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  • 1. Wal-Mart: Strategic Management An in depth analysis of Wal-Mart and its global strategic management and electronic distribution Analysis for Business Policy: Strategic Management.Instructor: Dr. M. Reitzel, DeVry University, February 2007, Austin, TX. Members of the Team: Marcus Bedford Jon Cable Wayne Oulicky Constince Sanchez
  • 2. Table of Contents:Executive Summary.……………………………………………………………….2Problem Statement ………………………………………………………………...2Situational Description and Strategic Analyses …………………………………...3 Strategic Analysis Overview & History.……………………………………………..3 External Environment.……………………………………………6 Internal Environment.…………………………………………….6 Intellectual Assets.……………………………………………......9 Strategic Formulation Business Level Strategy………………………………………….9 Corporate Level Strategy………………………………………...12 International Strategy……………………………………………14 Digital Business Strategy………………………………………..15 Strategic Implementation Strategic Control plus Governance………………………………15 Organizational Design……………………………………………19 Leadership……………………………………………………......20 Innovation……………..……….………………………………...22 Opportunities plus New Ventures…..……..……………………..22Proposed Alternative Solutions…………………………………………………....23Recommendations……………………………………………………………….....23Summary……………………………………………………………………….......24Bibliography……………………………………………………………………….25 -1-
  • 3. Executive Summary Though out the years since their inception in the 1960’s, Wal-Mart has grown at analarming rate. Although in the early years Wal-Mart was thought to be unsuccessful, it has sinceproven to be a retailer of the future. It is the largest retailer in the world. It has the highest grossprofits of any company in the world as well as the highest net profits. Wal-Mart has also toppedthe Fortune 500 4 times. According to “Wal-Mart - Out in Front”i it has the following Corporatestrategies: • Broadening Our Appeal to All of Our Customers • Becoming an Even Better Place to Work • Improving Business Operations and Efficiency • Driving Growth in Our International Business • Making Unique Contributions to CommunitiesBecause the public view of Wal-Mart is some what tarnished, they are making an effort bothcorporate and globally to address the image issues that they have. Many communities haverefused or at least petitioned to have Wal-Marts banned. Wal-Mart has tried to gain public interestby lining itself with politicians to achieve its overall goals. While the goals that Wal-Mart has currently for its corporate strategy may lead them totheir overall achievement, Team Wal-Mart does not believe that it will lead Wal-Mart intocontinued success. Wal-Mart has addressed all the issues listed above. However, our team thinkstheir success, although driven by these goals, contains major problems that arise while puttingthese goals into action. Some of the recommendations that we have developed are more at thelocal store level, where some of the goals need to be implemented globally. The public imageneeds to be addressed, the treatment of their employees both with regards to their pay scale aswell as the traumatic treatment that is displayed in the view of the media. Corporate hunger foradditional market gain has clouded their judgment when it comes to hiring to retain vs. hiring tofill head count. Wal-Mart also needs to address its views on how to navigate, infiltrate anddominate the global discount retail industry. Wal-Mart needs to address the issues that they currently have with the public, theiremployees and themselves. Although many work for Wal-Mart it is not the best place to work ifyou are a single mother, student or minority. Wal-Mart also needs to implement changes on howit treats and work with physically disabled people.Problem StatementThe best way to describe the problems that Wal-Mart is facing is the lack of being able to or justnot implementing their once believed motto that “customers are always right”. Althoughcustomers are not always right, associates at Wal-Mart should treated people, customers and thepublic with respect and admiration. The associates at Wal-Mart once had a great company behindthem that believed that without them, they would not be where they are today. Wal-Mart needs toregain that perspective in order to propel itself into the future of success. Their corporate tacticsof making money and reducing costs incurred by employee benefits needs to be readdressed andrealigned with the views of Sam Walton. -2-
  • 4. Situational Description and Strategic AnalysesThrough continual research and readings Team Wal-Mart has gained a better understanding andperspective of America’s fascination with Wal-Mart. Despite the constant barrage of negativepress relating to its handling of labor issues, employee benefits, vendor practices and customerservice, the retailer is able to thrive. Wal-Martfacts.com brings an enlightening perspective onWal-Mart views and how they and the public perceive its pitfalls. First, we are going to examinethe history of the company. Where did Sam Walton get the idea to come up with a retail store likeWal-Mart? Did he actually expect to be as large of the retailer as it is now? Our team wanted tobetter understand where Wal-Mart is with its corporate level strategy, business level strategy,strategic formulation and it own views on its implementation. W We will further explore somealternative solutions and make recommendations as to where the public views the company inregards to the topics of discussion, and where our team’s views, and its perceptions of where theyare today in how well it is or is not implementing their own strategies. We will also makerecommendations and explain how and why those recommendations were derived and how theyshould be implemented, as well as how Wal-Mart should take action to address those needs.Throughout the entire document you will gain insight into the tactics that Wal-Mart has used toachieve its goals. By reflecting on ideas and principles of where they were, where they want to beand how they perceive their path to gaining the success to achieve its goals a better understandingwill emerge. Although our ideas may have some of the same fundamental principles, we viewWal-Mart’s path to achieve its goal in a much different light.Strategic Analysis Overview and History In 1962 Sam Walton opens his first Wal-Mart in Rogers, Arkansas. His low priceapproach to retail soon became a model that all Wal-Mart stores would follow. "Sell brandmerchandise at low prices."ii Interesting enough, 1962 was the same birth year for Kmart, Targetand Wal-Mart. Sam Walton, founder of Wal-Mart wanted to take advantage of the opportunityand establish a discount retail company. In the beginning the stores were started in the smalltowns in the south. During that time period it was considered as the least successful retailer,however it has outgrown most of its competition. Sam’s mission was to have an everyday lowprice discount retail store. Five years into founding Wal-Mart, Sam felt that he needed to expandbefore his competitors out ran him. “During the 1970s, the retail industry became highlycompetitive, but at the same time the economy became weak due to inflation Sears was theleading retailer in the nation, during the 1970s, however, the recession of 1974-1975 and inflationaffected Sears adversely. Sears targeted middle class families and expanded its overhead. Wal-Marts strategy was to compete with its rivals and lower overhead expenses. Compared with -3-
