Walmart - the Consumer Champion - Case Study Example

? Walmart - The Consumer Champion The paper reflects upon the Walmart’s business strategies that are being implemented by them in different locations throughout the world. The varied aspects of the organization’s business strategy that help it to stay ahead in the retailing sector have also been recognized. The strategic factors implemented in the business of the Walmart have been recognized that have provided it the recognition of being the consumer champion. This paper also includes the contribution of Walmart to the stakeholders i.e. both the market and non-market stakeholders and their performances which ensure Walmart to achieve a dominant brand name in the retail segment of the world. A brief description about the social consciousness of Walmart through this paper is also portrayed. Introduction Walmart is one of the most famous and leading retail chains of the world. Sam Walton established the first Walmart store in Rogers, Ark in the year 1962. The retail company was included as Walmart in the year of 1969. The major growth of the company had picked up from 1970 by opening of their initial Walmart distribution center along with the Head Office in Bentonville, Ark in the first half of the same year. At that time Walmart engaged 1,500 employees to work in 38 stores. Currently, Walmart operates in excess of 10,130 retail units in 27 overseas countries with having in excess of 2.2 million staffs globally (Walmart stores, n.d.). They consequentially started to make growth through increasing their number of retail chains. Walmart was listed in the New York Stock Exchange in the year 1972 (Walmart Stores, Inc., 2010). Founder Sam Walton wanted to take advantage of the opportunity to capture the customers through available branded merchandise in low prices. At present, according to the altering business scenario influenced by the changing tastes and preferences of the consumers the company still has the same vision to save the people’s money in order to ensure that they live their life in a better way (Bedford, Cable, Oulicky, & Sanchez, 2007). Walmart manages above 4,300 retail units that include the Walmart Supercenters, Walmart Discount Stores, Sam’s Club and Walmart Neighborhood Markets in the United States (Walmart Stores, Inc. 2011). The main objective of this paper is to focus on Walmart’s strategies in their business, their conscientious practices within the business for the society as well as their stakeholder management that have made Walmart the consumer champion. Business Strategy of Walmart Walmart employs varied strategies for business in local as well as global context. This part of the paper would intend to recognize the competitive strategy formulation and the implementation procedure of the strategies of the company. The diverse business strategies of the company are the following: Control the Retail Market with Existence Number of The Walmart Presence Globally To dominate the entire retail market is the main and prime objective of Walmart. Walmart is essentially a discount retail store, which provides the merchandises in low and attractive prices as compared to other retailers or outlets. Founder of Walmart, Sam Walton envisioned a strategy of reducing the prices of the goods substantially than any other provider and to make profit by selling merchandise in a large quantity. This concept is still practiced by the company, which keeps them to dominate in the world’s retail revolution. Walmart is presently marked as one of the top retail corporations in terms of the sale of merchandize in the world. In order to increase the number of merchandize sales their key concept is to provide low price of the branded products as compared to the competitors in the retail segment (Hayden, Lee, McMahon, & Pereira, 2002). Expansion By Spreading Out In The US And Globally The expansion of the retail units by covering almost the whole world is one of the major strategies of Walmart. According to the present scenario, the retail giant has spread out in almost 27 countries of this world (Walmart stores, n.d.). Walmart exists within the domestic market of the United States in more than 4,000 retail facilities along with their different segments including, Walmart Supercenters, Walmart Discount Stores, Walmart Supercenters, Walmart Stores in small formats and Sam’s Club warehouses (Walmart Stores, Inc. 2011). Moreover, the retail giant has almost 5651 retail facilities globally excluding the United States. The company has spread by serving more than 176 million customers in each week in 27 countries through 69 diverse banners around the globe (Walmart Stores, Inc. 2011). Create Positive Brand and Name Recognition Walmart intends to generate optimistic consciousness regarding the satisfaction of the customers with the Walmart brand. The main goal of the company is to associate the customers with its reputation by selling merchandises in low prices as compared to the other retail organizations. Walmart achieves the current value