Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart’s business model is used to categorize employees according to their particular skills and experience.
Department
Type of Structure
Structure Details
Advantages
Drawbacks
Corporate Leadership
Hierarchy
– Walmart’s corporate leadership operates within a hierarchical structure, with clear levels of authority and responsibility. The structure includes executive leadership, senior management, and various divisions and departments, such as finance, legal, and corporate affairs.
– Clear lines of authority and accountability. Efficient decision-making process. Well-defined roles and responsibilities.
Potential slow decision-making due to multiple levels of approval. Limited flexibility in responding to rapid changes in the retail industry.
Retail Operations
Divisional Structure
– Walmart’s retail operations are organized into divisions, each responsible for a specific geographic region or store format. The divisions include Walmart U.S., Walmart International, and Sam’s Club, each with its own leadership team. Within each division, there are further divisions based on specific geographic regions or markets.
– Tailored approach to different markets and regions. Quick adaptation to local market conditions. Specialization in retail operations.
Potential coordination challenges between divisions. May result in variations in retail strategies across regions.
Supply Chain Management
Functional Structure
– Supply chain management functions follow a functional structure, with specialized teams for logistics, transportation, inventory management, and procurement. These teams manage the flow of products from suppliers to distribution centers and stores.
– Efficient management of the supply chain. Specialized expertise in logistics and inventory management.
Potential challenges in cross-functional collaboration between supply chain and other business units. May not align with specific business divisions.
Finance and Accounting
Functional Structure
– The Finance and Accounting functions operate with a functional structure, comprising specialized teams for financial reporting, auditing, and financial planning and analysis. Each team handles financial matters, including budgeting, financial reporting, and risk management.
– Efficient financial management and reporting. Specialized expertise in financial matters.
Potential challenges in cross-functional collaboration with other business units. May not align with specific business divisions.
Marketing and Sales
Divisional Structure
– Walmart’s marketing and sales operations follow a divisional structure, with divisions responsible for different regions or store formats. Marketing teams develop strategies tailored to specific markets. Sales divisions oversee retail operations and customer experience. Walmart also has an e-commerce division focused on online sales.
– Customized marketing and sales strategies for different regions and customer segments. Quick adaptation to regional market conditions. Specialization in retail marketing.
Potential coordination challenges between regional divisions. May lead to variations in marketing and sales strategies across regions.
Technology and Innovation
Hybrid Structure
– Walmart’s technology and innovation functions combine elements of both functional and divisional structures. There is a centralized technology team responsible for global IT initiatives and infrastructure. However, innovation teams within different divisions also focus on technology solutions tailored to their specific needs, such as e-commerce or supply chain innovation.
– Efficient management of global IT infrastructure. Specialized technology solutions for division-specific needs. Flexibility to innovate at the divisional level.
Potential challenges in balancing centralized and divisional technology initiatives. May require effective coordination between central IT and divisional innovation teams.
Human Resources
Functional Structure
– The Human Resources function operates with a functional structure, focusing on HR-related functions such as talent acquisition, talent development, and employee relations. Teams handle HR matters across the organization, including recruitment, training, and performance management.
– Efficient management of human resources and talent-related activities. Specialized expertise in HR functions.
Potential challenges in cross-functional collaboration with business units. May not align with specific business divisions.
Sustainability and CSR
Cross-Functional
– Walmart’s sustainability and corporate social responsibility (CSR) efforts involve cross-functional collaboration. While there is a dedicated sustainability team, sustainability initiatives require collaboration across various departments, including supply chain, marketing, and corporate affairs. The company’s sustainability goals are integrated into its overall business strategy.
– Holistic approach to sustainability and CSR, integrating it into business operations. Collaboration across functions for a shared purpose.
Potential challenges in ensuring consistent sustainability practices across the organization. Requires effective cross-functional coordination and alignment with corporate strategy.
Table of Contents
Walmart Business Model
History of Walmart
Understanding Walmart’s organizational structure
Walmart has an organizational structure characterized by the presence of a hierarchy and function-based groups. Since the company combines two different organizational structures, it can be said that Walmart utilizes a matrix organizational structure.
This allows Walmart to operate its vast retail presence in the United States and around the world, with approximately 10,500 stores under 46 banners in 24 countries. In fact, many similar multinational companies use this approach to deal with multiple divisions and functional structures at the same time.
Walmart utilizes the hierarchical structure which means that current CEO Doug McMillon is the only employee without a direct superior.
Directives are sent from top-level management to regional managers, district managers, middle managers, store managers, and store team members as required. This allows executives to easily exert their influence on the organization and monitor the impacts of decisions. What’s more, the hierarchical structure allows the company to effectively manage its more than 2.3 million associates.
Walmart has a 12-member Board of Directors with members of the founding Walton family and other individuals. Under the Board of Directors is the Executive Committee comprised of executives in roles such as Chief Financial Officer, Chief Technology Officer, and Chief Legal Officer and Corporate Secretary.
On the next level down is Senior Leadership consisting of 39 executives across a diverse range of roles in technology, merchandising, compliance, ethics, health & wellness, and international strategy, to name just a few.
Function-based structure
The function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
For example, function-based groups may include human resources, marketing, customer care, and production. Each group is headed by a manager who liaises with individual store managers to meet company objectives.
Furthermore, different Walmart store formats will be comprised of different departments. The member-only retail warehouse Sam’s Club, for example, will possess some functional groups that are not present in a Walmart Discount Store. Walmart Supercentres that incorporate banks, hairdressers, nail salons, pharmacists, restaurants, and optometrists will also incorporate several departments that are not relevant to a standard Walmart Discount Store.
Key takeaways:
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches.
