Strategic Plan for Walmart around the World - Example

Student’s Name: Institutional Affiliation: Course: Instructor’s Name: Date: Wal-Mart’s Strategic Plan Table of Contents Current situation 3 Past corporate performance Indexes 3 Strategic Posture 3 Corporate Governance 4 Board of Directors 4 Top management 5 External Environment 5 Natural environment 5 Societal environment 5 Task environment (Industry Analysis) 6 Internal Environment 7 Strengths and Weaknesses SWOT 7 Corporate structure 7 Corporate culture 7 Corporate resources 7 Analysis of Strategic Factors 8 Key external and internal strategic Factors 8 Review of mission and objectives 9 Alternatives and Recommendations 9 Alternatives strategies {pros and cons} 10 Recommended Strategy 11 Implementation 12 Evaluation and control 13 Bibliography 14 Current situation Past corporate performance Indexes Generally, there is an increase in cash flow due to the increase in the volume of sales and operating activities. Also, there is tremendous growth in national as well as international business expansions. The following are some keyed terms in 2014; a) Growth in earnings and sales. Remarkable international expansion for the past six years; b) financial state: Current ratio stands at 0.97%. Total earnings per share rise from $ 2.40 in 2004 to $2.69 in 20014; c) Level of Performance: increase in sales and cash flow from operating activities by 9.6% and $11567 million respectively. However, the company experienced low return of 9.4% on assets, shareholders’ equity of 23.4%. The decline in share price is to $56.98 in the year 2002 to $46.11 in 2006 is attributed to negative earnings per share ratio. Strategic Posture Current mission statement: Wal-Mart’s mission statement is “Always Low Price”. The company aims at saving people money so as to enable them live better lives irrespective of the nature of backgrounds they come from. Current Objectives: Expansion of stores and product lines Current Strategies: The strategies of Wal-Mart are geared towards the achievement of team spirit and customer satisfaction. The strategies are implemented with the help of the following set of programs. A) Domestic programs and strategies entail the following. i) Supercenters stocked with complete general merchandise, banking halls, video conference facilities, beauty and salon and discount stores with fully installed groceries. ii) Green marketing program which advocates for environmental sustainability, i.e., manufactu9ring process, use and disposal. iii) An inventory control program. It utilizes the RFID technology, computerized tracking of goods as they move from production, distribution and storage processes, data warehouse. This program has reduced out-of stock issues by 16%. B) International Programs and strategies i) Mergers and joint venture with over 590 in Germany, 70 Sam’s Clubs and 105 Supercenters in Mexico, 3Sam’s Clubs, 2 Neighborhood Markets and 51 Supercenters in China. ii) Discount store in Canada, 232 ASDA stores in England, over 360 CARHCO supermarkets located in Central America and 74 inter-spar stores in Germany. Current policies: The present policies of the company include store credits, rain check and cheerfully offer refunds. All are aimed at supporting Wal-Mart’s strategies. Corporate Governance Board of Directors Wal-Mart’s Board of Directors constitutes 13 members. The Board OF Directors is organized into five committees. These are: the Compensation, Nomination and Governance committee (CNGC), The Audit Committee, the Stock Option Committee (SOP), the Strategic Planning and Finance Committee (SPFC) and the Executive Committee. About 41% of the outstanding shares are controlled by two members of the board who attends at least 75% of the meetings organized by the firm. Top management The top management constitutes: 25 corporate officers. These are the Chief Executive Officers who are assigned to each unit of business (Wal-Mart International, Wal-Mart U.S. and Sam’s Club). Lee Scott was selected to be the third CEO of Wal-Mart making him the only in the history of the company. Previously, David Glass held the same position and the company realized growth in sales from 16 to 16.5 billion annually. External Environment Natural environment Wal-Mart is working towards achieving green culture in its daily operations. This will place the company in a better position to during the impending challenges with the natural environment. Also, the increase in the prices of gasoline led to closure of Wal-Mart’s operations in Germany due to reduction of customers who visited the stores. Societal environment Economic- the increase in interest rates, unemployment rates and consumer debts has created rivalry in the retailing industry. This is because different players would set their prices differently to suit the changing economic conditions. The same problem was experienced by Wal-Mart due increase in government restrictions and currency translation which resulted into increased costs. The increase in cost is also attributed to the changes in legislature. Technological- Wal-Mart was able to respond positively to the changes in technology e.g. the emergence of cloud computing, increase of global market, data warehouse, real-time system of reporting, computerized inventory control and the virtual community. Political/ Legal- fair labor regulations has changed the way in which Wal-Mart manages its subsidiaries outside the U.S. in order to avoid violation of immigration rules and policies. Socio-cultural- Wal-Marts response to increasing environmental awareness has been tremendous. It has managed to promote green marketing by supporting the American manufacturing through the ‘Buy American ‘program. Task environment (Industry Analysis) Increasing rivalry from competitors. Wal-Mart is currently facing stiff competition from other players in the industry who are trying to penetrate market frontiers where Wal-Mart has been for years. Also, population growth implies increase in special interest groups which exploit business opportunities (Fishman, 2006, p.19). Threats of new entrants into Wal-Mart’s market segments. Companies like Costco