Sample Essay: Wal-Mart

Wal-Mart Inc. is presently the biggest retail store chain in the world. Sam Walton in 1940 founded Wal-Mart starting with only a single store that has grown to more than 4000 stores and present in over 14 countries. Wal-Mart is a big success story in the retail industry. The success is attributed to the management strategies as well as marketing strategies that the corporation has put in place (www.walmartstores.com). This section undertakes to examine the management strategies of Wal-Mart in particular, its vision, mission, objectives, goals and market strategy.

Purpose:

Sam Walton stated that, if all employees of Wal-Mart together with there, shareholders and customers, Wal-Mart can reduce the cost of living for each one. Wal-Mart will offer the world a chance to realize what it feels to save as well as have an improved life (www.walmartstores.com)

Mission/vision of Wal-Mart

As Hay (1990) explains mission statements as well as vision statements are formulated for the employees and also the customers of a company. A mission statement normally is a sentence or a brief paragraph that is written by an organization which underlines its primary purpose, values, principles and identity. Wal-Mart’s mission statement is underlined below:

“Wal-Mart’s mission is: To help people save money so they can live better.” (www.walmartstores.com)

The mission of Wal-Mart underlines it commitment to provide the ordinary people with an opportunity to buy similar things as wealth people. Sam Walton’s mission when founding Wal-Mart was to sell products low prices than his competitor, a mission that until now the Wal-Mart still strives to achieve (www.walmartstores.com).

Save money

Wal-Mart understands that price of products matters a lot to their customers, at any place they are. That is the reason why all Wal-Mart stores offer high quality products at lowest prices. Saving for Wal-Mart goes beyond money; it involves other aspects like offering energy efficient items that cut down on what customers use (www.walmartstores.com).

Better Life

The means of making its customers’ lives better is through saving money, through offering the lowest possible prices on its products; Wal-Mart understands that it can afford its customers something extra from what they have saved.

Wal-Mart as well see the opportunity to assist people have  a better live go beyond its stores and prices, that it’s the reason it supports projects that are important to neighboring committees such as education and conserving the environment. This is indicated by Wal-Mart joint projects with Mercy Corps in helping small scale farmers in Guatemala, more so that is why Wal-Mart stock fair trade coffee  on its shelves.

Saving customers’ money so that they can have a better live as stated by Wal-Mart’s mission is thus is the center of everything that Wal-Mart does.

Wal-Mart’s Slogan

A slogan is a brief, unforgettable catch word, motto or a tagline that is applied to identify an organization or it’s product in advertisements Morrisey and Acomb (1990). As for Wal-Mart its slogan is:

“Wal-Mart. Always low price. Always.” (www.walmartstores.com).

Wal-Mart’s Values

Wal-Mart values are founded on its founder values and morals. These values have assisted Wal-Mart to become the world’s number one retail store. The following are Wal-Mart’s values:

Respect:

At the center of every rule and custom of Wal-Mart is the fundamental value of respect. The company respects its customers, its associates (employees) and its suppliers. Respect is the centerpiece that Wal-Mart uses to build its relationships. Respect assists Wal-Mart to serve the communities within its stores, and in building a business that is dedicated to excellence (www.walmartstores.com).

Services to its customers

Wal-Mart has a belief that it’s their customers that makes them to be in business, thus Wal-Mart aims at treating them as the most important people in their business. Wal-Mart offers high quality products at the lowest prices possible, not forgetting to offer the excellent customer services. Wal-Mart looks at every opening where it can exceed its customers’ expectations. To be at its best, Wal-Mart strives exceed customers’ expectations (www.walmartstores.com).

Striving for excellence

Wal-Mart is proud of what it has achieved, but it is never contended to be there. Thus, it constantly strives to incorporate fresh ideas and objectives of life. Wal-Mart as an organization follows the footsteps of its founder Sam Walton, who kept on looking for improvements. Thus Wal-Mart for example is never satisfied until it lowers its prices to the lowest possible price, or until it improves its product to the highest possible quality for its customer. Wal-Mart constantly asks, “Is this the best that can be down.” This is the zeal of Wal-Mart for its business, its customers and the community as whole. Table I in the appendix shows aspects of each value.

Wal-Mart’s Objectives

The long-standing objectives of Wal-Mart stores are:

Growth

Constant adaptation.

Lee Scott the CEO of Wal-Mart, hugely contributed to these two objectives by emphasizing international growth and venturing into new retail strategies; establishing Super centers. These two objectives are long term objectives and keep on growing through addition of more stores, acquisition of businesses in foreign countries and creating joint ventures with various corporations ((www.walmartstores.com).

Selected Strategies used by Wal-Mart

For Wal-Mart to achieve its objectives, which are international growth and new retail formats or plans, Wal-Mart has used several strategies; we shall examine two of these strategies:

Dominate the industry strategy

Hayden, et al (2002) states that, one of the main strategies of Wal-Mart stores is to dominate the retail industry. The founder of Wal-Mart established a retail philosophy that is still followed by the Wal-Mart. Indeed, Wal-Mart is mainly a discount retailer store since they sell their merchandize at the lowest price possible. Through selling products at the lowest price, Wal-Mart underlines that the core of success for a discount retailing store is to reduce the prices on a product to the lowest end possible, reducing the profit and earning profit on high volume of sales made.