  • 5. Sears, who consisted of more than 6,000 distribution centers, Wal-Mart had only 2,500comparable units.”iii Although Wal-Mart was under financed, it managed to have 30 stores in the8 years. In order to sell the merchandise at a low rate, Wal-Mart’s purchasing cost must also be ata low rate. However, suppliers and vendors were not willing to supply merchandise at the rateWal-Mart was asking. As result of this he built warehouses so that merchandise can be bought inbulk at a cheaper price because of the large volumes. At the same time Wal-Mart needed toexpand, but did not have enough capital. Sam decided to go public to raise capital. Over all, whilehis competitors were under the impression that Wal-Mart’s business model will not be successful,Sam has taken the advantage of the time and strategically placed his business to grow. Sam wasalso able to convince his establish an internal culture in order have everybody on the same boat.This resulted in everyday low prices. He did not have any sophisticated systems, which resultedin less overhead cost. Currently, Sam’s vision has become a global company employing more than 1.8 millionassociates worldwide and nearly 6500 stores and clubs spanning across 14 countries. "The secretof successful retailing is to give your customers what they want," Sam wrote in hisautobiography. "And really, if you think about it from the point of view of the customer, youwant everything: a wide assortment of good quality merchandise; the lowest possible prices;guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours;free parking; a pleasant shopping experience (www.walmartfacts.com).” In the 1980s, Wal-mart’s growth, among retailers, placed them in the top sellers inAmerica. Company sales in 1980 were an all time high; those figures were dwarfed in 1989 by arecord 26 billion in sales (www.walmartfacts.com). At the end of the 80’s, the company hadalmost 1400 stores in existence. “Wal-Mart Stores, Inc. branched out into warehouse clubs withthe first SAM´S Club in 1983. The first Supercenter, featuring a complete grocery departmentalong with the 36 departments of general merchandise, opened in 1988. Wal-Mart had become atextbook example of managing rapid growth without losing sight of a company’s basic values. InWal-Mart’s case, the basic value was, and is, customer service.”iv (www.walmartfacts.com) Timeline1960s and 70s1962 Wal-Mart opened the first store In Rogers, Ark.1970 Wal-Mart opens first distribution center and home office in Bentonville, Ark. 1970 Wal-Mart traded stocks as a publicly held company1971 Wal-Mart in five states: Arkansas, Kansas, Louisiana, Missouri and Oklahoma.1972 Wal-Mart approved and listed on the New York Stock Exchange.1973 Wal-Mart in Tennessee.1974 Wal-Mart stores now in Kentucky and Mississippi, Texas is ninth state of Wal-Mart.1977 Wal-Mart entered Illinois. 11th state: Alabama.1980s1981 Wal-Mart opened at Georgia and South Carolina -4-
  • 6. 1982 Wal-Mart opened at Florida and Nebraska.1983 First SAMS CLUB opened in Midwest City, OK People Greeter implemented at all store.Wal-Mart enters Indiana, Iowa, New Mexico and North Carolina.1984 David Glass named company president. Wal-Mart enters Virginia1985 Wal-Mart has 882 stores with sales of $8.4 billion and 104,000 Associates.Company adds stores in Wisconsin and Colorado.1986 Wal-Mart enters Minnesota.1988 David Glass named chief executive officer of Wal-Mart Stores, Inc.1988 First Super center opened in Washington, Mo.16 Wal-Mart distribution centers in operation.1989 Wal-Mart is now in 26 states with the addition of Michigan, West Virginia and Wyoming.1990s1990 Wal-Mart becomes nations No. 1 retailer.McLane Company of Temple, Texas acquiredWal-Mart enters California, Nevada, North Dakota, Pennsylvania, South Dakota and Utah.1991 Wal-Mart enters Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire,New Jersey and New York."Sams American Choice" brand products introduced.International market entered for first time with the opening of a unit Mexico City.1992 Sam Walton passes away April 5.S. Robson Walton named chairman of the board April 7. Wal-Mart has entered 45 states with the addition of Idaho, Montana and Oregon. Wal-Mart enters Puerto Rico. 1993 Wal-Mart enters Alaska, Hawaii, Rhode Island and Washington. 1994 Wal-Mart enters Canada by the acquisition of Woolco, and takes over 123 former Woolco stores across Canada. It opens 96 stores in Mexico. Three value clubs open in Hong Kong.1995 Wal-Mart enters its 50th state - Vermont - and builds three units in Argentina and five inBrazil.1996 Wal-Mart enters China1997 Wal-Mart replaces Woolworth on the Dow Jones Industrial Average2000s2000 Wal-Mart ranked 5th by FORTUNE magazine in its Global Most Admired All-Stars list.H. Lee Scott named president and CEO of Wal-Mart Stores, Inc. -5-
  • 7. Wal-Mart ranked #1 Corporate Citizen in America in the 2000Cone/Roper Report, an annual national survey on philanthropy and corporate citizenship.2001 Wal-Mart has the biggest single day sales in history: $1.25 billion on the day afterThanksgiving.2005 Wal-Mart Stores, Inc. closed out the year with $312.4 billion in sales, while expanding tomore than 6,200 facilities around the world, including 3,800 stores in the United States, alongwith 3,800 international units. Around the globe, we now have a strong presence in Argentina,Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico,Nicaragua, Puerto Rico, South Korea, and the United Kingdom. Wal-Mart employs more than 1.6million associates worldwide. There are more than 138 million customers who visit our Wal-Martstores each week all over the world.vExternal Environment Wal-Mart already provides products categorized as “negative category trips” within theirsuper stores. Consumer habits are not likely to change in this area unless they can change buyershabits which will account for more trips into their retail centers. Wal-Mart’s growth is partiallydependant upon its manufactures and their ability to package and brand items to meet Wal-Mart’severy day low price model. This means being able to market more recognizable brand names intoWal-Mart’s retail system, which could attract higher income shoppers. They have an estimated83% of total U.S. household penetration. Competing retailers in specialty areas include - dollarstores, automotive retailers, convenience/gas, home improvement stores, club stores and toystores. All of these outlets are in greater competition for Wal-Mart trips.vi “The Wal-Mart Storessegment is the largest segment of Wal-Marts business, accounting for 67.3% sales during thefiscal year ended January 31, 2005 (fiscal 2005). The segment consists of three different retailformats, all of which operate in the United States. The Companys SAMS CLUB segmentconsists of membership warehouse clubs that operate in the United States, and accounts for 13%of fiscal 2005 sales. The international segment consists of retail operations in eight countries andPuerto Rico, and generated 19.7% of Wal-Marts fiscal 2005 sales. In addition, the Companyowns an unconsolidated minority interest of approximately 37% of The Seiyu, Ltd., a retailer inJapan.”viiInternal Environment Economic Environment:− 1980s & early 1990s- eras of economic uncertainty for retailers, many retailers negatively affected.− Increased competitive pressures, sluggish consumer spending, slower than anticipated economic growth.− At the beginning of the year 2000, the US had experienced one of the longest periods of economic expansion in its history.− Wal-Mart responded to changes in the marketplace by selling goods at price levels below regular retail prices. Wal-Mart even though was considered as the industry leader carried much of the same merchandise, offered prices that were pennies apart and operated stores that look almost exactly alike. -6-
  • 8. Technological Environment: To keep with the pace of technology revolution, Wal-Mart had an inventory controlsystem that was recognized as the most sophisticated as retailing. They incorporated a high speedcomputer system that linked almost all stores to the headquarters and the company’s distributioncentre. Most important for management, it helped detect sales trends quickly and speeded upmarket reaction time substantially. At the beginning of 2000, Wal-Mart set up a separatecompany with website with plans to go public.Social Environment: Wal-Mart had launched several programs to highlight popular social causes-“BuyAmerican”, 1985. The theme was “bring it home to USA” and its purpose was to communicateWal-Mart’s support for American manufacturing. In the program, the firm’s exerted substantialinfluence to encourage to manufacturers to produce goods in the United States rather than importthem from other countries. Vendors were encouraged to initiate the process by contacting thecompany directly with proposals to sell goods that were made in the United States. Also, Wal-Mart was one of the first retailers to embrace the concept of “green marketing”. The programoffered shoppers the option of purchasing products that were better for the environment in threerespects: manufacturing, use, and disposal.Management The greatest strength for Wal-Mart from its start in 1969 to this day has been the visionand dedication of the top level management CEO’s David Glass and current CEO H. Lee Scottand no one can deny Sam Walton the founder for his great vision that he made become crystalclear. From the founding to this day Wal-Mart’s top level management