risks, problems, and hazards that the Walmart Company  faces

 risks, problems, and hazards that the Walmart Company  faces

Introduction

Walmart Company is one of the biggest supermarkets in the planets, if not the biggest (Bonanno, 2012). It has got branches in almost every corner of the earth. For this reason, it can be proven that the financial capabilities of this company are quite good. This has been attributed to good governance and the availability of customers who purchase products from the store. Since the company is privately owned but still enlisted in the stock market, the managers work round the clock to ensure that the share value does not fall. With such a huge company, it is evidently clear that they do have some challenges that they do face and how they come up with solutions. This paper will be shedding some light on the risks, problems, and hazards that the company faces and the measures that are put in place to mitigate them.

Company’s risks

In the business world, it is reasonable to come with the notion that a risk is something that is there, especially when a business wants to execute a plan. Taking a look at a company like Walmart, there are so many risks that the company gets involved in. For example, venturing into a new market requires an excellent plan so that losses cannot be incurred. These plans carry huge risks like how will the population react when the supermarket is opened. The type of market that the company wants to venture in must not be saturated, or else they will not meet their targets. The other issue is the relationship that will crop up with the local suppliers.

All these risks need to be addressed before and after the execution of the plans. To correctly manage risk, any business entity needs to come up with a risk management plan. The process consists of risk identification, risk assessment, risk management, then monitor and review. In risk identification, the management of the business identifies business hazards by brainstorming, reviewing past, experiences, and many more. In risk assessment, the risk magnitude and the likelihood of it occurring are evaluated. In risk management, the company can avoid, transfer, or reduce the chances of the risk occurring. In the monitoring and reviewing level, the managers ensure that the risk does not occur, and if it does, the plans set will help in mitigating it.

To further improve the chances of managing risks is coming up with the best reward system. This will ensure that the employees do their part so that they can be rewarded. The managers should have a well-integrated system to allow them to monitor how different branches of the chain are fairing. Also, there should be well structured organizational cultures that are followed. This will ensure that each and every employee in the supermarkets are aware of their jobs, and they are doing what they are supposed to do. The last one has an excellent organizational structure, which shows who is in control. This will reduce confusion because the employees and supervisors will know what they are supposed to do.

Selection problems and how to deal with them

Recruiting the best employees for any business entity is one of the crucial activities that it has to undertake. By hiring the best workforce, Walmart supermarket can be sure that it will reach its revenue targets, have a positive working environment, and also improve on the company’s culture. Some of the problems may occur when a business entity is trying to select their employees. These problems consist of narrow focus where the hiring manager is looking for shallow qualifications or looking at a single criterion. There is also misalignment whereby a manager can pick a candidate whose job description is different from what he has been hired to do. The last one is job analysis, where the company does not fully indicate the position that has fallen vacant.

To hire the best employees, an entity should have a plan of how to conduct the selection process. The process is as follows from the preliminary interview, receiving applications, screening applications, employment tests, employment interviews. The preliminary review entails eliminating the people who do not meet the criteria that are needed to feel in the vacancy. Receiving of the applications entails, the receiving of the CVs where the company builds up a biodata of an individual. Screening of the application entails the elimination of the people who do not meet the credentials as far as the board is concerned. Employment tests entail gauging the people who have passed the previous stage in accordance with their work skills, communication skills, intelligence, among others. The last step is calling the most qualified for an interview to get an overview of the person and to find out if they can handle the job if they are granted.

moral hazard problem

A moral hazard problem is a situation where a party may engage in risky behavior because it knows that in case of anything, another party will be liable for the action. The best example of such a situation is when the people in charge of keeping the shelves of the supermarkets need, do not do their work. Also, when the after-sales services of one employee would hurt the reputation of the entire supermarket. The company has a moral obligation to ensure that it does not have a negative reputation. This is because of a bad reputation, in most cases, scares away customers. If the customers are scared to buy goods from the supermarket chain, it means that the revenue will go down.

