Wal-Mart HR strategy:Wal-Mart’s success in Human Resource Management is keeping their workforce of 1.3million from unionizing, while adding to it and pursuing other HR activities to further Wal-Mart’s success. Wal-Mart would not have been able to expand and have the same level ofsuccess without hiring and taking care of quality employees. Some of Wal-Mart’s humanresource activities include employee advancement, employee recruitment on collegeuniversities, and employee training and development. Additionally, while most firms haveslowed down their hiring of new employees, Wal-Mart has sought out new ways to attractemployees to compensate for their further expansion over the next five years. Looking at Wal-Mart’s Human Resource Management, one of the most importantaspects is Wal-Mart’s employee advancement program. Currently, 65% of the company’smanagers began working hourly jobs, such as cashiers. Wal-Mart has taken great effortsto ensure that there are opportunities for their employees to rise up through the ranks so tospeak. This availability of opportunities to advance past low-paying hourly wage jobsundoubtedly is part of the reason that Wal-Mart was voted as one of Fortune magazine’s mostadmired companies and was distinguished as one of the best companies to work for in theU.S. In the realm of employee recruitment and employee training and development, Wal-Mart has targeted college students to add to their workforce. Wal-Mart achieves thisrecruitment by fanning out over 80 college campuses. While they are at these colleges,they are also able to expand their demographics by looking at minority fraternities andsororities, which brings all types of people from different backgrounds, races, and genderstogether in the Wal-Mart family. Having a wide variety demographic for a workforce, onlyserves to attract more people to seek employment with Wal-Mart because they are able toshow that they have a very open hiring process. Beyond this recruitment, Wal-Mart hastaken an additional step with college students by offering management training for collegestudents while they are still in school so they are more developed and prepared upon theirgraduation. This program serves the purpose of making college students consider careerswith Wal-Mart, and over the last two years, the program has had immense success. The results of these Human Resource activities speak for themselves. Wal-Mart hasachieved a very good retention rate for their employees, and the proof of this is their focus onadding to their workforce over the next five years by hiring 800,000 new employees bringingthe total over two million. Despite the reports that Wal-Mart’s employees are underpaidand not given benefits, Wal-Mart has not wavered. Employees, as much as 60%, have goneon record saying that they stay with Wal-Mart because the benefits allow them to take care oftheir families. If employees were unhappy and leaving at a considerable rate, then thefocus would be on filling these open spaces rather than expanding their workforce. “ASSOCIATES” Internal Promotions Retention Motivation to same culture Discounted rates of shares of the company for its employees
The discrepancy between Wal-Mart’s poor HR leading indicators and its high degree of financial success has to do with the introduction and extensive use of technology in its processes. By increasing the level of automation in its warehouses and stores, Wal-Mart has reduced the importance of employee satisfaction. The smooth flow of operations is less dependent on employees, allowing Wal-Mart to hire individuals with low levels of education for minimum wage compensation. This increase in the use of technology also means that very little employee training is necessary for successful execution of job tasks. The minimal training significantly reduces the investment that Wal-Mart has in each employee, which makes them easily replaceable as there is not a large financial or temporal penalty in getting a new person up to speed on their responsibilities. The reputation this builds for Wal-Mart is not favourable and could result in a reduced customer value proposition and loss in customers, but image and corporate social responsibility are not the only factors driving customer value. Additional factors include price and convenience, two things that Wal-Mart is very good at delivering.SWOT ANALYSIS:StrengthsWal-Mart is a powerful retail brand. It has a reputation for value for money, convenience anda wide range of products all in one store.Wal-Mart has grown substantially over recent years, and has experienced global expansion(for example its purchase of the United Kingdom based retailer ASDA).The company has a core competence involving its use of information technology to supportits international logistics system. For example, it can see how individual products areperforming country-wide, store-by-store at a glance. IT also supports Wal-Marts efficientprocurement.A focused strategy is in place for human resource management and development. People arekey to Wal-Marts business and it invests time and money in training people, and retaining adeveloping them.WeaknessesWal-Mart is the Worlds largest grocery retailer and control of its empire, despite its ITadvantages, could leave it weak in some areas due to the huge span of control.Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), itmay not have the flexibility of some of its more focused competitors.The company is global, but has has a presence in relatively few countries Worldwide.OpportunitiesTo take over, merge with, or form strategic alliances with other global retailers, focusing onspecific markets such as Europe or the Greater China Region.
