Walmart Case Study

Wal-Mart Case Study

Introduction

Over the past decades , the name Wal-Mart has become synonymous with low prices , high quality products , friendly sales assistants and a family place . Wal-Mart is a company which has built on the traditional concept store front shops and has taken it further to become a worldwide operation

The company Wal-Mart initiated in Northwestern Arkansas has managed to become a unique product and service offering for its customers . The officially declared world 's no .1 retailer has managed to capture such a huge market and loyal customer

base by building on its philosophy that the customer is the first priority for the business . In the new millennium the retail giant boasts multi-variant accolades such as the excellent supplier relationships , highly efficient systems and a ever lasting commitment to their customers by catering them with the best of products and service at the lowest of prices

History

In 1962 discount stores like Target and K-Mart sprung up operations in America . In the same year Sam Walton was running small chain of multi-purpose stores in Arkansas . After the emergence of the discounting stores Walton got inspired by K-Mart 's customer profiling and J .C Penny 's business philosophy , and started the first store for Wal-Mart in Rogers , Arkansas . This new venture quickly gaining success and customer loyalty in the state , and Walton , a previous employee at J .C Penny stores attributed the stores success mainly to the J .C penny 's philosophy that Sam Walton had adjusted and applied for his own store

JC Penny 's Philosophy which was adopted by Wal-Mart is depicted below as

1 . To serve the public as nearly as we can , to its complete satisfaction

2 . To expect for the service we render a fair remuneration and not all the traffic we will bear

3 . To do all we have in our power to pack the customer 's dollar full of value , quality , and satisfaction

4 . To continue to train ourselves and our associates so that the service we will give will be more and more intelligently performed

5 . To improve constantly the human factor in our business

6 . To reward men and women in our organization

7 . To test our every policy , method and act in this wise : Does it square with what is the right and just

Source : The Penny Idea , Trimble , Vance H , Sam Walton : The Inside Story of America 's Richest Man (1990

Sam Walton wrote in his autobiography "The secret of successful retailing is to give your customers what they want . And really , if you think about it from the point of view of the customer , you want everything : a wide assortment of good quality merchandise the lowest possible prices guaranteed satisfaction with what you buy friendly knowledgeable service convenient hours free parking a pleasant shopping experience ' He specifically goes on to mention that consumers appreciate it when they visit a store which provides them in a lot more than what they had expected before coming in , and really despise it when they come across a store which does not even acknowledge their presence

In the 1960 's the Wal-Mart stores grew comparatively slow (15 stores ) in regard to its competitors , but this dramatically changed when in the 1970 's Wal-Mart 's stock was publicly traded on the New York Stock Exchange (NYSC . The company now had access to a large pool of investment which it devoted to the expansion and development of the stores in multiple states , and in the same decade alone the company was operating 276 stores in 11 states across America

In the 1980 's the Wal-Mart stores , now came to be known as the Wal-Mart Inc . were the most prominent and the most successful retail operation in America with sales going up to 30 billion . The first `super-center ' for Wal-Mart , a 36 department store for grocery and merchandise goods was inaugurated in 1988 .The company then started expanding into other venture as well and invested in the warehouse clubs which came to be known as the Sam 's Club

In the 1990 's , with fast paced development taking place in the field of technology and innovating , the Wal-Mart Inc . invested in a computerized inventory and supply chain management system which enabled the stores to report any stock out or low level 's of stocks to its deports and warehouses . As a result the company was able to make a position of itself as an operation which never shuts down with no stock outs taking place at all . This was the popular Just In Time (JIT , or the Japanese Kaizen , technique which with its success became a focal point for the critics and managerial theorists around the world

The Wal-Mart Inc . went international in 1990 's with operations in Puerto Rico , Mexico City and the UK . Towards the end of the decade the company acquired a large chain of stores in the United Kingdome by the name of ASDA . As result , consequently the ASDA Group was launched which was run by the Wal-Mart Inc as the venture specific for the European market

The company 's success over the period was largely attributed to the fact that the company managed to expand its operations and grow dynamically at a very fast pace without loosing its focus and its values which specifically were , its customers

Management Issues

Wal-Mart 's retail divisions are sub-divisions of the original Wal-Mart Store chain . The operation divisions take the form of the following

