SWOT Approach : A Company Case Analysis on Wal-Mart

October 05, 2007

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I. Introduction

Wal-Mart Stores, Inc. was first established and founded by Sam Walton at

Rogers, Arkansas in 1962. The business growth of the retail store was momentous

that within a span of seventeen years in operation, Wal-Mart had already topped

annual sales at one billion US dollars. By the end of January in 2002, Wal-Mart has

been recognized as the largest retailer in the world a sales record of US $218 billion.

With this huge and continuous development, the retail store was eventually able to

operate at the global level. The global operation of Wal-Mart was marked by the

establishment of its first international store in 1991 at Mexico City (Govindarajan &

Gupta, 2001).

Through its international reach, an estimate of one hundred million customers

are said to visit a Wal-Mart store found somewhere in the world. A total of 1.3 million

associates worldwide are employed by the company and are distributed within its

3,200 stores in the United States as well at over a thousand other stores in Canada,

Brazil, Mexico, Argentina, Puerto Rico, China, Germany, Korea and in the United

Kingdom (Govindarajan & Gupta, 2001).

The business is actually divided into three main segments: Wal-Mart Stores,

Sam’s Club and International Stores. The Wal-Mart stores are further subdivided into

Discount Stores, Supercenters and Neighborhood Markets. Sam’s Club on the other

hand, is a business segment that consists of membership warehouse clubs.

According to the New York Stock Exchange (2005), Wal-Mart Stores operates about

1,478 Discount Stores, 1,471 Supercenters, 538 Sam’s Club and 64 Neighborhood

Markets within the United States as of January 31, 2004. In addition to this huge

local operation, Wal-Mart and its international segment conducts retail operation

within eight countries and Puerto Rico. Wal-Mart’s international segment is made

into several formats, which include retail stores, restaurants, discount stores, Sam’s

Club and Supercenters. Aside from these operations, Wal-Mart also owns a 37.8%

unconsolidated minority interest in one of Japan’s retailers, The Seiyu, Ltd. (New

York Stock Exchange, 2005).

Years of operation have indeed proved Wal-Mart’s effective techniques and

management, resulting to significant business success. In this analysis paper, the

internal and external factors affecting the company will be analyzed. Furthermore, its

strategies supported by relevant sources and models will be described as well.

Finally, recommended strategy based on the analytical findings will be developed.

Vision and Mission

            With the growing influence of globalization, competition within businesses

and markets is inevitable. However, with an established goal and appropriate

techniques, a company can gradually lead its way towards success. Vision, mission

and strategies are indeed significant in the business foundation as these serves as a

guide to the company so as to serve its main purpose and obtain its core objectives.

In the case of Wal-Mart, the company lacks the establishment of a formal vision

statement.

According to Kim Ellis, Public Relations Coordinator of Wal-Mart, the

company’s lack of a formal vision is attributable to its belief that the interest of their

customers are focused on the business’ other aspects. The company is then more

concentrated on meeting their consumers’ basic necessities. Nonetheless, if a formal

mission statement is made for the company to uphold, Ellis stated that it will probably

be “To provide quality products at an everyday low price and with extended customer

service…always” (Shah & Phipps, 2002).

The company also has no formal mission statement for the same reason;

however, it had recognized nine main components that support the company’s

mission for the consumers. These components include the customers, public image,

technology, markets, employees, self-concept, philosophy as well as survival, growth

and profitability. In general, the company aims to provide the best products and

services it can provide to the consumers not only to meet their satisfaction but also

to fulfil Wal-Mart’s objectives.

Products and Services

            As a retail company, Wal-Mart offers a wide array of products to the

consumers. These include groceries, toys, apparel for women, men and children,

jewelry as well as other hard goods; all of these product lines are sold at reasonable

and generally affordable prices. The services of the company on the other hand, are

centered on the operation of multiple retail stores both in the United States and

international branches. Wal-Mart Stores and Sam’s Club are the main segments of

the company. Each of these segments is centered on the company’s specific product

lines. The segment of Wal-Mart stores for example integrates the Supercenters,

Discount Stores as well as the Neighborhood Market within the US along with the

incorporation of the company’s online operation via Walmart.com. Under this

segment, the company sells a wide array of products including apparel for every age,

as well as local products such as accessories, fabrics, jewelry and sport

merchandise.

