Background information
Commonly known for its position as the world’s largest private employer, Wal-Mart Stores Inc has two million employees across the world. The organization, which is a retail business with well over 8500 stores under fifty names, operates in fifteen countries. According to Fortune 500, Wal-Mart Stores Inc was the third largest corporation in the world in the year 2012. The multinational retailer is headquartered in Benton Ville, Arkansas. The organization is best known for the way in which it treats its employees. The members of staff at Wal-Mart Stores Inc are referred to as associates. This is a unique strategy aimed at making the employees feel motivated by being referred to as owners of the organization. Making employees feel affiliated to the organization has for a very long time made the organization progress from one phase to another as the feeling of affiliation makes the employees receive change positively (Del Giudice et al, 2012). Wal-Mart Stores Inc was founded by Sam Walton in the year 1962 and incorporated on the 31st day of October 1969. The organization’s stocks were first traded on the New York Stock Exchange in 1972. To this day, the organization is run as a family business as the Walton Family controls 48% of the stocks. Perhaps the most striking feature of the organization is the reality that it has a unique culture referred to as the Wal-Mart culture. This culture is taught to the senior managers at the Walton Institute at the University of Arkansas. The organization is not a manufacturing concern. On the contrary, it is a large scale retailer that is mainly concerned with consumer goods, ranging from foods to consumer electronics.
Products Offered and the Customer Base
When Sam Walton established the organization more than four decades ago, he had two stakeholders in mind – the customer and the employee. Speaking of the customer, Walton argued that the customer is the sole reason for the existence of the organization. He sought to extend quality to the middle class. Other chain stores back then concentrated on selling quality products to the high end shoppers from the posh estates around cities. Walton thought it was worth trying a unique approach. As such, he made sure all his stores were located in the suburban areas on the residential areas of major cities. To the people going to shop at Wal-Mart stores, Walton gave one promise – everyday low prices.
At this point in time, therefore, the customer base was defined by the middle class income earners. During the global economic crisis of 2008, the customer base of the organization widened to embrace the high end shoppers. Worth mentioning is the reality that Wal-Mart is well known for cost leadership strategies. Due to cost leadership, the organization was able to sell at low prices during the economic crisis (Del Giudice et al, 2012). Other competitors such as Kmart and Target could not afford to lower their prices since their production costs were exceptionally high. This saw the customers formerly loyal to the competitors come to Wal-Mart – the organization that has since been described variously as the shopper’s darling. Wal-Mart emphasizes quality of the products it sells because customer satisfaction is a primary goal of the business. The products are manufactured by such consumer goods organizations as Procter & Gamble. As a way of retaining customers, Wal-Mart emphasizes the stocking off goods that meet and exceed the expectations of the customers.
Wal-Mart Stores Inc Balanced Scorecard
The balanced scorecard is arguably the most effective management tool, having replaced the six sigma models which, according to other management gurus have emphasized the reality that the six sigma model had quite a number of loopholes. Apparently, the balanced scorecard is a tool that touches on four critical aspects of the organization, which revolve around strategy. The four primary aspects are, as can be seen in the diagram below, learning and growth perspectives, financial perspectives, internal business processes and the customer perspective. The four elements are focused on, with regard to the particular objectives, initiatives, measures and targets. In looking at the case of Wal-Mart Stores Inc, the balanced score card will focus on the above discussed strategic objectives. The diagram below indicates how a default balanced score card looks like, and what it entails.
Financial
The organization has quite a number of critical success factors, among them being strong marketing, cost leadership and everyday low prices. All these three combined will yield a strong financial base for the organization since it ensures the organization remains resilient even in times of economic adversity. The combination of these critical success factors is the reason why the organization successfully sailed through the global economic crisis of 2008.
Customer
The customer, arguably the most important stakeholder at Wal-Mart stores Inc, can be associated with three critical success factors. The primary factor is customer retention. The ability to retain the customers assures the organization of constant demand. The second critical success factor is quality. The organization has a policy of handing only those goods that meet and exceed the expectations of the customers. The third critical success factor is a remarkable CRM program. Customer relationships management (CRM) is a very important aspect of the connection between the organization and the customer (Del Giudice et al, 2012). Through the CRM employed by Wal-Mart Stores Inc, customers are able to communicate their grievances to the management, and to get a feedback in a timely manner.
