Strategic Plan of WalMart - Case Study Example

Strategic Analysis - Draft Sherie Keenan Jean Gordon September 19, 2007 Wall Mart Wal-Mart Stores, Inc. is both a domestic enterprise, as well as a national discount retailer. They operate retail stores domestically in the US and various international markets. Wal-Mart operates on an "Every Day Low Price" philosophy because they are able to maintain their low price structure through complete expense control. With this philosophy they have proven to be extremely profitable domestically. Their primary task is buying from suppliers at a low cost and then reselling the goods to customers at a low price, to achieve their company philosophy of low prices and great customer service (Nelson Lichtenstein, 2006). Being in the retail industry, Wal-Mart can choose from many suppliers that provide its various stores with inventory, general buyers, and competition; including Kmart, Sears, Target, Costco discount stores also the local mom and pop stores in various neighborhoods. Wal-Mart is spread all over the Europe and this chain running successfully. But Wal-Mart in the city of Bentonville facing is some problems. Although it has many strengths but it has been facing many threats. This paper provides the brief SWOT Analysis of Wal-Mart in the City of Bentonville. This will provide the look into the Wal-Mart and also explore the external environment of the Wal-Mart. SWOT Evaluating Wal-Marts situation in terms of the SWOT Analysis, where we will view where its strengths, weaknesses, opportunities and threats in terms of its place in the retail industry. Let's look at what makes Wal-Mart such a dominant force and would break Wal-marts dominance both here and globally by analyzing its position in terms of the SWOT; let's start by looking at the first part of the SWOT analysis which is the strength of the company. Strengths The strengths of their existing circulation patterns and linkages are good pedestrian orientation around the square and accessibility from other areas of the city. The buildings on the Square are built up to the sidewalk which enhance the pedestrian character. Several entries into downtown help reduce congestion. Also, the schools downtown are within walking distance of a large number of residential areas and walking to school is an option. The redevelopment of the square has provided a central place for community gatherings. The fountain, the confederate soldier statue, the benches, and traditional street lights add to downtown's identity. The statue is a part of the heritage and culture and has been stated as being "a conversational piece". The square is the center for several community activities, such as the Farmer's Market, Pickin' on the Square, and the Art Walk (Weldon Nicholson, 2006). The Wal-Mart General Office brings thousands of people downtown during the week. The Wal-Mart Visitors Center serves to bring people, (approximately 80,000 annually) especially tourists, downtown. Also, Wal-Mart Shareholder's Week provides an economic surge in the spring. Another economic strength is the presence of public services and facilities. The county and city administration offices, especially the courthouse and Bentonville being the county seat serve to anchor the downtown as a place to conduct business. Also, quasi-public businesses, such as Main Street Bentonville, the Chamber of Commerce and the Bentonville Advertising and Promotion Commission have all selected a downtown location. There are also several personal services that are beneficial to the downtown economy, such as the bank, grocery store, and dry cleaners. They serve area residents as well as the thousands of employees working downtown. Recent development activity has sparked an interest in development and location downtown. Two new brick two and three story buildings at SW A Street and SW 8th Street offer office, retail and residential space. The Bentonville Plaza, just south of the Wal-Mart General Office, is the city's largest office building. Weaknesses Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control. It could loose focus on areas of its business that would allow competitors to gain an advantage over it. Since because of its size it could lack the flexibility of its competitors; therefore, losing ground over its competitor. Traffic, lack of pedestrian pathways, and lack of appropriate signage for entering downtown are the most identified weaknesses. The major thoroughfare through downtown, Central Avenue, is also a major east-west thoroughfare for the city with access to I-540. The rush hour presents some bottlenecks, especially at SW A Street and Central Avenue. Outside of the square, there is a lack of adequate sidewalks. There is not a safe pedestrian path between the General Office and the square and no other mode of transportation available. The only way for those employees to go to the square would be to use their car. But, committee participants indicated that those working at the General Office are likely not willing to give up their parking spaces and will remain in the office over the lunch hour. No signage or features are in place to let visitors know they have entered downtown. Directional signage to public facilities and parking is also deficient. The current condition and land uses of south SW A Street were consistently mentioned as an image weakness. SW A Street is one of the major entrances into downtown, but