            The American warehouse membership club as well as the utilization of

samsclub.com falls under the Sam’s Club segment. In this segment, sport goods,

soft good and jewelry are the main product lines offered. The international segment

of the company on the other hand are made up of fully-owned subsidiaries operating

in different countries such as Germany, UK, Argentina, Puerto Rico, Canada and

South Korea. Other subsidiaries of the company are also found in Mexico, Brazil and

China. The company, while it operates in different states and countries apply the

standardization strategy where products and services offered is delivered in a

uniform manner. Thus, segmentation of the company is mainly concentrated on the

types of goods rather than on consumer types. 

            However, resources revealed that the company is attempting to restructure

its segmentation strategy. In particular, Wal-Mart aims to change its one-store-fits

strategy and plans to segment its 3,400 American stores into six divisions based on

the main markets the company is serving. These segments include African-

Americans, the Affluent, Empty-Nesters, Hispanics, Suburbanites and Rural. The

company realizes that by applying the standardization strategy on its market sectors,

the possibility of giving below average products and services becomes very likely.

Hence, with this plan to restructure, Wal-Mart will be able to effectively serve most of

its target markets.

II. Strategic Analysis

            In this section the SWOT analysis tool will be used to analyze the internal

aspects affecting the company selected. Specifically, the company’s strengths,

weaknesses, opportunities and threats will be cited in this part.

Strengths

The company possesses a strong brand name in the retail industry that

represents both value and quality. This strength emphasizes Wal-Mart’s

capability to attract new customers and maintain customer loyalty. In addition,

with the diversity of its products offered in one retail store, company also

provides customers yet another important strength, which is convenience.

The company employs a focused strategy on its human resources, enabling

its employees to be shaped into productive and efficient service providers. By

investing on the staff’s training and development, Wal-Mart is able to acquire

a workforce that is loyal to the company, its set goals and customers.

Wal-Mart is a global company that is capable of operating not only in the local

setting but in other parts of the world as well. This is considered a strength as

it helps in increasing the size of the company’s market coverage as well as

diversity. The purchase of major retail companies abroad such as UK’s ASDA

for example, also marked the company’s strong global expansion potential.

This also helps the companies adapt successfully even in foreign setting.

Wal-Mart utilizes the most modern technologies available in order to handle

and manage it local and international logistic operations. Information

technology also facilitates the effective procurement of the company. With its

ability to install state of the art technologies, Wal-Mart is able to overcome

strong competition as well as serve its large market effectively.

            

Weaknesses

The company is considered one of the largest retailer in the world as it

manages not only a huge array of product lines but also serve a considerable

consumer population both in local and international sectors. While the

company may have the tools, strategies and technologies that can handle and

address its internal needs, the significant size of Wal-Mart’s operations leave

the company weak in some aspects.

The amount of product lines offered by the company makes Wal-Mart less

flexible to retailers who are focused on a single type of merchandise. The

diversity of the suppliers the company would have to deal with makes its

supply chain more complicated, making logistic issues and problems more

likely if not frequent.

Though the company is already operating globally; however, the number of its

international branches are only limited to a few countries. This then does not

optimize the ability of the company to operate internationally.

Opportunities

Wal-Mart has access to the opportunity of adapting its current strategy of

establishing and operating large super centers worldwide. New types of stores

and potential business sites are available for the company to enhance its

market development. These include the opportunity to expand in the

international retailing sector.

The use of internet to shop has been a continuously growing trend among

current consumers. The company can then use this opportunity to serve more

customers and promote shopping convenience. This opportunity may also be

used by the company in serving consumers whose residence are too far from

local Wal-Mart branches.

Forming strategic alliances, merging or taking over other local and global

retailers is also another possible opportunity for the company to strengthen its

operations, overcome competitors and support its future success.

Threats

As a global retail company, Wal-Mart is an open target by several competitors

both in the local and international setting. This puts the company on regular

pressure particularly in terms of maintaining its consumers as well as

developing new and better business strategies.

Wal-Mart is a global retailer that needs to adapt to foreign regulations and

standards so as to penetrate markets abroad. Because of this, the company is

vulnerable to the issues that would affect the country it chooses to operate in,

particularly political and economic issues.

