The Components of Walmart's Operations - Case Study Example

Your Lecturers of Case Study of Walmart Walmart is currently an internationally known retail line. It is a householdname in supermarkets throughout America. Walmart has gone through a lot of transitions since it was formed in 1962 by Sam Walton. This paper examines the components of Walmarts operations from a narration which centers on the state of affairs in Walmart in 1994. It assesses and evaluates the various aspects of business and operations of the retail giant in relation to how it enables the company to attain its position. Leadership The leadership system of Walmart is divided up into three main units (923). There is the Executive Wing, that is headed by Rob Walton (representing the family interest of the founder) who works as the Chairman of the Board. The Vice Chairman and Chief Operating Officer slot presents a hybrid governance role which combines operational leadership and executive leadership. There is also the President & CEO position which embodies the management unit of the company meant for the day-to-day running of the company. The history of leadership in Walmart can be attributed to the initiative taken by Sam Walton (924). The risks and entrepreneurial decisions taken by Sam Walton to invest in the discount retailing concept and grow such idea. Sam Waltons leadership philosophy has been instituted and deeply rooted in the relationship between members of the company. The concept encourages leaders to treat employees as partners, build for the future, learn from failures and involve all stakeholders in decision making processes (923). These soft leadership ideas became the foundation for the building of the organizational culture in Walmart. Other ideas from Sam Walton like the careful use of resources, collective systems of attainment of results, innovation, motivation, involvement of associates (Management by Walking Around) and good communication skills form the crux of the atmosphere of Walmart. Management The companys growth from just 9 stores in 1960 to over 2,100 stores in 1994 can be credited to good and effective management (923). Disciplined expansion: This is one of the most remarkable strategic decisions that the management of Walmart took. The backward expansion concept utilized very disciplined techniques and systems to ensure that they opened up stores in the suburbs and out smaller areas of each state. As the demand in these stores grew, they expanded into the city center and this ensured that they survived and remain profitable. Strong Marketing structures: Also, the management of Walmart must be credited with their ability to put together a great marketing strategy and structures to ensure that consumers remained interested in Walmart. Expansion of the lines: Walmarts management was also successful in the expansion of its offerings to wholesalers and large groups of buyers. It therefore expanded its supply lines and did not focus only on retail which was profitable in its own right. Competitive strategy: Walmarts management maintained the most competitive structures and systems that ensured that the company was modified to make it much more competitive in relation to other discount retailers like Sears through its location strategy. Strong stakeholder interaction: Walmart maintained a strong relationship with its suppliers and employees (933). There were low prices that were reviewed on a daily basis and strong advertising campaigns that kept the company connected to its consumers. It also maintained strong bargaining relationships with its suppliers (937). They maintained close relationships and long-term partnerships with suppliers which ensured that Walmarts suppliers grew with them. Marketing The marketing of theof Walmart brand is really strong. The marketing has been in sync with the 7Ps of marketing and this is exhibited strongly in the case. They are as follows: Product: The main marketing Walmart lay in the diversity of products that are available to the consumers. There are numerous brands from which a consumer could make choices and get a wide range of options to choose from (925). Price: Walmarts strategy has been built on a strong conception of providing low cost products for consumers. This therefore means that the main idea of the Walmart discount shop system has been to provide low cost and affordable services that are provided for consumers. Place: Walmart shops are always large with an average of 84,000 square feet. This gives the consumer an image of a shopping point where all needs could be attained in a single visit. This gave the consumers more options and a stronger reason to shop with Walmart and not with their competitors.The interiors of these shops were well designed and luxurious, giving every consumer shopping experience. The Sams Wholesale Club system enabled Walmart to also provide a good place for selling to large consumers. Also, the inclusion of different outlet of selling like the Supercenters, Distribution Centers, McLane and Westerns gave a larger variety of outlets that gave consumers more options. Promotion: The sales of Walmart was promoted through adverts presented through the various forms of media outlets like newspapers and the television. This helped in brand building and the enhancement of not only individual brands but the whole change throughout America. Process: Walmart remained innovative with the store layout, merchandise display, store color scheme and merchandise selection. This showed that the processes of marketing and purchases was evolved in a way that the consumers and employees could contribute by paying more attention to more effective and efficient systems. With time the best and most preferred processes were encouraged and consolidated to the main processes. People: Walmart maintains a strong recruitment and selection system of programs which enables it to get the best employees. Employees are encouraged to give good customer service to customers and also dress in decent and neat clothes that blend with the colors of the brand. In providing customer service, the employees were encouraged to think and feel like the customers and maintain a strong interpersonal link with the consumers (942). Physical evidence: Every Walmart