Wall Drug Proposal


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This was a proposal my team and I wrote for Wall Drug.

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Wall Drug Proposal

  1. 1. Strategic PlanStrategic Management March 31, 2011 Brandon Luong Blair Crawley Whitney Washington Tyler Weaver Carter Whitelow
  2. 2. Table of ContentsExecutive Summary………………….........................................3Opportunities and Threats………………………………….….4Marketing …………………..……………………………..........5 a. Revitalizing the Wall Drug Brand b. Target Market Analysis c. Increasing the Amount of Customer Touch Points d. Advertising e. Sales Promotion Strategies f. Branding g. Social Media Campaign h. Measurement of Effectiveness of Different Social Media Vehicles i. Key Partnerships/Community Involvement j. Marketing OverseasOperations…………………..……………………………………15 a. Activities b. Construction c. StrategyFinance…………………..……………………………………….22 a. Revenue Growth over the Years b. Threats From Rising Commodities c. Taking Market Share From Deadwood d. Western Art Gallery Expansion e. Leveraging f. The Cost of Land g. Feasibility of the Marketing Plan h. Balance Sheet Examination i. ExpansionHuman Resources…………………..……………………………32 a. The People b. Internal Alignment c. The Management d. Customer Loyalty e. Key Values of Wall DrugClosing…………………..………………………………………..41 2
  3. 3. Mission Statement Wall Drug specializes in Western themed attractions and apparel and bringing fun,educational, and “once in a lifetime” type of experiences to every member of the family. Thefocus remains in bringing together the community of South Dakota, developing our youth, andgiving those interested in America‟s Old West history an experience that they will never forget.Vision To become a part of the fabric of America‟s history and becoming the ultimate “must-see” tourist attraction.Slogan “The experience you have yet to experience.”Executive Summary Wall Drug, Inc. has been established since the 30‟s, and has gone through major changesthroughout the course of history in order to stay in the market. It was first known as apharmaceutical store, and eventually branching into a small theme park beloved by the residentsof Wall, South Dakota. This report contains recommendations provided by the Wall DrugConsulting Group in terms of the marketing, operational, financial, and human resource aspectsfor the company to strive for in the long run in the United States as well as in its globalexpansion into Germany. The marketing portion will discuss rebranding, target market analysis,and other marketing techniques. Operations will deal with enhancing the experience at the park,construction of new buildings, and reasons for the chosen strategy to enter the internationalmarket. Finance will address the 3 year plan of allocating the money at home and in the 3
  4. 4. international market. Finally, human resources will discuss on ways of restricting theorganization, detailed job descriptions, and investment in employees.Key Opportunity and Threat One key opportunity for Wall Drug would be to expand into an international market,specifically Germany in order to extend their brand scope, increase brand awareness, andincrease net profits. The key threat that prevents Wall Drug from reaching its full potential as atourist destination site is its brand awareness. Although Wall Drug attracts over two millionvisitors a year, the actual brand recognition and potential for growth could remain stagnant ifcertain measures and precautions are made. In order to overcome this threat, Wall Drug needs toposition itself as a niche market and invest time in redoing its marketing and operationsactivities, so as to set themselves apart from their competitors 4
  5. 5. MarketingRevitalizing the Wall Drug Brand This drugstore was not prosperous at all until the founder‟s wife, Dorothy, came up withthe idea of putting signs along the interstate, instructing people to stop in for free ice water. Thenext innovative advertising blitz came when South Dakota servicemen and other friends had theidea to put up Wall Drug signs overseas. Eventually, Wall Drug signs were placed all over theworld. These signs led to news stories and publicity that further increased the store‟s visibility.Even though money has not really been spent on other forms of advertising, their original effortsin creating awareness will serve as the backbone to this new advertising campaign which willfocus on increasing awareness of the Wall Drug brand, as Wall Drug is unknown to many due toits geographic location as well as its lack of a web presence. Current marketing and advertising efforts have been limited to mostly signage displaysplaced in different geographic areas, billboards placed along Interstate Highway 90 in the city ofWall, their company website, and word of mouth. Depending on these outlets alone will notbring about more customers, will not help bolster Wall Drug‟s competitive advantage againstother competitors, will not help in creating top of mind awareness, and will thus keep Wall Drugthe well-kept secret that it already is to most people. With this is mind, our marketing objectivesare to create a better web presence by increasing the amount of traffic accessing and viewing theWall Drug page and other related social media sites by 20%, to better search engine optimizationto establish key associations with tourism and Old-West related websites, to establish keypartnerships with cause-related programs and initiatives, to further develop an attractive student 5
  6. 6. recruiting marketing plan in order to increase the amount of student workers, and to expand intoa foreign market to extend the realm and scope of our brand presence by 2014.Target Market Analysis Wall Drug was founded as a “family institution,” with three generations of family Exhibit 1members involved in running and managing thedaily operations of the attraction site. With thisfoundation of family being at the forefront, BillHustead, the current CEO and President, wouldlike to create an experience that makes WallDrug a part of the “entertainment business,” inwhich the attraction can cater to the entirefamily, as well as adults who have a more refined taste for Western-themed art and memorabilia.As seen above in Exhibit 1, according to a site traffic analysis conducted by Quantcast, thevisitors who visit the Wall Drug website are predominantly Caucasian, have a college education,and range from the ages of 35-50+.1 Based on this information, Wall Drug‟s target market asdefined by both the founder of the company as well as the actual visitors who are interested inthe attraction include families with either no kids or at least one child, adults aged from 30-50years old who are traveling through the Badlands area, who are looking for new and excitingexperiences that are both educational and entertaining, and who are also interested in nostalgia,history, and memorabilia pertaining to the Old West. This Old West segment of Wall Drug‟sclientele will be turned into a market niche, where those people interested in Western-American 6
  7. 7. and Indian-American culture and art will serve as the prime target of who Wall Drug wants toattract to the part of the company that sells Western clothing and art.Increasing the Amount of Customer Touch Points Our first plan of action is to focus on increasing awareness and reaching the targetaudience that Wall Drug caters most of its attractions to. This will be done by first investing inthe research of the products and services that are offered and making sure that they are what ourcustomers want, are being updated to reflect current trends, and are consistent with the overallimage and style that Wall Drug wishes to portray. To find out what our customers are interestedin, we have to engage in social listening, where we can learn what our customers are sayingonline about the company and the goods and services that are being offered. There are manydifferent blogs and Web pages pertaining to the Old West, traveling, and tourist destinationspots. One way to begin is by observing customer reviews and ratings. One particular blog, “TheNew West Blog,” would be an ideal starting point to gather customer opinions, regarding tripsmade to Wall Drugs and items purchased there. By engaging in conversation with the consumerand encouraging responses and feedback on anything dealing with Wall Drug, Wall Drug willcontinue to be talked about and that is what is to be desired.Investing into our social mediacampaign will come afterwards, as we need to make sure that what our brand has to offer andhow it is being offered are up to customer standards and are the best allocations of money. Inorder to make these changes, the most effective tool to use in this process would be to collectcustomer information to form a database. Information will be taken from online store purchases,the number of different coupons and promotions that are used, the frequency of their usage, the 7