The diversity in conducting manufacturing operations has changed drastically

over time. With the availability of outsourcing options in low-cost areas all over

the world, manufacturing expenses have depleted significantly. This in turn

results to intense price competition among retailers.

III. Analysis of Corporate Business Strategy

Bob L. Martin, president of Wal-Mart’s international segment, stated that one

of the major strategies of the company is the promotion of a global brand name. This

insignia helps in promoting the Wal-Mart trademark: low cost, best value and

greatest selection of quality merchandise as well as highest standards of customer

service. The potential strategy was evident as the international segment of Wal-Mart

has grown in sales to more than 12 billion US dollars in less than seven years (Shah

& Phipps, 2002). The company then implements corporate strategies that are

patterned after this main strategic framework. In order to analyze Wal-Mart’s

corporate strategies, the discussion is divided based on the different aspects

affected by the company’s strategic efforts.

Management and Operations

            Within the corporate strategy of the company, Wal-Mart sees to it that its

management and operation are supported by its three main values, which include

respect for all, service to customers and to work towards excellence. As the

management of the company served as its main support, the integration of these

values in Wal-Mart’s managerial approach allowed it to become of the major retail

companies worldwide. In particular, the dedication of the company management to

people, its production, service delivery and overall operations enables it to

strategically operate amidst multiple competitors. There had been a number of

factors that suggests Wal-Mart’s strategic corporate strategy in the management

aspect.

            One of which is its implementation of work practices and policies that are

directed towards the establishment of an impartial and complete environment. To

fulfill this, Wal-Mart regularly asks for the feedbacks and opinions of the employees

with regards to their assigned work responsibilities, the company’s existing

regulations as well as Wal-Mart’s values, beliefs and work principles. The

management of the people in the company also ensures the safety and protection of

the staff. In particular, Wal-Mart provide the right training and orientation that would

enhance individual leadership skills as well as teach important work issues including

diversity, prevention of sexual harassment and discrimination, and equal

employment opportunities.

            Part of the company’s corporate strategy is to participate in various

community-based activities. For this, Wal-Mart has been a constant provider of

college scholarships for would-be high school graduates as well as provider of

manpower and financial assistance for fund-raising organizations, churches and

schools. Furthermore, the company also actively participates in community efforts

that are inclined in environmental protection and preservation. By coordinating with

relevant organizations, the company is able to educate the public on various

environmental topics such as recycling.

Products and Services

Wal-Mart’s many stores offer a wide variety of merchandise, including apparel

for women, girls, men, boys and infants. Every store also carries fabrics, and

notions, curtains, house wares, home supplies, shoes, hardware, electronics,

sporting goods, cameras and supplies, toys, health and beauty aids,

pharmaceuticals and jewelry. Merchandise that is nationally advertised accounts for

most of the stores’ sales. Initially, Wal-Mart marketed a limited line of merchandise

under the SAM’s American Choice brand. The products of Wal-Mart are selected

carefully in order to assure quality. Moreover, all products must be made in the

United States.

Wal-Mart also censors some products to ensure quality. The company for

example has banned recordings and removed magazines based on what it found to

be offensive lyrics and graphics and have stopped marketing teen rock magazines.

In addition, consumer needs are met through quality products by introducing new

apparel lines like Basic Equipment sportswear, Kathie Lee career sportswear and

dress collection as well as McKids children’s clothing (Shah & Phipps, 2002). Thus,

aside from conducting strict procedures in selecting products to put on sale, Wal-

Mart also creates it own original product lines to ensure quality.

In terms of product prices, the company also implements strategies that would

ensure the items’ affordability. Specifically, the company employs the program called

the Every Day Low Price (EDLP) strategy, which ensures that Wal-Mart constantly

provides goods that are of best quality at the lowest price. Consumers have always

expected Wal-Mart to sell items lower than its competitors, and Wal-Mart always

does, always has and always will (Newsome, 2000). Through the strong commitment

Wal-Mart has for its policies and customers, the business becomes highly

recognized and easily remembered. Clients become more attracted to visiting the

store as Wal-Mart tries its best to provide what they need. This interaction between

customer and business is developed strongly through the establishment of trust. The

inclusion of emotional appeal to such a relation further strengthens the business-

client bond. 

