The Benchmarks for Wal-Mart Strategy - Assignment Example

Wal-Mart management Name Course Tutor Date 2. Which of the five generic strategies is Wal-Mart employing? What are chief elements of its strategy? The benchmarks for Wal-Mart strategy are strongly entrenched commitment to cost-efficient functions, daily low prices, diversified store formats, large choices, a mix of both name brand and private-label merchandise, customer satisfaction, astute merchandising, restrained advertisement. All these aspects are the main characteristic of Wal-Mart strategy, but the ones they employ frequently are: Cost-efficient operation and daily low prices: From the initial stages, and proceeding to the current situations, key executives at Wal-Mart had aggressive and strikingly followed a low-cost management strategy. Throughout the world, no retail shops can compare with the Wal-Mart’s passion and efficiency in controlling costs and seeking new and appropriate methods of carrying out their activities effectively. Wal-Mart stress on attaining low costs spread to each and all value chain exercise, starting with major exercises associated to achieving the appropriate merchandise from several suppliers and afterwards continuing to other parts of logistics and division associated exercise related to man cutting inventory and stocking the stores of its agents. All the practices entailing the creation and functions of its retail stores while ensuring a strict restraint on the cost of selling basic and management activities. The organization’s efficiency and abilities in ensuring its low costs permitted it to sell its merchandise at or close to rock-bottom prices (Thompson, 2008). When Wal-Mart invented the idea of daily low pricing, it made it do good work than any other discount retailer in implementing the idea. The organization was largely viewed by customers as merchandise with the lowest prices ever. Its’ pricing formula trickle down to make other discount retailers lower their prices as well in anticipation of increasing their sales, and competing effectively with Wal-Mart company. Various studies illustrated that Wal-Mart saved US domestic household up to $2,500 per year, summing both the direct influence on purchases generated by Wal-Mart buyers, and indirect influence originating from reduced prices on the other side of other retailers to increasing their competition with Wal-Mart. Wal-Mart also employed use of multiple store formats. Under this, they have applied four various techniques in the Untied States and Canada to appeal and meet customers’ wants: discount stores for instance vary from 30,000 to 224,000 square feet, hired an average of 150 personnel, and provided a variety of up to 80,000 different items. This are made up of family apparel, home furnishings, auto-motive goods, hardware, sporting items, electronics, health and beauty aids, jewelry, prescription drugs, toys, and pet supplies. Supercenters-on the other hand, that Wal-Mart initiated in 1998 to fulfill the requirements of one stop family, unite the idea of general merchandise discount warehouse with that of complete supermarket. The other strategy employed by Wal-Mart is use of wide product selection and a mix of name-brand and private label merchandise. A vital feature of Wal-Mart’s plan was to offer clients with such a varied range of assortments of goods, which they would get more of what they want at suitable prices in one appropriate location. Supercenters that had a large lineup of basic merchandise alongside complete choice of supermarket products were highly a one stop shopping exercise for most customers. A considerable proportion of the merchandise, which Wal-Mart stocked, comprised of name-brand nationally advertised goods. However, it also sale merchandise through some 20 private-label brands (Thompson, 2008). Another strategy employed is the application of customer friendly store environment. Throughout all Wal-Mart warehouses, plans were created to offer merchandise in a simply to shop shelving and well laid down displays. Floors in apparel department were carpeted to ensure the section looks homely and ensure shopping look simply on client’s feet. Lighting was model in such a way to bring a soft, warm feeling. Sings showing the location of different items was put in place. Store formats were persistently evaluated to enhance shopping expediency and ensure it simple for clients to locate goods. Stores attendants wore blue vests containing tag line ‘how may I help you’ at the back making it easier for consumers to notice them from a distance. Furthermore, nothing on the color contrasted with Wal-Mart’s low-price figures; retailing associates took Wal-Mart as an expert in marking out a prominent mix of ambiance and signals about consumer service, reduced prices, standardized merchandise, and a homely shopping environment. Wal-Mart management trust that the concentration given to all details of ensuring the stores run smoothly and inviting made shoppers to observe Wal-Mart in positive way raising their reputations. Lastly, the other strategy employed is the use of acquisitions to expand into foreign markets. Currently, Wal-Mart had been struggling to spread its operation beyond boundaries mainly by the acquisition of and partially by construction of new stores. Wal-Mart admission into Mexico, Japan, China, Canada, Brazil, Germany, Great Britain, and South Korea had been an achievement through acquiring existing general merchandise or hypermarkets stores, with most of the acquired merchandise still carrying out operations under the old names. In 2007, Wal-Mart alongside Indian based Bharti enterprise publicized a combined venture to undertake wholesale cash and carry and back end supply chain control actions in India. Wal-Mart international plan was to ensure they become local in terms of products. Its application of local suppliers was feasible, and in certain functions, they undertook. Management excelled in applying Wal-Mart standards functioning features to be reaction to local societies and traditions. Most stores managers as well as the senior administrators in overseas states were the natives, where most had started their duties as hourly workers (Thompson, 2008). 