In this competitive era, it is difficult for business organizations to remain for long term period in market competition. Due to globalisation, there are several companies are being entered in market and effect the business of other organizations. It can also hamper their working activities and operations (Nunan, Campbell and Foster, 2012). The present report is based upon WALMART; its multinational retail cooperation that operates a chain of supermarkets and grocery stores. Apart from this, the report will be describe different challenges that are being faced by organisations and how to reduce them.
There are several issues and challenges are encountered by business organisations throughout to manage their working activities. These issues can affect the working activities and practices of a corporate association also hamper its profits and sales revenues. WALMART is one of the largest retailing sector as it operates 11500 stores and clubs in over 30 countries. It is also a known leading company by sales revenue, i.e. approximately US$500 billion as well as it is also known largest private employer over the world, i.e. 2.3 million employees. But due to the involvement of some internal and external factors there are several issues are being faced by the company that can affect its sales and profitability over the world. Below describe are the several challenges that are faced by business units, such are as-
Globalisation – The concept of globalisation is become major issue for running a business, during the last few decades. The phenomenon also hinder an economy, society, business life as well as an environment in various ways (Daniell, 2012). Along with this, globalisation is concern with increasing market competition, changes in technology as well as data or information transfer. For example- in UK, due to globalisation many companies are entered in retail industry of the country that can hamper profitability of other organisations also. If a new company will entered in market then existing companies have to reduce their prices of its products and services through which it cannot achieve goals and objectives from target market. Due to higher prices of goods, customers will not attract towards them then it reduces profitability and sales of the firm in an adverse manner. In addition, strong and developed economies continuously exploit underdeveloped nations on the name of business sharing. The number of manufacturing industries is raising day by day, it increases pollution because intensive technologies are based on heavy machines and power. Moreover, production factories are also polluting the atmosphere. Therefore, if companies are failed to accomplish their corporate social responsibilities then it cannot achieve high growth and success. Although, the number of customers will also get reduce. Thus, globalisation is a very big challenge for every multinational organisation which hamper its overall profitability as well as productivity. In this context, companies are require to determine different policies so as to reduce the negative of globalisation (Arayici, Egbu and Coates, 2012). Government also have to decrease foreign direct investment so that existing firms can easily expand themselves in their home countries.
Raising capital – Poor financial resources can be another major challenges for business units that can affect their profitability and productivity. Although, due to lack of financial resources company cannot spend money on improving the quality of its products and services. It also cannot adopt new and innovative techniques in order to survive at global market. In UK, financial crises has prompted an evaluation of risk management. Because of this economic crisis, banks and other investors are not ready to give loan or credit to corporate associations. At this time, interest rates and bank rates were also increase through which organisations were not managed their functions effectively (The Challenges Faced By An Organisation, 2017). Therefore, poor financial management eventually raise the situation of shut down of a business organisation. In past years, WALMART faced the situation of negative cash flow for a by extending payment terms to supplies. This was also effected market reputation of the company because suppliers were not ready to sell products to the company. Thus, the issue of raising capital should be eliminate as soon as possible by determining various ways of funds.
Social and economic issues – There are different socio-economic issues, like poverty, unemployment, lack of education, religious and cultural discriminations, corruption, overpopulation etc. also put a huge impact on growth and development of a business organisation. In which, poverty is concerned is major socio-economic issue that have an adverse impact on individuals purchasing power (critiquesAhmad, Hadgkiss and Ruighaver, 2012). Because, due to poor economic condition, people are not capable to consume luxury products and services through which sales of WALMART can goes down and firm cannot achieve its goals and objectives. Apart from this, overpopulation also a biggest issue for companies because it is too difficult to identify the needs and wants of large group of people and fulfil them in the best possible manner. In addition, company also cannot fulfil its CSR responsibilities effectively and efficiently.
Customers needs and wants – In this modern era, customers have multitude of interest and choices in market; this can affect their behaviour and purchasing power. Due to higher disposable income, customers want effective goods and services in an efficient way which gives them high quality with low prices (Dwivedi, Weerakkody and Janssen, 2012). Therefore, sometimes it becomes too difficult for manufacturing companies to recognise customers needs and wants and fulfil them in an effective manner. Along with this, TESCO, ASDA, Sainsburry, Morrisons etc. are the major competitors of WALMART that also has covered high market share. Thus, it is too difficult for WALMART to attain and retain customers for long term period. Taxation policy affects business costs, for instance- enhancement in corporation taxes increases production or manufacturing costs. The creation national minimum wages and heath and safety acts can hamper working activities and operations of an organisation.