has been striving to comeup with greater ways to bring Wal-Mart at level it is today and keep it at tops of all retailers andcompanies world wide. Wal-Mart’s greatest strength after its management is its size whichmanagement has helped it to grow with increasing sales and net income since 1993. The way theyhave implemented their strategic strengths in the industry is first by coming up with multiplestore fronts to reach all markets and segments of people. They have created a careful strategic planning on where and when to open new stores.This geographic expansion strategy has focused on opening outward into new geographical areas.Wal-Mart expands into adjoining geographic areas, saturating each area with stores beforemoving into new territories. This type of strategy created synergy by doing this by clustering newstores in a relatively small area, Wal-Mart could spread advertising expenses for breaking intonew markets across all area stores, and a tactic the company used it used to keeps its advertisingcost at 1% of sales compared to 2-3% for competitors. Wal-Mart although not the first but thebest at everyday low prices having 8-27% below those of such leading supermarkets this in turnhas been Wal-Mart’s winning strategy against competitors in find all ways to cut cost and createsynergy through the cost cutting there for keeping prices way lower than that of its competitorstherefore being the most popular amongst consumers when it comes to low price retailing. Wal-Mart cut cost on many different levels but its most effective strategy it has found itwith its suppliers. Its relationships with its suppliers are its main competitive advantage by havingprocurement management spend a lot of time with vendors and understanding there cost structure.Thus they made the negotiation process transparent, doing all it could to cut down cost and quoteWal-Mart an attractively low price. Some 200 vendors have established offices in Bentonville to -7-
  • 9. work closely with Wal-Mart on a continuing basis where they are encouraged to voice anyproblems in their relationship with Wal-Mart and to become involved in Wal-Mart’s future plans.Most vendors view Wal-Mart’s single bottom line price and its expectation of close coordinationas a win-win proposition not only because of benefits of cutting out “funny-money” costs butbecause they learn collaborative efforts and mutual data-sharing which often had tremendousbenefits in the rest of there operations. In executing Sam Walton’s strategic vision of become the largest low price discountretailer in the world they also increased shareholder’s wealth every year almost five times morenow in earnings per share than in 1993. Wal-Mart has been the leader in its industry and growthrate of more than 32 countries because it has had many strengths but with all strengths there areweaknesses and although I did not see much I did see that Sam’s club was not at the top of itsgame as all there rest of the other store fronts. Costco the main competition to Sam’s clubs is overperforming Sam’s club with fewer stores and is the nation’s biggest retailer of the fine wines(600million). As for opportunities and threats there are many opportunities and threats for Wal-Mart.One is to clean up its recent public image and try to fight or settle the 6000 lawsuits it is facingright now. “The law suites range from anti-trust and consumer issues to tort claims. A couple oflawsuits have potentially serious consequences like the alleging the company discriminatesagainst women, which has potential to turn into the largest sex-bias class action ever.”viii Wal-Mart also has the threats of having management put out brushfires instead of trying to grow andoperate the business. All the threats Wal-Mart can use as opportunities to show the public that itis not a sex-bias company and exuberate what Sam Walton had which was care for thecommunity and all of his employees.Porter’s Five Forces framework • Potential entrants - Wal-Mart does not have to worry about threat to new entrants because of high barriers of entry for companies aspiring to come into the retail industry. • Bargaining power of buyers - Buyers do not have to bargain with Wal-Mart for low prices and higher quality or more services because Wal-Mart has already established the low prices, higher quality, and more services philosophy. Wal-Mart has many pricing philosophies including “Every Day Low Price”, “Rollback”, and “Special Buy” to ensure that their customers get the lowest price possible. Also Wal-Mart does allow customers to match prices from its rivals by showing coupons from its rivals and will honor that price if it’s lower than theirs • Bargaining power of suppliers - Wal-Mart hand picks its suppliers and has a good and long standing relationship in order to maintain their pricing philosophies, every day low prices, roll back, & special buy, Wal-Mart’s suppliers also know that they supply have to be good quality products. Wal-Mart will not sell something that is not to their satisfaction. Also suppliers are put into a tight spot where they have to play by the rules set up by Wal-Mart or loose their contracts they are forced to redesign everything from packaging to even sometimes telling them what it will pay for their goods. • Threat of substitute products and services - The ability of Wal-Mart to offer the cheapest products that meet both quality and its price standards ensures that it will not incur the -8-
  • 10. threat off substitute products from its rivals cause they are able to meet the customers product satisfaction. Wal-Mart has an excellent customer service. Everything possible is done to ensure that shopping at Wal-Mart will be a friendly experience. Wal-mart was founded on 4 basic beliefs that all Wal-mart employees must adhere to which are, “respect for the individual, excellence in the workplace, customer service and always having the lowest prices”. Wal-Mart takes these 4 Basic Beliefs very seriously. • The intensity of rivalry among competitors in an industry - Due to Wal-Marts size, domination in its industry there is no intensity of rivalry among Wal-Mart and its competitors in the retail industry because Wal-Mart excels in this sector and the others like Kmart seem to be struggling to stay afloat, Target is not even half the size of Wal- Mart so they don’t seem to be having that big of threat by their rivals. No competitor can beat Wal-Mart’s “every day low price” so that gives Wal-Mart a distinct advantage over their rivals.Intellectual Assets Wal-Mart has not developed any real intellectual assets on its own. It has howeverincorporated other company’s assets to gain strategic success in the retailing industry. What thismeans is that Wal-Mart has taken and implemented RFID technology to a level that no otherretailer at the time has done. They took internal IT departments and implemented it in every storelocation around the world, linked the information to their warehouses and made the network areal-time network. This is discussed later. Their real Intellectual Assets are those of otherorganizations all collaborated to one to propel Wal-Mart into history as the largest, fastestgrowing and dominating retailer that it is today.Strategic Formulation Business Level Strategies Wal-Mart’s competitive advantage in the world of retailing is greatly attributedto their strategic focus on value chain activities. Efficient and innovative use of inbound andoutbound logistics and mastery of complex management operations with large economies of scalehave made it difficult for many retailers to imitate the value Wal-Mart has supplied to the worldof discount retailing. From establishing their own logistics operations, complete with their ownfleet of trucks and a private satellite system to successful management of complex cross-dockingstrategies at over 19 wholly owned distribution centers, their efficient utilization of value chainactivities has made its mark in the world of ‘low cost’ global retailing.Wal-Mart realized very early on that the typical models of value chains in discount retailinginvolving cost control, efficiency in distribution and purchasing and low overhead-facilities wasnot going to be enough to compete for a valuable market share. They needed a strategy thatwould move products from location to location quickly, efficiently and often without ever takingit into inventory first. The logistics technique of cross docking offered such an advantage and hassince been a central feature in Wal-Mart’s value chain activities. Instead of wasting time inwarehouse inventory, cross docking is the practice of reducing handling costs by receiving newmerchandise, selecting, repacking and distributing it across one loading dock to another asquickly as possible. Although efficient in use, cross-docking is extremely difficult to manage andoperate effectively. For this reason Wal-Mart’s ability to implement and manage cross-docking -9-
