Human Resource Strategy and Productivity at Walmart - Case Study Example

Identify and explain the strengths and limitations of Walmart’s “human resource strategy”? Strength The founder of Walmart Sam Walton decided to address his employees as “associates” to symbolize that they are important to the company. He believed that if employees are treated with respect this will make the ordinary employees empowered then they would work together and that would lead to achievement of extraordinary goals (Human Resource Strategy and Productivity at Walmart). Walton believed in an open door policy, which emphasized the management to listen to the ideas of the associates and work upon them. According to Walton the front line employee who directly deals with the customers are the best people to say what is going on (Human Resource Strategy and Productivity at Walmart). Limitations The “Sundown rule“, which says that whatever can be done today, should be completed instead of delaying it for tomorrow. The employees, who used to give extraordinary effort and achieve the goals, were rewarded with “profit sharing plan and stock ownership scheme”. The employees who used to work for long hours were not paid by any overtime incentives (Human Resource Strategy and Productivity at Walmart). Walton opposed unionization, as he believed that it would lead to a payment of higher salary to the employees and would restrict their working rules (Human Resource Strategy and Productivity at Walmart). If Walmart decides to review its human resource strategy, what issues/factors it needs to consider? Explain. The policy of the company to make their employees work for long hours and paying them low gave rise to immense protest. The employees who used to work for long hours were not paid any overtime incentives. Instead they were rewarded by profit sharing and stock ownership. This policy needs to be reviewed because the modern workforce may not like this traditional policy. And secondly the belief that unionization will lead to reduction of productivity, may not be always true. Labor union tried several times to unionize the store but failed. The labor union fights for the right of the workers, or against any exploitation. The company apart from thinking about their own profit should also think about the worker’s right (Human Resource Strategy and Productivity at Walmart). Identify and list the key business features of L.L Bean’s business model. The key features of L.L Bean’s business model are as follows: L.L Bean sold all its products through mails Reliability of the product and simultaneous feedback to the customers, against their complains Replacement of products even year after their sale Expanding their product line, this included high quality sporting clothes and accessories. Erecting a signature store to display their new product line so that customers can have hands on access to the product and have a better understanding of the quality. Products not only for personal use but also for friends and relatives to be gifted as gifts (L.L. Bean’s New Business Model). What are the limitations of L.L. Bean’s business Model? In what specific ways the company should change its business model to regain its competitive advantage. The business plan of L.L. Bean suffered the following limitations: The products were of high quality with high price, which were easily replaced by other companies. The unique appeal was missing from the catalogue, which could attract the customers. Lack customer retention power due to which it started even loosing the loyal customers. Distinctiveness of the product was missing because of which the customers were allured by the products of other companies (L.L. Bean’s New Business Model). The company should first create an attractive website that would contain all the product details with their unique features. The offers that the company is providing should be highlighted, to attract the attention of the customers. The company should provide special discounts on special products from time to time. Proper advertising should be done to allure the young generation. The company should keep track of the price changes done by other companies. The company should diversify its product line and keep products with high price as well as low price. The company should open new stores and mark its presence in new cities (L.L. Bean’s New Business Model). How would you define and justify the Amazon.com ‘business model’? The business model of Amazon.com depends upon the balance of short and long term issue. Amazon.com should grow rapidly so that they can capture a certain slice of the growing market. For this they have to raise fund through investment. May be that they are not profitable in the initial years and may not attain their short term goals. But if the company is growing and doing well in its business then short term goals does not play an important role. In this fast moving world everything changes very fast. So the uncertainty of the business is a factor that leads to volatility in the trading price of the share. For Amazon.com, since it is an online store and they get competition from not only physical book shops but also from other online bookstores too. The advantages that the physical bookshops enjoy like interaction between readers and authors, that Amazon cannot enjoy. Moreover it has also diversified it products to offer a competitive advantage to their competitors (Thompson, 2001, p. 917). How significant is reputation for Amazon.com – in relation to both customers and potential investors? Is there a link