Wal-Mart: An Overview of The Company - Research Paper Example

Wal-Mart: An overview of the company Wal-Mart has become a financial leader within the world. The discount chain store has developed a reputation for being the place to go to pick up whatever might be needed in one’s life. The store is arranged and merchandised in such a way that one could never shop in another place and still have everything required for life - and then some. The birth of Wal-Mart was based on the principles of saving money. The way in which it has been marketed, both thru advertising and in public deeds suggests that Wal-Mart is on the side of the consumer, supporting their needs and to provide a service that is honest. The company is powerful with a strong showing in both the United States markets, as well as in global influence. The position that Wal-Mart holds within the world is both powerful and unique, with little competition from those who would try to compete. The basic principle behind the discount store Wal-Mart is to save. An example of this is the cardboard box that used to surround deodorant products. Once upon a time, a consumer bought deodorant that was housed in its own individual cardboard box. That little box cost a nickel, but Wal-Mart executives took a look at that box and realized it served no real purpose. So, in the early 1990’s, Wal-Mart asked manufacturers to eliminate the box, and it was done. This savings, a little passed to the consumer, a little to the manufacturer, has saved over $10 million dollars, and one can go into any discount store and notice that deodorant no longer comes in boxes (1). This is the identifying example of how Wal-Mart has made significant changes in the world. This is what Sam Walton wanted when in 1962 he opened his first store in Rogers, Arkansas. The idea of saving money for the consumer by buying in high volume is central to the core principle of the business model. The company was incorporated in 1969 with the shares becoming traded two years later. By the end of the 1970’s, there were 276 stores in 11 states. The opening of Sam’s Club, a membership oriented division, occurred in 1983 and by 1988 the predominant model, the superstore, was opened which includes a grocery within the greater store area. Currently, there are 8,446 stores in 15 countries under 55 different banners. The fiscal sales for 2010 were $401 billion USD while employing 2.1 million associates across the world (2). The key to the product line for Wal-Mart is in its wide diversification. Upon walking into the store, one can purchase both a car tire and fabric to make a dress. Grocery shopping and clothes shopping can be accomplished in one quick trip. The Wal-Mart customer expects to find anything they might need within the store. In 2006, Wal-Mart introduced over 1000 products that were organic or related to green types of products intended to save on the environment. This is not only a commitment to environmental and healthier food, but it is part of an ongoing process of keeping current to customer needs (3). According to Fred Martels, President of People Solution Strategies, the Wal-Mart customer continues to shop at the story because “Customers become loyal and feel compelled to shop with a particular store when they consistently receive exceptional value, and have consistent experiences”(4). Wal-Mart uses strategy of aligning itself with its customer’s and their needs in order to provide a public image that is humble and inclusive within the social framework. One of the ways that it has accomplished this, outside or low affordable pricing that is family friendly, is through extensive philanthropic work. During the crisis of Hurricane Katrina, Wal-Mart is known to have responded more efficiently and quickly than did the federal government. Wal-Mart gave contributions of $17 million dollars in cash and more than $3 million dollars in merchandise to provide relief for victims of the disaster. They provided 100 trucks of water and enough food for over 100,000 meals. In addition, they promised jobs to every one of the displaced workers from their own stores (5). Wal-Mart garnered public respect for honorable and proactive actions when this major crisis hit the United States. Wal-Mart has a B2C web presence where items can be ordered and delivered to the consumer. However, it is not the predominant source of consumer activity for the company. It is still the walk in customer that creates the largest share of the business. While Wal-Mart used to be the top seller of music, the Apple I-tunes, through the use of innovative technology, have now taken over that top spot (6). The difficulty of using the internet as a strong form of purchasing power for the consumer is that many of the items are rotating very quickly in the store, while many of the items are needed immediately. Still, the internet offers an opportunity to provide certain types of items in a more consistent quantity and to have items that are more stable in their availability. As well, delivery service can be an advantage to the consumer. The main two competitors for Wal-Mart are Target and K-Mart. However, most references to competition where Wal-Mart is concerned deals with how competitors must meet the challenge of competing against Wal-Mart. There are numerous books that list the ways in which to compete with the company, but it is rare to see a mention of any struggle that Wal-Mart might experience against the competition. However, wall street did not take Wal-Mart seriously for many years, and it wasn’t until 1977 that they approached creating any sort of a threat to Target and K-Mart. It wasn’t until the mid-1990’s that the stock market evaluation of Wal-Mart was considered seriously. By 2005, Wal-Mart had reached a market capitalization of $257 million which placed it firmly in the 3rd