Retail Industry Internal External Factor Assignment

Retail Industry Internal External Factor Assignment

This is a  solution of retail Industry Internal External Factor Assignment which discuss the internal and external effecting factors of Retail sector

Organization Chosen: Wall Mart: The biggest Player of the Retail Industry

Using Weber’s and Fayol’s ideas about bureaucracy, describe the division of labour and job specialization in your chosen organisation.

 Weber’s and Fayol’s ideas about bureaucracy in nut-shell: -

Administration for anything and for any area; is the most essential and the most crucial part. Be it our day to day life or be it a business organization. No business runs without an effective business administration. Business strategy’s implementation part depends upon the administrative work of the organization. Be it a smaller proprietary firm or be it a complex Multi National Company, Administrative Management Theory plays a vital role in the development of every business and organization.

Administrative Management is the study of how to create an organizational structure and control system that leads to high efficiency and effectiveness based on Max Webber’s Theory of Bureaucracy and Fayol’s Principles of Management. Formally and informally, the manager has authority in any organization. Formally, a manager holds a key position in managing and making maximum out of the existing resources of the organization. In the theory of bureaucracy, a manager’s formal authority is decided from the position he or she holds in the organization.

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“Authority is basically the power to hold people accountable for their actions and to make decisions in reference to the use of organizational resources.”

 Principle 1

In a bureaucracy, a manager’s formal authority derives from the position he or she holds in the organization. Formally and informally, the manager has authority in any organization. Formally, a manager holds a key position in managing and making maximum out of the existing resources of the organization. In an ever changing and ever challenging business world, a formal authority is not very much of importance. The power distance is kept lower in order to create two way communications.

This helps reducing the autocratic leadership in the organization, which is nowhere wishful. In contemporary business models, a bureaucratic or autocratic type of theory implemented is uncommon to see. In this day and age, we find organization running with more of an off the record or informal mandate slant. In this, there we see personal expertise, soft skills, technical knowledge, moral worth, and the ability to lead and to generate commitment from subordinates, without the use of this absolute power from one individual.

Principle 2

In a bureaucracy, people should occupy positions as per their performance, instead of their social standing. In the contemporary business set ups there we may still find companies which recruit their labour force by the personal contacts. These are the internal contacts and are preferential. These contacts may come from the existing employees. They fail to hire personnel by their key skills and know how or performance based recruitment is also missing. Due to such influence, companies do not get the desired labour force and hence, ended keeping such costly employees.

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Principle 3

The extent of each position’s formal authority and task responsibilities, and its relationship to other positions in the organization should be clearly specified.For the better output in the organization, the tasks, jobs and authorities should be well stated and well justified. It is because when they are well clarified, employees at different levels understand their role and what is expected out them exactly. These specifications also clarify the things like how much to expect out of their fellow colleagues, subordinates, and immediate authorities.

Principle 4

Authority can be exercised effectively in an organization when positions are arranged hierarchically, so employees know whom to report to and who reports to them. Reporting and role clarification is quite an important task in any organizational structure. The following few things must be addressed by all the companies

  • Reporting system: How to Report
  • Reporting timings: When to Report
  • Reporting person: Whom to Report
  • Reporting Report: Why to Report
  • Reporting Place: Where to Report

The specifications are seemingly small. However, these guidelines resolve many problems. Many bigger issues connected to these small issues are curtailed from arising. Careful speculations by managers in the organization help suppressing undesirable conflict within the organization.

Principle 5

Managers must create a well defined system of rules, standard operating procedures, and norms so that they can effectively control behavior within an organization. In every companies, Standard Operating Procedures structures, widely known as SOPs, are exclusive situates of formal written commands, regarding what are the ways of undertaking and functioning a definite facets of any given chore. If they are communicated and explained well enough by the managers then it is easier to generate better output. For this matter, every individual of the organization come to know the organizational goal and reason of existence.

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  • Industry: Retail (Grocery)
  • Largest Player in the industry
  • Country of the origin: The United States of America
  • Competitors: Carrefour, K Mart, Spancer

Division of Labor

Division of labour is quite relevant concept given by Henri Fayol in today’s organization structure. Division of labour is basically Job Specialization. Labour division concept is basically to increase labour efficiency, thereby making resources most efficient. It is rational grouping and making labour division which may be useful to both organizations as well as to the human resource of the company.

However, as none practice and theory of any area is perfect, the possible downside and a limitation to this theory is boredom within the laborers that could drop down the expected quality, employee initiative, and elasticity.

In Wal-Mart, there is a new spatial division of labour. It is defined as 'developed' countries lose manufacturing, however, with an increase demand of low rate retail offers, more and more companies are getting into retailing business every new day. For making overall goods cheaper, companies seek less expensive labours and hence the task of low-wage retailing and distribution increases.

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Wal-Mart has a policy of de-industrialization. Seeking cost effective labour, Wal-Mart increases the effectiveness of the policy and unstable work. As labour is cheaper in developing countries; these countries are believed to have be agitated manufacturing. This kind of manufacturing is termed as Sweated Labour. Thy mainly are in the business of exporting their manufactured goods to retailers in developed countries like the U.S. and the Europe.

Wal-Mart has been able to develop this labour division strategy just because it has a back up of the analogous arrival of capitalism centric globalization.

 Working at Wal-Mart


Impact on labour because of the promise of Every Day Low Prices: The central juncture of Wal-Mart success is its vow to "everyday low prices". This is mainly because of lower industry wages. They also have a mechanism to organism of labour contain and control. This strategy mainly engrosses an invasive recruiting mechanism, pay scales that are lower than other competitors and departmental store, capricious working hours, forcing people to work for longer time than official timings, a insecure labour force, powerful inspection in the workplace, gender biased and a centrally- guarded anti-union document.

Labour Budget

The one, who takes care of Wal-Mart labourer incentives and wages, is the post of manager. The managers are basically the representative of management to laborers and labourers to management. They devise the budgetary formation of the laborers and employees working under them. The devised funds must be endorsed by the senior control centre.

Policy of Anti-Unionism

So far as Wal-Mart’s other policies for labour division is concerned, Wal-Mart is quite too much towards the Anti-Unionism. Wal-Mart advocates this policy is to establish a Wal-Mart Family. Hence Zero-Tolerance of Conflict arisen is guarded interested. The founder also keeps a philosophy of making sure of the worker’s well being and workers’ health and welfare issues. They call worker as associates instead of Workers or Labourers.

Reasons for establishing exclusive low-wage offerings to labourers

How do they keep labour rates so down from rest of the industry players? : Having adopted the policy of everyday low price, Wal-Mart accepts the cheapest labour rates. The basic reason of Wal-Mart influencing workers’ wages is the size of it. Another fruit of the same basket of Wal-Mart’s challenging wage rates is the ascendancy of retail market. These reasons have predisposed not only the wage rates but also the society as a whole also the retail quarter. As a result of which, the amalgamated employers got their warhead to exploit the labour and get the cheapest out of them.

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  • Wilson, Woodrow, 1987. The Study of Administration, Political Science Quarterly 2.
  • Shafritz, J.M., A.C. Hyde. 2007. Classics of Public Administration. Wadsworth: Boston.
  • Kernaghan, Kenneth, 2010 "Public administration" in The Canadian Encyclopedia. Available online
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