  • 11. strategies provides a central advantage to their logistics operations reducing the cost of sales by 2to 3 percent compared to its competitors. Since merchandise comes and goes from theirwarehouses so quickly they needed an effective inventory control system. Radio FrequencyIdentification (RFID) offered the ability for Wal-Mart to digitally monitor its shipments to-and-from its warehouses and efficiently manages its supply chain without hindering the effective useof its cross-docking strategies.Wal-Mart’s Information Systems (IS) strategy is a central force in bringing all operations andlogistics of its value chain together. Their IS strategy consists of three basic principles:Centralized IS for operations all over the world, common systems and platforms across the entireorganization, and “be merchants first and technologists second.” Wal-Mart was the earliestadopters of supply chain software in the retail industry. Today their application infrastructureallows a scan to automatically signal replenishment of stock, trigger a payment and adjustsinventory level. Therefore, suppliers know what is selling with up to the minute statistics.Through application and maintenance of this technology, a connection was made beyond that atthe store level, by analyzing that data as a mission critical requirement they are able to corner thesupply-in-demand equation and set them apart from their competition.One of Wal-Mart’s pitfalls in its value chain is in its customer service. They have taken a step inthe right direction by implementing interactive online tools, clearly defined their return policies,notification of product recalls, and encouraged of feedback from its customers. Leveraging buyerknowledge through advanced customer relationship management (CRM) automation allows Wal-Mart to build stronger customer profiles. This allows Wal-Mart to meet customer’s demands bykeeping shelves stocked while maintaining its low price credo.(A full outline of Wal-Mart’s Value Chain) - 10 -
  • 12. Competitive Advantages & Sustainability Through its efficient use of cost reducing value chain activities and large economies ofscale Wal-Mart’s competitive advantage offers them a significant position in overall low costleadership by providing a strong industry-wide low cost position. With aggressive constructionof sole-owned efficient warehouse facilities, knowledge gained through experience of costreduction and overhead control in its value chain, Wal-Mart is the model of low-cost leadershipindustry wide. Their inability to combine advantages by implementing a unique diversificationstrategy on top of their already successful low cost model has inhibited them from broadeningtheir product offerings and increasing their market share. By offering one-stop shopping ofgroceries, electronics, lawn and garden, clothing, optical/vision care, pharmaceuticals and nowhealth and medical facilities, Wal-Mart can assure its customers a convenient shoppingexperience at low prices guaranteed. By combining the differentiation of its diverse products andservices Wal-Mart challenges all of its competitors. Grocery chains, optical shops andpharmacies must now all fell the impact of market share when a new Wal-Mart comes to town.The Role of IS in Wal-Mart’s Business Level StrategyInformation Systems have played a key role in Wal-Marts management of its business levelstrategies. By developing new systems that increase performance and reporting they utilize thebenefits of leveraging their human capital. By utilizing buyer knowledge information systemsallow Wal-Mart to build customer profiles from which they can determine how best to stock theirstores. This type of well-defined CRM business process has helped propelled Wal-Mart to itsleadership position. By positioning their IT professionals in central roles in Wal-Mart’sorganization it is able to develop internal systems that are more inline with the company’s vision. - 11 -
  • 13. “In any development effort, our [IS] people are expected to get out and do the function before they do the system specification, design or change analysis. The key there is to do the function, not just observe it. So we actually insert them into the business roles. As a result, they come back with a lot more empathy and a whole lot better understanding and vision of where we need to go and how we need to proceed. Weve learned some hard lessons in our stores, clubs and distribution centers when we developed something and people didnt use it, and they chose to find other ways to get the job done. We are working hard to develop systems that are easy to use. That puts an awesome responsibility on that developer to get out and understand the business. Thats one of our key things: Were merchants first, technologists second.” Wal-Mart CIO Kevin TurnerCorporate Level Strategy Wal-Mart’s operations range in scope and are comprised primarily in three retailingsubsidiaries: Wal-Mart Stores Division U.S., Sam’s club and Wal-Mart international. Each oftheir divisions is broken down into three types of shopping experiences for their customers:Discount Stores ranging in size from 9k to over 200k square feet, Neighborhood marketscomprised like the typically supermarket and Sam’s club’s offering sales of bulk items to itmembers. Although Wal-Mart international consists of 2,700 stores in 14 countries outside theUnited States 67.2% of its fiscal sales in 2006 were comprised of its large U.S. division. Wal-Mart’s marketing has changed very little since its inception concentrating on two main principles“Low prices save you money” and “Always low prices, always”. Shared values at Wal-Mart seemto be, expand and overtake any and all other competition, no matter the costs. Make more money- at whatever costs even if affects public image and the public perspective of the organization.Management at the store and distribution levels are forced by upper management to pushrestraints and massive “growth” restrictions on internal employees. - 12 -
  • 14. Social CapitalAs executives of Wal-Mart push to make a “cheaper, more flexible workforce by capping wages,utilizing more part time workers and scheduling more night and weekend shifts,” they areattempting to “better serve there customers by deploying workers more effectively during peakshopping hours.” Through programs like: Office of Diversity, Corporate Compliance,Realignment of job Classifications & pay structures, and the implementation of the careerpreference system; Wal-Mart attempts to solve the publics views and concerns with its socialcapital.Office of DiversityThe goal of this department is to implement programs that develop pools of qualified diversecandidates. In essence to make sure that the percentage of qualified minorities and women theypromote is equal to the percentage who apply. (Financial compensation based upon themeasurement of success in each region is used to reward office-level management reach theunderline goals of this program.)Corporate ComplianceThe goal of this department is overseeing compliance of obligations of associates in terms of pay,working hours and time for breaks. The department is utilizing new technology as its main focusto automate its obligations and place checks and balances on its managers and employees.Job Classification & Pay StructureWal-Mart employed an outside consulting firm ’Hay Group’ to evaluate each of its positionsbased upon several criteria: knowledge, problem solving and accountability. They offered a freshunbiased approach to ensure fair market value for each of its positions and they cross-referencedeach positions pay scale against the competitive pay of similar retailers.Career Preference SystemEmployees are encouraged to participate in a career preference system. All participants, ifqualified can specify responsibilities and geographic criteria and be notified automatically ifcurrent opportunities are available nation-wide. This effort is to enhance its job posting systemand ensure eligible associates have equal opportunity to know about and apply for openmanagement positions.Wal-Mart’s Life CycleWal-Mart has continued to grow at an extraordinary rate compared to the rest of the retailindustry. The increase was considered moderate at first, but with the exception of the slow rise inthe mid-nineties, their growth has propelled them into an intense international and domesticmarket. With a high value on low-cost leadership, intense market growth, and some concern ofincreasing competition, Wal-Mart has reached the maturity stage of its life cycle. This forcesthem to build upon their existing values and vision statement to overcome public scrutiny andcompetition. Successful new ventures into international markets such as Mexico, Canada, and - 13 -