of the company through the different ways of advertising such as television advertising, campaigning and newspaper advertising. The company has also included certain other brands of companies along with their stores, such as McDonald’s Restaurant within the Walmart stores. The company also promotes certain other activities exclusively within their stores such as promoting upcoming Hollywood movies and music companies’ latest offerings (Hayden, Lee, McMahon, & Pereira, 2002). Formulation of Branching of New Segment in Retailing Walmart, in the previous decade has been involved with a significant diversification in grocery sales, automotive repair shop as well as pharmacy (Hayden, Lee, McMahon, & Pereira, 2002). The traditional retail business of the company has been categorized into five sections namely Discount Stores, Supercenters, Neighborhood Markets, Sam’s Club and International Operations. The other department within the Walmart Store contains stationery and office supplies, hardware, home appliances, paint supplies, art and craft, cosmetics and toiletries, shoes, books and magazines, greeting cards and confectionery items. The retail company has also started to be involved in providing home electronics goods, pharmaceuticals, automotive items, jewelries along with the home decorative and travel planning assistance. Recently, Walmart has started to move into grocery sales with the company’s neighborhood markets (Hayden, Lee, McMahon, & Pereira, 2002). Walmart Consumer Champion Walmart has taken an initiative to play a role of saving the consumers’ wealth in terms of purchasing goods, which is the main vision of the company. In order to fulfill this responsibility they have transformed their business activities to make substantial contributions in terms of focusing upon social responsibilities. There are certain important aspects for which Walmart can be depicted as a consumer champion. The aspects are: Saving Wealth of the Consumers Walmart has always remained focused upon providing consumers with value for money and also to provide the best deals at a significantly low cost. Effect of Walmart with regard to pricing can be recognized from in the UK by ‘Asda Price Guarantee’. It is a price checker which is powered by an autonomous website that compares ‘like-for-like’ branded or individual label groceries. Asda ensures to the consumers that they would be offered a product at a minimum 10% cheap at their store than any other retail store. It would provide customers an idea regarding price variation among different retail stores. In the United States, the effects of Walmart Supercenters on grocery prices and the competitive effects on prices at conventional supermarkets is seen from the situation that Supercenters provide products at considerably lower costs. In effect, the costs on nationalized brand groceries reduce 6% to 7% at supermarkets of competitors in every 8 km radius. Annually, people living within 8 km of a Supercenter who shop in the store are able to save an estimated US$186 to US$298 per individual. Walmart is also recognized as one of the prevalent retail organization in terms of earning revenue of the world according to the ‘Fortune Global 500 ranking’. With the constant emphasis upon offering value to its customer the retail company has generated a good number in overall sales in the international retail industry. Therefore, through the value attainment which has been made possible by Walmart regarding the product as well as the service it can be recognized as a consumer champion. With the strong sustainability management, Walmart intends to enhance its effectiveness by practicing various environmental activities such as ensuring ‘zero waste’, maintaining restorable energy through their product offerings and by selling products that are able to protract both consumer and surroundings (Walmart Stores, Inc. 2011). Identifying Harmful Chemicals Walmart depicts their responsibility towards maintaining health of the consumers along with the environment by reducing the usage of chemical in their product line. The company has developed a team to identify chemicals in their products and also promoted suppliers to explore alternatives. It has adopted three phases of process and encourages its providers to find alternatives for the chemical used in their products. The phases include Walmart’s environmental awareness, where contributing suppliers will be given a period to identify for Walmart any of their product that currently uses one of the priority chemicals as elements. The subsequent stage includes development of an action plan, where providers speak to Walmart about their plans regarding the main concern of chemicals in their products. Walmart acknowledges the providers who take part in this effort (Walmart Stores, Inc. 2011). Democratizing Green The concept of retailing for Walmart is not only involved with the products that can be in affordable prices but also it ensures to have those products which can ensure sustainability. For instance, in the retail