  8. 8. buying habits of customers during the peak season and off season, and how to tailor messagesand promotions to the specified target groups. Over 40% of the business conducted at Wall Drugdeals with repeat customers so by using this database, we will not only get a better look at thetarget audience and better refine who we send our messages to, but will also help to stimulaterepeat purchases, create customer loyalty programs, and allow for cross-selling of numerousitems. By increasing the number of touch points where customers and non-customers receiveinformation and the ways in which customers receive information, Wall Drug will be able toinfiltrate their target market and tailor specific information to each segment with more relevantcontent and will be able to understand their customer types. A mobile coupon strategy will beimplemented, where customers will be able to receive mobile coupons and information on eventsand specials that Wall Drug may be hosting on either their cell phones or the website. An Itunesapplication will also be created to further engage the customer or tourist who is looking for keyinformation regarding Wall Drug on the go. The application will include interesting facts,regarding Old West history, a pharmacy section with a barcode reader for prescriptions, games,and ringtones available for play and purchase.Advertising The company’s signage is a symbol of its traditional advertising efforts; it isrecommended that it be used on the Internet in the same form of display ads. Display ads areadvertisements consisting of mainly text, logos, photographs and maps. We could takephotographs of intriguing items in the store, and use them in display ads to attract customers.We 8
  9. 9. could also display the map of our store to show that we have a complex offering of items.Google, Yahoo,Shepler’s, and Cavender’s are a few websites that we would like to advertise onto display our advertisements. Google and Yahoo are popular search engines actively used bythe Internet community. We think that these sites would be beneficial to advertise on because ofthe heavy amount of internet traffic they possess. We would also use display ads to attractpeople to Wall Drug as a tourist destination. We also believe that since search engines are themost widely used internet tool among Internet users, both experienced and novice Internet userswill be targeted.Shepler’s and Cavender’s are two popular websites that sell western apparel.Since the current theme of Wall Drug is primarily “Old Western,” we could attract families,kids, and old-west enthusiasts to merchandise held within our store and online store as well asattracting them to Wall Drug as a tourist destination.Sales Promotion Strategies Another recommendation is to offer on-line and traditional promotions, coupons, andGroupons. Promotions could be geared toward tourists en route through South Dakota to BlackHills-Mt. Rushmore, Badlands National Park, and Wind Cave National Park. Along rest stopswould be a prime area to utilize this marketing strategy. We could bring in clientele by offeringdiscounts on a variety of items that we sell in house and discounts at our restaurant in furtherattempts to get people to stop at our attraction. Wall Drug needs to be looked at more as a touristattraction rather than a rest stop. On-line promotions through the use of display ads couldwelcome tourists to stop at Wall Drug inform them that we are more than just a drug store and 9
  10. 10. that we offer multiple selections to our company with an extensive assortment of wacky westerngear, an art gallery, guest house, museum, and more to keep our guests entertained.Grouponscould be used to increase traffic flow to Wall Drug by offering a discount incentive when aminimum number of users is met to rent a room at our proposed franchised hotel, Best Western.This would be geared toward groups traveling and looking for tourist destinations in the Mid-West. Wall Drug should also attempt to get an in-person radio interview or ad spot on aculturally similar show such as the John Boy and Billy show. We should further attempt for theshow to be broadcasted in South Dakota. This would be a crucial opportunity for our company toget the publicity it needs from stable radio-listeners. This would be a low cost method ofadvertising with high appeal.Branding In order to effectively convey the image of Wall Drug while also maintaining thehumorous appeal that has been made known in so many of its billboards and signage displays,Wall Drug should implement the help of a third party advertising agency to take on the creativemarketing responsibilities, as Wall Drug has not really invested in any other advertising effortsother than the billboards and signage displays. “Gerardot& Co. is a boutique creative agency forbranding and marketing cities, hospitality and tourism destinations.”2 Their clients includeLynxAir International in Florida, Nature Vacations in Costa Rica, and the Indianapolis Zoo inIndiana. This creative agency will provide professional help in creating a brand identity design 10
  11. 11. (logo) and will help in creating an advertising campaign that will target Wall Drug‟s specifictarget market. One of the other plans in branding is to use an individual to endorse the attraction. Thisindividual will be able to speak to the history and Old West attractions while consistentlymaintaining the entertaining aspect of the Wall Drug brand. Bob Barker was born in SouthDakota and “has also had the second-longest run as the host of a single broadcast show, as wellas the oldest man ever to host a television game show, and the oldest man ever to host a weekdaytelevision program since the inception of American network television.” Mr. Barker is able to bebooked for this type of endorsement deal. This individual will also serve as the associationbetween the brand of Wall Drug and the tourists that visit Wall Drug. This individual will beused on the Facebook page, the Wall Drug website, and the Itunes application so that everysingle aspect of the marketing campaign will remain integrated and consistent. There are alsoplans to create a new and improved logo, where the customer will be able to see and experiencea new physical difference that they can associate with the attraction site. This new logo, inconjunction with the improved website that has increased functionality, physical appeal, and aninteractive user interface will give website visitors ease of use in accessing the website andgraphic appeal that will keep visitors engaged and interested.Social Media Campaign Before Wall Drug begins their social media campaign, every effort has to be made toensure that whatever is being offered as far as food, products for sale, and attractions are up to 11
  12. 12. customer standards; if not, the social media campaign will be ineffective in communicating thevalue of our attraction‟s experience over other competitors‟ experiences. After all of thisinformation has been compiled, then we can proceed with the social media aspect and furtherengage our audience through a variety of different marketing tools. The original intent of theadvertising efforts was to remain light-hearted and comical in its delivery. With the use of anindividual to endorse the brand to recreate the humor that Wall Drug boasted of in its prime, wehope to create a viral campaign that will spurn excitement and interest in what Wall Drug has tooffer. Wall Drug currently has a Facebook page but does not have any features that aggregateinformation together to make it easier for the visitor to access, such as family history or whatattractions are available. Adding information about the family history and employees would bebeneficial so that people visiting their Facebook page would be informed that the business hasbeen family owned and operated since 1931.Measuring the Effectiveness of Different Social Media Vehicles On-line advertising on news/informational/ media sites and search engines such asGoogle or Yahoo using display or banner ads will be used with multiple ad formats. Theeffectiveness of these ads could be measured with pay-per-click (PPC) or through search engineoptimization (SEO). Our advertising agency will be focusing on helping us with search engineoptimization, as the words that are most associated with finding out about Wall Drug need to beused in such a manner to optimize our search results.There are a number of different searchqueries that are used quite often that automatically are associated with Wall Drug, with “cowboyboot spurs” having the biggest QCI (Query Competitive Index) out of these relevant search 12
  13. 13. Exhibit 2terms, which shows the number ofadvertisements that are typically displayedwhen this search term is entered into a searchengine, with higher numbers meaning morecompetition for advertisements,as seen inExhibit 2 to the right,4 In using thisinformation alone, Wall Drug needs to position their brand to the search terms that are entered inmost often as well as advertise where the most people will see their brand. One of the internet advertising models we would like to use is a flat-rate pay per clickmodel. This allows our company to advertise on various websites while only paying the hostcompany a flat-rate when a Wall Drug ad is clicked on. This efficient way of advertising willallow a cost to be incurred for our company only for interested customers and clientele. In advertising with Facebook, “if you choose a CPM model, you will bid on how muchyou are willing to pay for every thousand impressions (views) of your ad. In both cases,Facebook will display your ad in the right-hand Ad Space. The amount you are charged willnever exceed your daily budget.” In order to effectively reach our target market, we will use acost per thousand model. “CPM advertising is usually more effective for advertisers who want toraise awareness of their brand or company,” 5 with a budget set at $10/day with $1.20 USD CPMfor Facebook ads. We will continue to monitor changing bid prices, so that the advertisementswill be able to reach and capture our specified target audience on an ongoing basis. 13