  • 15. South America as well as further expansion into India, China and Europe has been a increasinglyimportant part of continuing to maintain their market position without experiencing anotherdownturn like that of the mid-nineties.International Strategy Considering Wal-Mart’s current domestic position provides very little growth in itsmature life cycle stage, significant growth in sales and profits seemed only possible ininternational markets. With an already saturated domestic market, consisting of only a small 4%of the world’s population, emerging international markets with increasing technology culturalhomogenization and lowered trade barriers offered huge platform advantages for growth indiscount retailing internationally. Although international expansion came with a fair amount ofrisks their one-size-fits-all mentality posed increasing pressure for adaptation in its internationalmarkets. Some of these risks are: customer loyalty, local adaptation, and preferences to marketdemands. Wal-Mart determined their expansion strategy had to consist of a series of corporatebuyouts, takeovers, or joint ventures (JV) in order to gain successful entry into many of itsinternational markets. With pressure to keep the strategic position of overall cost leadershipcoupled with strong local adaptation to customer demands it sent Wal-Mart into a TransnationalStrategy. In this stage Wal-Mart must try to reduce costs and adapt to its new local markets. Byapproaching international markets with sole-owned subsidiaries and buyout approach theyeliminated their competition and gained huge advantages in its targeted markets. - 14 -
  • 16. Digital Business Strategies – “www.walmart.com” Walmart.com is passionate about combining that best of two great worlds – technologyand dominating retailing – to give customers a great online shopping experience. By expandingservices to include in store pickup and no hassle returns at any location, Wal-Mart sustains acompetitive advantage in its approach by offering on-site service to aid its Internet sales.Although Wal-Mart has the ability to offer a competitive advantage on the web the threat ofsubstitutes within their low-cost strategy emerge as customers have access to an abundance ofnew low-cost alternatives in this digital environment. In order to compete in the digitalmarketplace Wal-Mart has adjusted many of its services to make it easier to search for particularproducts and get all the information needed to make an educated decision based upon: price,brand name, and availability. In order to make sure that transaction activities are monitoredcustomers are notified of arrival dates and offered several shipping options to choose from or theoption to pick the product up at any store location. The online customer service will allowcustomers to answer questions regarding: how to create an account, fulfill an order, track order,advise on shopping tips and even email suppliers for availability updates. This digital experienceallows any customer within shipping range to purchase merchandise from walmart.com.Strategic Implementation Strategic Control Wal-Mart is a company that in essence appears to operate within the realm of thetraditional approach to strategic controls. By this I mean the management formulates strategies,sets goals, implements those strategies, and measures them against their predetermined goals. Thefeedback received comes in many forms, but the most utilized resource is the numbers generatedby each store and the forwarded to corporate headquarters through its vast digital network. In anexcerpt from case study conducted by the Tuck School of Business at Dartmouth, “Each storeconstituted an investment center and was evaluated on its profits relative to its inventoryinvestments. Store-level data on sales, expenses, and profit and loss were collected, analyzed, andtransmitted electronically on a real-time basis. The data could be analyzed by region, district,store, department within a store, or even at the level of an item within a department.”ix It is thissystem that Wal-Mart basis some of its decisions on almost a daily basis as to whether or not theyshould adjust their strategies. This would imply that to a certain extent Wal-Mart operates with acontemporary approach because each of the four characteristics are realized and acted uponalmost on a daily basis.It wasn’t always this simple, back before the implementation of computers Wal-Mart used ledgersto track this data. The principle of tracking previous year’s data or forecasting as it is called nowwas something that Sam Walton instilled in his store managers. Sam Walton would instillresponsibility within his department managers and hold them accountable. This approach was notwithout reward. By allowing his associates and managers to be creative, those same principles orbest practices were emulated into other stores. It was this kind of thinking that lead to newstrategies and innovations for Wal-Mart. This creative process which was started by Sam Waltonwas a driving force in the creation of Wal-Mart’s culture. In light of what Sam Walton’s originalstrategy and where Wal-Mart is today there is a gap that exists between the company and itsassociates. The controls that are now being implemented do not align with the original conceptsas outlined by Sam. Areas such as employee turnover create gaps in learning which can causeinadequate response times when it comes to customers and the stores they service. Much of theturnover can be attributed to poor wages, less than adequate health benefits and working - 15 -
  • 17. conditions that have come under fire in recent years. All of these items signal trouble when itcomes to promoting a first class environment. If the associates don’t feel like they are being takencare of then that directly effect the company and it customers.Attaining Behavioral Control “Years ago, Sam Walton challenged all Wal-Mart associates to practice what he called"aggressive hospitality." He said "Lets be the most friendly - offer a smile of welcome andassistance to all who do us a favor by entering our stores. Give better service - over and beyondwhat our customers expect. Why not? You wonderful, caring associates can do it and do it betterthan any other retailing company in the world . . . exceed your customers expectations. If you do,theyll come back over and over again." (http://www.hrdm.net/en/wal-mart.htm). This statementoutlines the basic principles that Sam Walton wanted to instill within the organization as a whole.Getting his employees to adopt this philosophy wasn’t hard because one of the first things Mr.Walton did was breakdown a traditional barrier of employer and employee. Walton learned longago through his own employment at J.C. Penny that making the employee apart of the companyand creating responsibility was through their designation as associates. This approach provided asense of ownership in everything they did. It also laid the framework for his customer serviceprinciples and Wal-Mart’s success. Everything centered on delivering the lowest possible priceand providing the best possible customer service. This formula worked for Wal-Mart and as anincentive, but not without a little pressure Walton implemented a profit sharing plan in 1971.The current profit sharing plan work like this. "Every associate that has worked for the companyfor at least one year and who works at least 1,000 hours a year is eligible to have about sixpercent of their wages put into their personal plan. When they leave the company, they takewhatever is in their plan - in cash or Wal-Mart stock.” (Michael Clark) This plan has workedwell for the associates who stayed beginning in the early stages of the program but it is not in linewith what the company’s strategy is