Wal Mart Supercenter - Term Paper Example

 Wal–Mart Comprehensive Strategic Management Wal–Sam Walton formed Mart the leader in retail industry in 1962, in Arkansas, United States. The company went public in the New York Stock Exchange in 1969, which helped it to gain an influx of capital. The company though has closed stores in Germany & South Korea still can boast of having 6500 stores operational in 15 countries worldwide. In the United States it controls around 20% of retail grocery & consumables business making it the largest grocery store in US. The company operates in the high saleable areas. This helps Wal–Mart to make bulk purchases from its suppliers at low rates. Wal–Mart hence can give a minimum price offering to its consumers, thus creating an environment of monopoly in the retail sphere. (Maestri, 2008) Vision: Wal –Mart needs to be a company of the future. The company must highlight on Healthcare, Environmental Issues, must look at bettering its relation with suppliers & must look at reducing prices. Wal- Mart in total should be socially responsible for its activities. The company must be the global leader in the retail industry in terms of products or services offered, technology used and in creating a valuable social image in respect of its employees & the society at large. (Maestri, 2008) Mission: Wal-Mart operates keeping in mind certain parameters that can be seen as the philosophy of the concern’s day-to-day activities. They can be stated as the company’s mission is to provide to the customers a huge assortment of goods & services; reasonable pricing of the products; promoting on-line shopping; granting educational scholarships & creating employee satisfaction through rewards & giving equal opportunity to grow. (Wal-Mart 2000, N.D.). Wal–Mart External Audit: The external audit on Wal- Mart is conducted based on four main indicators viz. transparency, participation, evaluation & complaint & response. The indicators are scored based on data collected from independent experts & stakeholders of the company & as well as from individual sources. Transparency Dimension: Ten corporations including Wal–Mart being assessed on this point reveal that Wal-Mart ranks ninth amongst them with a score of 15 percent. The result obtained on being analyzed states that Wal–Mart doesn’t have a policy for disclosure of company information. Though a commitment is made in the company’s Statement of Ethics regarding transparency of information yet it is not being rightly followed. Wal-Mart only discloses the information in reports & documents filed with the United States Security & Exchange Commission (SEC) & with other public communication agencies. However, no transparency is observed in areas beyond SEC. The statement to be strictly followed confirms that Wal–Mart needs to be transparent in all its activities & operations. They should also be transparent as to the availability of the required information. It is further observed that Wal–Mart doesn’t even provide training to staff on transparency issues. Participation Dimension: On this dimension Wal–Mart ranked sixth with a score of 43 percent. To make an analysis of the result obtained this dimension can be sub-divided into two parts viz. engagement of Eternal Stakeholders & Control of Members. As regards to the first part Wal–Mart is seen to encourage a community dialogue to that of engagement of External Stakeholders. The company’s encouragement to in fostering community partnerships focuses on its social responsibility to education, public health, environment, disaster relief & so on. However, this community dialogue is not further expanded to other public documents. The external stakeholders have no say over the company’s decision making & no employee is also trained to make dialogue with the external stakeholders. This proved to be positive for the company. The second part focuses on how the company encourages Equal Control of its members in company operations. The company policy allows all shareholders to attend the annual general meeting & add their views in this regard. The shareholders are also vested with the power of electing & removing the board of directors of the company. Evaluation Dimension: As regards to the evaluation dimension Wal-Mart holds the ninth position amongst the ten evaluated corporations with a grade of only 15 percent. The low ranking is seen in this category for the company lacks to have a policy, which can guide its evaluation of environmental & social impact. Wal-Mart assesses the social impact by audits known as the Ethical Standards Audit. The audits are conducted based on the code of conduct of the company, which highlights on health, safety & environment issues. The information found thereby in these audits doesn’t confirm to any well-followed principles. Complaints & Response Dimension: Wal-Mart ranked ninth with a score of 28 percent in this regard. It is because the company is found of not having any suitable