  14. 14. Key Partnerships/Community Involvement Recruiting students has presented itself as a difficult task, as students are not familiarwith the existing area surrounding Wall Drug. Wall Drug‟s foundation lies in its family roots andheritage. This company prides themselves on the people that work behind the scenes in order tokeep providing the experience of both educating while also entertaining. With the clear focusbeing on the people that are employed and the people that are being served, Wall Drug needs tocontinue that lasting impression of family and values by stressing the importance of youth. TheBoys and Girls Club of America strives to develop youth into productive adults by focusing onproviding the following: “A safe place to learn and grow...Ongoing relationships with caring,adult professionals... [and] Life-enhancing programs and character development experiences...”Hope and opportunity.6 With over fifteen Boys and Girls clubs in South Dakota, Wall Drug canbecome a part of the cause by starting out with market promotions, by making certain eventsyouth-related and slowly working their way up to becoming a strategic partner with the Boys andGirls clubs. In doing this, Wall Drug will be able to show to the surrounding areas as well as tothe general public their interest in further developing and helping the youth who come to work atWall Drug. Another key partnership that would be beneficial to the growth of Wall Drug wouldbe the Expedia Affiliate Partner Program. Expedia.com is rated as the top online travel agencyand when compared to other major travel destination planning websites, such as Orbitz,Travelocity, Hotwire, and Priceline on Alexa.com, a web information company that suppliesfacts, statistics, and rankings on different web sites ranks Expedia as number one in both thenumber of page views on a daily basis, the amount of people that are reached, and the amount of 14
  15. 15. daily traffic to the website.7 Partnership is free of charge; links, banner ads,etc are sent via emailand commissions are received on a monthly basis based on the amount of actual transactionsmade.8 By partnering with Expedia, Wall Drug will be able to offer a coordinated solution forthe traveling consumer that will be made available on the website, making Wall Drug the one-stop shop for all of its traveling consumers‟ needs. This opportunity will also create more wordassociations between Expedia and Wall Drug, thus increasing the amount of people that may beexposed to Wall Drug‟s website and any another related sites. Along with the proposedpartnership with Expedia, Wall Drug should be able to offer lodging arrangements and this willbe done through a franchising opportunity through Best Western hotel, based off of theirdemographics and price ranges. This will also be offered on Wall Drug‟s websites to customerswho wish to make travel arrangements online.Marketing Wall Drug Overseas The second key opportunity that Wall Drug should take advantage of is in entering aforeign market. Wall Drug has been witnessing increased sales but in order to gain increasedprofits, Wall Drug needs to establish themselves in another country to gain both national andinternational interest in the brand and fulfill the need for an attraction of this kind “…From 2009to 2010, spending on personal travel & tourism is expected to have recovered somewhat, with anincrease of 1.6 percent. This increase still, however, lags significantly behind global GDPrecovery which is 4.7 percent, according to the International Monetary Fund (IMF) October2010 World Economic Outlook.” 9 With the tourism industry rebounding back with increasingnumbers in spending, Wall Drug should take advantage of this key opportunity and expand to 15
  16. 16. further legitimize their brand in the eyes of America as well as internationally. Another key trendthat characterizes the tourism industry is that there is “no growth in western hemisphere markets:Western Europe and North America represented 70 percent of total global personal spending onTravel & Tourism in 2000, but this share decreased to 62 percent by 2010, an average annualdecline of 1 percent (North America) and 0.7 percent (Western Europe) based on real terms. Thistrend has been accelerated by the greater price sensitivity of travelers who get used to seeking thebest bargain when it comes to private consumption of any kind.” 10According to the Travel andTourism Competitiveness Index Report, the two highest ranked countries in the tourism industryare Switzerland and Germany. Between the two countries, Germany exhibits the best potentialfor international expansion, due to the nature of both its infrastructure and interests in WorldCultural sites, specifically Old West history. “The country is characterized by abundant culturalresources, ranked 6th worldwide for its 32 World Heritage cultural sites, 2nd for the number ofinternational fairs and exhibitions held in the country, and 3rd for its creative industries. Thecountry‟s infrastructure is among the best in the world, ranked 3rd for the quality of its groundtransport infrastructure and 7th for its air transport infrastructure.” 11 With over fifty theme parkslocated in Germany alone, it can be deduced that Germany is among one of the top touristdestinations that prides itself on remaining innovative with the number and type of attractionsthat are offered in its country. Germany‟s history also serves as the qualifying factor in why Wall Drug chooses toexpand there. “Germans were among the largest ethnic groups to migrate to Texas in the 1800s,and their influence remains pervasive in places such as Fredericksburg. Each fall, the town of 16
  17. 17. New Braunfels hosts Wurstfest, a tamer and scaled-down version of Oktoberfest… Karl May, anauthor little-known in the U.S. but famous in Germany for a series of Westerns he wrote in the1800s, also deserves some credit. Though he never visited the U.S., his books sold millions andcreated perceptions that persist today.”12 Michael Kimmelman of the New York Times stated thefollowing as it pertains to Germany and its interest in the Old West: There are clubs, magazines, trading cards, school curriculums, stupendously popular German-made Wild West films and outdoor theaters, including one high in the sandstone cliffs above the tiny medieval fortress town of Rathen, in Saxony, where cowboys fight Indians on horseback. A fake Wild West village, Eldorado, recently shot up on the outskirts of Templin, the city where Angela Merkel, the chancellor, grew up.13As far as our advertising campaign is concerned, it will be adjusted accordingly, as it pertains toGermanic tastes and cultural preferences. Wall Drugs wishes to maintain its original appeal, sothe signage displays that displayed “____miles from Wall Drug” will be implemented inadvertising. The Itunes Application will be modified to include more languages and moreactivities that are culturally specific to the people who reside there. Strategic alliances and thefeasibility of this international expansion will be later explained in the financial portion. 17
  18. 18. OperationsOperations Overview Pushing the envelope is one of the founding principles Americans have always preached.To take Wall Drug to the next level, it must continue to evolve its operations, better itsorganizational structure, re-analyze its financial track, and improve its advertisement techniques.In this particular section, the main focus will be on how Wall Drug can enhance its activitieswith the construction of new buildings and ways to cut its costs in the manufacturing of itsproducts.Activities One highly effective strategy for driving traffic to theme parks is special celebrationscentered on holidays. For example, when amusement parks either market their Halloween themespecials, announce the Oktoberfest, or advertise about St Patrick‟s Day, people from all over thestates travel to their destinations in order to take part in the festivities. If Wall Drug wants to lurein more tourists, then celebrating holidays and holding festivals will be a good step in acquiringmore revenue. An example of how Wall Drug could accomplish this is if the company celebratedHalloween by redecorating the entire park. The park would be decorated with cobwebs, jack-o-lanterns, roads filled with blood and scary paintings throughout the streets. Another attractionthat is entertaining for both customers and employees would be if employees dressed up asghouls, monsters and demons, and scare the unsuspected pedestrians while hiding in hiddenareas. Mazes could also be constructed to attract the audience, and the employees could repeatthe mayhem as they did outside. The stores will be filled with special Halloween goods, like 18
