Knowledge management at Walmart
Executive Summary
Knowledge management composes one of the key drivers of business entities in the current times. The firms which adopt optimal knowledge management strategies achieve a competitive advantage in the market in addition to possession of sustainability. The case of Walmart adopted in this paper to analyze the relevance of knowledge management possess knowledge management strategies both within the internal and external context.
This paper provides an overview of Walmart in addition to its analysis in terms of internal knowledge management strategies. The considered aspects of internal knowledge management entail the adoption of Human Resource Management, communication feedback, and the adoption of technology. Walmart also adopts global sourcing, which is analyzed in the paper. The management of eternal knowledge management at Walmart is also done with a key focus on outsourcing, joint ventures, and strategic alliances. The paper also analyses Walmart through the Nonaka and Takeuchi knowledge creation model to identify recommendations to the shortfall of the company in the realization of knowledge management.
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Table of Contents
3.0 Analysis Of Knowledge Management At Walmart 2
3.1 Internal Knowledge Management 2
3.1.1 Human Resource Management At Walmart 2
3.1.2 Communication And Feedback As A Component Of Knowledge Management At Walmart 3
3.2 Walmart’s Approach To Sourcing. 5
3.3 External Knowledge Management Practices At Walmart 5
3.1.2 Outsourcing at Walmart 6
1.0 Introduction
The relevance of the Knowledge management concept lies with the formation, sharing, utilizing, and controlling the information and knowledge possessed by an organization. According to Holsapple and Joshi (2004), knowledge management acts as a platform through which the organization’s knowledge function combines with its management aspects to allow efficient use of information. The efficient utilization of information entails the functions such as the introduction, managing, storing, and sharing of information to steer the aspects of the organization. Through these functions of knowledge management, the organization’s management and employees acquire the facts and figures concerning its operation and thus enable the seeking of appropriate solutions to the encountered problems. The adoption of systematic knowledge management ensures that the effectiveness of the organization in combination with the available learning achievement realization (Alavi and Leidner 2001). Therefore, knowledge management plays an integral part in the achievement of success in an organization in addition to fostering innovation through the assessment of the available facts and figures. The assessment of knowledge management at Walmart creates the platform to assess the relevance of the knowledge management concepts and models contributing to the success of the organization in addition to the shortfall in its knowledge management.
2.0 Overview of Walmart
The Walmart Corporation composes one of the largest multinational corporations that runs a chain of stores in different countries with its headquarters in the US. Walmart employs more than 2.3 million employees in different nations (Caraway, 2016). Walmart was established in 1962 in the US, and it has since expanded to its current state. The size of Walmart makes it a perfect case to assess knowledge management practices to establish how the corporation adopts knowledge to stir its various outlets to accomplish common goals such as customer satisfaction. According to Becerra-Fernandez and Sabherwal (2014), knowledge management possesses the power to transform the business performance of an organization, thus necessitating considerable investment by the company in realizing the full benefits of its knowledge management system.
In the context of Walmart, the strategies and practices adopted by the company in the experience implementation through strategy creation entails the adoption of knowledge management. The tapping of the knowledge resource in a manner that creates value to the organization, in addition to the improvement of the operations of the organizations, reiterates the relevance of KM to Walmart (Geisler and Wickramasinghe 2015).The dimensions of knowledge management point to completeness, congruency, perspective, and connectedness. Through these aspects, innovation comes from the complete implementation of knowledge management practices. Therefore in case, there exist some gaps within knowledge management, the accomplishment of innovation becomes problematic through impacting the problem-solving capabilities as well as the decision-making process. The adoption of knowledge management enables an organization to realize a competitive advantage, which, in the long run, contributes to the sustainability of its practices within the competitive business environment (Omotayo 2015).
According to Grimshaw et al. (2012), Walmart focuses on the improvement of business processes, competitive advantage, continuous improvement, and innovation through the implementation of knowledge management practices. To achieve these aspects, Walmart implements the provision of professional training and formal apprenticeship in addition to the mentorship forums. Besides, the company adopts the use of specific technology adaptations to support cooperation and enable group decisions to steer the operations of its different multinational outlets. Knowledge management, therefore, holds a huge significance to the operation of Walmart with the adoption of the KM strategies enabling the company to maintain its relevance within the global market through the creation of competitive advantage. The implementation of KM contributes to the reduction of operational costs by Walmart through the adoption of strategic operations to also improve the value of the shareholder.