As the company greatly values the satisfaction of the customers’ needs, Wal-

Mart also implements strategies that are centered on enhancing its customer

services.  Technology is one of the methods used by Wal-Mart to extend its services

for the consumers. Internet e-tailing is currently a part of Wal-Mart, specifically

through Walmart.com. The internet possesses interesting aspects that will definitely

be advantageous to the growing market. In the case of Wal-Mart, profit gain was not

achieved as easily. In addition, several concerns must be taken into account in order

to succeed retailing online. Examples of these problems include issues of delivery

costs, merchandise returns and data security. Since 1997, Wal-Mart has been selling

its products through the internet. The company intends to continue investing on this

development as well as learn more on online retailing. In 2000, the company had

already launched its improved website, which now features travel services, a

pharmacy, and photography center. The site also helps customers with their

shopping (Shah & Phipps, 2002).

The company also delivers effective customer services by means of its

distribution and supply chain management strategies. The distribution operations of

the company are highly automated. Typically, its discount store carries more than 70,

000 standard items in stock. Supercenters on the other hand, carry more than 20,

000 additional grocery items that are mostly perishable, hence, must be ordered

frequently. In order to establish coordination, associates make use of hand-held

computers that are linked by radio-frequency network to area stores. When placing

orders, every store wires merchandise requests to warehouses that can either be

shipped immediately or reordered. More than 200 vendors are connected to the

company’s computers, making deliveries efficient and fast (Shah & Phipps, 2002).

About a hundred major manufacturers are servicing Wal-Mart, including Colgate-

Palmolive, Procter & Gamble and Gallo Winery. In order to efficiently provide

services for the mega-retailer, these manufacturers have set up offices near Wal-

Mart’s headquarters at Bentonville, Arkansas (Gosman & Kelly, 2002). In turn, this

enables both manufacturers and Wal-Mart to meet the needs of their consumers.

Furthermore, this strategy confirms the ability of supply chain systems in enhancing

the just-in-time (JIT) ability of the users (Davis, 1993).

Certain protocols such as the “Satisfaction Guaranteed” policy are also one

way how Wal-Mart delivers great services. This policy means that every associate

will do everything that they can possibly can to satisfy the needs of the customers.

Moreover, products that need to be repaired, exchanged or refunded are entertained

by the store with a smile and a thank you (Newsome, 2000). This policy gives

importance to Wal-Mart clients that make them come back again and again. This

particular behavior is naturally derived from the common observation where people

that are given respect and importance are more appreciative, cooperative and loyal.

Employees

            Similar to all other aspects of the company, Wal-Mart also considers its

employees as an important factor in its corporate strategy. For this reason, the

company has long been committed in developing its employees through the

provision of sufficient training and education. This does not only help in helping the

employees develop themselves in terms of their daily work performance but most

especially as professionals with clear career goals. As part of the corporate strategy,

the company provides training programs in the form of distance training, classroom

courses, corporate intranet sites, computer-based education, mentor programs, skill

assessments, satellite broadcasts as well as job announcements. These training

instruments had been useful particularly in enhancing the skills of the company’s

women employees as well as those who belong to certain minority groups. In

addition to the tools used, the efficacy of this strategy within Wal-Mart has been

supported by the company’s standard value with regards to respecting all individuals.

The success of this corporate strategy in the company has in fact been recognized,

enabling the company to be one of the 100 companies employing top training

programs for two consecutive years.

            In addition to training and education, it is also the strategy of the company to

retain its highly-skilled staff through the provision of relevant benefits. Using Wal-

Mart’s financial position, the full-time employees of the company have access to both

profit sharing programs and stock ownership. These programs help in establishing

employee loyalty as these greatly augments their total earning. At lower prices, full-

time employees can buy shares of stocks; the profit-sharing program on the other

hand, enables the qualified employees to receive incentives or bonuses based on

the overall success of the company at the end of the year. This company program

has been implemented by Walton since 1971. In profit sharing, eligible employees

are those who have worked for the company for at least a year and have worked for

at least a thousand hours a year (Walton, 1992, p. 132).