  19. 19. gummy eyeballs, chocolate newts, witches broom, and masks, and special theme cuisines in therestaurants. People love the holidays, so planning special events for those days would be prosperousto Wall Drug if it capitalized on the holidays with extended time frames. Halloween could lastfor a month while St. Patrick‟s Day would last for a week, and high-profile events like the SuperBowl could last for two weeks in Wall Drug. The theme park could hold a special festivalcelebrating its anniversary hiring a vendor for carnival rides, serving special foods, and hostingreenactments of key events in Old West American history. Holding festivals and celebrating holidays would entice consumers to come andexperience the creativity of how Wall Drug can be diverse and offer a array of entertainment andgoods. The target market would flock to Wall Drug, not only during normal operations, but forthe exciting holiday attractions. Conducting festivals draws in a big crowd, which could lead tocustomer loyalty since the consumers would want to come back throughout the year to witnessmore festivals.Construction To continue on with the improvements in entertainment for Wall Drug, Inc., theconstruction of several buildings would help obtain this goal. These new buildings will assist inthe tremendous task of gathering the entire family by making specific areas more attractive anddiverse for all the ages to enjoy. 19
  20. 20. 1) Stage Wall Drug, Inc. would benefit from the construction of a stage that would serve twopurposes: special staged shows and for private rentals. One of the many things that attract peopleto theme parks are when parks hold shows, such as SeaWorld, Universal Studios, King‟sDominion, and Disney World. Since Wall Drug has a western, cowboy theme atmosphere, theplays can be based on various ideas: cowboys versus samurais, cowboys against NativeAmericans, old shootouts and even newer concepts of cowboys and aliens. The entertainmentvalue of this structure would entice the audience to come and watch the spectacularperformances produced by the entertainment department. The added bonus to having the stagewould be if people would like to hold a particular festival or fundraiser, they would have theeligibility of renting out the stage and employees for the setup. When organizations look for anew venue to hold fundraisers or a different idea to collect money, Wall Drug would be at theforefront of their minds. There are many ways for Wall Drug to assist, such as allowingorganizations to conduct an event on stage or hold their own show. Also, there could be otherholidays Wall Drug are not familiar with, missed on the calendar, or conflicts with anotherholiday, and that is when the organization can rent the stage and other parts of the park for theirfestivities. For instance, let‟s assume Wall Drug does not celebrate Lunar New Year due to lackof information and conflicting with Valentine‟s Day. That then that gives the opportunity for theChinese community to rent the space and hold the festival. It is even possible for us to market 20
  21. 21. this event as to attract more people, and would assist in helping to rebrand Wall Drug andallowing the customers to see that Wall Drug is culturally sensitive. 2) Casino Another entertainment value to add on the long list of activities would be to construct acasino and attract any person between the young adults and the elderly. Sticking with the WildWest theme, it would be most fitting to have the casino‟s appearance to be a saloon with oldstyle craps table, western theme slot machines, and old roulette tables. There will be differentslots machines and tables aimed towards people who want to spend different amounts of money.Casinos are unique businesses that draw in various ages to participate in the fun, and for thechance to win a large sum of money. 3) Bars Whether it is after a person lost his life savings or while the person is rolling for the luckyseven, a drink comes to many people‟s mind in order to loosen up or a getaway. Casinos andbars are excellent complements because they complete one another and cannot have a fullexperience with only one of the asset. To complement the Wild West style, the bar will havewooden tables, countertops, chairs and swinging gates. 4) Hotel As Wall Drug expands into new areas with more amusement and attractions, it will get tothe point where people will need to spend a night at the hotel so they can spend more time at the 21
  22. 22. park. Since there is a bar and casino at the park, the hotel would be a nice addition to the placefor those people who need a place to lay their head after a thrilling night at the tables and saloon.The hotel will be part of the Best Western franchise due to the fact it has a well developed namebrand ensuring patrons the quality of Holiday Inn. 5) Pool When staying at the hotel, a pool is always one of the perks tourists love when onvacation especially during those hot summer days. Imagine a large pool where one can swim upto a side bar and order whatever adult drink they desire, kids making cannonballs, and parentsrelaxing with their favorite book. This small construction would simply give more style to WallDrug. 6) Laser Quest With the old west theme as ourdelivery attraction, having a laser quest at the park wouldbe a necessity for the consumers to feel they are in the old west with laser guns. Not only wouldthe people be wearing the laser suits, but they will have the option to wear cowboy hats, bootsand chaps if desired. Laser Quest by itself is extremely fun for all ages, and adding that into theactivities can increase the excitement of attending the one-of-a-kind Wall Drug. With all these added activities and events, Wall Drug will be made into a successful parkattracting people of multiple ages. Creating a magical place where anyone can have fun is a 22
  23. 23. challenge, but it is worthwhile to bring in the smiling faces. These buildings will bring on a newside of fun Wall, South Dakota that has never been seen before.International Expansion As discussed in the marketing portion of the paper, Wall Drug, Inc. will be expandinginto Germany as part of gaining a new source of revenue, and expanding the name abroad. Thissection will discuss the strategy Wall Drug will implement when conducting overseas businessthrough strategic alliances and a transnational program.Strategy The safest international expansion strategy for Wall Drug based on their financialposition and brand reputation would be a strategic alliance with a host country in Germany.There are many advantages for choosing this over creating a wholly subsidiary,franchising,exporting and acquisition. Alliances are a great way to enter another country withoutgoing in head first or placing all the capital into an unknown foreign investment. The alliancewith another country would enable Wall Drug to understand the target market better withouthaving to conduct a mass research, similar to how an acquisition or new wholly subsidiary wouldneed. Another added bonus would be that Wall Drug and the German company can split theresources needed to establish the new park, and split the work equally so that both groups placein the same amount of work. It also lessens the amount of expatriates needed compared to thegreen field factories or mergers, and would not require extensive interviews to find manyappropriate PCNs. Even though integration of PCNs and HCNs along with USA mentality will 23
  24. 24. be difficult,having a solid plan and strong negotiation skills will assist the company to pushfurther with American ideals at little resistance from the partner or its workers. Lastly, thepartner company should have an understanding of the general market better than Wall Drug sincethey are headquartered there. The host country would know if there are permits and documentsneeded, and be able to receive the permits more easily than the parent country. There would beno need of translation or miscommunication between Wall Drug‟s employees and thegovernment officials since the German partner will be the ones conducting this matter. The way Wall Drug will operate its new park is by using a transnational strategy ratherthan multi-domestic or global strategy. One reason for not choosing a global strategy would bethat those companies would be ethnocentric and would want every company to operate exactlyhow it does in its own country. The problem with applying this to Wall Drug is that the serviceand attraction might not be too attractive in the eyes of the Germans, and would only appeal to avery low number. Being centralized and using the current theme in Germany would be asking forfailure and waste of resources. Next, multi-domestic would be too broad in terms of how thesubsidiary would operate, and decentralized to where Wall Drug, Inc. would not be able tocontrol it. This leads the company to use a transnational approach since it is a mixture of both,bringing in the good parts of each. A trans-national strategy has all of the elements necessary forthe new park to succeed while giving headquarters the same power and position it experiences inthe USA. For one, the approach allows Wall Drug to use the same job description,organizational structure, and other aspects of human resources to ensure the same career path asits sister park. Although holidays are different in Germany, the operations and activities in its 24