4. What policies, practices, support systems, and management approaches underlie Wal-Mart’s efforts to execute the company’s strategy? To implement successfully its daily low price strategy, Wal-Mart ensured strong stress on obtaining lowest ever prices from suppliers, building close functioning association with major suppliers to seize win-win cost savings in the entire supply process. This was achieved by keeping its internal functions flexible and effective, considering even smaller details in store format, and merchandising, ensuring effective application of state-of-the art technology and grooming a culture, which excels on attracting customers. Wal-Mart observed all the international policies of foreign investor while operating in external countries to ensure they win the trust and loyalty of the indigenous community. This helped them relate well with the local people and promote their products and at the same time praising their services. This worked well in almost all the countries that they established their ventures (Thompson, 2008). In maintaining quality of goods, Wal-Mart began initiating standards fro its suppliers, with certain stress on suppliers from foreign states, which had a tradition of difficult wages and working situations. Management trust that the style in which suppliers carried out their activities relating to hours of work needed daily, the use of child labor, isolation depending on race or religion and other aspects whether suppliers observed the local regulations and principles would be associated with Wal-Mart and influence its image with clients and stakeholders. Wal-Mart had also initiated a set of supplier measures and put in place an internal team to oversee that suppliers were observing the regulations. The company’s supplier measures had undergone various changes due to concerns of the Wal-Mart management. In addition, Wal-Mart followed suppliers closely to adjust any abuse and those that were constantly abusing or not following the set measures were banned permanently from carrying out activities on behalf of the company. Different approaches were used by Wal-Mart to achieve their targets and objectives and one of them was the use of innovative technology. Wal-Mart’s application of technology was seriously considered and it went through evaluation, testing and afterwards fixing the most current tools, retailing methods, computer software programs, and other advances in technology to improves its productivity, efficiency, and push costs down. Wal-Mart was essentially a first-mover in improving its abilities through application of technology in most of its operations. It created a computer assisted merchandise system, which permitted the product mix to be tailored in all the stores in relations to market demands and sales trends. The use of technology by the company ensures efficiency and increase production considerably. Something the management were proud of and it facilitated the control of all stores under one central point (Thompson, 2008). Wal-Mart also had to ensure constant supply of goods to all its stores at all times. This was attained by creating distribution centers that were 250-miles apart and employed enough workers who ensured records and observe even distribution of products at appropriate times. The computer assisted programs maintained an effective transfer of information from all their stores. The company’s current innovation to improve distribution and logistics were to attain complete execution of RFID systems from supplier to retail centers. This was also enhanced by the availability of truck fleet operation for transporting products from one place to another. Other management practices employed by Wal-Mart include soliciting ideas from associates. This was helpful in a company that operates internationally because executives could not reach all the places. Instead, it relied on the information provided by the associates to improve products or look for other viable markets (Thompson, 2008). 6. What is your assessment of Lee Scott’s transformation initiatives? My assessment on transformation initiative was meant to improve the company’s images and reputation. He wanted to tell the company’s critics that the company is performing well and it will meet the customer’s needs. It aims at expanding its operations to all countries in the world by meeting all the legal requirements. Critics had been saying that the employees are not treated well and the company took action by introducing transformation initiatives so that favorable terms and conditions can be discussed (Sara 2008, p. 34). The main aim of the company’s transformative initiatives was to improve operations of the company so that it can compete favorably in the market. Furthermore, the company was facing a lot of court cases and wanted to analyze its legal and public relations so that it can avoid them in future. Many stores were being closed in many states because of non-adherence to the laws, failing to meet customers need, or inadequate products (Pahl 2009, p. 43). Are the initiatives “sincere” or just calculated to garner better PR for Wal-Mart? The initiatives are sincere because the company wants to improve its operations in the market. In addition, the company wants to open new branches in many countries because of the high demand of the products. The company’s image and reputation was the focus for the introduction of transformational initiative; hence, it was sincere because every company wants to improve its performance and to gain competitive advantage. Are more transformational initiatives needed? Why or why not? They are needed. This is because the company has more potential of expansion and this can be achieved through having adequate initiatives that can help the expansion exercise without compromising the existing systems. Management needs to be flexible and creative to enable them move and adapt to various situations. Without proper transformational initiatives, the company cannot meet all its demand and satisfy all the clients they are serving. It will also act as a guideline to the management in identifying operations that need to be prioritize and some initiatives needs urgent execution for it to penetrate into the market and win customer loyalty. 