Another aspect of this strategy is seen in the competitiveness of each store. Every store is given an encouragement to aggressively compete against other stores around its customer base until such a Wal-Mart store dominates the local competitors. Presently, Wal-Mart is the world leading retailer store and the leading company allover the world in regards to sales with a record of over $200 billion sales as indicated on the Fortune 500 list (www.fortune.com). As stated the main strategy of Wal-Mart is to dominate the industry, to achieve this, the company uses the power of its size as well as its volume purchasing power to successful carry out this strategy (www.walmart.com)

Expansion strategy

A strategic objective of Wal-Mart is expansion to new markets, which it has managed to successfully. A close look at facts and figures reveals Wal-Mart’s dominance and influence. Presently Wal-Mart has a workforce of more than 1.3 million, one million employees working in US Wal-Mart stores alone. In addition Wal-Mart has more than 4000 stores; more than 1200 of these are located in foreign countries. Locally, as stated Wal-Mart has more than 3,000 stores and over 70 distribution centers in the US alone (Hayden, et al, 2002). Wal-Mart serves over 100 millions in a week in 50 states of America, Puerto Rico and in other countries where Wal-Mart stores exists.

Globally, Wal-Mart has its presence in Mexico, United Kingdom, Canada, China, Brazil, Germany and Korea. Its global expansion strategy has been forceful and powerful. The most recent expansion strategy of Wal-Mart is to gain entry into a foreign market through corporate takeover of a leading retailer. After buying a retailer chain, Wal-Mart changes the stores to its own. Three countries, where in the past did not have Wal-Mart stores, have become part of Wal-Mart’s international existence when local retail chains were taken-over. Wal-Mart in 1994, took-over 122 Woolco stores in Canada, presently there are 196 Wal-Mart stores in Canada. Again, in 1998 Wal-Mart entered Germany by buying 21 stores of Wetkauf, today Wal-Mart has 94 stores in Germany. Similarly, Wal-Mart bought ASDA in the United Kingdom and acquired 229 stores in 1999; presently there are over 250 Wal-Mart stores in UK (www.walmartstores.com).

This specific strategy of taking over other corporate gives Wal-Mart an advantage upon entering new market, in one moment a big competitor is removed, giving Wal-Mart real estate, employees and a huge presence in the new market. This shows effective application of Wal-Mart’s size and financial power, since only some if any of its competitors are capable of doing this successful. Wal-Mart creates brand familiarity, whilst retaining the previous common outlets. Slowly as the domestic Wal-Mart starts to make profit, and the local management evaluates their competition situation, Wal-Mart starts to re-decorate the acquired stores so that they look similar to “Wal-Mart’s”, later Wal-Mart starts to build bigger stores in the new market. The success of this strategy can be attested by the fact that presently, Wal-Mart is the biggest retailer chain in UK and Canada (www.walmartstores.com).

Has the strategies of Wal-Mart worked?

The proof that the strategies taken by Wal-Mart worked continued growth and rise to be the top most retail store not in America but in the world. Wal-Mart has shown that it is possible to sell all products on low prices. And that it is also possible to have Super Centers that stock almost all items. Wal-Mart’s management style and marketing strategies has led the way in retail industry. Table II in the appendix shows (Five year average 1995 -2000) comparative financial performance of selected retail stores.

One action plan for Wal-Mart

Even though, Wal-Mart has been very successful, there have been a number of issues regarding its human resources management. Bearing that human resource is the most important asset of an organization Wal-Mart should improve its human resources management. Issues have been raised regarding Wal-Mart’s employees reluctance to join organizations that are anti-unions, its widespread foreign product outsourcing, gender issues, particularly discrimination against female workers. Thus, for high success, Wal-Mart needs to improve these areas.

Conclusion

As Mintzberg and Quinn, (1992) notes, in present day business environment that is characterized high competition, budget-centered planning or projected-centered planning approaches are not enough for big corporations to survive and thrive. Companies must undertake strategic planning, to clearly identify objectives and evaluate the internal and external environment to create a strategy, carry out the strategy, assess its progress and make the needed modifications to remain on the right track. Wal-Mart Inc. has been able to understanding this concept of strategic management and utilized it well to achieve the success it enjoys today.

Reference:

Canales, J.; Kibble, B. and Terk, N (2000): One Step Beyond Strategic Planning: Foundation News & Commentary, Vol.41 Issue 5; p 78-83

Hay, R (1990):  Strategic management in non-profit organizations, Westport: Greenwood Press,

Hayden, P; Lee, S; McMahon, K & Pereira, M (2002): A Case Study on Wal-Mart Stores Inc. Wal-Mart: Staying on Top of the Fortune 500 Accessed on 22/7/2009 from: http://mike-pereira.com/subpage/docs/walmartcs.htm

Lichtenstein, N. (2006) Wal-Mart: The Face of Twenty-First-Century Capitalism. New Press

Mintzberg, H & Quinn, J (1992): The Strategy Process:- Concepts and Contexts: Prentice-Hall, Englewood Cliffs, NJ

Morrisey, G & Acomb, B (1990): The Executive Guide to Strategic Planning: Jossey-Bass, San Francisco

Wal-Mart (2009): About Us (Wal-Mart): http://walmartstores.com/AboutUs/

Appendix

Table I: Wal-Mart values and some of their elements (www.walmartstores.com )

Table II: Comparative Financial Performance of selected retail stores (Five year average 1995 -2000) source: www.mba.tuck.dartmouth.edu/pdf/2002-2-0013.pdf