and BJ directly affects Sam’s Clubs. However, they do not cause any impact on the product lines, convenience locations and low prices of Wal-Mart. On the other hand, there is a low bargaining power of suppliers. This means that goods and services can be purchased from convenient places and suppliers. Internal Environment Strengths and Weaknesses SWOT Corporate structure The structure of Wal-Mart is divided into three business entities. Wal-Mart International, Sam’s Club and Wal-Mart USA. Members of the founders of the company possess the largest portion of shares. The management and control of the company is centralized and the headquarters is situated out of Bentonville. Corporate culture The company believes in its unique way of doing things. This way is branded “the Wal-Mart way”. It reflects on the values of the firm’s founder. It is based on the conservatism, rural and southern way of doing things. The corporate culture of the firm can be its strength and a weakness too. It serves as strength in that it facilitates cross-cultural raining and execution of the company’s mission. On the other hand, it is a weakness if the corporate culture does not go hand in hand with its strategies, mission, objectives and policies. Corporate resources The operations of Wal-Mart are based on the economies of scale. It aims at achieving the maximum profit possible by employing marketing mix strategies such as low pricing, distribution channels and through green marketing programs via the television and internet. Branding and value addition of products, technological competence and effective human resources enable the firm to maximize its resources. The process will also result into financial stability, maintenance of market position, increase in the firm’s purchasing power and continuous growth of business (Fogg, 2009, p. 25). Wal-Mart can out-compete its competitors given its ability to Maximize and consolidate the available resources. Lit can achieve this by identifying favorable niche using its unique competencies in terms of inputs, outputs, and behavior controls. The current financial state of the firm reveals that there is a performance gap in the strategies and programs of the firm that need a special focus on the input and behavior controls (Delener, 2014, p. 23). Analysis of Strategic Factors Wal-Mart’s external and internal strategic factors can be identified using SWOT analysis. This method of analysis reveals the strengths, weaknesses, opportunities and threats facing the firm. The important factors for each situation are given emphasis as described in the analysis below. Key external and internal strategic Factors Strengths- they are mainly internal factors. They are defined in the way Wal-Mart does its distribution and logistics. Wal-Mart’s operation with the economies of scale as well as high-speed and accurate computerized inventory control systems gives the firm a unique competency in generation of real-time reports. Weaknesses- cultural differences has led to withdrawal of Wal-Mart stores located outside the United Sates this is attributed to a strong corporate culture which makes it difficult for the firm to accept the corporate policies, mission, objectives and strategies. Opportunities- Wal-Marts expansion of its international businesses is an excellent opportunity. Its system of inventory control allows it to speed up the time needed to react to the changes in market behaviors. Computerized system of inventory will also help the firm in achieving better detection of buying trends within in a timely manner. International expansion of business will also increase Wal-Mart’s sales volume and overall financial growth hence translating into competitive advantage. Threats- Wal-Mart has focused a lot on centralized structure and low costs. By doing so, the firm is going against some ethical issues that may result into serious challenges such as lose of skilled employees due to low remunerations, hence subjecting itself to easy confrontation from worthy competitors. Review of mission and objectives The current mission statement is suitable for effective use of resources as well as output controls. The resources include factors like skills and knowledge of the employees, the firm’s values and motives or intentions of the future. On the other hand, the objectives of the firm are also suitable as it goes in line with global culture awareness as well as modified business model. The strategic audit process involved the following processes; examination, analysis and evaluation of qualitative findings (Hitt et al., 2007, p. 17). This led to generation of the strategic alternative as well as the recommended strategy as well as how implementation, evaluation and control processes will be established as discussed below. Alternatives and Recommendations The SWOT analysis revealed three potential alternatives to Wal-Mart’s Strategy. Each of the alternative strategies has advantages and disadvantages that should be taken into account before a final decision is taken. The strategic alternatives include; the pause-proceed with caution strategy, horizontal growth strategy and the turnaround strategy. Alternatives strategies {pros and cons} i) Pause-Proceed with Caution Strategy- although the current strategies for Wal-Mart seem to work, they do not translate to what are expected. This form of strategy may be suitable for adoption by the firm. The advantage of this alternative strategy is that it gives the management a temporary break from the normal schedules. The break allows the management to review and carry out necessary adjustments before proceeding. The disadvantage is that it may put performance activities in suspense, fail or take a wrong direction. ii) Horizontal growth strategy- This kind of strategic alternative can be achieved by Wal-Mart both internally and externally, through expansion of operations to the international spheres. The firm can also offer more fashionable array of products to both domestic and international markets. The strategy has the following advantages: Wal-Mart will be free to establish joint ventures with her countries by developing new