Wal-Mart Discount Stores

These are the discount stores made up on the format of the original discount store started by Sam Walton in 1962 . These stores offer the customer 's products in various qualities which is value prices . The establishments offer products in the categories of women , children and men apparel , automotive products , health and beauty products , home improvement products and home furnishings , electronic items , toys sporting goods , outdoor and garden facilities and products , pet products and jewelry and hardware products

Wal-Mart Super Centers

These are specifically developed for the customers with families who want a one stop shopping facility . These shops run 24 hour a day and include multiple types of goods being sold below one roof . These centers also provide customers with bakery goods , deli foods , frozen foods meats , dairy products and fruits and vegetables , employment agencies and small cafy , restaurant and fast food stands

Wal-Mart Neighborhood Markets

These were stores built around the same philosophy of the Wal-Mart original store but they are more focused towards the foods and pharmacy products . The distribution network for these shops concerning these two departments is very strong at these stores

Sam 's Club

This operation exists to provide families and small businesses with a wholesale experience . People who want branded products with value often frequent these stores . Most of the products which are sold over here are sold n bulk packaging

International Operations

Wal-Mart has also started and developed its operations around the world focusing on customer satisfaction and low prices . The operations specifically for the international market come under this division

For the year 2006-2007 the revenue generation for the company by its various divisions was at the following as reported by the financial reports

Wal-Mart Stores Division : Revenue of 209 ,910 million which resulted in a growth of 9 .4 percent over 2005

Wal-Mart International Division : Revenue of 62 ,719 million which resulted in a growth of 11 .4 percent over 2005

Wal-Mart Sam 's Club Division : Revenue of 39 ,798 million which resulted in a growth of 7 .2 percent over 2005

The company has maintained that in to do business successfully the approach has to be positive towards growth , innovation and providing the best products and services possible . The management over the years conformed to this believe which have now been etched in the value system of the company . When Sam Walton was asked why he thinks people like his store better compared to the others he replied It is our people and the way they are treated and the way they feel about the company (Camerius , 1996 . From the beginning the company called its employees and clerks associates , which helped the employees realize that the company was their to help them benefit from their work and was looking after them . This strategy of caring and keeping the focus customer oriented while the company culture an informal and accountable one with strong motivation for the workforce is had led the company 's customer first strategy which enabled the company to develop a strong customer base and a brand identity with its customers strong . This was the reason why even though the company did not use any expansionary strategies in the years following its conception

In the 1970 's the company did finally develop an aggressive expansionary strategy . It did this by locating the new stores in prime spots in small towns . When these stores started becoming successful and developed a following of customers the company started opening similar stores in the neighboring areas and towns as well to make it convenient for people from these towns to access a Wal-Mart Facility . This strategy made use of customer loyalty and word of mouth which was a favorable choice for the company as in this decade alone the company managed to expand in 11 different states across the U .S . Wal-Mart was able to choose prime locations for its stores by opening a distribution house or a warehouse first and then establishing retail outlets around it for better access to products and prevent stock outs

Another strategy that was use by the company which was unique from the competitors was that in the sprawling huge stores set up by the Wal-Mart Inc . the employees wore blue shirts and jackets with the company monogram on it to identify themselves as the store staff . Aside from this the aisles displaying products were deliberately kept wide and carpeting in warm tone and hue was done for the apparel department . A `people greeter ' was assigned to the door who welcomed every employee coming in the store and provided any aid and assistance that the individual might need . Aside from this an employee was assigned to help customers load their shopping I their cars and track down any stray shopping carts from the facility . These efforts however very subtle and minute were what gave the customers the image that this was a company which did provide high quality products and services at low prices without being cheap themselves

In the 90 's when there was extreme uncertainty in the retail industry due to the recession taking place in the international market many discount store ventures had to shut down . The Wal-Mart was able to sustain itself by introducing new managerial techniques and improving its customer product offering to stay in the game . The company invested in computerized retail management software and utilized the Just -In -Time technique for managing their inventories . The company also established affiliations and partnerships with its suppliers like