place as most valuable companies in the United States (7). Wal-Mart is considered a formidable and almost impenetrable competitive wall through which it is near impossible to come up against and overcome. However, it is a standard that must be aspired to by other companies, and even more often, the standard upon which innovations in marketing, branding, and products must be created in order to provide a different service that is outside of the purview of Wal-Mart. As of 2010, Wal-Mart has taken the number one spot on the Fortune 500 list, rising from its number two position, taking the spot from Exxon. This was due to a surge in profits by 7% within the last year (8). The popularity of Wal-Mart is not based on trend, but on the stable resource for goods that it has established during its existence, thus increasing its importance to the point that it has overtaken the financial sector. The concept of the chain store is by no means a new concept. Stores such as D. Pender Grocery, Hook Drugs, Daniel Reeves (Safeway), and Dockum Drug Stores (Rexall Drugs) were in existence by the year 1900 (9). The growth of the chain store is due to a series of benefits that fit both the consumer and the owners of the business. A chain store has a stamp of reputation that is immediately recognized by the consumer. The products within the store have been defined by the reputation of the company. For instance, when one goes into a Wal-Mart, one expects to find certain brands that can be trusted as well as some off brands that should be examined before buying. Some brands are cheapest of quality, but also cheapest in price, thus the quality is expected to be at an appropriate level. The consumer knows what to expect. Going into a store that does not have the weight of a chain behind them means that the quality, price, and service might have unknown variables. Wal-Mart has a strong position in the world’s economy, thus giving them a strong position within the financial markets. Investment in the company is a good long term opportunity as any business that is based on saving money within the world has some recession proofing. The company sells 50% more than its five closest competitors, suggesting that it has a strong hold on its market share. As of 15 July 2010, the share price had risen by .06 to 50.41, and this rising trend seems to be the standard (10). However, one problem that might be noted is that the ongoing dependence on Chinese made goods might prove a difficulty as the price of the yuan against the dollar is rising, thus creating a rise in US prices on Chinese made goods. As well, while the economic downturn created a 3.5% increase in overall profits for the worst year in the current recession, 2009, the current year, 2010 saw a drop by .8%. This is overall a good set of statistics, however, as the trend needed to stabilize and does not suggest a significant drop. Overall, with attention to the value of the yuan against the dollar and comparisons on the strategies with which Wal-Mart attends to such a problem suggests that investing in the company is a wise choice. Wal-Mart is a good company with solid values that attend to the financial needs of the average consumer. With its power in volume purchasing from distributors, the company has influenced pricing throughout the world. With attention to keeping current with the needs of the consumer, the way in which the consumer views the store has defined its presence in society. The consumer has a trust that the quality and the price will be equitable, but in favor to the price. Wal-Mart is a powerful entity in the world, providing help, jobs, and products and services that are invaluable to neighborhoods and communities. Endnotes 1. Charles Fishman, The Wal-Mart Effect: How the World's Most Powerful Company Really Works, and How It's Transforming the American Economy, New York: The Penguin Press, p. 2. 2. Wal-Mart. About us. Wal-Mart Corporate. 2010. 3. Stewart Lockie, . What I Learned from Sam Walton: How to Compete and Thrive in a Wal-Mart World. Hoboken, N. J: John Wiley & Sons, 2004, p. 117. 4. Michael Bergdahl. . What I Learned from Sam Walton: How to Compete and Thrive in a Wal-Mart World. Hoboken, N. J: John Wiley & Sons, 2004, p. 180. 5. Michael D. Hartline and O. C. Ferrell. Marketing Strategy. Mason, OH: Thomson South- Western, 2008, p. 64. 6. Amy, Macy, Paul Allen, and Thomas W. Hutchison. Record Label Marketing. Burlington, MA: Focal Press, 2010, p. 299. 7. Stanley Brunn. Wal-Mart world: The world’s biggest corporation in a global economy. New York: CRC Press, 2006, p. 52. 8. CNNMoney. Fortune 500 Wal-Mart Stores. CNNMoney.com. 9. Hicks, Michael J. The Local Economic Impact of Wal-Mart. Youngstown, N.Y: Cambria Press, 2007, p. 9. 10. Wikinvest. Wal-Mart. Wikinvest. 2010 Works Cited Bergdahl, Michael. What I Learned from Sam Walton: How to Compete and Thrive in a Wal-Mart World. Hoboken, N. J: John Wiley & Sons, 2004. Print. Brunn, Stanley. Wal-Mart world: The world’s biggest corporation in a global economy. New York: CRC Press, 2006. Print. CNNMoney. Fortune 500 Wal-Mart Stores. CNNMoney.com. Fishman, Charles. The Wal-Mart Effect: How the World's Most Powerful Company Really Works, and How It's Transforming the American Economy. New York: The Penguin Press, 2006. Print. Hartline, Michael D, and O C. Ferrell. Marketing Strategy. Mason, OH: Thomson South- Western, 2008. Print. Hicks, Michael J. The Local Economic Impact of Wal-Mart. Youngstown, N.Y: Cambria Press, 2007. Print. Lockie, Stewart. Going Organic: Mobilizing Networks for Environmentally Responsible Food Production. Wallingford [u.a.: CABI, 2006. Print. Macy, Amy, Paul Allen, and Thomas W. Hutchison. Record Label Marketing. Burlington, MA: Focal Press, 2010. Print. Wal-Mart. About us. Wal-Mart Corporate. 2010. Wikinvest. Wal-Mart. Wikinvest. 2010 Read More