Overview
There has been much competition among the retailers in the industry of United States. Wal-Mart has proved to be the key player as a retailer in the world, best known for its everyday low price philosophy. Like all businesses the aim of the Wal-Mart is to provide competitive product by reducing the cost of production by producing the amount in bulks and making sure that the quality is not compromised. It has been ranked as number one in recent fortune 500 ranking. Although, the business has spread its 5000 retail outlets and keep on dealing with the changes done in retail sector. With the influential supporter of contest what are the practices and how innovation, technology and strong relationship with the supplier has made the success in the industry.
Wal-Mart has effective distribution method, through which it has been able to sustain low price of products; negotiate better pricing margins with its vendors (Manitoba, 2012). Wal-Mart has multiple store format that ranges from a Sam’s club, where seasonal merchandize has a big role in making inventory turnover very well. Another, format is derived from supercenter that has add essential value in growth and profitability of Wal-Mart. Due to good margin in making business profitable Wal-Mart has expand heavily in Supercenter in 1999. After that the company had made investment in Grocery in year 2015 although, initially the business area did not bring in much later it proved to be the money making division it has one fifth of the items available in the store comparing to supercenter.
Wal-Mart had international exposure in the year 1998 where it started with the merger with Cifra, later moving on Wal-Mart acquired 122 Canadian Woolco discount stores. In its battle to expand the business Wal-Mart also been through the allegations, when its senior managers in Mexico were suppressed by the claim of the zonal laws (Oberholzer-Gee, 2015).
Soon, the whole structure of the company started trembling new appointed CEO has its won working style. Business has faced many challenges throughout years with the lack of good relations with Labor union employee turnover rate had been high comparing to competitors although Wal-Mart had not been a competitive salary provider, wage rate has been below the line of poverty. It was also claimed as facing gender inequality.
Wal-Mart has a strong retail image it has proved to be the big fish eating the small fish in the ocean, throb the small business in the town. And trim down its good image from the market, competition has been enormous when the business started shifting from bricks and mortar to click and mortar. Amazon seems to be attracting more customers and shifting their experience of shopping to ecommerce. Now, customers are getting more aware with the advent of technology and different modes of communication, customer wants the proper ambience to shop they do not prefer shopping in an old setup that Wal-Mart had as an icon years back.
Problem Definition
The problem with the Wal-Mart is to find out the new ways for growth to sustain the image they carry in the market. It has been inconsistent in the sales growth in past six years in United States; and no big sales turnover has been witnessed, in expanding the business internationally. Although, there has been boom in online shopping experience with the help of (ICT) information and communications technology however, Wal-Mart did not bring much in this part of production with a fear that further expansion might affect the sales negatively. Other issue that needs attention is human resource department should revise and to develop an employee compensation and benefits package that will be used for retaining them. Making it sure that each level of employees has different pillar for getting motivated at work.
Competitors
Wal-Mart has its edge over competitors they can benefit from the same low offshore manufacturing costs that Wal-Mart has as many of the rivals has studied the history of Wal-Mart and has come up with the duplicate strategies. Along with various small retailers Wal-Mart’s primary competition is with departmental stores similar to Targets, Kmart, Canadian Superstore, and stores in Mexico’s and Costco (L. Wei, S. Wang, J. Zhang, et al. 2013).
Internal Culture
Every Organization whether it is small or big has its own culture that exists in one form or another and that culture is influenced by the people working in the there. This includes the past practices that had been experienced by employees and history. The organizations situations employees have been through, by management and status of the company. The communication is a major drive to shape culture to a certain required degree. Top executives of the company should try to develop the culture through communicating with employees clearly. We have find in the case that there is lack of commitment from the management side, employees are discouraged and gender discrimination prevails in the company which has encouraged the high turnover ratio. And hurt the organizational image in the market.
Any planned strategy with brings up benefit for the company if it satisfy the stakeholders. The expansion plan may make work stability but the portion of success if not shared with employees would threat to individual self-esteem and wellbeing as associates are the drivers of the company it creates much issues for human resource of the company to retain them for long term having restricted policies of compensation and benefits (Kavanagh & Ashkanasy, 2006).
Alternative Solutions
Wal-Mart has to work on its external and internal issues to prolong its power of being number one. It has to work on the corporate brand name it should be limited in contributing to customer-based images of the organization, however, has to satisfy all stakeholders, including: employees who are known as associates, customer, investors, suppliers to whom they called partners, and regulatory authorities (Hatch & Schultz, 2003).
When any business is set up it is based on the particular business model that depicts the structure of the value creation and delivery. Retailers may have taken activities to minimize the impacts of rising input costs, despite the fact that their choices are liable to have been impacted by different variables (Teece, 2010). One weak area of Wal-Mart is Extensive labor relations problems, Wal-Mart has internal customers that are its employee and the external customer those who buy the products are services of the Company. This appears to conflict with its establishing standards of appreciation for workers.