IV. BCG Matrix

            In order to analyze the operation of the selected company, the Boston

Consulting Group (BCG) Matrix is used. The Boston Consulting Group (BCG) Matrix

is a tool developed to assess a company’s business units. Specifically, the BCG

Matrix is used to evaluate the business units’ level of market growth and share

(Burgelman, Maidique & Wheelright, 2000). Thus, this tool is often referred to as the

growth-share matrix. The matrix is divided into four panels to represent each

business unit identified. These divisions are the cows, stars, question marks and the

dogs. Cows represent the business unit that generates the most profit and cost less

expenses. The cows are essential to the business, and thus, should be the

company’s main focus. Stars are business units that generates significant profit but

also cost as much. Business units are considered question marks when they grow

rapidly, resulting to great expenses. The dogs on the other hand are the most

inefficient business unit in the company. These business units neither generate nor

consume any cash. Below is the BCG Matrix for Wal-Mart:

Analysis

            The distribution done in this matrix was based on the 2002 revenue report of

the company (Hopkins, 2003). From the diagram, it is indicated that the grocery

items function as Wal-Mart’s star product. The report stressed that this served as the

top revenue generator of the company, contributing to 22% in the total sales. While

this generates the most cash flow, it should also be considered that this product

causes the most inventory cost to the company, considering that Wal-Mart has to

derive its grocery supplies to multiple suppliers or companies. On the other hand, the

hard (appliance, kitchen tools, furniture) and soft goods (digital products, music files,

software) are the cash cows of the company. Compared to the groceries, the supply

chain for these products are less complex.

The private-label goods are considered cash cows particularly in the

international sector. This is because American brands do not exhibit the same

impact or appeal to foreign buyers as with foreign consumers. In the European

region for example, the sales of the private-label goods amount to 50% of the total

sales as compares to 25% in the US (Hopkins, 2003). As cash cows, it is essential

that Wal-Mart uses these products to generate funds that would support its other

business units particularly those categorized as stars and question marks.

Pharmaceuticals, toys, electronics and health products are Wal-Mart’s

question marks. As indicated in the revenue report, these products may generate

sales but not enough to compensate the level of funds required to distribute them.

Multiple suppliers and costly inventory make these products the question mark type.

For this reason, it is practical that Wal-Mart consider limiting the inventory of these

products to save on inventory expenses. Finally, the photo development, jewelry and

shoe products distributed by the company are those that exhibit low market share as

well as growth. Considering the number of alternatives available in the market with

these products, it is indeed difficult for the company to keep these product lines. As

certain retailers are focused on distributing these goods, they have more business

flexibility than Wal-Mart, allowing them to overcome sales issues.

Recommendation

            Based from the analysis of the selected company, it is then appropriate to

recommend that the product and service development strategy be applied by Wal-

Mart, considering that these factors serve as the core factors affecting its growth and

progress. With this type of strategy, Wal-Mart can increase its sales by means of

modifying or enhancing its existing products and services. This strategy has been

recommended as it has the ability to support the company’s potential to reach

greater markets. Wal-Mart has multiple product lines that will be affected by this

strategy. With the BCG matrix, it is appropriate that the company starts off the

development with its prime product lines. Through this, the company will have

sufficient funds to support other relevant activities in the future. The competitors of

the company targets similar markets. However, by means of this strategy, Wal-Mart

will be able to strengthen the market position of each of its product divisions,

resulting to greater hold to these specific markets.

            The suggested strategy does not only fit the purpose of the company and

support its future growth but has also been recommended based on the capability of

the company to implement it. In particular, the SWOT analysis of the company

indicates that Wal-Mart has an efficient distribution system which in turn would

support this strategy. The culture of the retail company also fits the requirements of

this recommendation. Specifically, the company devotes ample time and resources

to develop and maintain a skilled workforce. With productive managers and

employees, the delivery of the developed goods of the company will be made

possible. As a result, greater satisfaction from the customers will be obtained.

V. Conclusion

            Wal-Mart is indeed one giant retail company whose position in the industry is

more or less assured. Nonetheless, there will always be internal and external factors

that would affect it and may result to business problems. However, by means of

optimizing the company’s available resources and considering its environment, it is

possible for the retailer to overcome its present as well as future issues. From this

analysis, it has been stressed that the success of the company is actually derived

from multiple resources. It is then essential that Wal-Mart and companies in general

identify these resources, and use them towards continuous success.

References:

Burgelman, R.A., Maidique, M.A., Wheelwright, S.C. (2000). Strategic Management of Technology and Innovation. 3rd Ed.  New York: McGraw-Hill.