The stores are currently only trade in a relatively small number of countries. Therefore thereare tremendous opportunities for future business in expanding consumer markets, such asChina and India.New locations and store types offer Wal-Mart opportunities to exploit market development.They diversified from large super centres, to local and mall-based sites.Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.ThreatsBeing number one means that you are the target of competition, locally and globally.Being a global retailer means that you are exposed to political problems in the countries thatyou operate in.The cost of producing many consumer products tends to have fallen because of lowermanufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regionsof the World. This has lead to price competition, resulting in price deflation in some ranges.Intense price competition is a threat.Wal-Mart’s Basic Strategy: Low Cost High Volume Customer SatisfactionCompetitive Advantage: Distribution Capabilities Partnership relationship with suppliers Advanced Data mining Workforce Culture Everyday Low Prices (EDLP) Suppliers Weak Power: The suppliers are the consumer goods manufacturers for both food and durables and they have little power. The availability of alternate suppliers puts the retailers in a strong position. Retailers have high power of negotiation because of high volumes purchased and the projected discount market. A Wal-Mart is extremely important to any supplier, however Wal-Mart can easily survive without this particular supplier. Internal Rivalry: Strong Competition is fierce among discount retailers due to: Lack of differentiation in product offerings Low switching costs for end consumers
Volume driven strategies that aim at grabbing market share at the expense ofprofitability.Analysis of Starbucks Using Porter’s Five Forces1. The Threat of SubstitutionSubstitutes (Products)‐ Other beverages apart from Starbucks coffee and tea – Examples includesoda, fruit juice,smoothies, water, beer and other alcoholic drinks‐ Other “quick‐grab” foods apart from pastries, muffins, doughnuts, etc sold atStarbucks.Examples include burgers, burritos, tacos, sushi, snack foodSubstitutes (Environment/Ambience)‐ Lower‐end or “less luxurious” coffee places‐ Places that offer people a place to hang out, chat, relax or even work.Examples include teahouses, fast food places, ice‐cream parlors, side‐walk cafes, and bars and pubs2. The Threat of New Entry‐ The entry barrier for the coffee industry is relatively low, even for premiumcoffee like Starbucks.Any large and well‐funded company where capital is not a problem could bepotential entrants.‐ Some of the more current and ongoing threats of new entrants include fastfood chains such asMcDonalds, Burger King and Dunkin Donuts.3. Competitive Rivalry‐ Other coffee chains. Examples include Coffee Bean & Tea Leaf, GloriaJeans Coffee, Peet’s, andSan Francisco Coffee House‐ Smaller privately owned coffee houses‐ Secondary coffee providers. Examples include McDonalds, Burger King,Dunkin Donuts64. The Bargaining Power of Suppliers‐ Not much bargaining power for coffee bean suppliers due to the importanceof Starbucks’ business to any individual supplier, and the fact that Starbucksprobably accounts for a large percentage of any individual supplier’s sales..This gives Starbucks the ability to dictate the price ofcoffee bean sales.‐ Similarly, suppliers of paper and plastic products, such as cups, napkins, lids,etc, have very little bargaining power due to the large amount of alternativesources Starbucks could draw from. In addition, Starbucks has formedcontracts with such suppliers, giving them effectively no bargainingpower.
‐ There is more bargaining power for suppliers of technological innovationssuch as automated coffee machines, latte and espresso machines, etc becausethere are not as many suppliers for such equipment as there are for coffeebeans.5. The Bargaining Power of Buyers‐ In the past, buyers did not really have bargaining power when it came topremium coffee such as Starbucks. The sheer scale of Starbucks’ businessreduces the bargaining power of any single group of buyers.‐ With newer entrants and competitors such as McDonalds who claim to offerpremium roast coffee of reasonable quality for lower price, buyers now haveslightly more bargaining power than they’ve had in the past.