Why did the centralization of decisions at the headquarters on Walmart's international

division create problems for the company’s different national operations? Has
Walmart's response been appropriate?
Answer: The headquarters first thought that centralization will help them get into other
countries cause the methods and ways they used were already proved in domestic market.
The centralization strategy worked out because there were less things to worry about
However, as the international division got bigger, they had to deal with bunch of things from
a lot of different countries. When Wal-Mart began s international expansion, it set up an
international division to handle all foreign operations. However, over time, this approach
proved to be challenging. Managers in foreign countries had to get permission from
Bentonville before they could make any changes in strategy or operations. Not only did this
approach slow decision-making, also meant that decisions were being made by managers
who were removed from the local situation. Wal-Mart began to change this approach when it
acquired Britain’s ASDA supermarket chain. Today, the company has given greater
responsibility to local managers particularly in merchandising and operations.
Wal-Mart’s main business strategy is EDLP-Every Day Low Priced which is the key-point of
their success. To accomplish this strategy, they mainly focused on efficiency of distribution
structure. They had to reduce their Response time & Lead Time. Shortening the time for
distribution, storing, etc directly affected lower the price of goods which could be best
response to customer need. In other words, Wal-Mart has been successful since they always
managed their lead time and response to the customers. Those points were same for Wal-
Mart international division strategy. The international division was centralized so the
branches needed to get approval for every action and decision from headquarter in USA.
However, this centralization process made whole process slow and it harmed the core values
of Wal-Mart.
Walmart realized that the system cannot be same in other countries. It needed to be changed
and modified to fully get into each local market place. By the late 1990’s they started to
change their policy for international division. They gave more responsibility to each division
so that they do not have to wait for approval and response from headquarter. By this change,
each international division could meet their local market needs more efficiently and
effectively.

Do you think that having an international division is the best structure for managing
Wal-Mart’s foreign operations? What problems might arise with this structure? What
other structure might work?
The opinion of Wal-Mart's utilizing an international division is the best for managing their
foreign operations is not the correct strategy as this strategy has proved to be an ideal
penetration strategy. As the company matures and grows a centralized approach to solving
problems has not been successful because every geographical region has issues specific to
their own and solutions must be tailor-made to the same. The international division will either
will have to micromanage as per every country or geographical region to make things work
which will turn out to be an inefficient method thus, An International Division is not the best
structure for managing Wal-Mart’s foreign operations.
Problems likely to arise by following an international structure are as follows
1. Increased Bureaucracy- The International division will have a bigger company
hierarchy leading to an inefficient employee structure creating friction.
2. Increased Decision time- The larger the team the increased decision time it takes as
the proposal will take more time to be discussed, passed, and implemented through
the management communication channels leading to slow implementation of strategy.
3. Reduced Flexibility- The international will have standard protocols to be followed
and will lack flexibility as it will not allow the company to adapt as per specific
geographical region.
The other structure that can work is Transnational approach, with a transnational
organizational structure, you organize your business along several dimensions, such as
geographic, product and functional levels. This means you achieve integration either within
various product categories or within geographic areas or functions. Such an organizational
structure helps you coordinate across all related business activities simultaneously. You can
adopt a structure that meets your business needs, even using a hybrid structure that combines
two or more given models. For example, your business can have one division based on
geography and another based on products.