G to enable the JIT system to work properly . The company also built on the European concept of a mall without walls strategy where multiple products by multiple suppliers most often for specific niche market segments were being sold in one facility . This became the Wal-Mart Super Center . Also in the end of 1985 the Wal-Mart initiated a program by the name of `Buy American ' which resulted in boosting the products being manufactured in America and helped the company overcome the effects of the future recession in the international markets at an earlier date . As a result they were able to keep their costs low and thereby provide the products and services to the customers at a low price even in such difficult condition

The computerized system for the inventory and retail management provided the company with a direct benefit of no- stock out option however this strategy an the computerized information collection and update also resulted in the company forecast market trends well in advance as well as identify current market trends instantaneously at the `click of a button

The Wal-Mart Inc also was the first retailer in operation to actually acknowledge the concept of a green business and employee this in the form of `green ' marketing . This was focus towards providing the customers with products which were more environmentally finally . The company changed its packaging , posters and shopping bags to be made of recycled in to display their devotion to the green project The company also advertised publicly for promotion of environmentally friendly products and the company 's own dedication to this cause

The Wal-Mart Inc has a unique marketing and decision making style . The corporate philosophy of the business tends to include everyone and identify all employees and people associated with Wal-Mart as a Wal-Mart team . This is apparent in their mission statement and their operations where they relate to the company and its associates as `us ' and `we giving the staff a strong sense of belonging and motivation to strive better for themselves . Similarly in their marketing campaigns they tend to relate to the customers as part of the Wal-Mart team which again instills in their customers a brand loyalty which they are unable to shrug off easily

The Company made strategies for growth and development of the venture by using benchmarking techniques for goals to measure performance for their long term business objectives . They also use the Management technique to prove a standardized service across all their stores around the world

Over the years the company has also started participating in community programs and developing new ones for the people in need and of the communities in which they reside and operate . They try to support causes held strong and dear by the customers and communities around the stores The company strives to provide this support in terms of volunteer work and financial assistance to community based charities and developmental projects . This gave the company a humanistic image for its customers

However due to the company 's extraordinary success the Wal-Mart Inc . has managed to establish many enemies in the process as well who claim that the Wal-Mart Stores Inc . does not live up to its own values . These organizations lay the following claims which are damaging for the image of the Wal-Mart company

Gender Discrimination at Wal-Mart

Child Labor being abused at Wal-Mart

Wal-Mart associates living under the poverty line

Wal-Mart forcing workers to work off- the clock

Wal-Mart Health plan too costly for employees

Wal-Mart Covers Less of the Health Care Costs Compared to Its Competitors

Wal-Mart Only Spends 77 Cents an Hour Per Employee for Health Benefits

Wal-Mart Increased Advertising More Than Health Care

One Out of Six Wal-Mart Employees Has No Health Care Coverage At All

Public Healthcare focus is a better value

Wal-Mart hurts other businesses when it comes to town

Wal-Mart destroys the environment

Wal-Mart increases vehicle traffic

Wal-Mart desecrates sacred grounds

Wal-Mart 's empty stores are blighting communities

And other claims pertaining to employee rights , injuries , politics and tax evasion

SWOT Analysis

The strengths , weaknesses , opportunity and threats , for the Wal-Mart Stores Inc have been clearly outlined below

Strengths

A household name with a positive wholesome image

A very strong market position in the United States of America with 80 revenue being derived from it

Its revenue exceeds the combined revenue of its competitors like Sears Home Depot Target etc

The second largest company in the US after Exxon Mobil as stated by the Fortune 500 's rankings for 2006

A high quality and world class supply chain

The company holds and owns the second largest truck fleet in the US

The company has a portfolio of Wal-Mart label products which are very strong and lead in 16 categories . These labels include Athletic Works Faded Glory , George , Kid Connection , Life Puritan , No Boundaries , Simply Basic , Home Trends , Great Value Mainstays , Duraband and Reli-On

Weaknesses

There has been a decline in competitiveness for the company in its store revenue growth and revenue for the past 3 years has been less than the competitors in the same industry namely Sears and Target

Although the company is the second largest corporation in the world it does not derive sufficient revenues from the international market . Only 20 percent of its revenues for 2006 came from the international market and it withdrew from South Korea and Germany which has reduced its international operations to just 13 countries compared to competitors average of 20-30 countries . This is going to impact the company in the future as the growth will become more stunted from the limited market available