Davis, T. (1993). Effective supply chain management. Sloan Management Review, 34(4), 35-46.

Gosman, M. & Kelly, T. (2002). Big Customers and Their Suppliers: A Case Examining Changes in Business Relationships and Their Financial Effects. Issues in Accounting Education, 17(1), 41+.

Govindarajan, V. & Gupta, A. (2001). The Quest for Global Dominance: Transforming Global Presence into Global Competitive Advantage. John Wiley & Sons, Inc.

Hopkins, J. (2003). Wal-Mart's influence grows. USA Today. Retrieved January 4, 2007 from http://www.usatoday.com/money/industries/retail/2003-01-28-walmartnation_x.htm

New York Stock Exchange. (2005). Wal-Mart Stores Inc. Retrieved January 4, 2005 at the NYSE website Retrieved January 4, 2007 from http://www.nyse.com

Newsome, D. (2000). Think Small One Customer at a Time, One Associate at a Time. Business Perspectives, 12(4), 20.

(Shah A & Phipps, 2002).

Walton, S. (1992). Sam Walton, Made in America: My Story. Doubleday, 132.

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Wal-Mart Strategy Management

            Wal-Mart, an American discount store which is founded by Sam Walton in Des Moines, Iowa in the year 1940, it is the largest retailer in the world and operates internationally with stores in Mexico, United Kingdom, Japan, Argentina, Brazil, Canada and Puerto Rico. Wal-Mart is now known as one of the success stories in the retail industry.  The management strategies that the organization has employed became one of the most popular strategies in the retail industry today, a considerable number of retail stores have emerged in different parts of the world following the retail format of Wal-Mart. From a small store to the largest retailer in the world, it is one of the most noticeable success stories in the business world.

            This paper answers five questions regarding the management strategy of Wal-Mart. It also discusses the objectives and perspective of the organization.

 

1. What strategic resources did it bring to the market place? What are its competitive advantages? And what was the value added?

            Sam Walton established the current biggest retail store in the world in 1940. After the World War II, discount stores became evident in the large towns of the United States because back then people believed that in order to have a discount store a minimum population of 100,000 is required. However, Sam Walton sensed that discount stores can also be applicable in smaller communities; he believes that “if the prices were right, the stores would attract customers from a wide area.” That is the reason why the strategy of Wal-Mart was to build big discount stores in small towns, which opposed its rivals like Kmart. In addition, its marketing strategy focused on having low prices on its products than depend on advertised sales. (2002) And during the 80s Sam Walton tried alternative formats of retail such as Sam’s Club, Helen’s Arts and Crafts, Dot Deep Discount Drugstores and Supercenters and Hypermarts. However, Helen’s Arts and Crafts, Deep Discount Drugstores and Hypermarts were not successful and was sold-off; on the other hand, Sam’s Club and Super Centers grew quickly and became one of the most important aspects in the company. And by the early 90s Wal-Mart started to expand internationally starting from having a joint venture with Mexico’s largest retailer, Cifra, and thereafter the progress on the international market is still ongoing. However, the results on different Wal-Mart;s overseas are mixed, some was a success others have lead to collapsed and lawsuits.

            The competitive advantages of Wal-Mart from other discount stores are its marketing strategy, wherein the company sells undercut prices of products than other stores, and its management system wherein the employees must give the best service to its consumers and in return incentives are given to its employees.  

           

2. What was Wal-Mart stores strategic purpose? What were its vision, mission and objectives and over what time scale?

            The strategic purpose of Wal-Mart stores is to establish discount stores in areas that have less than 100,000 populations. The main purpose and strategy of the stores is to sell products everyday at a lower price. Moreover, the main priorities of Sam Walton are his employees or associates, customers and operational details.

Years after Sam Walton died the founder of Wal-Mart his belief, mission and objectives are still used by the company. Sam Walton has only three basic beliefs, and those are: Respect the individual, Service to our customers and

Strive for excellence. 

            Wal-Mart’s mission statement is “to give ordinary folk the chance to buy the same thing as rich people.” The mission of Sam Walton is to sell cheaper products than its competitor. In which up until now is still the mission of the company.

