Are Wal-Mart Stores Good for America - Essay Example

Are Wal-Mart Stores Good for America? Introduction Wal-Mart is a global chain of retail stores that has established its presence across many countries over the world. The retail store is the largest operating chain stores in United States reporting an annual sale of nearly US$ 401 billion in the year 2009 and an expanded outreach of more than 2.1 million associates globally (Walmart, 2009). The company has more than 8159 retail stores across 15 countries and accounts for nearly 20 percent of the grocery retailing business in the US. The retail chain store was founded by Sam Walton in Arkansas, USA in the year 1962. The company has grown extensively over the past few decades and opened thousands of stores across America, China, and other countries across the globe. The retail business in US has undergone rapid transformation since the emergence and growth of Wal-Mart culture. The Wal-Mart business model is being widely adapted and implemented by most competitive agencies owing to its successful operations and increasing revenues. The Wal-Mart has emerged as a popular brand name among the consumers looking for competitive rates and a comfortable shopping experience. Global strategy The success of the business model adopted by Sam Walton is attributed to a deeper understanding of consumer behaviour and consumer psychology that plays actively while making a purchase decision. “The secret of successful retailing is to give your customers what they want. And really if you think about it from your point of view as a customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience” (Walton, 1992). Wal-Mart procures goods from suppliers at low cost that translates to low pricing offered to the consumers. The incredibly low prices offered by the stores attract increased number of consumers to Wal-Mart and this is a major factor behind the success of Wal-Mart. The customers at Wal-Mart are offered with a wide variety of products at comparatively low rates that accounts for a convenient shopping experience under a single roof. Technology has equipped the workforce with speed and accuracy that has enhanced overall productivity and efficiency within any organization. Innovation is the key to success in most business enterprises and it is evident in the way Wal-Mart has leveraged the use of innovative technology to gain cost advantage in their retail operations. The use of bar code technology has helped the company in maintaining updated records of inventory and sales. Based on the instant information available through the use of this technology the company decides on the levels of inventory required to be maintained for each item category. The system also takes care of informing the suppliers on the quantity of items in each category required for delivery. Hence fast moving goods and items favoured by consumers are ordered in increased quantities and the company adjusts the pricing of such items based on its consumer demand. All these information are compiled into a report format to help the managers plan the future requirements and steps of action. The human resource management practices implemented within a company is critical in deciding the organizational effectiveness and employee performance and productivity. The company has an employee base of more than 1.4 million and this forms the base for its expanding operations across various locations over the world. The stores of Wal-Mart are strategically located to ensure increased visibility and easy access to consumers from all corners. Since the whole concept of retailing is based on establishing a strong consumer relationship and understanding the dynamics of consumer behaviour and purchase decisions, Wal-Mart emphasizes greatly on hiring individuals who possess excellent communication skills and experience in handling direct sales. Sales and marketing skills are essential for handling customers at the stores and hence form primary criteria while hiring employees within this organization. Wal-Mart is the leading retailer in US and the company accounts for an annual growth of 8.6 percent in revenues in the year 2008. The growth of the company in terms of size and revenues has been very impressive and this is evident in the number of stores that have mushroomed all over US and other countries. The retail industry is driven by widespread changes that are triggered by the globalization of economies and liberalization policies adopted by most countries across the globe. Market prices have soared in the past few months and the financial markets are witnessing one of the most unstable market conditions. A critical aspect of business management today lies in evolving well defined strategies to meet global challenges posed in the form of new opportunities and emerging markets. The developing economies today have emerged as potential contenders for consumer markets and most multinational companies are venturing to extend its operations to these regions in search of higher profits. However the global financial crisis has not made much difference to the revenues of Wal-Mart. The consumer spending may have reduced but the low price model of the organization has worked in favour of the company. Key problems and issues It is widely accepted that knowledge about customers, their preferences, and their behaviours are key to devising strategies related to marketing of products and services and assisting the companies in adapting new functionality and features within the deliver products to meet customer expectation. The company faces an employee turnover rate of nearly 40 percent annually that is quite high in the face of challenging economic conditions. The high rate of attrition in the company is largely due to stiff competition in the industry that enables employees to switch to other companies that offer higher financial benefits and compensation. The company pays lower wages as compared to industry standards and this is one of the major reasons behind the high rate of attrition. The benefits provided by the company too are rated as poor when compared to other players in the industry. One of the major HR challenges facing the companies today is evolving effective staffing practices that meet the increasing complexities of the business environment in which they operate. The organizations are adopting diverse measures to recruit and retain quality people across all levels and departments. Growing complexities within the business environment has created greater need for knowledge and understanding of the operating environment that affects the profitability and growth of the organization. Evolving business climate includes vast transformations in the perception of organizational leadership, managerial functions, and human resource strategy. Corporate management faces more challenges in the form of changing corporate relations and increasing global influences that have set a new pattern in managing people and businesses. The primary pre-requisite for organizational success lies in keeping employees motivated and retaining them