shop has a conspicuous display of the logos and philosophy of Walmart (925). The words “We Sell for Less” and “Always the Low Price. Always” amongst other logos are always written clearly in the various Walmart outlets. This provides a strong bond between the consumers and the supermarket chain. Finance The values of shares in Walmart rocketed at an unprecedented level. Shares purchased for $4,700 in 1983 are worth $91,000 in 1994 (924). This indicates that there was a 1900% increase in the worth of shares. This can be attributed to the growth and expansion of Walmart which led to accumulated earnings per share over the years. Walmarts main financial strategy was to cut down on costs of operation and increase its revenue base by offering low everyday costs. In its growth strategy, Walmart focused on maintaining a steady increase in sales each year by an average of about 26%. This was attained by finding innovative ways of sales and the increase in the product offerings that it had. Walmart maintained a good balance between assets and liabilities. Between 1991 and 1994, Walmart maintained a average current ratio of 1.6. This showed that it typically kept a higher volume of current assets in relation to current liabilities like credit and short term loans. Another remarkable thing that can be attributed to Walmart is its ability to maintain a higher volume of inventory in relation to its working capital. Typically, the ration was about 2.4 and this showed that inventory always exceeded working capital by 100% at every point in time. This is very positive for trade because there was always a high volume of inventory that Walmarts suppliers were willing to provide to Walmart even before they paid for these stocks. This meant that the trading position of Walmart was enhanced at different points in time for the company. Walmart also maintained a strong return on the assets it employed in trade. Each year, Walmart ensured that each asset it kept yielded at least 10% on the asset. This therefore meant that the assets remained vital income earning holdings of the company. Also, shareholders equity was increased consistently by about 30% each year. This showed that the investors of Walmart were kept happy and satisfied. This logically explains why the shares of Walmart continued to increase each year. Legal Walmart is a public traded company. The Walton family controls 35% of the shares of the company whilst the rest is available on the stock exchange. Ethical One of the most ethical components of Walmarts efforts was its connection with tough environmental policies meant to reduce its footprints and encourage others to do same. It urged its suppliers to use packaging that would not harm the environment and promoted recycling amongst consumers. Walmart also encouraged its suppliers and other connected parties to spend more on research an development to ensure that the products and services they produced were environmentally friendly. Since Walmart was a pioneer in environmental responsibility, they set the stage for other supermarkets and businesses to become conscious about the effects of their operations on the environment. Employees Employees of Walmart are motivated in various ways. There is the Profit-Sharing Plan which provides employees who have served for over a year a share of the profits made. This grows the sense of belonging amongst the employees. Employees are also encouraged to purchase shares and build their connection with the company. There are numerous benefits and training that are meant to develop employees and keep them motivated and productive. The dominant communication system of Walmart is the meetings which are held and try to take all the views and opinions of all employees. There are weekly employee meetings, weekly supplier meetings and annual meetings that enable the various stakeholders to interact. Political Walmart can be seen as an agent of national development. The Buy America policy of 1985 was meant to support America to offset its balance of trade deficit which resulted from tough economic systems. As a nationalistic entity, Walmart encouraged consumers to buy from its shops to support the economy to regain its footing. This can be contrasted with other suppliers who sourced for products from overseas. Thus a purchase of a Walmart product was seen as an injection into the American economy since all of Walmarts suppliers were American businesses. This could be seen as one of the political efforts that Walmart made to support America. International Matters As of 1994 when the case study was written, Walmart was a purely local American company. However, in 2011, it has branches in 15 countries around the world (walmart.com) Technological In its growth Walmart has made a conscious effort to apply the latest technology to improve productivity and decrease costs (936). Computers were used as far back as 1974 to control inventory levels and reduce lead time. Scanners were utilized to speed up processes and an intranet system was put in place to ensure that all the branches were linked to the various suppliers. This ensured that suppliers always had an idea of the stock levels in the various outlets. They therefore replenished stocks the moment they reached minimal levels. This prevented stock outs and idle times. Culture Walmart maintains an organizational culture that is based on the concern for individuals. The people of the company (employees, customers and suppliers) are taken care of, based on their specific and distinct needs. Thus the idea of communication and incorporation of different needs and expectations makes Walmart a melting point for several consumer needs. Also, the rural based branches of Walmart maintain a family atmosphere where entire families are given very strong and warm reception at the Walmart shops. This creates a culture of camaraderie and presents Walmart as one big family. Walmart also maintains strong ethics and conservative ideas and conceptions which are upheld by the management and staff of the company (949). Thus, in spite of the laxity and informal atmosphere, strong and disciplined rules are upheld by all the staff members. Work Cited Thompson Arthur, Pinegar Kem & Kramer Tracy Robertson. Walmart Stores Inc. 1994. Print. Read More