This paper analyses the application of knowledge management practices at Walmart to identify the points in which the current strategies adopted requires improvement. This analysis focuses on both the internal and external knowledge management aspects of Walmart.
3.0 Analysis Of Knowledge Management At Walmart
3.1 Internal Knowledge Management
3.1.1 Human Resource Management At Walmart
HRM operations at Walmart compose one of the avenues the company applies to knowledge management strategies. According to Alsughayir (2014), human resource strategies compose “the ways in organizations and business firms select, recruit, train and nurture their workforces for effective performance and delivery of services.” The adoption of effective human resource management by Walmart composes one of the keys to its success, considering the number of employees the company possesses throughout its international operations. The recognition of Walmart globally relies on the adoption of the HRM functionality, composing one of the key components of knowledge management at the company considering the strategies the company adopts to manage its branches and inspire coordination in the management of its employees. The effective adoption of HRM strategies by Walmart enables it to evade financial risks owing to poor services and a lack of coordination, thus improving its return on invested capital.
The HRM strategies adopted by Walmart ensure the integration of a skilled workforce within its employee structure. This factor contributes to the achievement of sustainability in its operations because of securing success in its future operations. To align the current state of the company to its aspired future position, Walmart adopts the use of human resource strategies that align with its future objectives and goals. As Boxall and Purcell (2011), stated, “the success of an organization more, especially in the field of knowledge management is determined mainly by the kind of Human resource management strategies displayed.” The relaying of proper information through the HRM strategies adopted by Walmart contributes to the persuasion and inspiration of the company employees to work in unison and share in its goals and objectives. This forms one of the means through which the managerial personnel within the Walmart stores convince and motivate employees to accomplish the company’s aspirations and thus creating a competitive advantage in the process. The top management, therefore, interacts with the employees sharing information with them in the process, thus directing their teams and individual personalities to contribute to the maintenance of the competitiveness of the company. Through the adoption of human resource management as part of the internal knowledge management strategy at the company, a redefinition of the Walmart stores’ knowledge management achievement realization occurred. The long-term objectives of the company, therefore, are attainable through the adoption of knowledge management to restructure its objectives. Walmart realized that the management of its employees was an invaluable tool in directing its business operations to implement its business strategies and pursue its goals. The adoption of “best knowledge management strategies” by Walmart thus attributes to the dynamism of the company in dealing with its competitive environment. The attainment of coordination within the human resource management functionality across the global stores of the company through personnel management reinforces the performance of Walmart in addition to developing and improving its performance in the market.
The process of adopting knowledge management should reflect dynamism and alignment to the operations of the company. One of the key stakeholders in the operation of Walmart is the customers who most of the functionalities of the company are centered on; therefore, the alignment of knowledge management to the objectives and direction of the company would play a key role in enabling Walmart to achieve its goals and objectives. The HRM strategies at Walmart enable the employees to learn about the relevant knowledge regarding the company, thus contributing to employee acknowledgment, further contributing to the realization of the overall objectives of the company.
3.1.2 Communication And Feedback As A Component Of Knowledge Management At Walmart
The operation of Walmart, concerning its international operation and multiples stores, creates many conflicts requiring solutions. The solution to these conflicts at times comes from the implemented knowledge management strategies by the company. The adoption of knowledge management strategies at Walmart enables the identification of these areas giving rise to conflicts through the analysis of communication and feedback paves the way for intellectual negotiation. Knowledge management practices contribute to the achievement of effective communication at Walmart, especially regarding the development of self-esteem and ascending principles (Mehta 2012). The maneuvering of the employees of Walmart by the top management composes one of the reasons contributing to the achievement of positive transformations at the company. The managers compose the entities making decisions at Walmart and therefore provide the direction to the tackling of the company’s objectives without consideration of some elements of matters raised by the employees. This strategy achieved through the adoption of knowledge management contributes to the creation of a unidirectional in the operations of the company across its global stores. Walmart provides a platform through which the adoption of knowledge management enables the employees and the management to share knowledge and experiences, thus providing guidance and direction to the company’s employees. Besides, the communication and feedback process at Walmart encourages the achievement and adoption of teamwork to create a shared vision of growth to the company.