through personal development and growth opportunities that offers them with the incentive to drive performance levels. Development of employees within an organization is essential since it fulfils the individual motives and drives satisfaction within the workforce. In the absence of professional growth and challenges the employees tend to search for new pastures and in this competitive market environment it is not very difficult to get a better job opportunity for the skilled individual. Human resource can become a powerful asset to an organization that invests in building and developing the competency levels of their employees. Training and development programs implemented within the organization play a critical role in harnessing human capital resources and utilizing it to their maximum potential. Business models centred on employee skills development and information sharing practices are well adapted to survive in challenging market conditions. The increasingly changing market demographics and business environment dynamics have created the need for effective training and development programs on a regular basis to fine tune the employee skills and capabilities. Since the current business environment is wholly dependent on evolving technology and innovative applications the organizational workforce is in a continuing need to upgrade their skill sets and equip themselves to meet these changing demands. The focus of the business hence should be on building strong and well balanced teams with requisite skills, knowledge, experience and talent to support the organizational activities. Entrepreneurs seek maximum profit and are least bothered about the social consequences. In face of growing dominance of large multinationals, the smaller companies are struggling to survive and sustain their business. Large chain stores like Wal-Mart and Starbucks have taken consumers away from small ice-cream vendors, coffee shops, and local grocery stores. Economic activities are pushing resources into the hands of few who already have wealth accumulated, whereas farmers are forced to sell their stocks at low prices to business men who sell them at more than double prices in the big supermarkets. The growth and popularity of the retail chain stores has spelt disaster for local grocery shops or small time retail establishments in the locality. The extent of spread of the Wal-Mart culture is evident in the way thousands of consumers flock to the nearest Wal-Mart store to buy the supplies. It is the scale of operations that provide the owners of Wal-Mart a distinctive advantage over the small time business operators. The business strategy of Wal-Mart relies on the low cost model for procurement of goods from suppliers. The equation between the manufacturers and the suppliers is hence reversed by this model. Moreover, this approach places the pressure of meeting the delivery schedules and cost parameters on the suppliers. So when the suppliers agree to provide the items at such low cost they have to resort to cost cutting in the production phase to earn profits. This leads to consequent low quality of supplies and goods that are being passed on to the consumers. Conclusion A critical aspect of business management today lies in evolving well defined strategies to meet global challenges posed in the form of new opportunities and emerging markets. The developing economies today have emerged as potential contenders for consumer markets and most multinational companies are venturing to extend its operations to these regions in search of higher profits. Wal-Mart has expanded its operations to emerging economies of China in order to gain cost advantage and increased market shares. Market research is a vital tool that can help businesses in evolving appropriate strategies for expanding into new markets. An understanding of the consumer needs and expectation is primarily important for planning and implementing a successful business strategy. Market research helps in gaining competitive advantage in the industry and expands operations to new and emerging market regions. Market research is used by managers to understand the market dynamics and economic forces driving consumer trends and expectations. Market research provides the managers with an in-depth knowledge and insight into the opportunities and threats existing in the operating market environment and the industry competitive forces that have a significant impact on market share and potentials. The consumer needs assessment and expectations drive the market share for any product. At the end of the day it is the consumer satisfaction that dictates the success story of any product launch in the market. Marketing professionals today increasingly focus their strategies on developing a strong brand for the company since brands are highly instrumental in driving consumer loyalty, business revenues growth and increased market shares. Brand positioning strategies focus on meeting consumer needs and expectations that drive sales and revenues. Wal-Mart requires a team of dynamic professionals who have the ability to understand the market driving forces and consumer psychology to anticipate their needs and requirements within different market zones. The primary responsibility of the Wal-Mart executives is to retain its customers and create an ambience within the stores to extend its popularity and ensure the return of customers. Management skills are vital for running this kind of a chain store and this encompasses knowledge of strategy formulation to implementing improvements in the operational processes. Wal-Mart managers besides the managerial skills need the ability to lead their teams in an integrated manner towards the organizational goals and targets. Skills management and development play a significant role in devising effective organizational strategies. In view of the skills required by the company the management has placed increased emphasis on enhancing employee performance and productivity through adequate assistance from their managers. Ensuring high levels of performance within the organization requires active participation of both management and individuals in the workforce in implementing tasks and objectives. The existing business environment has increased the need for creativity and proactive behaviour from employees. Businesses require skills for doing the job and in current market conditions advancing technology at rapid pace makes it imperative to learn new skills and upgrade one’s knowledge to adapt to changing market conditions. References: 1. American Radio Works. 2009. Is Walmart good for America? http://americanradioworks.publicradio.org/features/walmart/a2.html 2. Walmart. 2009. About Us. http://walmartstores.com/AboutUs/ 3. Deloitte. 2008. Wal-Mart remains largest global retailer according to Deloitte survey. http://www.deloitte.com/view/en_IE/ie/news/ie-pressreleases-en/press-release/b84fb247c4efd110VgnVCM100000ba42f00aRCRD.htm 4. Walton, Sam. 1992. An introduction to Walmart. http://www.walmart.com/catalog/catalog.gsp?cat=542413 5. Lecture notes and slides. Read More