Wal Mart And Target example essay topic

BATTLE OF THE DISCOUNT RETAILER: The Visionary's Secret Weapon A Comparative Case Analysis A Paper Presented in Partial Fulfillment Of the Requirements ofAbstractThe recognized giants in today's discount retail market are Wal-Mart, Sears, Roebuck and Company, and Target, and this paper compares Wal-Mart and Target. As the competition stiffens to capture market niches, these two organizations are heading for a showdown. This work demonstrates distinctive differences in company culture, promotion within the organization, lofty goal setting, and leadership styles between these two organizations. Although this paper shows a definite competitive advantage for the Wal-Mart organization, it will also demonstrate that Target Corporation has taken some innovative steps to secure itself in the discount retail market. Battle of the Discount Retailer: The Visionary's Secret Weapon What makes a company great?

This is one of those pithy questions -- like 'What is great art?' or 'What is great leadership?' that defy a simple response. Are companies deemed great because they have made buckets of money, or because they have made their employees happy? Are companies great when they make an impact on Wall Street or when they make an impact on the world? As a general rule all-visionary companies jealously preserve strong, and sometimes fanatical, corporate cultures even as companies adapt to rapidly changing times. Visionary companies heavily promote executives from within, constantly set lofty goals, and surprisingly, CEO's are rarely charismatic. Moreover, visionary companies drive to make an impact on society, not just to make profits.

This research project will serve two objectives: first to define what constitutes a visionary company, and then to show a comparison between a visionary company and a non-visionary company. To demonstrate the above stated principles this researcher chose two companies. I chose Wal-Mart as my visionary company within the mass-market discount retailing industry. I chose Target Corporation as my comparison company since it serves the same market as Wal-Mart and has been doing business for a similarly long time.

Based on the research presented, Wal-Mart has clearly out performed Target in all categories that lead an organization toward visionary status. The Visionary Organization Visionary companies are premier organizations within their industries, highly admired for their accomplishments and their ability to teach other organizations while giving back to their society in general (Lafemina, 1995). They are greater than any one man or idea; they are a living organization that adapts to change and emerges along with its environment. Visionary companies are the survivalists of the industry. Little can be said about visionary companies without citing the works of James C. Collins and Jerry I. Porras.

Collins and Porras dedicated six years to research in an attempt to define a visionary company. Their published work, Built to Last: Successful Habits of Visionary Companies (199? ), blanketed the world of business with a new perspective. According to Brewer's (1995) interview, Collins defines a visionary company as follows: It's one that has sustained performance over long periods of time, and is a premier institution in its industry. Any industry will have successful companies, but every once in a while, you " ll find a company to which everybody will look and say, 'That is a very special company. ' The visionary companies have had a significant impact on the world.

For better or worse, they " ve affected our lives. Considered one of the strongest findings by Collins and Porras' (1997), the premise that visionary organizations have very strong corporate cultures and that the core values are the backbone of the organization that is preserved over time, especially during change. Now that we have defined the term visionary organization, let us compare and contrast certain key principles of the two comparison organizations. Corporate Culture The word culture encompasses the values, customs, heritage, legal codes, educational traditions, social attitudes, political institutions and processes, and economic systems. Corporate decision making must consider the cultural values of an environment as it makes decisions. Wal-Mart has done a wonderful job in managing the organizational culture when Sam Walton took his Wal-Mart stores into small American towns.

He hired and trained managers from the local population to ensure a compatible work environment. Capital is relatively easy to obtain nowadays. Today's scarce, sought-after strategic resource is expertise, which comes in the form of employees (Brown, 1994). Although organizations have changed mightily from the days of hierarchical, top-down management, they still have a long way to go. Some intangible yet crucial changes must not only occur in senior managers' ways of thinking but also in the atmosphere and culture of the company (Johns-Treat, 1994). One of the truly distinctive characteristics of the Wal-Mart Culture is its focus on individual development.

The genesis of this belief is that the customer comes first (Qualls, Sheppard, and Walton, 1986). Wal-Mart managers believe that if associates are expected to treat their customers with attention and respect, associates should be treated in the same manner. Wal-Mart managers accomplish this in many forms. First, associates are solicited from within the departments on how processes can be improved.

This simple form of empowerment can go a long way in making employees care about their jobs, and get a feeling that their managers care about them. Second, department managers and departmental associates enjoy a great deal of autonomy. Sam Walton demonstrates this principle with his concept of a "store within a store". Departmental managers are free to use their own creativity, judgment, and customer knowledge to set up their departments to best serves their customers (Walton, Huey, 1993).

