Free Essay On Walmart Company
This report has been produced to review and analyze the role of the corporate strategy of Walmart Company in the project management, which is the largest retail company in the USA and belongs to the top ones according to the Fortune Magazine. Considering the challenging and extremely competitive economic situation, the management of the corporation focuses the current strategy on four key points:
Exceptional dominance in the retail market;
Expansion of the capabilities on the domestic and international markets;
Creation of the positive reputation of the company;
Addition of the new sectors of retail.
Project background provides scope, objectives and timeline of the corporate strategy implementation project, followed by an introduction of general characteristics of the company, its main objectives. The analysis is centered on the elements of the corporate strategy and its affect on the successful operation of the company. The report also concerns the possible negative consequences of the chosen direction.
The report centers on the public affairs strategy as it enables the world number one retailer to penetrate into the other sectors of the marketplace and expand into the foreign countries.
The discussion is also referred to the recent criticism of the corporation that is going to retail too many products than it can cope with.
Recommendations for improvement the managing procedures regarding the choice of the most effective strategies are presented.
This report has been produced to review and analyze the strategy of the Walmart Company that is operating in a very unique competitive environment. Despite the fact the major competitors of Walmart are the merchandise retailers; the company has also to deal with the warehouse clubs and supermarket retailers in the industry that is growing enormously on the domestic and international levels. The companies are competing on price, location, store size, layout and environment, application of the innovative technologies and the reputation of the brand. The market usually behaves according to the economies of scale and the retailers’ activity covers also such functions as purchasing, manufacturing, advertising, and shipping. Therefore, it is significant for Walmart to be among the top competitors in these large scale functions.
The competition with the large supermarket retailers belongs to the direct ones as the production capacities in the grocery industry may be quite populated. Walmart poses a threat to the majority of the supermarket retailers due to its low prices. Particularly, such companies as Kroger, Albertson’s, and Safeway, attempt to lower their prices as this factor is one of the most important in the overcrowded grocery industry. Therefore, Walmart has the lowest costs, prices, profits, and market share and its position is strong around the world. The revenues of Walmart Company are constantly growing, thus ensuring the stakeholders in the financial stability of the world’s retailer number one. The situation is illustrated for 2007-2011 and presented on the Figure 1.
Figure 1 Walmart Revenues 2007-2011
Thus, the project is aimed at discussing the current peculiarities of the company’s strategy and suggesting some possible recommendations and improvements for the future. Naturally, this process requires some period of time and the managers of the project are negotiating for 4 months in order to study all the materials, the peculiarities of the changes in the modern market and the effective methods and techniques for the company. One of the most active groups negotiating and influencing project outcomes are project stakeholders – individuals or legal entities interested in successful project completion. Project team is responsible for identifying project stakeholders, their roles, interests, as well as determining stakeholders’ requirements and expectations for delineating project goals and objectives.
This report will provide a background to the company’s current corporate and public affairs strategies and their influence on the Walmart’s operation in the industry, possible ways to change the direction in order to become more profitable.
The report is based on both the information provided by the company including financial reports, press releases and on the secondary sources of information. In conjunction with discussion, tables and graphs are provided to support and clarify information.
Following the discussion and critical analysis of the project, conclusions and recommendations are to be presented based on the discussion.
Although it is believed that one of the fundamental issues about business is making money and gaining profit, the society expects that companies follow all the moral and ethical principles regarding the employees, suppliers and other interested groups. Consequently, one should not forget that since in the modern world, most individuals work in organizations, it indisputably affects their sense of responsibility and the morality of people’s conduct.
While analyzing the way that employees’ activity in the discussion organization influence on their sense of responsibility and morality of conduct, one cannot but claim that the strict framework between the individuals and the company results in the increase of responsibility among the personnel; it is clear that the employees, once the human resources management strategy is well designed, will make efforts in order to keep working on board; as a result, it is necessary to indicate that people’s sense of responsibility gets firmer, since the employees are engaged in cooperation with each other. Moreover, according to William Shaw’s argument, advanced in his book Moral Issues in Business (2012, p.340) the effective human resource management allows developing strong and reliable workers who are able to handle all moral and ethical problems in their business environment when the organization ends the individual’s employment against his or her will. All in all, many organizations often make common mistakes while managing employee inappropriately (Shaw 2012). It is necessary to take into consideration the need to consider certain steps that can help in managing the employees’ effectiveness.
The point is that the process of working in certain organizations leads to rethinking the main goals of the staff and reformatting the morality of conduct, respectively (Shaw 2012). All in all, on the other hand, as for the impact of corporate environment, it is also necessary to be aware that it can cause fear of punishment based on the termination; it is obvious that this fear can easily worsen the psychological confidence and entail the loss of revenue.