Walmart adopted some employee motivation techniques from its knowledge management strategies, which saw the practice of employee retention in addition to providing appraisals and rewards to the employees concerning their performance. This points out the reasons as to why the management at Walmart focuses on knowledge management through the motivation of their staff and employees to ensure they commit to providing rendering their optimal services to the company. The process of communication and feedback, therefore, collectively takes into account the responsibility of the company and its staff, leading to the creation of a balance within the management roles and response to global trends.
The adoption of employees skills improvement as a knowledge management practice by the company composes one of the strategies enabling it to maintain its productivity and combat challenges it experiences within its multinational stores. The transfer of knowledge management skills to the employees and staff form a prime means of ensuring the company adheres to knowledge management skills, which increases its efficiency in the delivery of services to its esteemed customers. The business decisions made by Walmart also consider the perspectives provided by the knowledge management practices and the acknowledgment of the changing business scope, which influences the investment strategies and decisions. The company maintains an effective knowledge storage system enabling it to assess its historical data to plot knowledge management changes in practice, which translates to the adoption of both indirect and directs knowledge elicitation. The innovation maps compose one of the core derivatives of knowledge management practices at Walmart, considering models of knowledge management adopted by the company.
Figure 1 “Technology push framework of KM used by Wal- Mart.” Retrieved from: (Mehrabani and Shajari 2012)
The figure illustrating the knowledge management framework above points out the relevance of technological systems in the implementation of knowledge management practices by Walmart.
3.2 Walmart’s Approach To Sourcing
Sourcing of products and services forms a core part in directing the operations of the company in achieving its goals and strategies. According to Blohm et al. (2016), sourcing entails “every activity that revolves around identifying and assessing potential suppliers as well as selecting and engaging with an appropriate supplier who offers the best value.” During recent years, Walmart sought to redevelop its sourcing strategies to enables the company to keep pace with its core objectives within the dynamic business world. Walmart adopts global sourcing practices directed by its customer-centered operations to ensure it provides good quality products to its customers at competitive prices as compared to its competitors to achieve a strategic competitive advantage. The adoption of global sourcing enables the company to leverage the sourcing of products and services to improve the efficiency of the products reaching the target consumers in addition to the realization of a competitive price for the products.
The adoption of global sourcing has contributed to the development of strategic alliances with some global companies such as the Li & Fung situated in China (Uygun 2014). Walmart thus developed Global Merchandising Centers in addition to the transformation of is structure to accommodate these changes and cooperate with global sourcing organizations to ensure the acceleration of products reaching the market. Besides, the adoption of global sourcing by the company sought to improve the value delivered to its various stakeholders, such as the customers and other shareholders. The realization of global merchandising centers composes one of the results of the adoption of “consolidated global sourcing” structures targeting the attainment of “Everyday Low Prices” as a goal of Walmart in improving its customers’ experience (McShane 2010). The global sourcing targeted the availing of food products in addition to general merchandise products.
The adoption of knowledge management strategies by Walmart, therefore, contributes to the ranging of sourcing and merchandising of the various merchandise categories. The sharing of information between the company and its partners composes one of the success criteria, ensuring the realization of success from the adoption of knowledge management practices (McShane 2010). The sourcing approach adopted by Walmart, therefore, covers even the private brands of the company as the adoption of global sourcing also contributes to the realization of savings within the supply chain of Walmart. The agreements made by Walmart to enable the realization of global sourcing entailed the formation of new entities to manage these operations. The sharing of information between the entities coming together to realize global sourcing reiterates the relevance of knowledge management in the undertaking of global sourcing by Walmart. Besides, KM builds the required knowledge and capacity to manage the accounts of the company to ensure the supply of these products aligns with the demand of the customers. This strategy market the redesigning of the sourcing practices at Walmart with the recognition of knowledge management concerning the products it imports to its retail stores across the regions it operates within. Besides, the maintenance of proper communication with suppliers contributes to the realization of scale leveraging to create an enabling environment for its operations.
3.3 External Knowledge Management Practices At Walmart
3.3.1 Strategic Alliances
Strategic alliances compose one of the key means through which companies undertake the management of external knowledge. According to Hitt et al. (2004), a strategic alliance is the “Strategic alliances are agreements between two or more independent companies to cooperate in the manufacturing, development, or sale of products and services or other business objectives.” Walmart has adopted the use of a strategic alliance with one key aspect entailing the consideration of joint ventures with other companies to fulfill its goals and objectives. When entering the Indian market, Walmart sought to enter into a joint venture with Bharti Enterprises, a retailer within the Indian market.
