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Organizational Structure

The specific structural features of any organization reflect a number of factors inside and outside the organization. These factors are referred to as contingency factors. Throughout the history of organization theory size has been singled out as one of the primary factors to consider when designing the formal structure of a company. This is especially evident in very large organizations, for instance, in mega companies. Consider the example of Walmart, currently the largest company in the world, when measured by revenues. By the end of 2009, they employed no less than 2.1 million persons with revenues of up to a staggering 408 billion USD. How can such a huge company be organized? Walmart is a US based retail chain that operates a number of different types of stores and warehouses. Even though the company is firmly rooted in the US they are in the middle of a rapid expansion internationally. In fact, more than 30% of revenues come from the operations abroad, and the foreign operations are put together in a separate division called Walmart International. For the US operations the company is organized in two separate divisions. Walmart Stores is by far the largest and accounts for around 67% of the annual revenues. It houses the different retail formats such as the Discount Stores and the Supercenters, both of which are familiar signs in any American city. The second division is called Sam’s Club which houses a chain of warehouse clubs, open to members. A huge company such as Walmart needs to rely on a finely tuned combination of decentralized operations (each store or warehouse operating as an ‘independent’ unit) at the same time as overall operations are tightly controlled. Walmart, like many huge retailers, for example, developed a highly effective logistical system to make sure that goods are bought at lowest possible prices, and delivered to stores and warehouses when needed without carrying big stocks of inventory.

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