property maintenance conditions and used car sales in the southern part of the corridor are unattractive (Weldon Nicholson, 2006). They do not present an image of an urban, pedestrian friendly business district. Participants considered promotion activities to be weak. There is the absence of a logo, motto, and theme to provide for consistent promotion. Some have suggested delving more into radio and television advertising. Over and over again, committee participants mentioned the lack of after-hours and weekend businesses as a serious economic weakness. There are very few restaurants and shops open past five p.m. Also, the dry county status is perceived to be a deterrent to restaurants locating in Bentonville. The mixture of businesses is considered to be unplanned. A strong niche market is not evident and the number of retail businesses is extremely low, with very little specialty shops. There is also a poor use of the first floors for office space, which can reduce the level of pedestrian activity. Opportunities The employees at the General Office, Sam's Club and Bentonville Plaza present one of the biggest opportunities for circulation and linkages. There is a need to link this area to the rest of downtown. The two opportunities are with a transit system and pedestrian pathways. Transit may be accomplished with a trolley network, which is currently under review. Pedestrian pathways include both trails and wide sidewalks along the major thoroughfares. A common signage theme could give greater impact to visitors entering downtown. The signage could be used not only to identify downtown, but to direct visitors to places within downtown, particularly parking. Many businesses are either offices or stores that close at 5 p.m. Parking lots for those businesses are often empty in the evenings. Therefore, parking is available for after-hours activities. Also, the large parking areas for the three churches provide an opportunity for shared parking. The many destination places allow for downtown Bentonville to be promoted through tourism. Also, several special events and activities already occur. Those could be expanded to be larger with additional promotion. Participants also see an opportunity to expand further into arts and culture with the success of the Art Walk and the art and home design shops. Scottsdale Center in Rogers is a dominant retail area in Northwest Arkansas. However, it does not have the quaint character and pedestrian friendliness of downtown Bentonville. This is an advantage to retailers and shoppers and can be promoted as such. To address the lack of incentives, the boundaries of the redevelopment district could be expanded and the Square Roots program could have stronger promotion. The redevelopment district expansion would allow for more commercial and residential developments to be exempt from impact fees. The next biggest opportunity is to build upon the existing business mix and promote the tourism related industries. Promoting downtown success stories could help encourage more businesses to locate here. Threats The participants continued to mention that the biggest threat to the identity and image of downtown is by not thinking long term, not clearly defining a vision and promoting that vision, and being hesitant to change. Degeneration of surrounding residential areas, particularly as it pertains to property maintenance, also presents a threat to image. Efforts need to be taken to preserve older homes that offer moderate income housing. These same efforts are needed to help preserve the small town character and avoid the location of major redevelopment projects that are not consistent with the downtown character. Losing an anchor facility and competitors on the major arterials are the leading threats. Every now and then, Benton County discusses relocating the administrative offices. Losing such a strong anchor could present hurdles for downtown development, especially for the spin-off businesses, such as attorneys, that come from those services. Participants also see the strip malls along Walton Boulevard and Scottsdale Plaza as a threat to the retail business activity. The conclusion on wal-marts future success in terms of growth and profitability is a little bleak; first let's look at its growth with all the new laws being enacted by various states it would stunt the vision of the company expanding new stores because states do not want new stores being constructed. Also the company's mantra of offering low prices guaranteed is being threatened because of all the threats by its employees and some lawmakers for the workers to be offered better pay and to be offered benefits this would force Wal-Mart to increase prices in order to meet these new demands and keep their profitability up. Also looking at all the latest sales figures from wal-mart they seem to be struggling to meet their sales forecast which is usually a good indication of where the company is (Hedrick Smith, David Smith, 2005). If I was to determine with that I would say it seems the company's growth is stunted and its profitability is down because of their current sales struggles. The focus by the company that each store should reflect the values of its customers and support the vision they hold for their community, this would be easier in international markets because with the employees being from that community they understand the values of the community