The Indian market composed one of the fastest-growing markets which had attracted the investment of Walmart. This formed one of the key reasons for the formation of the Walmart-Bharti joint venture targeting the creation of a new legal business entity to operate within the Indian market. The venture also targeted tapping into the “cash-and-carry” business considering the perspective of the Indian market, composing one of the fastest-growing consumer markets (Bh 2017). The formation of the joint venture provided one of the quickest avenues for Walmart to enter the Indian market without extensively investing capital in establishing its independent business networks. Walmart signed the joint venture agreement with Bharti Enterprises in 2006, which entailed a 50-50 equity stake for both the two companies forming the Bharti Walmart Private Ltd to undertake the wholesale business within the Indian market. The joint venture, therefore, saw both the companies provide their respective inputs to seeing the operations of the partnership. Walmart came in with a global brand name with a strong financial base in addition to competencies in the management of the international business, which it had undertaken for quite some time. Bharti Enterprises, on the other hand, came into the joint venture with familiarity with the lab labor market, economy, and laws relevant to operating within the Chinese market. Besides, the venture also benefited from the knowledge possessed by Walmart regarding its optimal supply chain management, which prides in the timely delivery of products to the consumers at an affordable price.
The joint venture enables these two partners to share information concerning their competencies as Walmart wasn’t also prepared to venture alone into the Chinese market, considering the local makeup of the Indian market. Walmart, therefore, invested $103 million while Bharti Enterprises had to pay documentation fee, technical training fee, franchise fee, and other royalties generated from the cash-and-carry business to Walmart (Bh 2017). This arrangement enabled the introduction of Walmart brands to the Indian market through the Easyday branches operated by Bharti’s multi-brand though managed by Walmart. This joint venture, though, failed prematurely due to misunderstandings and lack of transparency by the two companies, i.e., Bharti enterprises and Walmart.
Another case in which Walmart utilized the strategic alliance concept regarding knowledge management was during its merge with one of its key rivals within the UK market called Sainsbury. After the formation of the strategic alliance with Sainsbury, Walmart held 42% of the shares. Through this alliance (Shabbir 2015). Walmart sought to weather the tough UK market with stiff competition from other retailers within the market. This move also enabled Walmart to refocus its resources on its international operations. The adoption of the strategic alliance at Walmart also extends to its Latin America stores, which it sought to partner with some local retailers already possessing relevant knowledge about the Latin American market (Tan et al. 2018). To enable optimal adoption of IT infrastructure by the company, Walmart formed a strategic alliance with “JD.com,” which saw Walmart set up its operations in China with the establishment of the high-tech supermarket.
3.1.2 Outsourcing at Walmart
Outsourcing also composes one of the means of managing external knowledge. According to Bhagwati et al. (2004), outsourcing is the “utilization of a third-party provider who is specialized in the area to perform functions or manufacture products that are considered non-core to the business and previously handled in-house.” The case of Walmart presents instances in which the company has exploited outsourcing functions like manufacturing and IT solutions. Besides, Walmart outsources some of its warehousing functions within the US to derive down costs to achieve its business motto of “everyday low price.” Walmart embraces the outsourcing of the manufacturing of its products. According to Harsono (2017), about 80% of the products Walmart retails are manufactured abroad, which is also contributed to by the efficient supply chain possessed by the company. Walmart has about 6000 suppliers, with most of these suppliers outsourced, forming a crucial aspect in ensuring the success of Walmart’s supply chain. The achievement of the outsourcing success depends on the sharing of information between Walmart and its suppliers to influence the forecast and planning of demands to relay crucial information to the suppliers to place orders to ensure continuity in the flow of products to satisfy the customer needs. The undertaking of outsourcing has enabled Walmart to focus on improving its customer-centric operations, which also includes the lowering of the costs of its products.
4.0 Nonaka And Knowledge Creation Theory And Recommendations To The Improvement Of Knowledge Management Practices At Walmart.
The realization of knowledge management lies with the creation and transfer of knowledge. According to Hoe (2006), concerning “Nonaka and Knowledge Creation Theory,” there are four ways through which the combination of different aspects of knowledge to realize the sharing of the created information within the organization. The four modes of knowledge creation entail socialization, internalization, externalization, and combination, as proposed by Nonaka and Takeuchi.