  25. 25. core would still be the same, but with a twist to cater to the Germany population. For example,the Germany park would support popular holidays, create festivals for the occasions, do thesame kind of work as if they were in South Dakota and operate according to the standards set byWall Drug. One perk of this strategy is this would allow the Germans to decorate the park toappeal to the overseas market, use their German philosophy to influence the target audience andset their own standards while abiding to our international rules and regulations. The standardswill be specific, but allow enough “wiggle room” for the partner to conduct business efficiently.Examples of how these two ideas are implemented are as follows: The new park will greet the visitors the same way one would expect when entering itssister park in South Dakota, yet the scenery would be catered to the taste of the Germansaccording to what the partner sees fit. The restaurants, activities and shops would still follow thesame format it would in USA, but be specific to what Germans would tend to purchase, its taxsystem, and the style of the building. The organizational chart would be the same as in America,but the marketing would mostly likely be altered to German appeal while reducing anytranslation problems. 25
  26. 26. FinanceFinancial Overview Currently Wall Drug, located in Wall, South Dakota, has an interesting financial plan.Their original revenue draw was free ice water and 5 cent coffee. Although it was feasible in1936, their current strategy is to attract tourists heading to Mount Rushmore and the black hillsin the spring. Revenues have increased steadily in the small town establishment, growing from$350 in the first month of business to a multi million-dollar firm by the 1970‟s.Revenue Growth over the Years The revenue growth in Wall Drug over the years is partially due to their cost leadershipand their niche product line. However, the Hustead‟s rely on superior marketing tactics to attracttourists. Their first foray into signage came in the summer of 1936, and a trend was established.The opportunistic signage drew tourists heading to Rushmore, as well as those heading for theBlack Hills. Signs were also posted in several unique locations around the world hoping tobranch the brand out in an international way. Although markups and margins were miniscule,Wall Drug has seen a steady increase in revenue since this period. Free publicity in publicationssuch as Time and Village Voice made Wall Drug a household name and tourist Mecca. Theiringenious marketing strategy took a hit when the Highway Beautification Act of 1965 waspassed, and their Income Statement took a minor hit. The signs that they were famous for had tobe moved back 660 feet from the highway. Although the Hustead‟s won a major victory inFederal court, signage that was removed during the initial stages of the law being passed had tobe reinstalled. By 1990, only 300 Wall Drug signs were still standing, most of them located in 26
  27. 27. South Dakota. This sign decrease seemed to not hurt sales much, as profits have still increasedsince the legislation was passed.Threats From Rising Commodities Although the Highway Beautification Act did not affect the revenue to a great degree, theGas Shortage of 1979 did. The price of oil doubled, leaving Wall Drug‟s tourists at home. Walldrugs revenue decreased by 13% during this period. This is a very troubling sign for a „RestStop‟ business model. There is no way to predict a doubling in gas prices, so hedging was not anoption at that point. They were forced to incur a decrease in revenue. These factors lead us tobelieve that Wall Drug needs to become more of a tourist attraction in and of itself, not just anattractive rest stop. Before the gas shortage, in 1971, Ted and Bill borrowed 250,000 over ten years in anattempt to leverage for the first time. The project was the Wall Drug Mall, which resembled oldWestern living. This was their first foray into the amusement business model. Capitalizing ontheir Western niche and devotees to the culture, Wall Drug created a town that could drawpotentially more customers than ever before. However, the added debt cut into profits during thedown years of Wall Drug. This is one of the fears that come with leveraging; when times arehard, you still have to pay the interest payments. This strategy of leverage worked well for thefirm until 1979, when Wall drug saw a decrease in Net Income of a shocking 83%. This couldhave crippled more cash strapped firms, however Wall Drug was still able to survive. Ourrecommendations entail Wall Drug maintain a constant cash balance of at least $100,000. This 27
  28. 28. would allow Wall Drug enough liquid assets to maintain their business without collapsing due tointerest expense.Taking Market Share From Deadwood When looking at the competitors and analyzing the dining and lodging establishments,Wall Drug has a potential opportunity to capitalize on the tourists going to Deadwood.According to the map of South Dakota, most of the traffic heading west to Mount Rushmoremust pass the Wall Drug location. Eating and lodging revenues are much higher in Deadwood.This may be due to the limited betting casino that is located in Deadwood. During the wintermonths, Deadwood is able to attract 10 times the revenue for lodging and two times the revenuefor eating. This is a disparaging number, especially since tourists must pass through Wall to getto Deadwood from the east. During the winter months, Wall Drug must utilize their Christmasin the West paintings to draw more tourists to the site during the winter months. The plan thatthe Hustead‟s have for the expansion, including the mansion, is well conceived. The cornerstoneof their financial stability for the first five years will depend on the success or failure of theChristmas Art Gallery. Wall Drug must spend advertising dollars in travel magazines to alert thepublic to the new Christmas attraction.Western Art Gallery Expansion Wall Drug is the quintessential year round destination for those looking for a Westerndestination. The notoriety of the store reaches across the world, however their profits need toreflect this. Our first key to stability is the construction of the Wall Drug Western Art Galleryand guesthouse. This is going to be a plantation style three-story mansion draped in the 28
  29. 29. Hustead‟s art collection. Not only is the art collection good for business in the winter months,but it could also serve as a source of capital if there are problems with expansion costs. Thereare several threats that come with investing in art, however. Artwork is not very liquid, whichcould present a problem if immediate funds are needed to support expansion. Although piecescan range in the tens of thousands of dollars, the beauty is subjective. It is very hard toadequately value artwork. On the balance sheet, how is art appreciated and depreciated. Sincethe proceeds from the mansion are proposed to go directly to the purchase of new art, Wall Drugmust devise a plan to always have 35 to 40 pieces of art. According to Bill‟s assessment, 40% of the business (approx.) is from repeat customers.The repeat customers will not want to see the same pieces displayed year after year. I believethat the artwork should be retained for a year, maximum two years, and rotated out. Marketresearch will be done to observe which works resonate with the consumer, and those piecesshould be retained. With the daily traffic in November through March averaging 2359, weshould assume conservatively that 1100 people could stop through the Art gallery during thesemonths. If Wall Drug charges $10 per person to enter the Art Gallery and take a guided tour ofthe facility, they could generate an average of $11000 a month just from the tour alone. This isan assessment just from traffic alone, so once more people know about the luxurious art in SouthDakota, the more revenue that could be generated. Some Western Fine Art has been known tofetch as much as $120,000 at the Dallas Fine Arts auction. Wall Drug must use some pieces thatmay become outdated, and auction them in Fine Art Auctions. They can also go to these 29
  30. 30. auctions and purchases pieces, with the assistance of a curator. The collection could not only become the tourist destination for the winter, but also a valuable asset financially. Western Art Gallery Expansion One suggestion that our team would raise is to capitalize on the tourists going to the Mount and the Badlands by offering lodging to the guests. Whether we want to build upon the mansion style Art gallery that has guest rooms, or franchise the hotel is a key concern of the team.Exhibit 3 shows a list of probable franchise opportunities and their costs. Exhibit 3: % of Total Total Total Total Total Total Reservatio Frequent Total 10-Economy Initial Royalty Marketin n Traveler Yr Cost Room Cost Cost g Cost Revenu Cost Cost eBudget US$5,000 US$71,25 US$93,15 US$12,000 --- --- 0.6 %Host 0 0Best Value 5,000 93,000 --- 36,000 --- 136,400 0.9InnSelect Inn 10,000 383,086 17,053 153,234 7,994 721,752 4.7Super 8 25,000 766,172 229,852 229,852 61,294 1,568,268 10.2Travelodg 36,000 689,555 315,594 315,594 61,294 1,625,390 10.6eDays Inn 36,000 766,172 291,145 291,145 61,294 1,688,985 11.0Mid-RateBrands --- --- $1,388,33 $61,000 $545,680 $292,000 2.8 %Best 3 30