Several measures have been put in place to ensure that moral hazard does not occur. First, the company has invested so much in employee training on how to handle different customers. They have trained that customer is always king, and addressing any customer is vital while making sure that they are satisfied. The second measure is that the company has an excellent organizational structure, which ensures that there is a proper chain of command. In case of anything, everyone is answerable to his or her own mistakes. The last one is that there is a good reward system where both positive and negative reward systems are used. Incentives are used to those who perform as needed, and there is also punishment for any misconduct found at the workplace.

principal-agent problem and the tools used to align incentives

The agent problem is a conflict that erupts when an agent does not act as per the requirements of the principle. An agent is not supposed to act contrary to what they have agreed on with the principal. The principal-agent problem is said to be varying depending on the roles and the agreement that they have. This means that the agent can be given the responsibility to take control of the assets of the principal. In the Walmart supermarket, the branch manager acts as the agent. He is supposed to act in favor of the company by ensuring that all work in the branch is done perfectly, and the welfare of the employees is well-taken care of. In case the branch manager acts in a manner that could benefit himself, then a problem may arise. This is when there is a misappropriation of funds, and also employee productivity goes down, which reduces the revenue.

There are several tools that the company uses to align incentives. First, the company should avoid measures that can be gamed. There should also be a reasonable measure of targets so that they can be achievable. This motivates the employees to work extra hard to hit the targets because they can feel that the targets set are possible. The company should have a controlled system put in place to avoid manipulation of the system. Such actions will ensure that the employees do not go around the system for them to be able to achieve their targets. For the bonus to be considered relevant, it should not come as easy as it sounds since the employees will be hitting the targets with ease.

There should also be trigger mechanisms that are supposed to be put in place to avoid the company from losing so much money. For example, during tough economic times, it is essential for the company not to set too high bonuses. This is because it may need the money that is giving out bonuses for its survival. If these measures are put in place, then the productivity of the company will go up since the employees do notice that there are incentives to be given if the achievements are met. This action, on the other hand, increases revenue to the company, which is in the form of profit. By so doing, the shares in the securities exchange go up, and the company will be able to venture into new markets.

Organizational structure

The above store managers rarely go to the store every day. What they do in most cases is to ensure that the accounts and the logistics. He is supposed to ascertain the information that has been given by his juniors. After that, the senior vice president is supposed to look at all the functioning stores that are there. He is supposed to keep track of the profits while ensuring that there are smooth operations in all the stores. The regional vice president is supposed to know the well being of the stores in a particular area. His job is to keep track of the profits and revenue that have been generated in a single day. The marketing managers, on the other hand, analyze the markets by using the profits as the data. He is supposed to study customer patterns of a particular area while giving discounts and new offers. In-store managers are supposed to manage the operations of a specific store.

The general manager of a store is supposed to ensure that there are smooth operations of a store. He ensures that there are no stock-outs in the store. The co-manager is supposed to assist the manager. The assistant manager is supposed to instruct the employees of the store while being respectful. The support manager is supposed t keep records of the stocks and sales. Customer service supervisors are supposed to ensure that the welfare of the customers is well handled. The customers are supposed to get what they need in the store. Cashiers and Sales Associates take the billings of the customers and helping customers get what they require, respectively. Stockers are supposed to stock up the shelves in the store and arrange the products as they are supposed to be.

From the look of things, this company has one of the best organizational structures. This means that what should be done is to make sure that every employee should know what to do and when to do it, and all will be well. In my opinion, there is little that can be done to the organizational structure to increase the profits. The structure should remain intact as it is.

Conclusion

Every company has its own problems and shortcomings as it conducts its business. The company needs to mitigate the risks as much as possible, improve on employee selection, have well-behaved principal-agents, and have an excellent organizational structure. This ensures that a business entity, just like Walmart, has continuity in the market that they venture.