Socialization.
The socialization process entails experience sharing through a method that promotes the creation of tacit knowledge (Nakayama 2015). The tacit knowledge in this aspect entails the knowledge obtained from technical skills and mental models. The work environment of Walmart promotes teamwork allowing the interaction of the employees with the managers of the Walmart stores. Through this association, tacit knowledge acquisition occurs with the employees gaining knowledge directly from their co-workers and manager. This process of socialization also promotes the transfer of tacit to tacit knowledge through communication adopted at Walmart during meetings, mentorship, and training of the employees. Besides, the organization’s culture of Walmart also composes the main source of tacit knowledge at Walmart.
Externalization
According to Nonaka and Takeuchi (1995), externalization entails the communication of tacit knowledge to explicit ideas. This process entails “the quintessential knowledge-creation process, in that tacit knowledge becomes explicit, taking the shape of metaphors, analogies or models” (Bratianu 2016). This process required articulation in the sharing of information through engagement and interaction with the receiver. The sourcing practices adopted by Walmart targets the realization of constant improvement by the company to adapt to the changing business environment. The formulation of these sourcing decisions relates to the externalization of information concerning transforming the tacit knowledge into explicit knowledge. The modeling and relaying of the explicit concepts dictate the relationships of the company to its suppliers and, thus, the effectiveness of its supply chain. Walmart adopted the global sourcing strategy to inspire improved from of products to the market, reiterating adequate adoption of externalized information by the company.
Combination
The process of combination entails the formulation of knowledge systems from the existing systemized concepts Hoe (, 2006). The various aspects of explicit knowledge are adopted by the management to obtain new knowledge to stir the company. This process emphasizes the relevance of communication and feedback through the use of the company’s database and other computerized communication avenues.
Internalization
The process of internalization entails the embracing of explicit information in terms of tacit knowledge. The relevance of this point entails the application of the adopted knowledge and prospers with the interaction of the company’s workforce. The sources of explicit knowledge in this aspect entails the complaints of the partners to Walmart considering to adoption of strategic alliances by the company.
The breakup of the Bharti-Walmart joint venture within the Indian market failed owing to questionable investment decisions by the partner company of Walmart. The two companies failed to internalize the explicit information regarding their operations to evaluate their investment opportunities. The joint venture lacked alignment in terms of information adoption and decision making, shaking the existence of the strategic alliance. Walmart should, therefore, consider the adoption of interactive knowledge models with its partners to enable the transformation of tacit knowledge to explicit knowledge. The consideration of the knowledge spiral initiated by the Nonaka and Takeuchi knowledge creation model.
The process of socialization builds interaction within the company, thus triggering the development of new information. The process of socialization holds relevance to both the internal and external knowledge management aspects. Socialization foster group work which contributes to the operation of team members through the sharing of tacit information.
The adoption of meaningful dialogues between Walmart and its partners at all times would enable the company to reflect together with its partners to inspire the formulation of decisions that provides benefits to both parties in the case of strategic partnerships. It would enable the company to get into productive strategic alliances and see them realize the intended functions through the sharing of information by both parties.
The concept of combination, as provided by Nonaka and Takeuchi knowledge creation model, entails the crystalizing of management systems from the available knowledge and adoption of networking the developed knowledge. The learning by doing would enable Walmart to realize the full potential of global sourcing considering the aspects of initiating the right decisions within its supply chain process.
5.0 Conclusion
Walmart forms one of the largest retailers in the world operates on a global scale. The analysis of Walmart concerning knowledge management practices creates an avenue of understanding the relevance of internal knowledge management and management of external knowledge. Through the analysis of knowledge management at Walmart, it’s evident that the company adopts knowledge management at different levels and through the adoption of diverse strategies. The company exploits internal knowledge management through practices such as Human Resource Management in addition to the management of its communication and feedback process, contributing to the realization of the overall goals and objectives of the company. The consideration of the management of external knowledge by Walmart presents through the adoption of sourcing, strategic ventures, and outsourcing by the company. The case of Walmart presents considerable success in the management of knowledge though it experienced some shortfalls in managing external knowledge. The breakup of the Bharti-Walmart strategic partnership composes one of the avenues the company failed. The adoption of the Nonaka and Takeuchi knowledge creation model provides a means through which the company may ensure successful strategic partnerships.
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