Wal-Marts Business Management - Case Study Example

INTERNATIONAL BUSINESS MANAGEMENT AND STRATEGY The important elements of Wal-Mart's business management are to precisely define the business, identify the goals and serve as the firm's resume. Pro forma balance sheet, an income statement, planning precise strategies and cash flow analyses comprises the basic components of a business management strategy. Preparing a business management plan helps in the allocation of resources properly, making good decisions and handling of unseen or unexpected complications that may become hurdle in the future development of the business. One of the important aspects of business management is that it provides organized information about the company and importantly a good business plan helps in attaining FDI, joint ventures and franchises. Other important applications include informing the details of the company to the finance personnel, suppliers and others so that they become aware of company's goals and achievements. Economic Feasibility: It refers to the benefits or outcomes. We are deriving from the product as compared to the total cost we are spending for developing the plan. If the benefits are more or less the same as the older system, then it is not feasible to develop the plan. The development of the new product should greatly enhance the accuracy of the system and cuts short the delay in the processing of the business strategy. The errors can be greatly reduced and at the same time providing great level of security. Hence, we do not need any additional equipment except memory of required capacity. Operational Feasibility: It refers to the feasibility of the product to be operational. Some products may work very well at design and implementation but may fall in the real time environment. It includes the study of additional human resources required and their technical expertise. Technical Feasibility: It refers to whether the product that is available in the market fully supports the present trend. It studies the pros and cons of using particular product for the development and it's feasibility. It also studies the additional training need to be given to the people to make the product work. A qualitative and quantitative research is must in developing an Information system. Qualitative research is more of collecting data, conducting interviews, using documents and to understand and explain social phenomenon. Quantitative research involves is of development of natural sciences to study natural phenomenon. Survey methods, formal methods, econometrics, etc., are some of the examples of quantitative research. Planning Wal-mart generally forays into the international market by establishing a retail market by issuing FDI (Foreign Direct Investment) to the retailers so that the profit from the FDI's would go to the retailers as well. Their plan will be to first energize the FDI lobby and then preempt the FDI lobby in any country they try to establish their retail store. They primarily look for the average annual income of the family in that country, Wal-Mart also looks how much is the retail market and at what percentage it is growing annually. Wal-Mart recently decided to foray into the Indian retail market which has a $250 billion retail market growing at 7.2 % per year. Wal-Mart initially looks for the weak supply chain managed countries for FD investments. John Menzer the CEO and president of Wal-Mart plans as per the data acquired from the countries he personally visits and then decides weather to invest or not. It is not that Wal-Mart doesn't face any challenges, it has to face challenges but struggles for both business and profit from governments of the respective countries. In any business sector strategic planning is considered to be very important and a thoughtful business plan cannot be overemphasizes because much hinges on it: financial support, management of the available resources like operation and finances, credit from suppliers, promotion and marketing and last but not the least company's goals and achievements. Before writing a marketing plan some of the important questions that has to be addressed are: 1. What service does the business provide to the clients 2. Who are the potential customer and reasons for purchasing the service or product 3. What are the steps or ways you reach the potential customer 4. From whom or where the funds come In the present business world aggressive strategic planning is the new mantra. Due to the changing trends and tastes of customers the retailers are exploring new ways of marketing. Advertising, considerably slashing the prices of the commodities, increasing the discount rates, etc., are the methods used by the companies to stay in the extremely competitive market. I would like to choose Wall-Mart for a critical evaluation of the company's internationalization strategy. Wal-Mart is the top retailer in the present American market. Wal-Mart is having more than 1000 stores. Wal-Mart is the king of the ring. It's the number one retailer in United States of America. Target is another store which is slowly moving closer to Wal-Mart and has become a tough competitor to Wal-Mart. Kmart has a long history; recently it is trying to emerge from bankruptcy reorganization. Kmart is slowly losing its customers to Wal-Mart. Before being bankrupted Kmart was the second best retailer after Wal-Mart. Both companies used different strategies to outsmart each other. They tried different strategies to woo the customers. After coming out from bankruptcy Kmart found that it has lost most of the customers to Wal-Mart and other retailers like Target. Its total net profit also declined considerably. Target took this opportunity to its full advantage and started aggressive campaigning. Though the think tank of Target knew that most of Kmart's customers would go to Wal-Mart rather than coming to Target's stores, they started slashing the prices of the products and announced heavy discounts on them. They used innovative ideas to woo the customers. To maintain its top position Wal-Mart used to slash the rates so that when customers come to purchase the items would buy other products also. These items were termed as loss leaders. Most of the middle class families are Wal-Mart's customers. Target aimed at upper middle class. Because of this stiff competition between Wal-Mart, Kmart, Target, Costco, etc., customer has wide range of choices to choose. Customer can buy products at discount rates. The companies are employing every possible method to woo the customers to their stores. Due to the bankruptcy Kmart