INTRODUCTION:
A globally recognized discount chain of department stores and warehouse stores, Wal-Mart Corporation is also renowned as the Wal-Mart Stores. The Company which was originally founded in the United States has well established itself in the international market as well. It was founded in the US by the founder, Sam Walton in the year 1962. The incorporation year of the Company was however 1969 and the Stock Exchange listing year was 1972. The Company has its headquarters in Bentonville, Arkansas. Wal-Mart has been able to establish a unique name of its own as it is the leader retailer in the domestic market in terms of its size and market and is also a leader in the private employer sector.
Mission and Vision:
The Wal-Mart mission statement that reflects the sentiment of the whole organization is also used in the advertisements and promotional tools.
"We save people money so they can live better.”
The Company has also developed a purpose that combines and the tethers the whole Company, which has been developed by the founder of the Company, Sam Walton:
“If we work together, we’ll lower the cost of living for everyonewe’ll give the world an opportunity to see what it’s like to save and have a better life.”
Wal-Mart portrays a strong corporate culture that act as a foundation for all other Wal-Mart processes to function. The Company has explicit procedures, principles and policies. The motive behind this culture is to provide motivation to the Company employees in reaching the overall organizational objectives. Out of the many components of the Wal-Mart corporate culture, the following has been stated in the assignment:
- The three basic Values & Beliefs–There are three established beliefs of the organization that guide all the functions and processes of the Company. They are:
- Shared Respect for Individuals
- Quality Service to all Customers
- Striving for Excellence
- Open Door Policy – This policy has been established to create a strategy that helps in establishing better communication systems within the Company. This strategy helps develop effective relations between the members of the organization (Walmart.com, 2014). This policy allows any employee to go to the doors of managers in case there are any issues that need to be addressed.
The mission, vision and corporate culture play the following roles in the Company’s success:
- It establishes a feeling of familiarity and connectivity with the organization, producing dedicated staffs and thus increasing productivity.
- The mission and vision of the Company not only connect with the employees but also to the customers as a whole. This creates an emotional connection with the customers and sales are increased.
- The Corporate culture at the Company guarantees that there are no deviations from the specified organizational objectives. This ensures uniformity in terms of internal and external relationships, ensuring sustainability of profits.
Porter’s Five Forces Analysis:
Porter’s analysis is useful in identifying what elements of the Company should be given greater emphasis when compared the position of the Company in the whole industry. It gives an overall assessment of what are the threats and opportunities of various parties present in the industry and how the Company flares in such situations.
Threat of New Entrants: There is a low threat of potential threats because of the following considerations-
- The market that we are talking about which is the discount retail industry has high competition and requires high level and quality of resources.
- The major feature for the competition factor is the Price.
- The existing players in the industry have developed a robust network with the supplier and customers which is hard to enter.
- The Company has an excellent system of logistics and distribution, combined with superior technology. This provides extended back up to all other aspects of operations, helping it to get established as the successful enterprise with the required financial and other resources.
- There is cost advantage that Wal-Mart can exhibit against any established or new player in the industry.
Threat of Substitutes: There is a low threat of substitutes because of the following considerations:
- Small stores or specialty stores cannot match the diversified products and competitive prices that Wal-Mart and other branded retailers provide, though they exist as a choice to consumers.
- For regularly consumed goods and services, consumers prefer visiting the stores themselves rather than purchasing on-line, because of the shipping costs involved.
Threat of competition: There is a high threat of competition because of the following considerations:
- The discount retail industry is in a saturated and mature state.
- There may be only few established retailers but the competition among them is very high.
- Cutting prices are crucial since for this industry, the key to competition is Price.
Bargaining power of suppliers: There is a moderate bargaining power of suppliers because of the following considerations:
- The significance of retailers in the distribution system is crucial as these retailers generally carry out the function of distribution.
- Wal-Mart maintains a good distribution system of its own too. It has its stock of 4,000 trucks using which the Company can easily and independently operate much part of its logistics related to transportation.