industry context in the past decade a large number of customers have experienced that to maintain the green was a luxury which can be affordable for the wealthiest people. In recent times, Walmart has worked with its suppliers to make energy exhaustive products in its stores consisting of Televisions (TVs), air conditioner, video games and personal computers. They have ensured to make their electronic products at least 25% more energy efficient (Share Network, 2006). Making Healthcare Reasonable According to the commitment of providing affordable healthcare, Walmart started with their new concept in the healthcare segment in the United States by electronic prescription to reduce the prescription costs for companies (Share Network, 2006). Walmart made 314 general prescriptions available to customers and its employees for only US$4 per prescription valid up to a 30 days’ supply at generally prescribed amount. The healthcare program was first time launched by the company in September 2006 at Florida, whereas the program at present has been set up in more than 1,008 Walmart and Sam’s Club pharmacies in a number of the countries of the world (Share Network, 2006). Walmart considers that the employers ought to be required to provide healthcare benefits for their employees. The company also ensures to share responsibility and support and made compulsory for the workers to be part of the healthcare initiative. Walmart is always looking forward to make certain innovative activities for the employees both the full-time and part-time associates and their families’ benefits are structured according to their requirements. Even when the healthcare costs get high, the associates are able to avail the service in a very reasonable price with high quality as well as with comprehensive benefit packages. Walmart assures assistance from the medical plans towards their employees by offering medical benefits at a minimum of US$11. Certain plans have been also introduced known as ‘Health Reimbursement Account’ (HRA). Through this arrangement the company will set aside US$500 for an associate or US$1000 for those associates who are dependent upon an HRA which will provide the medical expenses before paying any co-insurance. These steps help the associates to gain medical benefits where they are able to refrain from paying expenses from their individual pockets. The company also provides ‘Health Savings Account’ (HSA) plan that helps employees to achieve benefits by saving money from their paychecks (Walmart Stores, n.d.). Walmart’s Contribution to the Stakeholders The stakeholders that determine the community associations of Walmart are a few of the groups and individuals. These stakeholders can be separated into two types, market stakeholders and non-market stakeholders (Hayden, Lee, McMahon, & Pereira, 2002). Market Stakeholders The market stakeholders of Walmart are those stakeholders, who have their financial stake in the same stake where Walmart has. Market stakeholders of Walmart consist of certain stakeholders (group or individuals) present in the market (Hayden, Lee, McMahon, & Pereira, 2002). These market stakeholders include: Shareholders The shareholders are the first group that has their financial stake with the Walmart. These group or people have possession of shares of Walmart and are expecting for a good return of their financial investments. The shareholders always look forward to the increasing value of their stock in terms of acquiring dividends. In the year 2011, Walmart paid out US$ 0.24 per share in dividends to its stockholders (Hayden, Lee, McMahon, & Pereira, 2002). Executives of the Walmart The higher level of executives has also their stakes in the company like the other shareholders. Moreover, the large numbers of Walmart executives collect share preferences which can be regarded as their income. In order to earn a large amount of incentives the executive shareholders desire to increase the share value of the company along with the present performance of Walmart’s stock in the market (Hayden, Lee, McMahon, & Pereira, 2002). The Employees of Walmart The employees of Walmart whose main source of earnings is the job they are doing in the company, they have stakes in the company. These stakeholders always want to increase the performance of Walmart in the market because they are dependent upon their existing job that they are doing in the company as their source of income. Advancement in the overall position of Walmart would in turn provide them the benefits in terms of enhancement of their standard of living (Walmart Stores, Inc. 2010). The Communities of Walmart The communities that are involved with Walmart have their stakes in the activities’ performed by the company. Various numbers of communities depend upon Walmart not just only for earnings but also for the availability of their necessity products in a lower price (Hayden, Lee, McMahon, & Pereira, 2002). Consumers of Walmart The consumers of Walmart also have stakes in the company. Walmart is regarded as one of the largest