According to the last financial reports, in 2011 Walmart received $191 billion of revenues and the number of employees was 1,283,000 workers around the world. Currently, it is operating over 4,150 retail facilities in the domestic and international level providing general merchandise, such as family apparel, health & beauty aids, household needs, electronics, toys, fabrics, crafts, lawn & garden, jewelry and shoes. Besides, the company controls a pharmacy department, Tire & Lube Express, and Photo processing centre. The Company was founded by Sam Walton in 1962 and he declared that it should be developed on the three policy goals: respect for the individual, service for customers and thriving for excellence. Therefore, that was the beginning of the company’s strategy and it is involved into the current policy as well.
As for the corporate management strategy of Walmart, it proclaims that the company is aimed at selling high-profile products (Vance & Scott 1994). To preserve the lowest prices for the clients, the company is applying the advanced technologies and warehousing. Furthermore, it is also involved in the direct deals with the manufacturers, thus avoiding additional expenses for the middlemen. Walwart is also known for its active social position as it is interested in providing local community services, different campaigns for children and environment.
Historically, Walmart was firstly centred in the small towns and then moved to the large cities as the other retailers were already concentrated in the big urban centres (Gimein 2002). However, the economy faded a downturn and people were searching for the good products of low prices and were able to move further to buy the products with the satisfactory prices and Walmart became to thrive. Nowadays, the chain has 1,636 retail stores, 1,093 Wal-Mart Super centers, 502 Sam's Clubs, 31 Wal-Mart Neighborhood stores and 1,183 international stores. Generally, the retail business can be divided into four main parts: Wal-Mart stores, super centers, Sam's Club warehouses and neighbourhood markets. On the international level, the company has more than 1,000 stores in nine countries around the world.
The analysis of the current operation of Walmart in the grocery has demonstrated that the company belongs to the top successful retailers in the worlds. Logically, the corporate and the public affairs strategies have contributed to the thriving of the company as they are the key elements of the functioning in business.
Walmart’s Effective Strategy: Key Element of Successful Operation
Generally, the operation of Walmart according to its principle strategy can be illustrated by the Figure 2.
Figure 2 Functions of the Walmart Business
The public message of the company was proclaimed by its founder Sam Walton and it remains consistent even nowadays. The core point is that Walmart is a “family friendly store”, is good to its customers and is an asset to the local community (Vance & Scott 1994). H Lee Scott, CEO is traditional in repeating the core message in the Walmart Annual reports, restating the corporate culture espoused by the founder. Therefore, the ideas of selling for less, respecting employees and communities and expanding are present in all the reports. Particularly, these principles are developed into the main four strategic goals of Walmart that are implemented into real life. They are the following:
Domination in the Retail Market during the time of Walmart’s presence;
Growth by the expansion in the USA and other countries;
Develop the name recognition and customer satisfaction with the Walmart brand; create the association of the retailer with the best prices’
Expand the retails to the new sectors, such as pharmacies, automotive repair and grocery sales.
Therefore, offering the products for low prices is not the only business objective of the company but there are many other activities that are aimed at supporting the major one. Firstly, Walmart’s supply chain management is considered to be extremely cost balanced and sometimes the company imitates the competition successful merchandising concepts. Besides, the employees feel free to make suggestions to the process are rewarded if their pieces of advice are effective. The management is able to track the movement of the product through the entire value chain: in shipment, in distribution centre inventory, in the store etc. (Lim & Sambrook 2010) The Company attempts to rationalize the use of the supplies among the stores and suppliers in order to study what products are demanded and what not (Bernstein 2000).
Moreover, operation and distribution strategies are also helpful in achieving generally low prices of the Walmart products. The strategy of the company was to locate the stores in the small towns and in distance of 200 miles from the existing stores. The stores are usually close to each other and this helps to reduce the distribution costs. Furthermore, there is no necessity to make additional investments into the advertising campaigns as Walmart uses the word-of-mouth advertisement. Different needs of the customers are met with the use of four distinct retail options: super centers, discount stores, Sam’s Clubs, and neighbourhood markets that are characterized by specific range of store size, total employment and estimated sales. (Troy 2011) The “greeter” near the entrance welcomes the customers, offers the shopping carts and helps with the location of the goods. Therefore, the company’s strategy is to provide the superior service to its customers.