Government rules and regulations – Political condition of a country can also be another challenge for a business organisation. If UK government increases tax rate and duties on importing and exporting of goods in other countries then corporate units cannot sells their products at global level. For this, they would pay high amount; that thing also effect their sales and profitability in an effective manner (Kogg and Mont, 2012). UK's regulatory bodies can also implement different laws and legislations that is must followed by all companies in order to survive in capital market. Such rules can also affect decision making process of the company in direct and indirect manner.
Cultural barriers – In multinational business units, there are many cultural people are working at there. Sometimes, management is also not capable to manage these changes and it raised conflicts and misunderstandings among employees and managers. WALMART is a multinational business organisation, where different types of people are working who have different values, believes and morals. Due to different languages, workers cannot understand each other's feelings and messages. In addition, cultural barriers also affect public relations of a firm. For example- in order to raise sales, management have to determine different ways so as to navigate language barriers. Thus, to diminish the impact of cultural barriers religious boundaries must be understood to run effective marketing campaigns abroad.
Strategies to overcome from organisational challenges
There are several strategies and policies can adopted by WALMART so as to reduce the impact of environment on its working activities. Management have to find out several ways and implement effective technologies for competing such challenges (Sharma and Gadenne, 2011). There is describe difference strategies that helps an organisation to face external environmental challenges, such are stated as under: -
Provide training and development assistance – It is one of the best way to improve skills and knowledge of employees; this helps a firm to face all future challenges and issues. Along with this, if WALMART continuously provide training and development assistance to its staff members then it would increase its production level; it results employees will be performed in innovative method. They also use effective and new ideas towards reducing the impact of future challenges. Therefore, well skilled and qualified employees are the source of gaining high competitive advantage to a firm and helps it in achieving goals and objectives in a certain time period.
Analyse future risks – Evaluation of future risks and uncertainties aids management to prepare effective strategies and policies so as to compete with future challenges and issues. In addition, risk assessment refers with better use of placement and monitoring; it improves overall functioning as well as cost savings. WALMART has a team of few experts that helps to analyse future market situations and forecasting about upcoming sales and profitability; it gives guidance to employees as they can work accordingly. Future risks can also be related with climate changes, technological advancements etc. There are three types of risks, such as – price risks that is uncertainty towards future price of an asset whereas credit risk concerned that party on the other side of the agreement will abide by the terms of an agreement (Northcott and Ma'amora Taulapapa, 2012). Apart from this, interest rate risk related with future interest rates an their impact on future cash flows as well as on the fair value of existing assets and liabilities. Therefore, all these kind of risks highly effected sales and profitability of a business organisation in an adverse manner.
Regulate free flow of communication – Implementation of free flow of communication is really assistive for a business organisation. It helps management to communicate with staff members and determine various tactics in order to compete with external business environment. Along with this, effective communication also helps companies to increasing business transaction so as to meet global demands. If managers and employees will be communicate with each other than its reduces cultural differences as well as misunderstandings among both parties.
From the above mentioned report, it has been summarised that there are certain internal and external challenges of business environment can affect working activities and operations. It can also harm their market reputation and sales. Along with this, in order to overcome with these challenges it is essential for WALMART to conduct a market research and determine all issues. It also helps firm to determine competitors' strategies and policies so as to make effective decisions in future. In addition, to reduce the impact of these issues, managers are required to adopt certain strategies and policies so as to gain high competitive advantage in a certain time period.
Books and Journal
Nunan, F., Campbell, A. and Foster, E., 2012. Environmental mainstreaming: the organisational challenges of policy integration. Public Administration and Development. 32(3). pp.262-277.
Daniell, K. A., 2012. Co-engineering and participatory water management: organisational challenges for water governance. Cambridge University Press.
Arayici, Y., Egbu, C. O. and Coates, S. P., 2012. Building information modelling (BIM) implementation and remote construction projects: issues, challenges, and critiques. Journal of Information Technology in Construction. 17. pp.75-92.
Ahmad, A., Hadgkiss, J. and Ruighaver, A. B., 2012. Incident response teams–Challenges in supporting the organisational security function. Computers & Security. 31(5). pp.643-652.
Dwivedi, Y. K., Weerakkody, V. and Janssen, M., 2012. Moving towards maturity: challenges to successful e-government implementation and diffusion. ACM SIGMIS Database. 42(4). pp.11-22.
Kogg, B. and Mont, O., 2012. Environmental and social responsibility in supply chains: The practise of choice and inter-organisational management. Ecological Economics. 83. pp.154-163.
Sharma, B. and Gadenne, D., 2011. Balanced scorecard implementation in a local government authority: Issues and challenges. Australian Journal of Public Administration. 70(2). pp.167-184.
Northcott, D. and Ma'amora Taulapapa, T., 2012. Using the balanced scorecard to manage performance in public sector organizations: Issues and challenges. International Journal of Public Sector Management. 25(3). pp.166-191.
The Challenges Faced By An Organisation, 2017. [Online]. Available through: .
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