Walmart utilizes the hierarchical structure which means that current CEO Doug McMillon is the only employee without a direct superior. Directives are sent from top-level management to regional managers, district managers, middle managers, store managers, and store team members when required.
The function-based structure of Walmart is used to categorize employees according to their particular skills and experience. Examples include sales, marketing, human resources, customer care, and production.
Key Highlights
Hybrid Hierarchical-Functional Structure: Walmart employs a hybrid organizational structure that blends elements of both hierarchical and function-based approaches. This combination is often referred to as a matrix structure, allowing Walmart to effectively manage its vast operations.
CEO’s Role: In the hierarchical aspect of the structure, the current CEO, Doug McMillon, stands out as the sole employee without a direct superior. This gives him a pivotal role in the decision-making process and overall management.
Hierarchical Directives: Walmart’s hierarchical structure facilitates the flow of directives from top-level management down to various organizational levels. This ensures that executive decisions and strategies are effectively communicated and implemented throughout the company.
Board of Directors and Executive Committee: Walmart’s leadership includes a 12-member Board of Directors, which includes members of the Walton family and other individuals. Below the Board of Directors, the Executive Committee comprises key executives responsible for different areas such as finance, technology, and legal affairs.
Senior Leadership Team: The Senior Leadership team consists of 39 executives who handle diverse roles in various domains, including technology, merchandising, compliance, ethics, health & wellness, and international strategy.
Function-Based Groups: Walmart’s function-based structure involves categorizing employees based on their skills and expertise. This results in various functional groups, such as human resources, marketing, customer care, and production, each headed by a manager.
Adaptation to Store Formats: Different store formats within Walmart’s portfolio, such as Sam’s Club and Walmart Supercenters, accommodate distinct departments and functional groups based on the specific needs of each format. This flexibility allows Walmart to tailor its operations to different customer requirements.
Global Operations: With over 10,500 stores across 24 countries, Walmart’s matrix organizational structure proves beneficial in managing its multinational operations and ensuring consistency while addressing local variations.
With over $572 billion in net sales in 2022, Walmart operates a differentiated Omni business model with three primary units comprising Walmart U.S., Walmart International, and Sam’s Club (a membership-only warehouse club), together with Walmart+. This subscription service includes unlimited free shipping, unlimited delivery from its stores, and discounts launched in 2021.
Walmart generated over $572 billion in revenue in 2022 and over $13.6 billion in net profits in the same year. Compared to over $559 billion in revenue in 2021 and over $13.5 billion in net profits.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
From humble beginnings just over 50 years ago, Walmart has become the world’s largest retail company. A single small discount store in Arkansas has now expanded to over 11,000 stores in 28 countries. Some reports suggest that the company makes $1.8 million of profit every hour.
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.
OpenAI is an artificial intelligence research laboratory that transitioned into a for-profit organization in 2019. The corporate structure is organized around two entities: OpenAI, Inc., which is a single-member Delaware LLC controlled by OpenAI non-profit, And OpenAI LP, which is a capped, for-profit organization. The OpenAI LP is governed by the board of OpenAI, Inc (the foundation), which acts as a General Partner. At the same time, Limited Partners comprise employees of the LP, some of the board members, and other investors like Reid Hoffman’s charitable foundation, Khosla Ventures, and Microsoft, the leading investor in the LP.
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.
The Amazon organizational structure is predominantly hierarchical with elements of function-based structure and geographic divisions. While Amazon started as a lean, flat organization in its early years, it transitioned into a hierarchical organization with its jobs and functions clearly defined as it scaled.
The Coca-Cola Company has a somewhat complex matrix organizational structure with geographic divisions, product divisions, business-type units, and functional groups.
Costco has a matrix organizational structure, which can simply be defined as any structure that combines two or more different types. In this case, a predominant functional structure exists with a more secondary divisional structure.
Costco’s geographic divisions reflect its strong presence in the United States combined with its expanding global presence. There are six divisions in the country alone to reflect its standing as the source of most company revenue.
Compared to competitor Walmart, for example, Costco takes more a decentralized approach to management, decision-making, and autonomy. This allows the company’s stores and divisions to more flexibly respond to local market conditions.
Dell has a functional organizational structure with some degree of decentralization. This means functional departments share information, contribute ideas to the success of the organization and have some degree of decision-making power.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams are based on the main corporate functions (like HR, product management, investor relations, and so on).
Goldman Sachs has a hierarchical structure with a clear chain of command and defined career advancement process. The structure is also underpinned by business-type divisions and function-based groups.
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.
McKinsey & Company has a decentralized organizational structure with mostly self-managing offices, committees, and employees. There are also functional groups and geographic divisions with proprietary names.
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.
Nestlé has a geographical divisional structure with operations segmented into five key regions. For many years, Swiss multinational food and drink company Nestlé had a complex and decentralized matrix organizational structure where its numerous brands and subsidiaries were free to operate autonomously.
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Samsung has a product-type divisional organizational structure where products determine how resources and business operations are categorized. The main resources around which Samsung’s corporate structure is organized are consumer electronics, IT, and device solutions. In addition, Samsung leadership functions are organized around a few career levels grades, based on experience (assistant, professional, senior professional, and principal professional).
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.
Starbucks follows a matrix organizational structure with a combination of vertical and horizontal structures. It is characterized by multiple, overlapping chains of command and divisions.
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.
Toyota has a divisional organizational structure where business operations are centered around the market, product, and geographic groups. Therefore, Toyota organizes its corporate structure around global hierarchies (most strategic decisions come from Japan’s headquarter), product-based divisions (where the organization is broken down, based on each product line), and geographical divisions (according to the geographical areas under management).
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
