Shopping For Its Customers O Wal Mart example essay topic

Wal-Mart Current Situation Analysis Mission and Strategic Objectives Wal - Mart Corporation's mission statement can be identified as follows: Sam Walton built Wal-Mart on the revolutionary philosophies of excellence in the workplace, customer service and always having the lowest prices. We have always stayed true to the Three Basic Beliefs Mr. Sam established in 1962: 1. Respect for the Individual 2. Service to Our Customers 3.

Strive for Excellence Wal-Mart is the world's largest retailer, operating more than 5800 discount stores. Wal-Mart employs more than 1.5 million associates 885,000 in the United States and 225,000 internationally. Walton had a reputation for caring about his customers, his employees, and the community. In order to maintain its market position in the discount retail business, Wal-Mart executives continue to adhere to the management guidelines Sam developed. Walton was a man of simple tastes and took a keen interest in people.

He believed in three guiding principles: 1. Customer value and service; 2. Partnership with its associates; 3. Community involvement.

Strategy Wal-Mart succeeds in the United States simply by selling branded products at low cost. But that doesn't explain it all. Following is an analysis of Wal-Mart's competitive strategy. Pricing Wal-Mart's marketing strategy was to guarantee 'everyday low prices' as a way to attract customers. The traditional discount retailer, which relies on 'sales,' not only has to do more advertising and promotions but also has to rely more on catalog mailing, buildup of inventory before a sale, markdowns on the unsold inventory, etc.

Wal-Mart stores operate according to their 'Everyday Low Price' philosophy. Wal-Mart has emerged as the industry leader because it has been better at containing its costs, which has allowed it to pass on the savings to its customers. Wal-Mart has become a capability competitor. With such low wages for those who make the Bratz dolls, Wal-Mart can profit greatly while still providing low prices to its customers.

In a global labor market, it is the companies who can find the cheapest, most exploitable conditions, with little worker protection or regulations that will profit the greatest. Distribution System About 85 percent of all the merchandise that Wal-Mart sold was shipped through its distribution system to the stores (competitors averaged less than 50 percent). Wal-Mart used a 'saturation's strategy for store expansion. The standard was to be able to drive to a store within a day from a distribution center. A distribution center was strategically placed so that it could eventually Information System First and most important thing about Wal-Mart's information system is precisely that the customer's needs come first. Wal-Mart had implemented a satellite network system that was used to share information between the company's network of stores, distribution centers and suppliers so orders could be consolidated, enabling the company to buy full truckloads without incurring excess inventory costs.

Increase flexibility, insured 100 percent in-stock position increased store-selling space (by reducing the space required for back-room inventory storage). Store-level data were collected, analyzed and transmitted electronically to see how a particular region, district, store, department within a store or item was performing. This eliminated stock-outs, reduced the need for markdowns on slow-moving stock and maximized inventory turnover. The benchmark information across stores was also a valuable tool to help 'problem's stores.

1) The Customer-One of Walton's deepest beliefs was that the customer is always right, and his stores are still driven by this philosophy. When questioned about Wal-Mart's secrets of success, Walton has been quoted as saying; 'It has to do with our desire to exceed our customers' expectations every hour of every day' 2) The Associates-Walton's greatest accomplishment was his ability to empower, enriches, and trains his employees. He believed in listening to employees and challenging them to come up with ideas and suggestions to make the company better. At each of the Wal-Mart stores, signs are displayed which read; 'Our People Make the Difference. ' Associates regularly make suggestions for cutting costs through their 'Yes We Can Sam' program. One of Wal-Mart's goals was to provide its employees with the appropriate technological tools, in order to do their jobs more efficiently, and succeed in the retail market.

Wal-Mart has grown from a single store open by Sam Walton in 1962 to a global corporation. Wal-Mart is presently the largest private employer, hiring directly for its own needs, in the United States. Wal-Mart has promoted over 9,000 associates into management positions. International Development Wal-Mart noticed certain saturation in their home market, especially in the suburbs.

They recognized that future growth and expansion could only take place internationally. 1992 was the year of starting their international activities. They joined a joint venture with CIFRA, the largest retailer in Mexico. After the successful introduction into the international market they made a logical decision to try the similar approach in other neighborhoods. Wal-Mart operates in ten different countries overseas. Future Expansions The company will further expand its Neighborhood Market concept by adding 50 new stores in the upcoming fiscal year.