today. Wal-Mart’s goal to dominate the Retail Market doesnot come without a cost. The continued drive to drive prices lower impacts far more than just theassociates working for them. There are external costs to the tax payers for the low wages thatWal-Mart pays to its employees. “A May 2004 study released by the University of California,Berkeley entitled “The Hidden Public Costs of Law-wage Jobs in California” identifies low payin retail as a serious cost to the public. Interviews with one of the study’s authors identified Wal-Mart as costing California’s taxpayers $86.0 million annually as a result of under-paying itsEmployees.”x Wal-Marts current plan is to reduce full time employees down to forty prevent ofits overall work force. With a common practice of considering employees who work over twenty-eight hours a week as full time, there is considerable amount of gain to be made by the companyfor taking this kind of measure, but there is greater loss associated with it as well in terms of lossof experienced employees. It is issues such as these that have slowly eroded the culture that oncedominated Wal-Mart’s internal landscape. There was a philosophy that Sam Walton started calledThe Sundown Rule, “we respect our customers, Associates and suppliers and strive to treat themas we ourselves want to be treated. In building and nurturing these relationships, as well asserving the communities where we live, weve helped build a better business-one committed toexcellence.” Only a portion of this statement truly reflects the operating environment that is Wal-Mart today. Capturing this philosophy in whole, not in part is what could help to recapture theculture that some have said was cult like” - 16 -
  • 18. Corporate GovernanceThe qualifications for members of the board of directors are as follows. The board will have amajority of directors who meet the criteria for independence required by the New York StockExchange. Nominees for director will be selected on the basis of outstanding achievement in theirpersonal careers; broad experience; wisdom; integrity; ability to make independent, analyticalinquiries; understanding of the business environment; and willingness to devote adequate time toBoard duties. Directors will be shareholders, holders of options granted under the Company’sstock option plan, or will elect to receive compensation in the form of stock units under theDirector Compensation Plan.The responsibility of the directors is to exercise their business judgment, and to act in what theyreasonably believe to be in the best interests of the company, its shareholders, and to performtheir duties of care and loyalty. In discharging that obligation, directors should be entitled to relyon the honesty and integrity of the company’s senior executives and its outside advisors andauditors, to the fullest extent permitted by law. Directors are expected to serve on Boardcommittees. The Board will meet at least four times per year and will hold additional meetingswhen needed to address issues of special concern or urgency.The Board will have at all times an Audit Committee, Compensation, Nominating andGovernance Committee, an Executive Committee, a Stock Option Committee and a StrategicPlanning and Finance Committee. Each committee will have their individual charter. The charterswill set forth the purposes, goals and responsibilities of the committees as well as qualificationsfor committee membership, procedures for committee member appointment and removal,committee structure and operations and committee reporting to the Board.Directors have full and free access to officers and other associates of the Company and theCompany’s outside advisors. At least once per year management will report to the Boardregarding management development and succession, including diversity initiatives and progressand long-term strategic planning. Inclusion of the CEO and other executives on the Boardprovides the Board with information and insight about the Company. Other executives may attendBoard meetings or committee meetings at the invitation of the Chairperson of the Board or theCEO to provide information and insight to the Board.The form and amount of compensation of the director will be determined by the followingcommittees: Compensation, Nominating and Governance Committee in accordance with thepolicies and principles set forth in its charter and applicable legal and regulatory guidelines. Eachnew director must participate in the Company’s Orientation Program, which should be conductedwithin two months after a director is first elected to the Board. This orientation will includefamiliarizing new directors with the Company’s strategic plans, its significant financial,accounting and risk management issues, its compliance programs, its Statement of Ethics, itsprincipal officers, and its internal and independent auditors. The Compensation, Nominating andGovernance Committee will conduct an annual review of the CEO’s performance, as set forth inits charter. The Board will review the Compensation, Nominating and Governance Committee’sreport in order to ensure that the CEO is providing the best leadership for the Company in thelong- and short-term.The Compensation, Nominating and Governance Committee should make an annual report to theBoard on succession planning. The entire Board will work with the Compensation, Nominatingand Governance Committee to nominate and evaluate potential successors to the CEO. The CEO - 17 -
  • 19. should at all times make available his or her recommendations and evaluations of potentialsuccessors, along with a review of any development plans recommended for such individuals.Committee Charters - AUDIT COMMITTEE (1) Assist the Board in monitoring: (a) The integrity of the financial reporting process, systems of internal controls and financial statements and reports of the Company, (b) The performance of the Company’s internal audit function, and (c) The compliance by the Company with legal and regulatory requirements; (2) Be directly responsible for the appointment, compensation and oversight of the Company’s independent auditor employed by the Company for the purpose of preparing or issuing an audit report or related work (the “Outside Auditor”).COMPENSATION, NOMINATING AND GOVERNANCE COMMITTEE (1) Discharge the Boards responsibilities relating to the compensation of the Companys directors, executive officers and associates; (2) Assist the Board in the implementation of sound corporate governance principles and practices.EXECUTIVE COMMITTEE The Executive Committee is appointed by the Board to exercise the powers and duties ofthe Board between Board meetings and while the Board is not in session, and implement thepolicy decisions of the Board.STOCK OPTION COMMITTEE The Stock Option Committee (the “Committee”) is appointed by the Board of Directors(the “Board”) of Wal-Mart Stores, Inc. (the “Company”) to administer certain of the Company’sequity-based compensation plans with respect to equity-based compensation awards granted toassociates who are not directors or officers subject to the provisions of subsection 16(a) of theSecurities Exchange Act of 1934, as amended.STRATEGIC PLANNING AND FINANCE COMMITTEE The Strategic Planning and Finance Committee (the “Committee”) is appointed by theBoard to review and analyze financial matters and assist the Board in long-range strategicplanning.Organizational Design • Wal-Mart Stores - Super Centers • Neighborhood Markets • SAMS Clubs • Wal-Mart International - • Walmart.com - • Wal-Mart Pharmacy – • Wal-Mart Optical • The Tire & Lube Express Division • Alaska Bush Shopper • Wal-Mart Used Fixture Auctions - 18 -
  • 20. Each division may contain(s) all or some of these departmentsAviation & Travel; CMI & Benefits; Corporate Affairs; Finance; Independent Doctors ofOptometry; Information Systems Division; Legal; Merchandising & Product Development;Operations; Pharmacy; Realty; Replenishment Wal-Mart’s Matrix Organizational Structure: Determining a Designing the Direction Organization Nurturing a Culture dedicated to excellence and ethical behavior - 19 -