complaints handling program to address the complaints they might receive from the stakeholders & employees. It has only a set of ethical standards stating about how to lodge a complaint, the investigation process and assurance of confidentiality & independence of the investigators. The main problem here is that neither is there any public reference pertaining to the training of employees for dealing with complaints & ethical standards nor can be found any training imparted to the investigators. The conclusion that can be drawn from the above context is that Wal-Mart is only strong in the respect of developing community dialogue with the society by & by restraining the stakeholders from indulging in company matters. Several areas of improvement are identified like transparency of information, complying with safe standards at the workplace & also of complaint management, which needs to be worked upon. (Wal Mart Corporation, 2007). Wal-Mart Internal Audit: An internal audit conducted on Wal-Mart stores reveal that the company suffers from violation of state labor laws. The audit generates a statistics, which state that there are 1,371 infringements of child labor laws; 60,767 cases where employees have missed breaks & 15,705 instances where the employees have reported to skip meals. The audit was conducted at 128 stores for a period of one week. (New rules of Staff, 2004) This is a clear reflection of the extent to which labor is misused in big US companies like Wal-Mart. Wal-Mart also takes on the training initiative of its employees with the help of its 325 auditors worldwide in order to stop the chances of job-hopping. The training module thus designed contains components like education, where employees are taught not only auditing skills but also skills to develop communication. It also has a cross-training part wherein several audits like store, information & corporate audits are coordinated for smooth functioning of the business. The Job-Shadowing part assigns the auditors to spend time with store managers to see the changes in the retail atmosphere. Wal-Mart also gives Certification Incentives to successful auditors on completion of their training. (Campbell, 2001) Long Term Objectives: In the light of discussion of long-term objectives of Wal Mart the paper highlights the company’s use of Sustainable 360 program to combat the growing environmental challenges. The sustainable 3600-program was officially launched in February 2007. The objectives underlined based on this program are all long term in nature. There are mainly six key areas upon which these objectives are framed. They can be listed as Land -where appropriate treatment of land is the key objective; Supply Chain- engagement of local suppliers, increase use of organic materials, selecting suppliers who are following the emission rules are some of the key objectives; Packaging- reduction of sizes of packets & containers, reducing the production of solid waste by 25% by end of 2010; promoting the use of recycled materials; saving energy & reducing emissions are the key objectives; Logistics- reduction of carbon monoxide emissions by 25% by 2012, increased use of private trucks are the objectives taken; Energy- reduction of overall energy dependency & utilization of renewable resources are the key objectives & Climate- reduction of Carbon Dioxide emissions, supporting regulations & policies for reduction in greenhouse gas emissions & initiatives to be taken to invest in energy efficient technology are the key objectives. (Meliton, 2007) The above long term objectives suggest the environmental outlook of Wal-Mart in respect to its business operation. A further look at its long-term business objectives suggests four key areas where developments need to take place for sustainable business development. They credit their continual expansion of supercenter stores as the key driver to retail business growth. Major acquisitions are to be conducted in the international arena where taking over of firms like a Puerto Rican supermarket or making investments in Japan signify the major possibilities awaiting. Focus needs to be given on the opening of discount stores; looking after the continual opening of its warehouse club division the Sam’s Club is also one of its key objectives. (Troy, 2002) Strategic Management & Wal-Mart This part of the paper aims at judging Wal-Mart’s operations in the light of SWOT Analysis conducted & the Porter’s Five Model. The SWOT (Strength, Weakness, Opportunity & Threat) Analysis conducted in this regard states that factors like growing use of internet shopping, environment conscious customers, making foray in untapped markets like Asia & Europe, retail sales force on the rise are some of the Opportunities. The Threats impart factors like small towns having grudge against Wal-Mart, bad media exposures against one of its brands, wide variety of competition leading to product substitution. Wal-Mart’s Strengths to be cited follows that