grocery retailers. Consequently, the large numbers of its consumers are relying upon it for their necessities for the grocery items (Walmart Stores, Inc. 2010). Non-Profit Organizations Walmart is one of the world’s foremost retail companies which contributes significant amount of funds to nonprofit organizations in the countries where it operates. In the same way, those non-profit organizations have also stakes in the activities performed by Walmart. Walmart Foundation had donated approximately US$958.9 million as contribution around the world in the fiscal year that ended on January 2012 (Walmart Stores, n.d.). Other Retailers The other retailers have an interest in the Walmart stock and how much they are increasing. The other retailers generally face a threat in a business environment if Walmart is operating in the same environment due to the low price strategy employed by it (Walmart Stores, Inc. 2010). Online Retailers Online retailing has created an effect upon the business activities of Walmart. The company’s online retailing represents a small part of their overall sales, as it is a method of less expense to deliver the goods to the consumers in communities without Walmart stores. Therefore, in order to stay ahead of its competitors such as Amazon, which uses e-retailing, Walmart needs to devise strategies in the online front as well (Planet Retail, 2012). Non-Market Stakeholders The non-market shareholders are the groups or the individuals who have non-financial shares or political stake in the performance of the stocks of Walmart (Walmart Stores, Inc. 2010). A few of the non-market stakeholders are, Labor Unions Walmart has strict guidelines about not unionizing their workers. A number of the labor unions in the countries in which Walmart operates have political stakes in the company, Walmart, which is one of the biggest retail corporations. Walmart has taken initiatives to look after its workers and benefitted them by providing good values of compensations. The company never wishes to interfere with the activities of the unions (Walmart Stores, Inc. 2010). International Retail Stores The expansion of the business into other countries is one of the key objectives of Walmart. In this strategy, it must be cautious from local retail stores that already exist in the countries in which Walmart operates and should desire to keep significant understanding with them whenever they are moving to other countries. Walmart is able to attain a higher satisfactory level from the customers where it is present, by taking a strategy to provide local products of the countries. The company ensures that in excess of 90 percent of their international products are sourced from the local areas which enable them to get local consumer preference (Hayden, Lee, McMahon, & Pereira, 2002). Conclusion It has been recognized that Walmart is one of the most trusted and value providing retail corporations of the world which is serving in more than 27 countries. Since the establishment of the retail giant, it has been involved with providing low cost goods keeping in view their environmental responsibilities. The history reflects that the status of Walmart has been to ensure development of its dominance around the world without losing view of the customers’ values. Walmart has been able to provide customers with enhanced benefits from their purchase which has been their vision since its inception. They have also been able to ensure sustainability of their business by focusing upon the community welfare aspect. These factors have enabled Walmart to be regarded as a consumer champion. References Bedford, M., Cable, J., Oulicky, W., & Sanchez, C. (2007). Walmart: strategic management. Retrieved from http://resume.edjent.com/pdfs/strategicmanagment.pdf Hayden, P., Lee, S., McMahon, K., & Pereira, M. (2002). Walmart: Staying on top of the Fortune 500. Retrieved from http://allman.rhon.itam.mx/~oromero/Wal_Mart_CaseStudy.pdf Planet Retail. (2012). Press Release. Retrieved from http://www1.planetretail.net/sites/default/files/pdfs/New%20book%20warns%20Walmart%20could%20lose%20position%20as%20world's%20largest%20retailer.pdf Share Network. (2006). Walmart bringing $4 generic prescriptions to working families. Retrieved from http://sharenetwork.org/walmart_presc_facts.pdf Walmart Stores, Inc. (2011). The Walmart Effect. Retrieved from http://www.walmartinfo.co.za/docs/walmart_effect.pdf Walmart Stores, Inc. (2011). Walmart Stores, Inc. data sheet - worldwide unit details January 2012. Retrieved from http://walmartstores.com/pressroom/news/10821.aspx Walmart Stores, Inc. (2010). 2010 annual report. Retrieved from http://cdn.walmartstores.com/sites/AnnualReport/2010/PDF/WMT_2010AR_FINAL.pdf Walmart Stores. (n.d.) About us. Retrieved from http://walmartstores.com/AboutUs/ Walmart Stores. (n.d.) Associate health and benefits. Retrieved from http://walmartstores.com/HealthWellness/7624.aspx Walmart Stores. (n.d.) The Walmart Foundation. Retrieved from http://walmartstores.com/CommunityGiving/203.aspx Read More