Wal-Mart International plans to open 100 to 110 units in existing markets. Projects are scheduled to open in each of the countries, and will include new stores and clubs as well as relocations of a few existing units. These announced units also include several restaurants, department stores and supermarkets in Mexico. In addition, Germany will continue with the remodeling of all the acquired hypermarkets. Retail Industry The retailing industry is mature and slow growing. These factors mean companies will have to do a better job in managing their operations.

Retailers must be forced to close unprofitable stores, locate in regions with faster growth. For instance, Wal-Mart has gained a competitive edge by locating their large stores in small towns. Thus, lowering their operating expenses. Moreover, retailers must also invest in automated processes to keep their inventory costs down. Wal-Mart has been able to reduce their overall entry processing costs, by not becoming too dependent on any supplier (suppliers don't have more than 4% of overall purchases volume), and also persuaded them (nearly 3,000 vendors) to have electronic "hook-ups" with stores. MGA is one of Wal-Mart biggest suppliers.

Online Retail Industry The on-line industry is a very attractive market since the number of people accessing the Internet has increase tremendously through the years. Wal-Mart, for instance entered the online industry in 1996, through a partnership with the Internet venture-capital firm, Accel Partners. Even though Wal-Mart formed this partnership, they have separate management team and board of directors who developed the company's online retailing model. This model provides opportunities for even greater sales growth, future profits, and shareholder value. Also, the new on-line model approaches the Internet as new market with different retailing rules. In addition, Wal-Mart formed another partnership with Map Info Corporation to enhance customer service on the web.

Competitors Although Wal-Mart is the leading company in the retail industry, it faces intense competition from its three main competitors, which include Kmart, J.C. Penny and Sears. Now that Kmart has brought Sears along with Home Depot they will own about 42% of the market share. Final Analysis Wal-Mart is by far the largest retailer in the United States. It consistently puts competitors out of business, and has sales larger than the Gross National Product of most countries.

In order to minimize operating costs and maintain low prices, Wal-Mart has its own distribution and extensive information system, as well as a great customer service, and low cost structure. Even though Wal-Mart has all these great advantages, we conclude that Wal-Mart needs to improve in their associate / manager relationship in order for them to continue being the largest and most powerful retailer in the world. Otherwise, they would be facing many challenges, and probably enter into a declining stage. SWOT Analysis Strengths. Creates new jobs for the community Brand Name recognition. Number one retailer worldwide o Ability to maintain low price structure effective distribution system Great customer services (friendly) o Store location in small towns, creating entry barriers for competitors Weaknesses Paying low wage so Ethical issues overseas (exploiting conditions) o Law suits over 5,000: about 3 per day Opportunities.

Keep running commercials advertising what they are doing well... Stronger publication department. o Super Centers can provide truly one-stop shopping for its customers. o Wal-Mart can improve its Website through Alliances with major online players. o Wal-Mart can control the Convenience-type market through the implementation of the Neighborhood Market concept. o Wal-Mart can continue it's domestically and international expansion. Threat so Jobs being shipped overseas. Competition E-commerce: Unfamiliarity with the new web based business may put Wal-Mart at disadvantages with its competitors. o Environmental Interest Groups: Expansions often entail building new stores in uninhabited areas. o Economic Climate: As the stock markets and interest rates fluctuate so do sales revenues. o Market Demographics XII. Recommendations Recommendations as it relates to its financial so Decrease charitable contributions for the next fiscal year in order to pay off debt. o Seize in the acquisition of several new locations at same time to decrease overall expenses. o Reduce amount of markdowns and improve shrinkage methods Recommendations as it relates to expansion so Expand brand products internationally such as the best selling brand names (O'L Roy, Garden Fertilizer and Spring Valley) to countries where they are currently operating. This can be done though intense advertising and offering discount coupons for purchases. o Open Discount stores in countries where they are operating such as in Argentina and Brazil where they only have Sam's Clubs and Super centers.

Recommendations as it relates to its associate so Wal-Mart has to allow workers to file an accident report. o Wal-Mart needs to recognize injured worker's right to time-loss compensation. o Wal-Mart has to increase its wages. o Wal-Mart has to stop its violation of labor law, including intimidation, coercion, harassment and illegal discharges Wal-Mart needs to stop cutting wages and benefits Recommendations as it relates to its customer so Walt-Mart's customer service is strength to the company. Therefore, they should try to improve it on an ongoing basis. This would create customer's loyalty and attract even more customers to buy on their stores. o Since customers enjoy low prices, and value and effective and friendly customer service. Wal-Mart should offer training and programs to its employees such as the "Putting People First" (British Airways) in order to reinforce and improve their effective customer service.