  • 21. Leadership: Current StrategyIn January of 2007 Wal-Mart announced its “Out in Front” campaign. The plan outlinestransformations that are taking place within the company as apart of their current strategy. Eachof the areas addressed within the context of the plan are areas that Wal-Mart has struggled with orcome under fire for not addressing. The plan consists of five pillars and is modeled after SamWalton’s advice of staying out in front. Three of the five pillars outlined within this strategicplan address current, high profile issues that exist within the internal and external environment ofWal-Mart. The three areas of most importance center on their appeal the customers, a better placeto work, and the improvement of business operating efficiencies. Each of these areas have beenthe core focus of external entities looking to attack the company. Wal-Mart seems to be trying toaddress those areas, and display an attitude of listening and caring.Broadening Our Appeal to All of Our Customers“More in-depth market research is helping us understand our customers better. We arecommunicating more directly with them through new ads on television and new signage in ourstores. And our “Store of the Community” approach helps us better serve the specific needs ofour customers. We are demonstrating this in our merchandise mix and in our store designs. Wal-Mart stores are becoming an even truer reflection of the communities we serve.” (Wal-Mart “Outin Front)Becoming an Even Better Place to Work“People want Wal-Mart jobs. There’s no better example of this than our Evergreen Park Store inChicago, where 25,000 people applied for just 325 jobs. People want Wal-Mart jobs because wepay competitive wages and associates have the opportunity to advance. More than three-fourthsof our store managers started as hourly associates. We also offer health benefits that areaffordable and accessible and provide financial security from catastrophic medical expenses.Every associate - both full-time and part-time -- can become eligible for health care that costs $23per month. And for a cost of just 50 cents more per day, their children can get coverage too.”xiImproving Business Operations and Efficiency“Our goal is to have the right product, in the right place, right when our customers need it. Sowe’re shortening the time it takes for merchandise to go from our suppliers to our customers. Weare eliminating inventory on shelves that are out of the reach of customers. And we are makingsure our aisles are clear of clutter. These inventory improvements -- combined with theoutstanding work of our logistics team -- mean a better customer experience in our stores.”xiiDriving Growth in Our International Business“Today Wal-Mart operates in 14 countries, up from 11 last year. Of the nearly 600 stores we planto open this year, more than a third of them will be international. We are also interested in newmarkets opening up, like India. With each store we open, our company has the opportunity tolearn and grow. Just as important, we offer working men and women everywhere the opportunityto improve their quality of life.”xiii - 20 -
  • 22. Making Unique Contributions to Communities“We donated more than $245 million to charity in 2005, with the majority targeted locally. We’reincreasing the number of in-store health clinics, which bring affordable and accessible health careto working families and a high number of the uninsured. We’re also becoming moreenvironmentally friendly by selling organic products, minimizing waste and conserving energy.Corporations can be more efficient and more environmentally friendly at the same time. And weare proving that at Wal-Mart.”xivIMPLEMENTING THE VISIONWhen Sam Walton began the company he envisioned a company that would take care of thecustomers by offering them whatever they wanted. He also understood that service to thesecustomers was paramount and to take care of the customers you also need to take care of theassociates. The early stages of his customer service principles helped to grow the company farbeyond even his own expectations. Walton’s vision for growing the company further grew out ofhis basic principles, and what he called his ten rules for building a business. Each of these rulesdefined a specific area. If addressed properly and in the manner that he envisioned the sky wasthe limit.The first rule was committing to your business. This was Walton’s way of telling associates thatif you approach your job with passion, the attitude would become contagious throughout theorganization. This approach apparently worked because the company reaped considerable gainsin the early nineties. Another aspect that he preached reverently was sharing the profits with theassociates. Walton understood that none of the successes experienced by the company wouldhave been possible without the hard work of his associates. Sharing that success was part ofrecognizing those efforts. Of the ten rules Sam instilled, these two were his most important andhad considerable weight on what the culture was about when Sam Walton was alive. Rules fiveand seven represent the missing elements of what is currently occurring within Wal-Mart. Lack ofappreciation for associates and lack of communication.xvRule 5“Appreciate everything your associates do for the business.”“A paycheck and a stock option will buy one kind of loyalty. But all of us like to be told howmuch somebody appreciates what we do for them. We like to hear it often, and especially whenwe have done something were really proud of. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. Theyre absolutely free -- and worth a fortune.”xviRule 7“Listen to everyone in your company.”And figure out ways to get them talking. The folks on the front lines -- the ones who actually talkto the customer -- are the only ones who really know whats going on out there. Youd better findout what they know. This really is what total quality is all about. To push responsibility down inyour organization, and to force good ideas to bubble up within it, you must listen to what yourassociates are trying to tell you.”xvii - 21 -
  • 23. “Developing a Learning Organization”“Wal-Mart has always tried to instill and maintain a learning environment. From the verymoment that an employee begins working at Wal-Mart they are put through customer servicetraining, on the job training and ongoing formal training of job responsibilities. In the beginning,customer service and the ten foot rule were the driving forces to the associate’s indoctrinationinto the Wal-Mart culture.”xviii Walton believed in associates at every level having the opportunityto make suggestions, some of which were adopted and spread throughout the company stores.This exemplified his desire to empower employees at all levels to have and impact on theorganization. In addition to these opportunities, “Wal-Mart offers reimbursement to employees forbooks, classes and tests for successful completion of their GED”xix. In addition to this resource,the company offers a service called My Education Connection. Through this resource, “Wal-Marthas created partnerships with selected online education providers. Some of these providers arewith accredited national institutions and universities with special pricing passed on toassociates.”xxWal-Mart is active in recruiting through the college ranks as part of their ongoing diversificationprograms. The utilization of internships is another asset that Wal-Mart implements to furtherstrengthen their ranks and bring in talent.Managing InnovationWal-Mart’s continuing process of evolving its distribution channels is a testament to theirinnovation in this field. Their adoption of RFID (Radio Frequency Identification) technology ismeant to further strengthen their ability to get products to their consumers. This technology willallow Wal-Mart to begin tracking shipments the moment items leave the manufacture, into theirdistribution channel, onto the store, and off the shelf to the consumer. The overall impact has notbeen fully realized as of yet but the long-term aspect is that it will save the company millions inoperational costs. In addition to this step towards innovation, Wal-Mart’s commitment towardsthe environment and the impact it has on it is another innovation process that is in the early stagesof implementation. The approach is this concept is realized through their “Sustainable ValueNetworks”xxi, where everything from renewable energy, waste reduction and sustainable productsare all areas that are being monitored and radically changed to benefit the company, environmentand the consumer.Opportunities and New VenturesSome of the opportunities that Wal-Mart has passed are due to the lacking of them no panningout. They tried a joint venture in Germany and China however it has failed. The failure is moredue to Wal-Mart inability to cater to the interests and ideals of the environment that is going into.Through further research and cultural understanding, two things that Wal-Mart does notimplement well, they would be able to expand and enter into the global market in these countrieswell. To become a global player in the global market, Wal-Mart has to gain access into China andJapan. In order to be considered in all other Asian countries, having a foot-hold, not necessary astrong-hold, in Japan and China is detrimental. - 22 -