Opportunities

The industry is showing an increase in the demand for organic products and the company is already popular with its organic juices and milk . The company has room for growth in this sector

The population of America is aging and they require more drugs . The company operates pharmacy in most of its stores , therefore it can make allowances for the growth in this field

The company is working on a transformation plan to make it favorable to minorities , Hispanics and for international customers

India is a fast developing market with increasing incomes and demand for consumer goods . Expansion to this region could benefit the company improve its international revenue

Threats

The company is facing opposition from local communities as small retailers are opposing to new Wal-Mart stores as they fear that the low prices will end up over taking their business

Lawsuits were field against Wal-Mart for discrimination against women in regard to pay and glass ceilings

International suppliers filing suits for improper work conditions in Wal-Mart facilitated factories

The company is also facing stiff competition from Carrrefour , Tesco Target , and Home Depot in terms of growth

Rising energy prices are due to reduce the consumers spending power in the future

Recommendations

There is a major threat that aside from the quality of service the reputation of the company will go down drastically is the company 's identified weaknesses and threats are not handled properly and immediately . As a result the company should take the following steps

Increase international operations include operations in the India Targeting the market in this region will help in company increase its international revenue and market place while also increase the room for growth with the Indian economy

The company can lease out more health clinic and invest in their pharmacy to cater to the future growth in the demand for drugs for the aging population of America

The company will have to address the issues pertaining to the women rights , equal work opportunity and induct fair industrial and operational practices in America as well as the international markets in to avoid lawsuits like the ones that are being d right now . Na increase control and monitoring of the operations need to be conducted

The company needs to develop and find new areas of growth and innovation in to compete with the new emerging and growing stiff competition from the smaller and more agile retailers

Wal-Mart Today

As apparent Wal-Mart Inc , has come a long way from its inception in the 1960 's , however the company still remains the world 's no . 1 retailer This has been possible due to the company 's devotion to technological innovations and a persistent value system

In lieu of the company 's orientation towards technology , the Wal-Mart Inc . started Walmart .com , an online retail subsidiary of the Wal-Mart Stores . The operations for this venture are based in San Francisco Peninsula next to Silicon Valley . Walmart .com was built and founded on the same principles governing Wal-Mart Stores , but they now were able to offer the 24 /7 convenience shopping experience online from the setting of their own home . The products being offered online are also of the same nature but with lower prices . This venture however does offer its customers unique products and service like options for Music Downloads from the internet and 1-hour digital photo processing . The operations also offer its customers the convenience of buying products online and getting them delivered from the nearest Wal-Mart Store facility

Wal-Mart Stores Inc . has been able to assure another venture under its belt and this has come in form of the Wal-Mart International . In the 1990 's the company initiated its expansion strategy for Latin America and Europe with a subsequent takeover of the ASDA . The official website for Wal-Mart international states that as of 2006 the company now offers the same Wal-Mart experience in the form of 2 ,700 retail outlets , and more than 500 ,000 associates in countries such as Argentina , Brazil Canada , China , Costa Rica , El Salvador , Germany , Guatemala Honduras Japan , Mexico , Nicaragua , Puerto Rico and United Kingdome

References

Camerius , W . James (1996 , Wal-Mart Stores Inc . Strategies for Continued Market Dominance

Fitzgibbon Micheal (2005 , Wal-Mart 's Windsor Stores . Available at HYPERLINK "http /labourlawblog .typepad .com /managementupdates /2005 /03 /walmarts_win dso .html http /labourlawblog .typepad .com /managementupdates /2005 /03 /walmarts_wind so .html

Curry , Myron (2004 , Wal-Mart 's Class Action Gender Discrimination Case Holds Warnings for all Employees . Available at : HYPERLINK "http /www .business-marketing .com /store /article-walmart .html http /www .business-marketing .com /store /article-walmart .html

The official site for Wal-Mart and its online operations : HYPERLINK "http /www .walmart .com " http /www .walmart .com

Citation of Statistic Used in the Film . Available at : HYPERLINK "http /www .walmartmovie .com /facts .php http /www .walmartmovie .com /facts .php

Wake Up Wal-Mart 's Official website : HYPERLINK "http /wakeupwalmart .com " http /wakeupwalmart .com ...