- Wal-Mart is also indulged in the sale of its own privately labeled products that are customized to demand of local people.
Bargaining power of buyers: There is a medium bargaining power of buyers because of the following considerations:
- There is low switching cost of buyers.
- Since the buyers are price sensitive, they may easily shift to other competitors and products that offer lower prices.
- There is only a limited differentiation in the products offered by the different brands available in the discount retail industry.
- Buyers tend to see the location advantage when choosing to buy items of daily use.
- Wal-Mart offers a wide variety of services and products and that too at low prices. It also serves a large geographical area and maintains a robust base of customers.
SWOT Analysis:
A systematic method where the organization is analyzed on the basis of external and internal environment to derive a bigger and clearer picture of the organization is the SWOT analysis. This analysis is an opportunity to assess what overall value the Company possess and can further create additional value for different stakeholders. It also helps in the formulation of future plans and actions that enhance the opportunities by utilizing its strengths and overcome the weaknesses to face the threats.
The SWOT analysis of Wal-Mart provides us the following different information:
- How the Company can utilize its competencies to utilize the market prospects?
(Strengths and opportunities)
- How the Company can be able to identify and tackle competition? (strengths and threats)
- What are the positioning and other functions that the Company needs to learn to carefully project its products in the market? (Weaknesses and Threats)
Strengths:
- Wal-Mart has a competitive advantage as the leader in the market of the grocery retail industry in the world. The expansion in terms of numbers and the growth in terms of profit are very impressive for the Company.
- The low cost leadership that the Company uses also acts as a competitive advantage for the Company. This is an advantage as the Company can provide innovative products at low prices. The difference range of products is almost 12 percent lesser than the rate in market (Nyakreal, E. 2013).
- One of the major strengths of the organization is also the Internationalization strategy.
Weaknesses:
- The Company had followed the Big Box systems in the past, providing it low penetration when it came to operations in urban areas. New stores that initiate their operations of the same brand may still act as a negative catalyst for the existing Wal-Mart stores.
- The labor relationships have encountered certain unfavorable litigation situation.
- Recession and other reasons have caused a somewhat declined appeal of the Company so that attraction of new customers is difficult.
Opportunities:
- The opportunities of expansion in other markets.
- Innovations in store systems types and location selections.
- The opportunity to adopt its strategies of traditional Wal-Mart super stores.
- Strategic alliance and other partnership opportunities.
Threats:
- Global and local target of competition.
- Political problems that may arise in the countries where the Company operates.
- Increasing price competition which results in the price deflation.
The Governance at Wal-Mart:
The leaders at Wal-Mart are the ones who set the values and beliefs for the organization which acts as a foundation for all other employees to base their activities on. The level of integrity that leaders exhibit gets passed on throughout the organization and becomes an attribute of all organizational functions. The Board of Directors is the official leader of the Company who help achieve the overall purpose of serving the customers and its shareholders. The ethical standards in the Company are maintained by these people with responsibilities and the monitoring of this compliance is done by Company’s Global Ethics Office.
“Personal and moral integrity is one of our basic fundamentals, and it has to start with each of us.” These are the thoughts expressed by Wal-Mart’s leader, Sam Walton who expressed his thought on Corporate Governance. The main leaders of the organization can be classified as:
- Board of Directors
- Governance Documents
- Executive Management
- Board of Directors Committee Information
These members of the organization have contributed a lot to the success of the organization as they have been successful leaders be it in the planning or implementation or control phase. They have tackled the issues very well and rightly identified and grabbed the correct opportunities.
One recommendation to be provided to the leadership may be greater considerations to ethical issues so that issues of the past may be identified and prevented.
Corporate Social Responsibility:
The corporate social responsibility at Wal-Mart comprises of the following three areas of focus: opportunity, local communities and sustainability. The interrelationship between these areas affects the global efforts that the Company makes in all other areas. The synergy created in greater and produces better results. Wal-Mart established a separate foundation to carry on with its activities of social service and fulfilling its social responsibilities.