Wal-Mart utilizes a mix procedure of cost administration and separation. They give a more extensive assortment of items and administrations with the same or better quality at a value that is less expensive than their contenders can give. Wal-Mart focuses on discovering approaches to bring down their expenses by always reconsidering how to finish their essential and bolster exercises to lessen costs still further while keeping up focused levels of separation. Their effective production network administration is an essential way helping them to actualize the cost authority procedure (L. Wei, S. Wang, J. Zhang, et al. 2013).
To create a good brand image and remove the tag of monopolist behavior, Wal-Mart has to input in its most valuable asset that is employee. It has to work on its compensation and benefit plan and need to revise it by examining the U.S. Bureau of Labor Statistics. As, high turnover rate costs more to the company it includes training and other associated cost. It also gives bad impression to the industry the reason employees leave jobs is based on one factor that is concern for money. Although, money is not the only motivator for the worker, it includes different hierarchy of need factor that needs to be investigated and implemented accordingly.
Another, way to make the company’s image prominent is to act in response on growing input cost the one way of reducing cost for retailers is to have reacted specifically to input cost increments, by rolling out operational improvements with the particular point of decreasing expenses would work here. This business is offering high volumes of item in bulks at low profit margin, although being productive is critical with little innovation in process and making our strong supply chain has signify substantial increases. Wal-Mart in its desire to growth and expansion in order to enlarge the business, company has to revitalize its brand image. Previously, the Company has not invested much in the promotional activities however, with the changes in recent years and impediment at the Wal-Mart end there is need to create the positive brand image before thinking of further expansion plans.
Recommendations and Conclusion
Few factors that make Wal-Mart a competitive retailer is because of its cross docking methodology that has encouraged Wal-Mart to streamline the production network from initiation point to the last purpose of offer and it has decreased the taking care of cost, working expense and definitely diminish the stock stockpiling cost (Akwasi, 2013). It likes to purchase specifically from framers and has solid, long term associations with partners. Wal-Mart has to keep up this effective strategy and build strong relation with the partners. Although the competition has increased in massive amount supplier has more options to switch to other vendors based on the offers made by the competitors.
Wal-Mart has to carry on with a disciplined approach to managing the company (Wal-Mart, 2016). In all, the company’s strategy is that of growth, expansion, and diversification by finding new areas to expand into within retail industry. It is the number one retailer in the US and in the World as a result. Its customers know its brand, and will shop there because of the price, selection, and size (P. Hayden, S. Lee, K. Mcmahon et. al, 2002). The factor that needs attention is to create one single technique that can be connected all through the world while in the meantime keeping up the adaptability to adjust that procedure to the nearby business environment when fundamental (Twarowska & Kakol, 2013).
Reference
Akwasi. (2013). CROSS DOCKING; WALMAT’S INVENTORY STRATEGY. Retrieved from http://cmuscm.blogspot.com/2013/02/cross-docking-walmats-inventory-strategy_12.html
Jo Hatch, M., & Schultz, M. (2003). Bringing the corporation into corporate branding. European Journal of Marketing, 37(7/8), 1041–1064. http://doi.org/10.1108/03090560310477654
Hayden, P., Lee, S., Mcmahon, K., & Pereira, M. (2002). Wal-Mart : Staying on Top of the Fortune 500. Retrieved from http://mike-pereira.com
Kavanagh, M. H., & Ashkanasy, N. M. (2006). The impact of leadership and change management strategy on organizational culture and individual acceptance of change during a merger. British Journal of Management, 17(SUPPL. 1). http://doi.org/10.1111/j.1467-8551.2006.00480.x
Manitoba, C. (2012). Case Study: Why Wal-Mart Implemented Cross-Docking for Supply Chain Success. Retrieved from http://www.crossdock.mb.ca/blog/case-study-why-wal-mart-implemented-cross-docking-for-supply-chain-success/
Oberholzer-Gee, S. M. and F. (2015). Wal-Mart In Search of Renewed Growth.
Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2-3), 172–194. http://doi.org/10.1016/j.lrp.2009.07.003
Twarowska, K., & Kakol, M. (2013). International Business Strategy: Reasons and Forms of Expansion Into ForeignMarkets. Retrieved from http://www.toknowpress.net/ISBN/978-961-6914-02-4/papers/ML13-349.pdf
Wal-Mart. (2016). Walmart strategy drives growth and sustainable returns, Plans $20 billion share repurchase program over two years. Retrieved from http://news.walmart.com/news-archive/2015/10/14/walmart-strategy-drives-growth-and-sustainable-returns-plans-20-billion-share-repurchase-program-over-two-years
Wei, L., Wang, S., Zhang, J., & Ao, Y. (2013). Strategic Analysis For: Wal-Mart. Retrieved from https://www.sfu.ca/~sheppard/478/syn/1137/G_6_1137.pdf
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