third parties. Before acquiring Jet.com, Walmart had opted for organic growth with less success. At thirteen billion dollars in revenue, its e-commerce business was only trailing Amazon in the United States, which recorded seventy-nine billion dollars. However, that area’s growth rates had been poor compared to eBay and Amazon. One major reason is that the company failed to concentrate on e-commerce for multiple years after beginning to gain success (Ballista, Grau-Carles, and Sainz, 2018, p. 410). The management did not consider e-commerce as a core focus area. This suggests that rivals invested more in the infrastructure needed to perform well in dispersed delivery. Additionally, an organisation such as Amazon achieved better innovation and established an enhanced digital user experience in contrast to Walmart’s exhausted virtual feel or look. Considering the less importance associated with online at Walmart, an organic technique was less likely to succeed.

Walmart organisation could have considered a partnership or an alliance. To provide the needed growth, the partner would need to be of a specific scale. The business would be an e-commerce-only entity instead of one with a clicks and mortar model. The biggest e-commerce companies six years ago when the acquisition happened included Amazon, Q.V.C., Wayfair, HSN, and Overstock.com. Both Amazon and Walmart being great rivals, it was difficult for them to be partners. Whereas on the one hand, other businesses showed potential, on the other hand, they are more successful companies, and there is less chance of scaling them (Prajapati and Nakum, 2019, p. 44). Walmart choosing to acquire in this situation offered a better chance of succeeding in e-commerce. This would enable them to pick a built-for-purpose firm creating a comparative edge in digital business. Buying Jet.com allowed Walmart to place itself as a frontier in online shopping.

Despite being behind in social media presence, Walmart’s current distribution in the United States can provide a competitive edge in e-commerce margins. For instance, with ninety percent of the people living 15 minutes from a store, Lore can get synergies in the available Walmart cost make-up to result in stronger digital sales without affecting margins as Amazon has. The latter has launched brick-a-mortar locations after realising that the channel remains the desired alternative for consumers (Wessel et al., 2021, p. 102). Whereas Amazon is investing in a test as well as learning approaches for their physical space and increases costs for its aggressive shipping commitments, Walmart has incorporated the virtual in physical stores without delay. The move to acquire Jet.com has been a compelling and feasible plan for the firm to gain more market share in the e-commerce market.

Conclusion

Change is good for business, especially when it aims to cause growth. Walmart management identified the market forces driving them toward starting their eCommerce platform and accepted the challenge. This can be related to Lewin’s force field theory which claims that it divides external elements into forces for change or against. It is noteworthy to state that even though there may be factors influencing a new way of conducting operations, the current state must be disturbed. It would have been impossible for the organisation in discussion to establish its eCommerce line while primarily focusing on physical stores. More resources and efforts had to be invested in the novel project, which allowed it to work.

The company then had to create favourable conditions that would allow them to move toward its goal. Walmart acquired Jet.com, an eCommerce on its own, for three billion and three hundred million dollars in cash and stock. Additionally, they hired the founder of the platform, who had enough knowledge and insights on scaling the eCommerce business. Despite the change being successful and practising it as the new norm, the event affected the customers and employees who took the time to transition.

Reference List

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