so it will be easier to institute the values since people in that community already know the values of that are. Strategic Plan for Wal-Mart Stores at Bentonville Who are they Wal-Mart is the largest retail chain in the world and the largest corporation in the world. It was started in the year 1962 in Rogers, Arkansas, by Sam Walton. It took a long way to reach an annual sales turnover of $1 billion. By the year 2002, Wal-Mart became the world's largest retail giant with sales of $218 billions. In the initial days of starting the business, Wal-Mart designed a strategy to build large discount stores in rural areas. Wal-Mart employed the strategy of selling branded products at a very low price. Initially, the management of the firm decided to develop the firm as a one-stop discounted departmental chain store with a vast variety of general merchandise goods to be offered to the customers that too at a low price. The management's initial focus was on its purchase decisions. The firm focused on exploring each and every opportunity that helped in general merchandise goods. The two important products of the entire Wal-Mart product line on which the firm laid a strong emphasis were health products and beauty products. The stores used to maintain a high stock of these products. When the firma became successful in opening more than 279 stores by the end of the year 1979, the next focus was on designing strategies for expanding the firm aggressively. In contrast, to the other retail stores who built ware houses in order to serve the already existing outlets, Wal-Mart used to first build distribution centers and later started stores around the distribution centers. This strategy of Wal-Mart helped the firm in pooling the advertising and distribution overheads. The firm also focused on the transportation time needed for a customer to reach the outlet. The strategy of aggressive expansion turned out to be a big success because Wal-Mart became the largest retailer and discount stores in United States by the end of the year 1991 which had almost 1,573 Wal-Mart outlets in 35 states. Proposed Strategic Plan for the company Based on the SWOT analysis that has been carried out about Wal-Mart stores, the following strategic plan is proposed. The plan would be to create a Vision or a dream for the downtown area. The epicenter of this vision would be to create an identity for the downtown area which could possibly become global over the next five years and Wal-Mart should be seen as a source of inspiration for the plan and the dream. 1. As part of the designed strategic plan, the sponsorship of uniform signage in complete downtown area with a logo of the company on each signage is proposed. This would increase visibility and enhance the recall value. 2. In order to cope up with the problems regarding vehicle parking, it is proposed that the store shares the parking with the churches nearby. 3. A specific campaign named 'Dial-a-grocery' is to be designed which targets home-goers. The main aim of the campaign would be to facilitate home-goers with the required groceries in a less time. The following are some important highlights of the campaign: a. The customers can call a particular representative of the store and order for the groceries and tell them who would be picking them up from the store. b. The groceries would be packed and billed and would be ready to pick-up from the store whenever the customer goes. This would help Wal-Mart not to lose the customers working at different offices in and around downtown. c. There would also be a separate counter which enables the customers to identify themselves, pick their parcels, pay for them and walk away. d. It is also recommended that items of 'impulsive purchase' like chocolates, ice-creams etc., are displayed close to this special counter. e. The employees of the Wal-Mart stores who manage such counters would be trained to ask the customers - "is that all or may I help you with anything else" 4. The proposed strategic plan also includes a public-private partnership to promote the statue of contender soldier which is located in the Square. In order to monitor the achievement of goals outlined in the above strategic plan, a Performance Management Plan is also proposed as under: Goals: Increase footfall in the store to achieve the revenue targets set by the company and also to meet the revenue targets of the store. Performance Management Plan - Entering into a public-private partnership to create a logo, promote the statue and many other similar things. Instead of the TV and Radio campaign, it would be better to go in for signage to promote and create visibility about the downtown area and the Wal-Mart store. The Performance Management plan would be distributed along the four quarters wherein the first two quarters would focus on the initial efforts of creating or entering into a public-private partnership, creating a vision and dream etc. From the third and the subsequent quarters, the fallouts of the strategy would be felt and addressed thereafter. References Weldon Nicholson, (2006), "Wal-Mart in the City of Bentonville" Charles Fishman, (2006), "The Wal-Mart Effect: How the World's Most Powerful Company Really Works--and How It's Transforming the American Economy" Nelson Lichtenstein, (2006), "Wal-Mart: The Face of Twenty-First-Century Capitalism" Hedrick Smith, David Smith, (2005), "Is Wal-Mart Good for America" Read More