The corporate social responsibility functions of the Company have generated great results for the Company in terms of increased goodwill and better operations, significantly increasing the Company’s contribution to the society. Out of the many CSRs that the Company caries out, the following two are explained in the assignment:
- Renewable Energy: Wal-Mart considers itself to be a global citizen and directs its efforts towards issues that matter, one of them being the energy crisis that the world is currently facing. Apart from managing to create a hype for the pledge of global saving of the renewable energy supply by over 600 percent by the end of the year 2020, the Company is also on its way to becoming the supreme on-site green power generator in the domestic country (Global Responsibility Report. 2014).
- Fighting Hunger Together: Fighting hunger is another issue that the Company aims to fight by contributing its bit to the society. The Company and its foundation, the Wal-Mart Foundation has confirmed its efforts in standing by and supporting those fighting hunger all around the world. In 2013, the Company made the commitment of donating $2billion cash and kind to fight hunger n Africa and they fulfilled their contribution, one year ahead of proposed and committed schedule.
Analysis of the Strategic Management Process:
There are certain strategic cases that the Company is facing:
- The evolutionary changes that is the incremental changes in demand and other variables of business operations.
- The revolutionary Changes that is the drastic and unexpected changes of business operations.
- International competitors: To increase their sales revenues and boost the domestic economy mainly from the recent economic recession, the Company has been expanding at a rapid rate. However, what stands as the problem is that big retailers at local levels or those even smaller ones are not in favor of Wal-Mart because they do not want Wal-Mart to invade their operations area.
Recommendations:
The strategic recommendation to the Company may be given in two folds: recommendation to the Company to excel at the overall organizational level, which also encompasses the ethical levels, where the corporate governance and Corporate Social responsibility are to be considered (Slideshare.net, 2014).
Strategic Management at organizational Level Recommendation:
The Long Term Management Strategy:
- Local market penetration so as to gain a deeper understanding of various cultural and customer behaviors.
- Focus on the establishment of long term partnerships of suppliers by extending cooperation with suppliers at local level.
- Purchase and acquisition of retail companies at local levels in order to ease the Company’s entry to international markets.
-Enhancing the amount of Foreign Direct Investments in countries where operation environments are favorable.
The Short-term Management Strategy:
The short-term focus of the management strategy at Wal-Mart can be seen for a period of about next three years. The short term focus of the Company may be improving the supply chain, managing the logistics and improving the technological aspects of the Company so that it is able to compete with huge retailers at local levels, not losing its control over costs and not compromising the quality in operations, delivery and distribution systems and the services.
Conclusion:
Thus, the overall analysis of Wal-Mart shows that the Company is in a good position regarding the policies it makes and the activities it carries out. The areas where improvements could be made are presented in the recommendations. With a proper implementation of strategies, the Company can excel further in all endeavors it ventures into.
References
Walmart, (2014). Retrieved 9 December 2014, from - http://www.slideshare.net/9xHuyHoang/59363626-walmartstrategicmanagement
Buddhist, K. H. (2014). Retrieved 9 December 2014, from 1. http://khbuddhist.blogspot.com/2011/11/wal-mart-and-porters-five-forces-model.html
Global Responsibility Report. (2014).
Nyakreal, E. (2013). SWOT and PEST Analysis of Wal-Mart - Top Best updates. Top Best updates. Retrieved 9 December 2014, from http://kenyayote.com/swot-and-pest-analysis-of-wal-mart/
Slideshare.net,. (2014). 59363626 wal-mart-strategic-management. Retrieved 9 December 2014, from http://www.slideshare.net/9xHuyHoang/59363626-walmartstrategicmanagement
Walmart.com,. (2014). Walmart. Retrieved 9 December 2014, from http://www.walmart.com/