7. What issues do Lee Scott and Wal-Mart management need to address? Both Lee Scott and Wal-Mart managements should address numerous issues. First is about many ailments that were established to bring accessible and affordable health care. They are not insured; hence, leased meaning the personnel from both companies cannot operate. In addition, the growing population is an issue to be addressed because customers want sufficient supply of merchandise. They have to expand their operations so that they offer their customers globally high quality products and services without delay or shortage. They should operate in a cost effective and efficient manner to meet the rising demand in the market. The changing expectations of people are pushing both companies so that they will have to adjust as they prepare to face the future. The companies should not fall behind because there is high competition in the market; hence, can loose their customers to their rivals (Pahl 2009, p. 44). Leadership is an issue to be addressed because without capable leaders, the companies cannot become successful. Leaders should have required skills so that they can manage the organization towards the achievement of the set goals and objectives. Leadership is an issue that needs to be addressed so that employees can be motivated to discharge their duties in accordance to the rules and regulations set. Employees are important and the top management should address issues that affect employees. Finance is an issue that needs to be addressed because when expanding operations it requires many financial resources (Pahl 2009, p. 46). Wal-Mart has had an issue about criminal investigation in Los Angeles. This was because of the way in which they handled hazardous waste on merchandize classified. They dump the waste products from California stores in Las Vegas. They used the return center before disposing them or dumping at disposal site. This issue needs to be addressed so that waste products are disposed in the right place or site. This will reduces criminal cases that may affect the company because it involves the use of many financial resources. In addition, it can lead to the closure of the company leading to losses and waste of assets. The waste materials should have gone to the disposal site direct rather then causing inconvenience. Wal-Mart too has had issues where it was forced by former employees in Canada. It is believed that employees were harassed. This led to the ruling that the retail store should be closed due to unfavorable conditions and terms of employees. Wal-Mart management did no allow their employees to join local union in Denver. These complaints have been reported severally and therefore, the company has to correct this because it will affect the performance of the company. In addition, the image and reputation will be adversely affected; hence, an issue that should addressed (Pahl 2009, p. 47). Wal-Mart Company has been facing shortages of products that have been inconveniencing customers in some stores. For example, Wal-Mart stopped selling guns in California across its 118 stores due to violation of laws. The investigation authorities stopped the stores from selling the products. Violation of state laws has been a major issue affecting the company because it cannot comply with the rules and regulations. 8. What recommendations would you make to Lee Scott? Lee Scott should ensure the company’s top management maintains the required standards in the company. He should not listen to the critics because most of the want to bring down the company. There has been many incidences facing the organization, but he should formulate strategies to ensure the company improves in the production of high quality services and products. Lee Scott should ensure the company comply will all states laws to avoid court cases and many stores being closed (Pahl 2009, p. 48). In addition, he should ensure the products are distributed in the market within the required in order to avoid shortages. The company should cut the costs of production so that it can be cost effective and efficient in the market. Low priced products will ensure the customers are maintained or retained because the competitors will not lower the prices of their products. This will lead to increased sale; hence, improved profits. The image and reputation of the company should be improved so that it can gain competitive advantage in the industry with stiff competition. He should motivate employees by ensuring the terms and conditions are favorable to them they can discharge their duties freely without unnecessary conditions. He should focus on opening or expanding its operations to areas where there are many customers. In addition, it should improve its publicity by expanding its operations to other countries in the world so that it can be trusted and gain more customers. It should review legal and public relations in-depth so that the company cannot involve itself in court cases that have led to the closure of its stores in some regions such as California. He should reach to its critics so that he can determine whether they are saying the truth about the company’s operations or malice that aim at affecting the reputation negatively because of competition or otherwise. He should merge and acquire some firms that area a threat to the company so that it can dominate the market. Furthermore, it should promote the conservation of environment so that waste products are not disposed in undesignated sites that can cause more law tussles that are costly and can lead to closure of the company (Pahl 2009, p. 49). References: Pahl, N. 2009. The Idea Behind the Starbucks Experience: The Main Elements of Starbucks' Strategic Diamond. New York: GRIN Verlag. Pp. 43-49. Sara, G. 2008. The Story of Starbucks: Built for Success. Kansas: The Creative Company. Pp. 34-39 Thompson, A. (2008). Wal-Mart Stores Inc. in 2008: Management’s Initiatives to Transform the Company and Curtail Wal-Mart Bashing. New York, NY: The McGraw-Hill publishers. Read More