  31. 31. WesternClubHouse 30,000 1,961,401 164,666 --- 69,943 2,226,010 4.5InnMaster 6,000 1,961,401 --- 1,225,876 - 3,213,027 6.6Host InnsBaymont 50,000 2,189,056 980,701 1,225,876 196,140 5,199,436 10.6Hampton 95,000 2,451,752 --- 1,961,401 196,140 5,213,485 10.6InnComfort 100,000 2,574,339 858,113 1,029,736 196,140 5,252,313 10.7InnFirst-ClassBrands $3,034,04 $1,152,936 $1,152,93 $1,152,93 $7,065,85Omni $50,000 7.0 % 3 6 6 1Luxury 120,000 4,045,390 954,931 1,011,348 404,539 7,232,252 7.2CollectionWoodfin 120,000 5,056,738 --- 2,528,369 90,000 7,795,107 7.7Suites 10,957,58Radisson 150,000 6,068,085 2,022,695 2,022,695 454,306 10.8 7 11,192,68Hilton 92,500 5,056,738 2,022,695 2,022,695 1,376,681 11.1 1 11,231,04Marriott 90,000 7,888,511 648,320 1,011,348 1,010,329 11.1 3 Since one of Wall Drug‟s new markets will include catering to the Sturgis Biker Market, I would suggest franchising instead of having mass lodging for consumers in the pristine art 31
  32. 32. mansion. The Husteads should look into acquiring new land near the Wall Drug compound anddevelop a franchise with a mid sized brand such as Best Western. Although rather cliché, a BestWestern in Wall would allow for the Husteads to form a new capital stream and capitalize on thefamiliar name. They could also create a specialized Best Western complete with Wild Westthemes. Best Western appeals to both the motorcycle crowd that they so desperately need toattract in August, as well as the families coming to see the Christmas decorations and Art in thewinter. Best Western‟s don‟t elicit a „low-budget‟-type response to the ritzy customer base. Italso doesn‟t scare away some bikers who may think that an Omni, for example, is too highpriced for them. From a cost standpoint the Best Western makes the most sense. The 10-yeartotal cost of the project is only 1,388,333, which is only 138,000 USD a year. This projectwill cost less than the proposed plan to build the new stores or the upgrade and repairs to theexisting building. The notoriety from a Best Western in a plain state, could draw well morethan $138,000 in sales. The breakeven point for customers to stay for $100 a night is 13,800guests per year. This is absolutely attainable considering the average traffic in one year is42758. If half of the traffic stays in the Best Western (21379), the Wall Drug can generate$2,137,900 in revenue per year. This equals a net profit of $1999900. This would be a boomand an increase in revenue 11 fold per year from lodging. You could essentially payback theten-year costs in one year.Leveraging Although the revenue exceeds the cost tremendously, I would still suggest Wall Drugtake out a loan for USD 1,000,000 for 10 years starting next fiscal year (1991). This initial 32
  33. 33. capital will help pay for the cost of any restoration or upgrades to any existing buildings on theproperty. Assuming a cost of capital at 8 percent, Wall drug would have to pay $80,000 a year ininterest payments, a very achievable number. I strongly encourage the Husteads to take out aloan with a favorable bank in the area to get an even better interest rate. The goodwill built upover the years with their local bank should give them leeway.The Cost of Land Since the backyard area will be removed once new construction is made and some of theHustead‟s property will be used for this project, cost of land will not be an issue. Since BillHustead is acting as a general contractor, we will not have to hire outside contractors. Daylaborers are usually very cheap, sometimes only $50, per worker per day. This can cut down oncosts tremendously, and cut into some of the unskilled workers that have been attracted toDeadwood, instead of the unskilled workers being paid in checks from Deadwood. This onlyleaves the costs of raw materials to be dealt with. We suggest that Wall Drug invest in futures tohedge their risk on the rise in metal and gas prices.Feasibility of the Marketing Plan The proposed marketing plans are all extremely low cost solutions to our marketingproblems. The first suggestion was a customer relationship database. This is completely feasibleand would also increase our revenue by keying on the most likely visitors to Wall Drug. Thiswill analyze the key consumer base, and help cut down on excess inventory by being able todiscard waste and unsuccessful products. Another suggestion that has worked wonders isacquiring an ITunes Application. This would allow consumers one button access to all of the 33
  34. 34. wonders of Wall Drug. The average web application costs $5,000, so the upside to developing aweb application is limitless. Mobile alerts/Groupon coupons are the wave of the future, so weknow that many consumers don‟t have time to look through a catalog to find bargains. Offeringtrip packages to Wall including a stay at the hotel and deals on the attractions will bring inclientele that Wall Drug never knew they had. Also,Expedia.com‟s affiliate program will befree, but will charge a commission based on how many click throughs there are to the website.This is the most cost effective and revenue-generating marketing plans that we have developed.With no surcharges, we only have costs if we incur revenues. Expedia‟s commissions are muchless than Hotwire.com, which charges an initial fee to post rooms and trips on the site. Themost exciting but most costly venture in the marketing aspect will be hiring Bob Barker fromPrice is Right. The iconic figure could help drive our older segment to South Dakota, and he‟s alocal celebrity. This may cost us in the $100,000 range, but this is a liberal and negotiablefigure. Partnering with the Boys and Girls club will be inexpensive, but allow us a more stableroot in the local and international community. One of the most valuable things in a firm isgoodwill, and we will establish that in the community at little to no cost. Stressing family valuescan also attract families from all over the country. We plan on funding the marketing aspect ofthe plan by using the funds generated from the Best Western, as well as dabbling in some assetmanagement with our new marketable securities if we need extra funding.Balance Sheet Examination When examining the balance sheet, the rapid increase in Cash was first noticed. Althoughcash holdings are always positive for the liquidity of a firm, too much cash can hinder 34
  35. 35. growth.Knowing that the construction of a Best Western in Wall will be a boom for the firm, theCash can be converted to cash equivalents, such as Marketable securities, short-term bonds,commercial paper, and treasury bills. These liquid assets can also accumulate interest and canbe traded very easily. Wall Drug should have a healthy balance and mixture between assetclasses. Wall Drug should convert at least 100K of cash into current marketable securities. Thatwould leave them with 167,000 in liquid cash and 100 in marketable securities. The largemerchandise inventory intimidates me, but according to the case, peak inventory levels havereached 2.5 million. Currently, there have been no ways of decreasing the inventory levels otherthan to decrease growth. Once the international business comes to fruition, we will then see astabilization in inventory levels relative to sales.Expansion Our final and most bold plan of all is our expansion into a foreign market. Germany wasranked 2nd in travel and tourism, and also has a Wild West interest. Germany is one of the mostfinancially stable countries in Europe, and we would not have to spend a lot of money bringingin culture consultants. We considered other countries (Japan, China, France, etc.) but there wasa larger cultural gap in these countries. Wall Drug‟s original business model would have beencompromised. However, there is a tremendous opportunity for franchising/strategic partnershipwith a preexisting Wild West theme park called Silver Lake City. Located in eastern Germany,Silver Lake City follows the same business model that Wall Drug does. A Wild West museumwas also opened. The close proximity to Berlin (60 miles) makes this an ideal candidate for a 35
  36. 36. strategic alliance or expansion. From a cost perspective, waiting two years to pay off some ofthe new interest payments before expanding would be best. There also needs to be revenuegenerated from the new Best Western before another expansion is made. Right now, the chargefor the Wild West is EUR8 for children and EUR 15 for adults. This is extremely encouragingfrom a financial standpoint, because the consumer is willing to pay more in Germany for thesame attraction in America. The Husteads could charge initial admission into Wall Drug, andalso capitalize on revenue from the stores inside the German Wall Drug. The notoriety in theU.S. would be gained from international expansion. The Husteads should examine theirexpansion into a stable foreign market if it wants to increase its financial growth and health. 36