            The long-term objectives of Wal-Mart are growth and continual adaptation. The Chief Executive Officer of Wal-Mart, Lee Scott had a huge contribution to the two goals, he emphasized growth overseas and ventured into new retail plan, which is the creation of Supercenters. These objectives are in a long-term scale and continue to grow adding more stores, acquiring businesses overseas and having a joint venture with other corporations.  

 

3. What strategic options were available to WAL-MART stores to achieve its objectives? From a prescriptive and an emergent perspective? You might want to look at prescriptive options And also emergent options . And for emergent options, you might like to explore particularly the Learning-based strategic route forward.

            In order to achieve the objectives of the company, which are growth overseas and new formats of retail, the following are the options that Wal-Mart used:

            Purchasing and Vendor Relationship. In order to get the cheapest and greatest deals, the purchasing of the company is centralized and all the transactions took place at the headquarters of Wal-Mart. The transactions are directly between the manufacturers and Wal-Mart, and from the year 1992 the company refused to negotiate with the representatives of the manufacturers. And to avoid the dependence on a manufacturer the company only allowed supplying more than 2.5%. Moreover, Wal-Mart had established closer cooperative transactions with its biggest suppliers such as the Proctor & Gamble. And as a result there is faster refilling of products and goods that agrees with the needs of the consumers, plus a lower cost for inventory.

            Warehousing and Distribution. A big part of distribution of the suppliers products are handled by Wal-Mart and 80 percent of the purchases are directly shipped in the Warehouse. And still the Wal-Mart is continuously upgrading its distribution system wherein the products that arrive via the inbound trucks were

loaded and unloaded on outbound trucks without sitting first in the inventory of the warehouse.

            In- Store Operations. The management of the retail stores of Wal-Mart has the fundamental purpose of creating customer satisfaction through low prices, wider scope of excellent products and pleasing shopping experience. The management of Wal-Mart identified the three important characteristics which are; Merchadising, Decentralization of Store Management and Customer service.

            Marketing Strategy. The core of the company’s marketing strategy is its slogan stating “Everyday Low Prices” in which the undercutting of prices is the basic principle of Wal-Mart’s business. And because of this marketing strategy consumers started to flock Wal-Mart stores upon word-of-mouth which made advertising of the stores easier and least expensive.

            Information Technology. Wal-Mart was the primary organization that utilized information and communications technology in order to aid in the decision-making and advanced the effectiveness on the response to consumers.

            Human Resource Management. The policy of the human resource is based on the ideas of Sam Walton regarding the relationship of its employees to the organization and vice versa. All of the employees of Wal-Mart from the executive down to the clerks are called “Associates.” The relationship of Wal-Mart and its employees is based upon respect, high expectations, close communication and efficient incentives. The associates of the company receives a tremendous degree of autonomy and received continuous communication regarding their performance within the company and about the operations of the stores.

            Organization and Management Styles. The management of Wal-Mart has been based upon the values and principles of the founder. The executives must always keep in touch with their customers as well as the operations on the retail stores, in which lead to an effective communication between each stores and the company’s headquarters. Wal-Mart placed a great amount of stress on the development of its management.   

 

4. What choice did WAL-MART stores make from a prescriptive perspective? And what is the strategic reasoning behind such a choice?

            From a prescriptive perspective, Wal-Mart have chosen to employ is its marketing strategy wherein, the company sells products that are lower in prices than their competitors, the model made it easier for the management to attract

consumers. It is a simple perspective that is very effective especially to consumers who are putting a great emphasis on low prices and value.

            The strategic reason behind the use of that marketing strategy is that consumers prefer buying products that are in low prices at the same time of great value and by applying that policy not just in particular products but the whole business it can attract more consumers at the same time reducing its competition. Having a low price strategy has made the corporation expand in the whole of America as well as in different parts of the world.    

 

5. What was the evidence of an emergent strategic process here? What experimentation and dynamic happened in the market place?

            The evidence of an emergent strategic process in Wal-Mart is it continued to rise and become one of the top corporations not just in the United States but in the whole world. Moreover, some of the competitors of Wal-Mart have already adopted a number of its effective practices such as Target and Cotsco. 

            The experimentation and powerful thing that happened in the market place because of Wal-Mart is that it is possible to have low prices on all products that can only be bought during advertised sales, plus the creation of Super Centers that carries everything including supermarkets, pet shop and pharmacy. The company’s management and marketing styles has been the pioneer in the retail industry

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