The Greening of Wal-Mart - Article Example

Ever since the company was set up in 1962, Wal-Mart has strived to become one of the best in the business. Wal-Mart’s initial business strategy was based on three goals – customer service, operational excellence, and respecting individuals/customers. These were the main values that the store has built up, over the past 4 decades. Wal-Mart’s strategy today is to provide high-quality and branded products at the lowest price possible. The company makes this possible by eliminating the need for middlemen, thus reducing logistic costs. Wal-Mart purchases directly from the manufacturer. This coupled with the effective use of technology and warehousing strategies, Wal-Mart is able to provide its customers with quality products at competitive prices. Such decisions made by companies, which help them gain a competitive edge against their rivals in the market are termed strategic decisions. These decisions involve some degree of innovation and thus, help companies gain advantages that are sustainable (Hayden et al, 4).

One of the key components of Wal-Mart’s business model is its human resource. The company has a frugal culture yet the working environment is pleasant. The employees are called associates as opposed to employees. An associates’ well-being is of high priority for the management. There is no concept of work-union, as the company takes care of associates’ needs and demands. The promotion criterion for managers is dependent upon the profits made by their particular outlet; thus, it leads to maximum work efficiency. In order to inculcate the spirit of competitiveness, the stores are not only encouraged to compete with other retail franchises, but also amongst themselves. The organization is well equipped with the latest technological innovations, which are like real-time market research, satellite system, and store performance tracking. In addition to this Wal-Mart is very particular about its logistic partnerships with various vendors from around the world. Low-cost logistics are the reason why Wal-Mart has its present competitive edge. Thus, the company pays special attention to its procurement process (Canak, 5).

Over the years Wal-Mart has thrived by using a number of various different factors to its advantage. This includes a business model which to date is a mystery to those outside the organization. The company is also very good at hiding its deficiencies and covering its faults. Thus, it provides an example of an organizational model to the competitors seems which virtually seems flawless and is overall very efficient and effective. Such effective strategies by the company, have made it one of the largest retailers in America.

Wal-Mart follows three fundamental and generic strategies - Focus Strategy, Differentiation Strategy, and Cost Leadership. Wal-Mart started its operations by opening large stores in small shops (Canak, 5). At that time, all the other companies focused their efforts and resources on large metropolitan cities. However, Wal-Mart saw a gap and thus, capitalized on it by opening stores in small towns, not only did the company have a monopoly but also had to pay low rental costs and goods were available at cheap local prices.

Wal-Mart aims to not only provide products at low prices but also provide unique and differentiated products to its consumers. The store’s USP is high-quality products at the lowest possible prices. This is one strategy that Wal-Mart has followed since the very beginning and plans to follow for its future strategic plans as well. In order to reduce its product cost, the company streamline its procurement process by getting products manufactured from different parts of the world. This reduces the production costs and thus, the eventual end price of a product (Hayden et al 12). High inflation has plagued the world over the past few years. Even though countries have found their way out of the recession, high economic inflation is still a problem. Wal-Mart plans to provide goods at affordable prices in such times so that the consumer can benefit from it.

Today, consumers and companies alike are focusing a lot on green practices and environmental conservation. Companies have adopted this strategy because consumer refuses to buy products from companies that harm the environment in any way. In October 2005, Wal-Mart started a “business sustainability strategy”, which ensured that the company procedures and practices will have the least amount of detrimental effect on the environment. To do this Wal-Mart decided to use renewable energy resources and to create zero waste. Along with this, only those products were to be sold which would help sustain the environment. This is an essential part of its long-term plans, where Wal-Mart seeks to diversify its supplier base so that the company does not face any pressure to reduce the effects on the environment by increasing its production cost (Plambeck & Denend 1).

This has a two-way advantage for the company. Firstly, taking over a store reduces the need to construct and start up the infrastructure for a store from scratch. Secondly, it reduces the presence of competitors in the area, thus leaving the people with no choice but to go to Wal-Mart stores. Keeping in line with its previous expansion strategies, Wal-Mart plans to open up 22 new stores in Japan. Even though the company faced numerous problems during its operation in Japan, it still plans to expand in the country. Wal-Mart operates under the name of Seiyu in Japan (Banjo 1).