lost its most of the investors to other retailing companies. The company that largely profited by this was Wal-Mart that was so much preoccupied of defeating Kmart. Most of the investors purchase bonds. A bond is nothing but a promissory note that the company would repay the sum over a certain period at a certain interest rate. Bonds are also called as debentures. If the company is in trouble and has to be dissolved, bondholders must be paid in full before paying the stockholders. Experts advise the investors to buy both Wal-Mart and Target stock. Both the companies had seen upswing of their net profit in the recent past. Cash rebates, though may look deceptive in some manner to the consumers, they worked well. Special offers like zero down payment, buy now and pay later strategies made by the retail companies look suspicious but when it seen under the viewpoint of businessmen these are the tactics they rely upon to survive in the market. So, it can be said that their strategies are ethically correct. Wallmart.com has become one of the biggest online retailers of the world. Wallmart was a small company that used to sell books on the Internet. Slowly with precision planning and goal oriented strategies they were able to become one of the biggest online retailers. One of the important strategies to study is the feasibility study. Feasibility study is an important phase in the development process. It enables the developer to have an assessment of the product being developed. It refers to the feasibility study of the product in terms of outcomes of the product, operational use and technical support required for implementing it. Feasibility study should be performed on the basis of various criteria and parameters. The various feasibility studies are (1) Economic Feasibility, (2) Operational Feasibility and (3) Technical Feasibility. Their strategies include low price and free shipment. This factor played an important role in the long-term development of the company. The cheaper prices of goods with high quality and further free shipment attracted many. Another factor is the customer service. Customer plays an important role in the development of the company because it is the customer who uses the product that was developed by the companies and Wall mart's services were good at it. To stay and hold the position in the present competitive market Wall mart has planned to expand its business outside US like Eastern Europe and Far East Asia. Wall mart is encouraging other companies to advertise their product on their website. A study has shown that Wall mart would make more profit in diversifying than expanding. TOWA matrix (Threats-Opportunities-Weaknesses-Strengths) has been used to develop feasible alternative strategies. The matrix consists of four quadrants. They are (1) using strengths to overcome weaknesses, (2) Using strengths to overcome threats, (3) overcoming weaknesses to take advantage of opportunities and (4) overcoming weaknesses to address threats. First quadrant concentrates on possible strength-opportunity strategies. Important factors are to hire highly skilled workers, wide brand recognition, customer satisfaction, effectively and efficiently raising capital resources, etc. Second quadrant concentrates on possible strength-threat strategies. Important threats that have to overcome are changing government regulations, seasonal shopping, and competition from ebay and Wal-Mart, protect business and customer information, currency exchange, etc. Third and Fourth quadrants concentrates on Possible Weakness-Opportunity Strategies and Possible Weakness-Threat Strategy. Third quadrant looks at reviewing product, develop standards up to the customer satisfaction, etc. Fourth quadrant looks at implementing backup systems, implementing policies to protect and avoid security risks. Since these strategies give a wide range of choices to the customer they can be supported. Hence the international business strategy used by wall mart is making the company most profitable if this strategic management is advised to other major brands then it is sure that every company will sure develop its market share. Though wall mart spends a lot on adds and other infrastructure it has a major profit on it's strategic planning and policy which keeps Wall mart always in a profitable position. Hence to conclude the above explanation brings the true strategic and ideal planning required for the growth of the company. References Chevalier, Judith, Goolsbee and Austan. (2003, April). Measuring prices and price competition online: Wallmart and Barnes and Noble. Retrieved Sep 28, 2006, from http://gsbwww.uchicago.edu/fac/austan.goolsbee/research/amzn.pdf Frey, Christine, and Cook, John. (2004, January 8). How Wallmart.com survived, thrived and turned a profit. Seattle Post-Intelligence. Retrieved Sep 28, 2006, from http://seattlepi.nwsource.com/business/158315_Wallmart28.htmlsource=techdirt Hunter G. Target versus Wal-Mart, Wal-Mart Competitive Analysis. 31 Jul. 2005. echeat.com. 15 Mar. 2006 http://www.echeat.com/essay.phpt=27488. Mathew Emmert. Reinventing Kmart. 16 June. 2003. The Motley Fool. 15 Mar. 2006 http://www.fool.com/mft03061604.htm Daniel C. Leonard. KMART CORPORATION COPMANY FORECAST. 20 May 2003. Ctopc. 15 Mar. 2006 http://www.ctocp.com/Kmartpage.htm --> Serge Halimi. Wal-Mart, The New Southern Plantation. 5 Jan. 2006 Le Monde diplomatique. 15 Mar. 2006. http://mondediplo.com/2006/01/05walmart Brad Boa. Kmart - Running Out of Time. 4 Jan. 2006. About Inc. 15 Mar. 2006 http://retailindustry.about.com/library/uc/02/uc_wiat12.htm Rick Aristotle Munarriz. Duel: Wal-Mart vs. Target. 9 May 2003 The Motley Fool. 15 Mar. 2006 http://www.fool.com/news/commentary/2003/commentary030509ram.htm> Bethany K. Laurence. Will My Business Make Money Retrieved 4 september 2006 < http://www.nolopress.com/article.cfm/objectID/73FBAC1E-B3B2-432A-B186FE6E090326F5/111/228/296/ART/>. 2006. SBA. Writing the Plan. Retrieved 4 september 2006 < http://www.sba.gov/starting_business/planning/writingplan.html>. 2006. SBA. Marketing Basics. Retrieved 4 september 2006 < http://www.sba.gov/starting_business/marketing/basics.html>. 2006. SBA. (2006). Writing the Plan. Retrieved 29 August 2006 < http://www.sba.gov/starting_business/planning/writingplan.html>. SBA. (2006). Marketing Basics. Retrieved 29 August 2006 < http://www.sba.gov/starting_business/marketing/basics.html>. Bethany K. Laurence. (2006). Will My Business Make Money Retrieved 29 August 2006 < http://www.nolopress.com/article.cfm/objectID/73FBAC1E-B3B2-432A-B186FE6E090326F5/111/228/296/ART/>. Read More