supercenters are providing one-stop shopping facilities to customers, customers are being able to buy in bulk from Sam’s Club, programs guarantying satisfaction to consumers, sharing of information like profit & stock ownership with employees, strong community development activities & ongoing development of employee standards. However, the company also suffers from certain Weaknesses like membership facilities being only provided for Sam’s Club reduces customer morale, non-removal of non-performing employees, backdated store policies & women & minorities not being given to rise to top management. (Wal-Mart 2000, N.D.). Porter’s Five Forces Model in the light of Wal-Mart’s strategic position needs also to be given in this context. It states that the Potential Competitors offer a medium pressure to Wal Mart as grocers could potentially enter the trade. However, Wal Mart by the dearth of its distribution systems, brand name & financial position act as barriers to entry. The Rivalry among the existing Firms also lend a medium pressure in that there are significantly three market players in US retail Target, K-Mart & Sears. Out of these Target is the strongest in that it has a tremendous growth in domestic market. However, internationally Wal-Mart stands to be the best. The Bargaining Power of Buyers confers a low pressure for the individual buyer has no effect on Wal-Mart. Further, the consumers can purchase from other stores but the convenience of shopping is the main reason behind them sticking to Wal-Mart. The Bargaining Power of Suppliers in respect to Wal-Mart renders a low to medium pressure for the volume of business Wal-Mart caters to involves huge number of suppliers. Thus a shift from one supplier in this case leads to industry panic amongst the others. However, big players like Procter & Gamble & Coca Cola show more bargaining power than the small ones. The fear of Substitution shows a low pressure for there are lesser substitutes in retail providing facilities like online shopping & low price offerings. (Industry Analysis Example-Porter’s Five Forces & Complementors, N.D.) Conclusion Evaluating Wal-Mart in the light of a comprehensive strategic model conveys that the organization is a key contributor to issues involving Corporate Social Responsibilities by focusing on environmental & social issues like education from within its business sphere. However, the company has lot to develop on employee standards, work hygiene, in promoting transparency of information & complaint & response management. Wal-Mart must not underestimate formats like Discount Stores & Sam’s Club in the light of international coverage & acquisitions for they help create mass customer satisfaction. References 1. Campbell, S.D. (2001). Training as a retention tool. Business Services Industry. Retrieved on August 17,2010 from: http://findarticles.com/p/articles/mi_m4153/is_5_58/ai_79355709/ 2. Industry Analysis Example-Porter’s Five Forces & Complementors. (N.D.). Wal Mart. Retrieved on August 17,2010 from : http://webcache.googleusercontent.com/search?q=cache:EjO6l9VURdIJ:classes.bus.oregonstate.edu/ba469/Dibrell/Miscellaneous/Industry%2520analysis%2520example.doc+porter+five+forces+model+%2Bwal+mart&cd=1&hl=en&ct=clnk&gl=in 3. Meliton, E. (2007). What influence will Wal Mart’s green initiatives have on future corporate strategies? Frost & Sullivan. Retrieved on August 17,2010 from: http://www.frost.com/prod/servlet/market-insight-top.pag?docid=105661785 4. Maestri, N. (2008). Wal-Mart outlines vision as “company of the future”. Reuters. Retrieved on August 17, 2010 from: http://www.reuters.com/article/idUSN2256766320080124 5. New Rules of Staff. (2004).Wal Mart Internal Audit finds Thousands of Labor Violations. New Rules Project. Retrieved on August 17,2010 from : http://www.newrules.org/retail/news/walmart-internal-audit-finds-thousands-labor-violations 6. Troy, M. (2002). Lengthening its lead: Wal Mart hits 40 in full stride- Wall Mart Overview-Statistical Data Included. Retail Industry. Retrieved on August 17,2010 from : http://findarticles.com/p/articles/mi_m0FNP/is_11_41/ai_87146167/ 7. Wal-Mart 2000. (N.D.). Mission Statement Components. Retrieved on August 17,2010 from: http://webcache.googleusercontent.com/search?q=cache:L8nbUMotXyEJ:faculty.uwstout.edu/adekolaa/STRAMGT/powerpoints/Wal-Mart%2520-%25202000.ppt+wal+mart+mission+statement&cd=4&hl=en&ct=clnk&gl=in 8. Wal-Mart 2000 (N.D.) Mission Statement Components. Retrieved on August 17,2010 from : http://webcache.googleusercontent.com/search?q=cache:L8nbUMotXyEJ:faculty.uwstout.edu/adekolaa/STRAMGT/powerpoints/Wal-Mart%2520-%25202000.ppt+wal+mart+mission+statement&cd=4&hl=en&ct=clnk&gl=in 9. Wal-Mart Corporation. (2007). Retrieved on August 17,2010 from : http://webcache.googleusercontent.com/search?q=cache:IJ4TXWHUAuYJ:www.oneworldtrust.org/index.php?option%3Dcom_docman%26task%3Ddoc_download%26gid%3D102%26Itemid%3D55+external+audit+on+wal+mart&hl=en&gl=in Read More