  37. 37. Human ResourcesHuman Resource Overview Within the Human resource department, Wall Drug‟s three year plan will consist ofreconstructing the Internal Alignment of Wall Drug. This entails creating an effective and highlyorganized management team that will properly lead the company in carrying out tasks andresponsibilities. There are three areas that Wall Drug will primarily focus on. We want not onlythe managers, but the employees as well to know that the people of Wall Drug are our corefocus. The employer and employees are the most important people of the company and makingthese people feel valued, respected and highly appreciated is key. The second area we will focuson is the transition of Wall Drug, from an Egalitarian structure to more of a HierarchicalStructure. As Wall Drug is being divided into clear cut divisions,It is essential that we make sureeach division is being led by a well-experienced and personable manager who will effectivelytrain and manage their team within that division. Organization is necessary. The third area wewill focus on is increasing customer loyalty. In doing this we have to make sure the entire WallDrug staff is well-educated on how to provide excellent and extraordinary customer service. Westrongly feel that if we can significantly improve in these three key areas; Wall Drug will be thenumber one place to go for years to come.The People 37
  38. 38. Before Wall Drug can make any internal changes to its management team and staff, wewould like to take time to recognize them for their dedication, hard work and passion in buildingWall Drug Store from the bottom up. Wall Drug has reached great success from where it used tobe years ago, and it would not have been possible without these employers and employees. Wewould like to make it very clear, that the people who work here are highly appreciated andvalued for their services and everything they bring to the table. The employees, includingmanagers, supervisors and staff, are the most important part of the business. The employers andemployees are the heart of Wall Drug, and it is in their hands to assist in contributing to thecompany‟s growth and success for many years to come. It is up to them as Wall Drug‟sbackbone to provide an extraordinary experience to customers, and maintain a positive,respectful and attractive image for Wall Drug Company as a whole. Effective communication is the one of the few ways in making Wall Drug‟s staff feelspecial and appreciated. The managers of Wall drug will work toward building stronginterpersonal relationships with employees so that a level of trust and reliance is created amongemployers and staff. As Wall Drug expands and makes internal changes within this three yearplan, it is important that employees feel confident and comfortable in being able to turn to theirmanagers for anything regarding their work schedule or the environment they work in. Effectivecommunication will have a positive impact on the organization as a whole, and lead toimprovement within the environment while carrying out tasks and duties. 38
  39. 39. Employers and staff will also be acknowledged through rewards and incentives whichwill be directly related to job performance of the individual and change each pay period.Certificates recognizing improvement and hard work will be given out monthly, along withexciting coupons and treats. This will encourage employees to stay motivated in performing tothe best of their abilities on a consistent basis. A small level of competition will createexcitement and power among the staff and actually have them wanting to come into work.Internal Alignment Before any services or production of Wall Drug can be improved, we need to focus onthe internal alignment of the company itself. As of now, Wall drug is more so made up of anEgalitarian Structure, where teamwork is highly valued and tasks are carried out in groups ratherthan individually. The organization has a great deal of leeway and flexibility when it comes tothe jobs that are performed on a daily basis. This is not a bad thing, however employees areunable to really focus on being detailed in effectively carrying out essential responsibilitiesbecause they are too busy multitasking. This can lead to a negative impact on providingcustomer service in not being able to really provide that extraordinary experience. This alsoleaves the employee with a disadvantage of not having the opportunity to fully-educatethemselves on proper guidelines in performing their job. To eliminate this, Wall Drug will betransitioning into a Hierarchical Structure, where individual performance is better acknowledgedand a variety of jobs exist. Duties and responsibilities will be based on job description, andemployees will be paid based on individual performance, experience, skills and ability. Pay 39
  40. 40. differentials will be larger, simply because each division will entail different jobs and the level ofexperience needed and possessed will vary depending on the job.The Management Team After analyzing the case we came to the conclusion that when looking at the managementof the staff and store itself, illustrating an organization chart will be the best way to physicallyshow who possesses what position, and what essential responsibilities that position entails. Eachmanager will be in charge of their own division of the store. This means that within eachdivision, there will be different but similar duties for both the manager and employees workingin that division. Ted Hustead, owner of Wall Drug Store since 1931 with his wife Dorothy, bought thedrugstore in Wall, South Dakota for $2500. Retired at the delicate age of 82, Ted has decided topass down the prosperous and successful business to his only son Bill and his wife Marjorie,who have brought great contribution to the store as well. Dorothy Hustead, wife of Ted, was inTed‟s eyes the backbone of Wall Drug Store. Wall Drug store would not have evolved in to thewell-known loved store if it weren‟t for Dorothy‟s dedication and aspiration for the business.Dorothy‟s creative idea to set up signs along the highway has led Wall Drug to much great 40
  41. 41. success, and has opened many doors. Retired at age 81, Dorothy too has decided to pass downher position to Bill‟s wife Marjorie who has already embraced the title as her own. Bill Hustead, CEO and president of Wall Drug, has spent most of his life working withhis parents to build and expand Wall drug from the bottom up. He is Responsible for the successor failure of Wall Drug. He will ensure that Wall Drug is operating in a positive environment andthat employees are providing the best customer service to clients and customers, will oversee allDepartments of Wall Drug Store including Operations, marketing, strategic planning, financing,the company‟s culture and makes sure the store is in compliance with safety regulations, salesand public relations. Bill also makes sure revenues are in coordination with Wall Drug‟s balancesheets and income statements, enforces the rules and regulations which are in compliance withthose of the state and federal laws and also makes sure managers, supervisors and employees arecarrying out their duties effectively and efficiently within their own departments. Marjorie Hustead, Wife of Bill Hustead and Vice President of Production will be incharge of estimating costs for merchandise and needed products. More specifically she will be incharge of Wall Drug‟s jewelry store. Marjorie will manage production processes and is in chargeof purchasing cost-effective equipment and products, will work with other managers in enforcingimportant laws including OSHA, HIPPA and COBRA among entire staff, enforces the “5 keyBehaviors” and the core values so that employees are consistently providing excellent customerservice in all departments and directs supervisor of the jewelry store as well 41
  42. 42. Rick Hustead, son of Bill and Marjorie and Vice President of Sales, In charge of newhires and firing for all departments of Wall Drug, with the exception of the restaurant which willrun by Mike. He also makes sure employee schedules are up-to-date and in conjunction withentire staff‟s work schedules and Plans and develops and implements successful strategies forincreasing revenues Karen Hustead, wife of Teddy and Vice President of Marketing, is In charge of tourismrelated business with Badlands and Black Hills Association, Manages public relations andgovernment issues, coordinates with global countries in advertising Wall Drug worldwide,Works very close with Wall Drug‟s Marketing Team and Makes sure signs are properly andevenly distributed along the highway. Karen Poppe serves as the corporation‟s accountant. She Directs all accounting functionsof the store so that adequate financial records and fiscal controls are maintained, makes surefinancial operations are in compliance with state and federal laws and regulations and makes surefinancial matters are properly coordinated with state and federal agencies pertaining to policies,procedures and programs within Wall Drug‟s financial department Kathy Hustead, wife of Rick and Wall Drug‟s Pharmacist manages the store‟sprescription drug business, organizes prescriptions according to date and time they are ordered,makes sure shelves are properly stocked with the right labels and prescription and managesinventory and orders related to pharmaceutical department 42