technologies and products (Soderquist 2005, p. 32). Also, through mergers and acquisitions, the firm can buy other companies that operate in the same region. The disadvantage to this strategic alternative is the fact that Wal-Mart has managed to penetrate some of the international markets before but it has not succeed. For instance, the firm had to withdraw its operations in South Korea because it was not able to offer many of the products that the customers needed. This failure is attributed to its inability to research the demographic and geographic characteristics of the region. iii) Turnaround strategy- As for his type of strategy, the firm would be encouraged to focus on achieving operational efficiency (Chorafas, 2007, p.43). Operational efficiency can be attained through cost reduction techniques such as elimination of some employees, preferably 10% of them, and cutting back expenses and costs. The fact that the firm is performing much better than its target mean that it is not facing serious problems in its corporate governance. The advantage of this strategy is it allows employees to engage in productivity improvements hence leading to improved competitive position. Wal-Mart would then come out of this period more powerful that it was. The major setback this strategy if Wal-Mart fails to properly consolidate its units. Downsizing is essential but it can place the company in a disadvantaged position that will prevent any improvement efforts. Recommended Strategy The findings of qualitative analysis of the strategy shows that there is a performance gap that emerged as a result of Wal-Mart’s withdrawal from Korea, French and Japan. It is therefore appropriate for Wal-Mart to adopt a pause/proceed strategy for the next eight months. This will give room for Wal-Mart to redesign a corporate infrastructure and re-organize its strategic business entities. Redesigning of the business process will facilitate the inclusion of detailed job designs that integrates cross functional team works as well as employee flexibility. It will also facilitate careful process of hiring and selection wit training in multi-cultural and multi-functional environments. Such restructuring of business units will prepare Wal-Mart to increase flexibility and coordinate strategies that will help in smooth implementation as well as effective utilization of collaborated tools. Implementation As per the provisions of the Total Quality Management, it is the responsibility of everyone involved in creation or consumption of the products and services offered by any organization to ensure their adherence to quality. This simply implies that the Total Quality Management capitalizes on the engagement of the management, suppliers, customers and the workforce in order to meet the expectation of customers. Since Australia is known for outback, Wal-Mart can enter into agreements that would see it expand to Australia. This is because Wal-Mart has wider varieties of outdoor gears. The a agreement would be a joint effort between New Zealand and Wal-Mart’s marketing department to create a plan that will lead to provision of sufficient products to the country and eventually leading to increased revenues for Wal-Mart. To determine if the market is appropriate for Wal-Mart, the Information Technology and Marketing representative will participate in scouting of the region in order to ascertain the tastes of local people and if there is really the need for their products. The IT experts will have to verify that the telecommunication fees are worth enough to warrant the move. The entire process would mean hiring and training of local people, a move that could be cost effective only if the area has low wage costs. Budgetary allocation- $ 12 billion could be set aside for capita budget program. The budget will cater for ay acquisitions of new supercenter, viable retain companies or discount chains that would translate into profits in the first years of operation under the brand Wal-Mart. Also, a timetable showing every activity that will be undertaken in all steps of the business plan will be imposed. Standard Operating Procedures- They are a basic necessity for every business to succeed. Development of the standard working procedures for Australia market will show what is working and what is not working as per the plan. Wal-Mart can use a modified model of standard procedure because it is not its first venture in international arena. Doing so will reduce the cost hence greater outcome. Evaluation and control Based on the current information system, Wal-Mart can get sufficient feedback concerning implementation and performance activities. During Wal-Marts international expansion, the firm experienced conversion challenges that were very difficult and time consuming. For instance, the Wal-Mart upgraded to its computer system to RFID IN 2004. Although the upgrade was expensive, it reduced the costs up to 16% decrease of out-of stock. Also, Wal-Mart entered into joint partnership with Accel Partners in order to eliminate costs in electronic coerce and receive financial boost. Also, Screening and government legislations have delayed communication Wal-Mart’s revenue has increased through sharing of unused software upgrading costs. The future is promising for Wal-Mart since the firm is more than ready to implement horizontal growth strategy. Bibliography Chorafas, N. Strategic Business Planning for Accountants: Methods, Tools and Case Studies. Oxford: CIMA, 2007. Internet resource. Delener, N., Strategic Planning and Multinational Trading Blocs. Westport, Conn. [u.a.: Quorum Books, 2014. Print. Fishman, C. 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. Fogg, D. Implementing Your Strategic Plan: How to turn "intent" into Effective Action for Sustainable Change. New York: AMACOM, 2009. Print. Hitt M., Ireland, and Robert E. Hoskisson. Strategic Management: Competitiveness and Globalization; [concepts and Classes]. Mason, Ohio [u.a.: Thomson South-Western, 2007. Print. Soderquist, D. The Wal-Mart Way: The Inside Story of the Success of the World's Largest Company. Nashville: T. Nelson, 2005. Internet resource. Read More