between the reputation and share price volatility? How might Amazon.com attempt to reduce this volatility? Amazon.com the online bookstore is open for 24 hours and is accessible from any part of the world. The time taken by Amazon.com to deliver a book depends upon the type of book ordered by the customers. Amazon.com also offers discount on the books depending upon its type. The combination of price and service were used as instrument by Amazon.com to persuade the customers to return back to their websites. So not only the reputation but also the customers are concerned about the product, price and service offered by them (Thompson, 2001, p. 922). The case suggests that in June 2002 the share price had fallen by 20% when Lehman Brother suggested that Amazon.com is running out of cash. This suggests that investors are not driven by reputation but by the financial position of the company and the market condition. Since for expanding their business Amazon.com needs to attract investors so they should portray their financial position to be healthy. Reputation cannot be considered to be the sole parameter on which the investors will depend (Thompson, 2001, p. 919). The share price volatility may be due to the changes the value of the firm, which has arisen from the fundamental factors that are associated with the change in the firm’s value. Therefore the increased volatility in the value of the firm may lead to the volatility in the share price (Mohammad & Nassir, 1993, p. 180). This volatility can be reduced if Amazon.com puts effort on increasing the value of the firm. The company should provide a healthy picture of its financial position. It should highlight on its sales and revenue. How might the alliance with Toys R Us affect both the business model and Amazon’s reputation? In August 2000 Amazon.com has gone for alliance with Toys R Us. This was because Amazon.com was left with unsold merchandises whereas Toy R Us was unable to fulfill the orders as they lack distribution network. Through this alliance Amazon.com got rid of its unsold merchandize, which otherwise would have caused it a heavy loss. By this alliance Amazon.com not only diversified its product line but also provided a window for combined business. Its reputation increased since it extended its customer service. This will also help in raising revenue (Thompson, 2001, pp. 922-923). Does Amazon.com have a distinctive competitive advantage? If so what is it and how might it be sustained? If not how might it achieve now? Though Amazon.com has diversified its business with making alliance with other companies who are not into book business, but there is no shortage of direct competition to its main business. The agreement with Microsoft Reader Software enables the readers to read a large amount of text on their computers. This provides a competitive advantage for Amazon.com (Thompson, 2001, p. 923). Amazon.com should aggressively highlight on this so that it can attract more and more customers. Amazon.com should not go on aggressively promoting its other products (Thompson, 2001, p. 923). Evaluate the challenges given at the end of the case. Can you think of additional issues? Amazon.com deals as an online bookstore. But it has diversified its business by going on for non book products, which provides it with a wider base of products. But its competitors like “Barness & Noble, Borders, Waterstone’s” (Thompson, 2001, p. 923) etc are dealing with only books. So customers may switch to these companies, thinking that they are specialized into book business only. So Amazon should not go for active promotion of its non book products. At the same time its partner companies should not be able to access the customer information (Thompson, 2001, p. 923). Any up gradation in the technology can pose threat for Amazon.com. Though Amazon invests considerably towards development and innovation of their site but any technological development by any of the rivals may lead Amazon to lose its attraction (Thompson, 2001, p. 923). Though Amazon.com provides more than any physical bookstore but it cannot provide the author customer interaction that a physical store can. So the company should try to provide this privilege to the customers, which will in turn add to its competitive advantage (Thompson, 2001, p. 917). What is the contribution of Jeff Bezos to Amazon.com and e-commerce generally? Jeff Bezos had the dream of starting an e-commerce business. With this idea in his mind, he started Amazon.com. Amazon.com was not seen as a book selling operation but as an “e commerce customer relationship business” (Thompson, 2001, p. 920). Jeff Bezos gave importance to customers and services and was regarded to be customer friendly. He used the image, reputation and network to expand its business in the areas such as”electronic greetings, music, video, pharmaceuticals and pet supplies” (Thompson, 2001, p. 920). It has also acquired and absorbed other e-commerce business. The company invested heavily to maintain its website. It generates potential customers, persuades them for ordering and finally provides then with excellent service. Thus Jeff constantly focuses on his business and thus says “70% of the shoppers are regular customer” (Thompson, 2001, p. 920). REFERENCES 1. Mohammad, S & Nassir, A.M. (1993). Factors Associated with Stock Price Volatility and Evaluation of Gordon's Share Valuation Model on the Kuala Lumpur Stock Exchange. PertanikaJ. Soc. Sci & Hum, 1(2), pp. 179-186 2. Thompson, J. L, (2001), Understand Corporate Strategy, Cenage Learning EMEA Read More