Further, lavish rewards are provided to the employee who finds a potential improvement. The idea or concept is then distributed throughout the Wal-Mart organization via an intranet, and TV network system. Wal-Mart aligns its core values with the premise that no single one person is smarter than all of the team members working together. Target Corp., the comparison organization, failed to show such un restrictive processes in terms of its customers and its employees.

Rather, Target is the first discount retailer to appeal to customers with higher income and education levels. Therefore, they focus on such things as a clean store, well-organized products, sharp lighting, and bright colors. Target is fussy about its store design, configuration of departments, and words used on signs (Clifford, 2001). It targets a consumer base with an average yearly income of $60,000.

Wal-Mart, on the other hand, aligns itself with the national average of $45,000 (Clifford, 2001). However, this researcher found no definitive efforts by the Target Corp. to further the personal development of its employees. Promoting leaders from within Preserving the core ideology is of great concern for any organization striving to build an institution that will stand the test of time. The concept of promoting key leadership positions from within the organization increases the likelihood that the new leader has the right stuff for the organization. Further, management-training programs not only facilitate the progression of people, but also allow organizations to further petrify their core ideology. Collins and Porras (1997) note in their finding, "across the seventeen hundred years of combined history, that only four CEOs have that come from the outside to lead visionary companies".

These findings are equally true for the Wal-Mart Corporation. Of the three that has led the company; all have been promoted from within. They all demonstrated strong alignment to the core ideology, and they learned the Wal-Mart culture from by living it in their daily performance of their duties. Rarely does any member of the organization enter into management without first moving through the ranks and taking several management courses offered by the corporation. Furthermore, Wal-Mart spends a large portion of its capital resources on personal development, and they offers an on-line job announcement system that makes all new job opportunities accessible to all associates. This greatly assists the organization in its approach to hiring from within.

In addition to the abovementioned program, Wal-Mart offers eight additional personal and professional development programs that develop both technical and leadership skills. The Target Corporation has not focused its efforts into futuristic growth as did its competitor Wal-Mart Corp. The Target Corporation began as the Dayton Hudson Corporation and was renamed Target Corp. in 2002. While trying to manage several other organization -- Target stores, Marshall Fields, and Mervyn's -- management attempted to inflict their ideology upon these different markets using a cookie cutter approach. This conservative approach, combined with an unclear strategic direction as a corporation, could have quite conceivably led to their slow entry into the discount retail market. Target lacks in its personal development programs when compared to the Wal-Mart Corporation.

They offer little or no sustainment training, formal mentoring program, and educational programs that could empower their employees to benefit the organization. However, they do offer a wide range of benefits that attract and perhaps retain their employees. Target lumps its benefit programs under the headings of Health, Future, Growth, Time, Family, Finances, and Other. Most of the benefits offered are standard for each employee.

However, your family and time benefits offers a smorgasbord ranging from chosen holidays, funeral pay, and adoption reimbursement. Setting Lofty Goals As stated by Collins' and Porras' (1997) setting lofty goals further stimulates visionary companies toward progress. Setting "Big Harry Audacious Goals" acts as the underlining purpose of the organization. It set an almost unimaginable goal for everyone to strive to reach.

It is this challenge that bonds the organization to work together. However, those who use BHAGs must align them with the company's core ideology, and they must ensure that the BHAG's do not conflict or send the wrong message to the organization. Historically, Wal-Mart has shown the power of setting lofty goals. Sam Walton, the company's founder and CEO until 1988, used the power of lofty goals as far back as his first five and dime store in 1954 (Walton & Huey, 1993). Walton continued to use the power of setting BHAGs for the organization to stimulate growth long after his death in 1993. Probably the most audacious goal ever set by Walton came in 1991 when Wal-Mart's current sales was 32.6 billion.

Walton set a goal of 125 billion, a target that had never been reached by a retail organization and a benchmark that had only been reached by one other organization (General Motors) in U.S. history (Mayer, 1989). The most powerful insight to this goal speaks to the character of Sam Walton. Walton died one year later, but he had already envisioned future of his beloved organization well beyond his own life. In recent years Target Corporation has attempted to canalize its resources toward their greatest prospect of success, Target Stores (Heller, 2001). However, most if not all of Target's futuristic goals are chasing the programs already launched by Wal-Mart. Target has lacked the innovation and the strategic planning to capture its own market niche.