SWOT Analysis of Walmart
There are many of strengths that are present in the activity of Walmart Company as it is one of the most powerful retail brands in the world with the good reputation. Walmart is known for its low prices, quality and verification. The retailer has grown substantially over the last years and is now expanded internationally. For instance, Wamart purchased the other retailer ASDA that is located in the United Kingdom. The company has a core competence as it uses information technology for its international logistics and efficient procurement. The company is predominantly focused on the research and development and human resources departments. The managers are deeply convinced that personnel is the key to success in business and the invest time and money into the people.
The weakness is connected with the difficulties that may occur while controlling such a large chain, despite the use of the modern IT. Besides, the company is global but is present only in few countries in the world. Thus, one of the opportunities is to expand the capacities of the company to the regions of Europe and Asia. New locations and store types offer Wal-Mart opportunities to exploit market development. Basically, the major points of SWOT analysis are presented in the chart.
Figure 3 SWOT Analysis of Walmart Company
It can be stated that the development of market relations in the world resulted in the enhancing the role of finance in general and the finance industry in particular. It opened a new stage in the sphere of financial reality offering new models of business. Finance of companies became one of the main indicator characterizing the outcomes of their activities.
Quantitative and qualitative indicators of the financial condition of the company define its place in the market and the ability to function in the economic area. All this has led to the enhancing the role of financial management in the overall management of the economy. In the current market conditions financial management of the company is of paramount importance, since only the enterprises with an effective system of financial management will be able to maximize their efforts and to offer to the market their services and to get the highest possible price for them. What is more, it allows to recover all costs, as well as to increase the effectiveness of internal and foreign investment projects. All in all, one should forget about other factors influencing the success of the enterprise; obviously, the human resource management is less important in terms of running business. Moreover, it is evidently a determinant within the framework of the enterprise’s reputation.
Having scrutinized the issue thoroughly, the report reveals that the current strategy of Walmart Company is based on the three main principles: respect for the individual, service for customers and thriving for excellence, as they were proclaimed by the founder of the chain. The financial reports and the revenues of the company demonstrated that the strategy is quite effective and has brought the retailer to thriving. Therefore, there is no necessity to revise the police and make some reformations.
There are still many possibilities for the company’s expansion to the Asia or Europe and the management can use this ides in order to be present worldwide. Besides, there are many market segments that are still not covered and could be also quite attractive for the company.
Despite the fact that the strategic HR management is a complex and, what is more, effective phenomenon when making corporate decisions, it is not widely implemented in the working process. The strategic human resource management should revisit the corporate strategies to provide the successful industrial relations for all business companies. The strategic human resource management is targeted to realize both management practice and actions. When estimating the efficiency of the strategic human resource management, it is necessary to use the comparative method that will help collate two basic management models like strategic and not-strategic ones. Under non-strategic model the company implies the Industrial Relations Management. In other words, the IRM tends to manage all organizational departments in advance, for example, to distribute the policies within the departments so that each manager that is in charge of his department should respectively attract customers’ attention, provide the proper advertising campaign and signing of the contracts with the supplies. This non-strategic model has the drawback in terms of not being ready to cope with long-term implications. To provide the effective realization of long-term management tools, each organization should revisit the barrier and interaction between management process and employees. Moreover, the company directors should be what they are, the interested leaders of the departments in order to accelerate the decision-making processes and enhance the stable interrelation in terms of long-run goals. Strategic change to business product market orientation will help manager provide the competitive advantage. The long-term investigation of the customers’ behavior and demand will aid the staff to make the right policies. The managers’ skills should lead their business, relying on their motivation and ability to take the necessary actions in accordance with the company’s corporate response. The bargaining policies of each company can be observed either on corporate or plant levels.
Providing the overwhelming control over the staff, the better performance of the managers can be expected (Kochan & Cappelli 1983). Management should not be observed in congruence with business. The bargaining policies have to be chosen due to the types of the marketing products. If the company has the typical products, then the market is stable, and it is worth considering the operational and integration management.
Differentiating the attitudes towards trade, it is necessary to pay attention to management styles, which can be traditionalist, standard modern, sophisticated modern and sophisticated paternalist (Armstrong 2006). All of those styles depict the connections between industrial relations and the staff. In all cases management has to recognize the employee role in the implementation of the strategy, to provide the certain strategies for the company.
As the result of this, it is suggested to provide the congruence between the quality of the products and the employees in some companies. Other organizations should consider product development and, respectively, the competitive advantage. If the organization has a huge cash-flow, it should its productivity levels. One product business companies should apply the highly proactive and encouraging corporate identification, because their contributions can lead to the financial success. But all the steps depend on the market orientation and demand.
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