Internal business
The internal business environment is a very important aspect of business success. For this reason, Wal-Mart counts on three critical success factors, namely: transformational leadership, the Wal-Mart culture and the use of inclusive management. These strengthen the ties that bind the internal stakeholders because they ensure the organization’s employees are part of the system that makes decisions. Wal-Mart has successfully achieved the goal of creating affiliation – a sense that makes employees work harder.
Learning and Growth
As far as learning and growth are concerned, the organization has given paramount attention to three critical success factors, key among them: the training and development of personnel. For the senior managers for instance, a mandatory course on the Wal-Mart culture must be undertaken at the Walton Institute at the University of Arkansas (Mclean-Conner, 2006). Secondly, the employees are continually taught on new technologies and need to keep abreast with time in such a manner that resistance to change is unheard of in the organization. The third CSF is competitive advantage which stems from the cost leadership.
Significant costs within the organization
The most significant costs incurred by the organization are: labor costs and the costs of marketing. These are the most significant routine costs. Other costs of non-routine nature include the costs of expansion. The main reason why the labor costs are considered exceptionally significant is because, as mentioned earlier, the organization has over 2 million employees. This means a hefty expenditure on such people. Worth mentioning also is the reality that speaking of quality, labor costs are the defining factors of quality (Soderquist, 2005). Apparently, the labor costs qualify to be called quality costs because they motivate the organization’s employees to serve the customers better. Through amicable service and assistance, customers develop what is referred to as high service quality. Marketing costs can as well be quality costs because they create the impression of quality – perceived quality. Labor costs are internal failure costs while the marketing costs are external failure costs.
Strategy Map for the Wal-Mart Inc
A strategy map is a blueprint that an organization will rely on in the bid to attain long-term goals. In developing a strategy map, what is considered most is the analysis done by the balanced scorecard. Below is the strategy map for Wal-Mart Inc. the elements in this map are explained below the above balanced scorecard.
Figure 2: Strategy Map: Wal-Mart Stores Inc
Sustainability
Wal-Mart Stores Inc prioritizes sustainability, both environmental sustainability and social sustainability (Soderquist, 2005). As a matter of common knowledge, environmental sustainability is concerned with the surrounding natural environment. On the other hand social sustainability refers to the extent to which the organization considers societal needs. Wal-Mart has embraced both concepts, as evidenced by the following Environmental performance indicators.
- Proper disposal of garbage
- Use of biodegradable packing bags
- Planting of beautiful flowers and trees around their premises
- Providing containers for waste disposal
- Ensuring serenity and minimal noise
Social performance indicators are the factors indicating good relationships between the organization and the community within which it operates. Wal-Mart has achieved this as established by these indicators.
- Comprehensive Social responsibility program
- Its mission is linked to social goals
- Offering a wide range of products
- The organization creates customer retention.
Conclusion
In conclusion, it is clear to note that from the foregoing, Wal-Mart Stores Inc is a well performing organization, especially judging from the balanced scorecard. It is important to note also that organization considers sustainability. Among the primary strengths of Wal-Mart are such points are: One of the most significant strengths of the organization is the actuality that it is considered a reputable brand. The main reason why the organization is associated with exceptional reputation is the reality that the organization offers variety of quality products and embraces convenience in offering services. Another huge strength of the organization is the actuality that it has an exceptionally effective human resources strategy. The human resources of the organization perform exceptionally well in interacting with the customers. One unique thing that defines Wal-Mart Stores Inc’s strength is the reality that all the premises on which every store is located is property of the organization (Soderquist, 2005). As per the end of 2012, the organization was performing exemplarily well, but had some faults in the human resource section. The human resource function of any organization depends on a good flow of information to perform well. Communication is essential as it eliminates tension and uncertainties in the internal environment of an organization. Wal-Mart is currently characterized by high employee turnover.
References
Del Giudice, M., Carayannis, E. G., & Della Peruta, M. R. (2012). Wal-Mart and Cross-Cultural Approaches to Strategic Competitiveness. In Cross-Cultural Knowledge Management (pp. 103-115). Springer New York.
Mclean-Conner, P. (2006). Customer service: utility style: proven strategies for improving customer service and reducing customer care costs. Tulsa, Okla, PennWell Corp.
Soderquist, D. (2005). The Wal-Mart way the inside story of the success of the world's largest company. Nashville, T. Nelson.