  43. 43. Mike Hustead is a loyal and good friend to the company.As restaurant Manager, Mike isin charge of employee schedules within the restaurants, manages day-to-day operations withinthe restaurant and café, ensures that chefs and employees are following rules and regulations incorrespondence with state and federal laws and regulations, enforces safety guidelines andprocedures and makes sure all staff including servers, hosts, supervisors and chefs are well-trained and knowledgeable on menu selections and Business code of conduct. Teddy Hustead, husband of Kathy and wall Drug Manager, is In charge of all shopswithin the Mall, Oversees all managers and employees in each shop, making sure they arecarrying out duties prompt and efficiently, Enforces that extraordinary customer service is beingdelivered on a consistent basis. Teddy will make sure all shops are in compliance with state andfederal rules and regulations and is In charge of custodians and janitors as well in making sureWall Drug Mall is properly cleaned and organized on a daily basis. The positions listed above are just the main positions of upper management that will beassigned. Wall Drug will also be undergoing extensive recruiting because it is clear that as weseparate into sections Wall Drug will need more employees within each section. Morespecifically we will be focusing on student recruitment. We strongly feel that having studentemployees will bring a nice college crowd to Wall Drug Stores, and eventually parents will haveto stop by as well.Customer Loyalty 43
  44. 44. The company‟s updated and more extensive training package will cover many areasincluding health and safety, job tasks and responsibilities pertaining to each job description, anda key area called building customer loyalty. Organizing and improving the company‟s internalalignment is important just as much as providing excellent customer service to our Wall Drug‟scustomers. It does not matter how much experience or skills our employees have, regardless oftheir work history they must be full-educated on how to greet a customer and make them feellike they are in a home away from home. Outstanding customer service will bring a sense of trustand loyalty to our customers and will have them wanting to come back again and again. Acustomer will not remember what they ate or bought, but they will always remember how theywere greeted and treated. With this in mind, Wall drug‟s training package will address what isknown at the “5 key Behaviors” that will promote positive and effective customer service. Thesekey behaviors include (1)Greeting Customer with a warm smile while exchanging names,(2)Giving customer your undivided attention, (3) Having a positive attitude, (4)Using thecustomer‟s name and (5) Giving a friendly Goodbye with a warm smile. Employees will also beprompted to undergo role playing and taking turns participating in realistic scenarios that willbetter assist them in learning how to deal with different kinds of customers whether it is the irate,happy, confused or sad customer. Each section will carry out these five key behaviors.Employees will be trained to use winning phrases such as “Welcome to Wall Drug,” “Yes!” “ICan Help You with that,” “It Would Be My Pleasure” and “thank You.” A few more butimportant things that will be included in the training package include knowledge on HIPPA,COBRA, OSHA and confidentiality of Wall Drug. 44
  45. 45. HIPPA It is essential that employees are aware of their rights if they do choose to leave WallDrug for any reason. The Health Insurance Portability and Accountability Act (HIPAA) forbidsinsurers from imposing preexisting-condition exclusions when an eligible individual transfersfrom one plan to another. After you have been covered in a health plan for twelve months,preexisting-condition exclusions are no longer in effect. Prior coverage would not qualify if thereis a break in health insurance coverage for more than sixty-three days.Cobra The Consolidated Omnibus Budget Reconciliation Act (COBRA) extends coverage for18-36 months. The employer does not have to pay the premium, and the premium may beincreased to a maximum of 102% of the group rate. The employee may elect COBRA withinsixty days of the qualifying event.COBRA does not protect an employee who is fired for cause.OSHA Employees need to be aware of the environment and the surroundings they work in. TheOccupational Health and Safety Act is a Federal law which enforces occupational health andsafety. It is up to the employers to enforce the rules and regulations regarding the safety, healthand welfare not only of themselves but their employees and everyone engaged in the work 45
  46. 46. environment. Key issues such as hazards, health and safety risks, suitable safety controls, andrecommendations on avoiding accidents to management and employees in an organization.Expats Expats will be trained not only on Wall Drug‟s updated training package discussedabove, but also on the customs, rules and regulations of Germany. It is important that expatsunderstand the norms and customs of Germany when it comes to little things such as shaking abusiness man‟s hand, or how to speak when carrying on a conversation. We need to make surewe maintain a positive and attractive reputation if we are going to be doing business in Germanyand other international countries.German Customs The way you greet a person in Germany is important. A simple “guten tag”,meaning“good day,” is greatly respected. When you enter a small place of business it is important to saythey, regardless if the business person is busy or not. This also is the same case for say goodbye,or “Auf Wiedersehen.” When you first meet or are introduced to someone, just like in the U.S.it is essential to shake their right hand with your right. If the German person is a young person, itis proper to greet them with a nice personal “Du.” The older they look, you change your greetingto a formal “Sie.” Meeting Germans might come off as challenge, but it is recommended to takea basic German course at the education center. Also if you are inviting a German coworker orfriend out, you should make it clear that you are treating them. Expats will also have to beeducated on the importance of Sundays and Holidays. Germans take these days very 46
  47. 47. seriously.No one is seen outside washing their cars or doing laundry, it is a day where no noise ismade. All of these are just a few little but important things expats have to be educated on.Key Values of Wall Drug Whether it is in South Dakota or Germany, with these improvement and expansion plansin mind, we expect that wall Drug‟s core values will be carried out effectively and efficiently byboth the employers and employees. These values include supporting an environment thatencourages advancement and retention of employers and staff through effective training anddevelopment, collaborating with all departments of Wall Drug to support each other‟s successesin achieving the division‟s goals and objectives and creating a positive atmosphere that respectsdiversity, trust, confidentiality and encourages professional interpersonal relationships amongemployers and employees. 47
  48. 48. Closing Remarks We estimate that all of these improvements, transitions and expansion ideas will developand go into effect within the next three years. Wall Drug company has come a long way fromselling free water to setting up signs along the highway with hopes of increasing clientele. Weare proud to say that the company has developed into a prosperous and booming organization.However, that is not where it stops. Wall Drug‟s three year plan consist of working day andnight toward these goals in better organizing the management of the company and strengtheningits internal alignment so that we can make all of these adjustments even possible. Yes, WallDrug was prosperous when everyone worked together in making sure tasks and responsibilitieswere carried out. However, as our society continues to prosper and as technology continues toadvance, it is essential that we are taking advantages of these opportunities that are beingpresented to us. Expanding globally will also push Wall Drug into a direction we are unsure of,but willing to take that risk if it means having the opportunity to expand internationally andcompete with existing companies within the market. No, this will not be easy, but we have faithand strong belief that Wall Drug has the power to make this happen. Ted and Dorothy are thereason Wall Drug even exists, so it is up to the people of Wall Drug to maintain an attractivereputation consistent production and loyal customers to keep the booming business on its feet. 48
  49. 49. Sources1 http://www.quantcast.com/www.walldrug.com2 http://www.gerardotandco.com/about-gerardot-and-co/areas-of-specialty/place-branding-destinations/3 http://athletes-celebrities.tseworld.com/entertainment/hosts/bob-barker.php5 http://www.facebook.com/help/?page=8646 http://www.bgca.org/whatwedo/Pages/WhatWeDo.aspx7 http://www.alexa.com/siteinfo/expedia.com8 http://www.expedia.com/daily/associates/affiliates.asp9 The Travel and Tourism Competitiveness Report 2011: Beyond the Downturn pg. 3510 The Travel and Tourism Competitiveness Report 2011: Beyond the Downturn pg. 37http://www.weforum.org/issues/travel-and-tourism-competitiveness/11 http://www.weforum.org/issues/travel-and-tourism-competitiveness/ pgs. Xiv, xvi12 Mendoza, Moises. “Germans love of the wild west is bigger than Texas.” The Houston Chronicle. 16 November 2009 http://www.usatoday.com/travel/destinations/2009-11-16- germany-texas-influence_N.htm13 Kimmelman, Michael. “In Germany, Wild for Winnetou.” The New York Times. 12 September 2007 http://www.nytimes.com/2007/09/12/arts/design/12karl.html 49
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