Target has dedicated itself to chasing a different consumer, the upper middle class. It is developing partnerships with the now crowd, and bringing the consumer designer products at a competitive price. However, the organization treads on dangerous ground, for many have already tried the same concept without any guarantees for success. Dynamic Leadership Visionary companies carefully select, develop, and promote managerial talent grown from inside the company to the greater degree than those of non-visionary status (Collins & Porras, 1997).

However, Collins and Porras both agree that visionary leadership is not the single most important factor for a visionary company. Rather, it is the combination of both leadership techniques and the leader's personal traits. The combination of these two factors enables them to develop a core ideology that last beyond their tenure as the leader. Many professionals have classified Sam Walton as a true visionary leader.

Sam Walton's discount retail chain began out of his 15 variety stores that operated in Arkansas, Missouri, and Oklahoma. His first Wal-Mart store opened in 1962, the same year that Woolworth, Kmart, and Dayton Hudson's Target stores opened it doors. Keeping with his knowledge of the post-war small town, Walton searched for key areas in which to locate his new stores (Walton & Huey, 1986). As his store chain began to gain market shares, he did everything possible to streamline his organization. In 1966, he attended an IBM school in New York to recruit young talent that could computerize his operation. Today, Wal-Mart's computer database is only second in capacity to that of the Pentagon (Qualls, Sheppard, Walton, 1986).

Walton recognized the need for new ideas and creativity if Wal-Mart was going to continue to grow, but he stepped aside in 1988 and turned over the CEO position to David Glass, an up and coming new executive. Walton continued to serve on the company's board of directors and dedicated himself to building an impenetrable culture. He never concerned himself with money, but he saw that if he took care of his employees, they would serve his customers as he desired. Harry Cunningham, founder of Kmart and CEO of S.S. Kegg Co., commented, "Sam's establishment of the Walton culture throughout the company was the key to the whole thing. It is just incomparable. He is the greatest businessman of this century".

David Glass served as CEO for twelve years. During his tenure, the Wal-Mart Corporation continued to realize substantial growth. Glass strengthened Wal-Mart by developing and leading a team of strong managers to help establish new lines of business, embrace technology, and spearhead international growth (MMR, 2001). More importantly, he accomplished this while maintaining the core ideology that Walton developed. In January 2001, Lee Scott, a twenty-year Wal-Mart veteran, succeeded Glass. The first Target store opened in Roseville, Minnesota in 1962 as a subsidiary of the Dayton Hudson Corporation.

In terms of leadership, one of the major differences between the Wal-Mart and Target is that one man founded Wal-Mart and that the Dayton Hudson Corporation branded Target, and therefore leadership and vision have been quite confusing for the Target chain. Due to the success of the target chain, the Dayton Hudson Corporation renamed its organization Target Corporation in 2000. Bob Ulrich began is retailing career as a merchandising trainee at the Dayton's in 1967. He has worked his way through the organization in various management positions. He was instrumental in the merger of Dayton and Hudson to form the Dayton and Hudson Department Stores. In 1984, became the president of the newly formed Dayton and Hudson Department Stores.

Bob Ulrich assumed the position of CEO of Target in 1987 and CEO of Dayton Hudson Corp. in 1994. Although the Target Corp. has had a rocky start in terms of leadership, it has found a silent leader in Ulrich. Named retailer of the year in 1990, Ulrich has set his sights on creating an organization that will command attention. While Ulrich is relatively humble about his accomplishments at Target, there is no question that he has led the organization to its current position within the "upscale discount retail industry" (Lisanti, 1990).

Conclusion While there is no clear definitive formula for an organization to grow into a visionary organization, it can take progressive steps to ensure that it concentrates on its core ideology before looking at the bottom line. This research compared two very dynamic and prosperous organizations that hold futures within the discount retail market. The research shows that Wal-Mart Corporation had accomplished visionary status before its competitor, Target Corporation, because it focused on building its core ideology and organizational culture. However, the Target Corporation has seen itself in terms of market competition. They realize that, due to their slowness to the marketplace, Wal-Mart Corporation has captured the discount retailers market. Wal-Mart has fortified itself within its market niche, and they continue to be creative in both new products and services to secure its future.

Target, therefore, has decided to attempt to capture the upper middle class markets. Target Corporation should focus on personal and professional development programs to maximize the effectiveness of its human resources. While these programs are very costly, they are all programs in which the organization will benefit long term in customer service, which is area that they will need to capture to compete against Wal-Mart.

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