  • 24. Proposed Alternate SolutionsFor the company to recapture some of the lost enthusiasm it is currently experiencing bothinternally and externally, Wal-Mart needs to refocus on the core concepts that got them there. Themost important of these is their focus on "associates". Rekindling the bond that was onceprevalent when Sam was alive is instrumental to reviving overall appeal. If the associates seeinterest being taken in them, that in turn will transfer over to their customers.Aggressive pursuit, refinement and implementation of their Sustainability 360 program isinstrumental to their long-term success as a company and could well define them as an industryleader when it comes to doing what’s right for the environment. Gaining the trust of consumers inregards to their public image when it comes to energy, waste and the environment can have adramatic impact on their ability to capture new customers who shop there just on the basis that itsa company dedicated to doing right when it comes to being an environmentally friendlycorporation.Another idea to further Wal-Mart’s ambitions in becoming a global market is to better understandtheir environment. To better understand their environment, they would need to gain access to newmarkets through joint ventures as they are currently doing in India. While they explore newmarkets, they should allow for the growth at a rate that they are not used to. To expand into aculture that does not have the same ideals as you, you need to have patience and communicationwith the local environment to fully understand the culture in which they may not be accustom too.For the recommendation of how to better their public image here, Wal-Mart would need to makesome radical changes. The corporate memo that went public about how they would change theirwork force from a 80/20 (full-time/ part-time workers) to a 60/40 all to reduce costs of employeebenefits, drop coverage for associates that have spouses or force them to part-time, would requiresome very radical transformations. One-way of transformation is to take a poll of the associates,with an 100% none judgmental approach. Allow it to be in complete confidence withoutramifications to the employee based upon their responses, and take their ideas into consideration.Allow those that need certain shifts to work them, allow those that need health care theopportunity for coverage and take the difference in corporate tax expenses. The governmentoffers grants for this reason if the company looks for the right opportunities.RecommendationsSetup a program under the human resources department to monitor strategic controls concerningthe social problems arising from associates at the store level to ensure that employee concerns areheard and addressed appropriately at the corporate level.Considering the amount of lawsuits Wal-Mart has faced in the past concerning unjust treatmenttheir employees, unfair opportunity and benefit packages, Wal-Mart should not only address theconcerns of their store level employees but also monitor the resolutions to ensure that theseconcerns are addressed. In order to ensure these concerns are accurately portrayed employeesshould feel comfortable and have open opportunities to submit complaints directly to HumanResource at the corporate level rather then filtered through local management. Considering Wal-Mart’s has a strong IS department where employees are required to work in the jobresponsibilities before developing software, they should employ IS staff to job positions inlocations where the most amount of concerns are present. The IS staff will not focus on thenature of each individual concern rather identify a common variable between the complaints and - 23 -
  • 25. develop an open system that will encourage those employee’s to voice their concerns directly toHR without fear of repercussion. By developing applications that will track and monitor the overall satisfaction of the store level employees they can maintain a value database of information inorder to poll overwhelming concerns that may seem repetitious or alarming. By employingsystems that will monitor and archive employee complaints Wal-Mart management at thecorporate level should be able to get a broader picture of concerns arising in local markets in it’spast and present.Monitor and poll international markets identifying discount trends and customer preference innew and unknown markets before approaching new ventures or corporate buyouts.Wal-Mart’s future sustaining its desired growth pattern is undoubtedly in its internationalmarkets. However, Wal-Mart has continuously entered markets where there presence was eitherundesired or customer preferences were not fully understood. Its seems that Wal-Mart’s currentstrategy is to gain local presence in communities is by buying up land acquiring buildingcontracts and then address the concerns of the local community in the development stages as theyarise. Wal-Mart should approach new markets with great opportunity but also with a very goodunderstanding of the local culture and market. By placing marketing management in strategicresearch rolls to poll and request feedback from the local communities before entering into aparticular local market they may find a better understanding of the needs of their clients. Oncethey provide acquire feedback and analysis the concerns of the community at hand they may findgreater opportunity to assist and serve the market. This approach will not only offer themunderstanding of the market but also prevent an undesired backlash once the project has alreadybegun.SummaryThroughout the entire exploration of the organization, Wal-Mart, we have gained a betterunderstanding of the organizations strategies and the turmoil that is plaguing. Primarily theissues discovered within Wal-Mart are in its inability to gain access to global markets, regain itspublic image as the “Most Admired Company in America”, and steadily increase its market share.Wal-Mart has long since been the largest retailer in the world, however without increased growth,further expansion in other locations besides Americas, it will become very stagnant. With furtherconsideration into the recommendation made by Team Wal-Mart, they may be able to gainaccess, increase profitability, increase global market share and delve into more global marketswith joint ventures. Having a better understanding of what is holding you back may finallyposition them to the stature of global domination that they desire.Their history further provides information into how the success of their past needs to be rekindledto better gain success into their future. By regaining their once admired, Sam Walton’s dream,they may be able to reach the projection of what they see themselves becoming in the future andallow the organization to successfully reach the global growth they seek. Better understanding oftheir external and internal environment will draw further focus on change and expansion in bothexisting and new markets. Comprehension of their need to further develop their intellectual assetsglobally will allow for Wal-Mart to expand internationally at a rate that they have here in thestates. Reformation of their business strategies at the corporate level will allow for theirassociates to feel like the community that Sam once held so strongly has been regained. Having abetter connection with where your employees fit into the larger scheme of the corporate strategywill enable the organization to better its public image by changing the overall treatment byenriching their employees and offering further development and adjustments to local - 24 -
  • 26. management. If you have a positive and nurturing work environment that encourages andpromotes employee cohesiveness within, then the rest will fall into place. With the right strategiesWal-Mart can be the organization with global dominance their stockholders desire with the visionSam Walton once dreamed. - 25 -
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