Wal-Mart uses market control mechanism that stresses on the use of external market mechanisms such as price competition and relative market share to establish the standards used in control system. Market controls at Wal-Mart have ensured that the retail merchandiser reduces prices to regulate and increase its performance. Mukherjee (2009) says that Wal-Mart uses this approach because it produces products and services that have huge competition in the market. In this context Wal-Mart has divisions that have been turned into separate business units and profit-centers and hence they are evaluated in terms of the amount of profits it generates (Mukherjee, 2009).
Bureaucratic control at Wal-Mart puts into consideration on authority and it depends on managerial rules, instructions, processes, and strategies (Mukherjee, 2009). Wal-Mart exercises this type of control through expert assignments that seek to ensure effective implementation of parent policies by its business subsidiaries. For Wal-Mart this ensures proper execution of its strategic tasks such as marketing and financial management. At Wal-Mart bureaucratic control employs the use of formal rules set by the management, operational standards, chain of command, and legitimate authority while making long term decisions. This type of control mechanism executes well with precise tasks that are completed by independent workers such as the marketing team (Sitkin, Cardinal & Bijlsma-Frankema, 2010).
Wal-Mart imposes clan control to its employees through peer pressures in the form of shared values, norms, traditions, rituals, beliefs and other forms of its business and organizational culture (Mukherjee, 2009). Through this control Wal-Mart’s employees are encouraged to provide contribution, make selections, and act autonomously to increase the need for innovation. For example Wal-Mart gives its employees the opportunity to help in buying stock options besides giving inducements to employees who report theft. The clan control mechanism has helped Wal-Mart to have a strategic position in the market place.
Budgetary control mechanisms at Wal-Mart takes place by means of budget reports that compare actual results with planned objectives (Weygandt, Kimmel & Kieso, 2009). Through budgetary controls Wal-Mart is capable of keeping on track its planned budget allocation and objectives while at the same time monitoring its business progress along the way. Weygandt, Kimmel & Kieso (2009) says that “top management at Wal-Mart requires periodic reports on the progress of department managers towards their planned objectives” (436).
In conclusion, Wal-Mart uses the above four control mechanisms to monitor progress and evaluate its business performance. Wal-Mart should effectively use these controls to monitor activities in its business and further ensure that these activities are taking place as planned while providing the organization with an opportunity to correct deviations in when they occur. Through the four controls Wal-Mart is able to consistently access its performance standards to increase its revenue.