Business Plan for Wal-Mart - Essay Example

Running Head: Wal-Mart Wal-Mart of the appears here] of the appears here] Retailing is a key globalindustry with direct contact with daily life. All over the world it is affected by technological changes that enable new supply chains and new ways of selling and marketing (Daft & Richard, 1986). Managers in the industry respond to demographic and Sociocultural changes and negotiate with regulators. Dominating global retailing is the US firm Wal-Mart - it dominates North American industry directly and the global industry by example. Wal-Mart having 1.2 million of employees is considered as the world's largest retail stores chain. Every week, 138 million shoppers visit one of Wal-Mart's 4750 US Stores to benefit from their everyday low prices. There are another 1309 stores in 10 other countries. These prices are obtained through the massive buying power of the firm and tight contracts with the suppliers, by the relatively low average wages paid to employees, by the streamlined business model and by continual fine -tuning of strategy. This attracts customers: Wal-Mart commands about 30 per cent of the US market for household staples such as toothpaste and sells 15 - 20 per cent of all CDs, Video and DVD. It is now becoming a force in book retailing as well. The firm was started by Sam Walton, who focused on locating large stores in rural areas while rivals built in cities and suburbs. The typical new Wal-Mart I now a 'Supercenter' that sells groceries and general merchandise in a store with an area of about four football fields. Wal-Mart has about 1400 of these supercenters in the United States. Wal-Mart has a great impact on suppliers and consumers. Due to the huge demand of Wal-Mart stores, suppliers are bound to stick to it only. Consumers get all the household items at a relatively low prices. To get the goals of any organization in certain intensity there are some issues involved. These issues, consists of necessary business, technology and human factors, are called Critical Success Factors. Firstly, a company has to focus on its business environments and secondly, it must be examined that what kind of risks have to face during the implementation cycle of business strategy (Aram, 1976), because the CSF is very much reliant on business's position. Several other CSF can be identified for specific circumstances. It is necessary that the basic features of the business like cost, quality of the product, services will not be affected negatively after entering into the marketplace Company must maintain a solid and comprehensive strategy of business The business of the company must have a complete support of its top management The infrastructure of the business must be complete and comprehensive The employees of the company are well trained Company's pricing policy not affected by its business The expectations of the customers must be taken care of Personal and 1-1 attention to all customers Strategic Planning: The strategic choice really consists of answering questions about competition - that is how the firm will compete to achieve its mission and goals (Daft, 1989). While these decisions are important, strategic decision makers often pay less attention to the 'with what will we compete' issue, resulting in poor strategic decisions (Galbraith & Kazanjian, 1986). For example, Pepsico in the 1980s acquired the fast-food chain of Kentucky Fried Chicken, Taco Bell and Pizza Hut in an effort to increase its customer base. However, it failed to recognize adequately the differences between its existing workforce and that of the fast-food industry as well as its ability to manage such a workforce. One recent study in the United States of 115 strategic business units within Fortune 500 corporations found that between forty nine and sixty nine percent of the companies had some link between Human Resource Management and the strategic planning process (Fisher & Dowling, 1999) however, the level of linkage varies and it is important to understand the different levels. The Executives of Wal-Mart are well capable and have extra ordinary skills. They simply concentrate on patrons, markets, and competitive positioning and so on domestic issues. The perils and openings were discovered the endurance of an appropriate business strategy. The demands of assignments for preparing strategies and scheduling their implementation is subject to find out the altering atmosphere, know how of customer groups and requirements of their needs in a planned way (Mowday & Sutton, 1993). The development of business strategy proceeds on the basis of domino effects obtained from the study of industry and competition (Drucker, 1954). By the revelation of business strengths and weaknesses, for the growth of a wide range of strategic plans for the successful administration of environmental openings and threats is called the Strategy Formulation (Robbins, & Coulter, 1996). It comprises exploratory or redefining the corporate or project mission by indicating attainable goals, emergent strategies, and setting execution procedure for business. The formulation of objective of Wal-Mart depends on its mission and by the help its objectives there are some desired goals that Wal-Mart has to achieve. The product diversification is also an element of its strategy. Core Competencies Core competency is something very vital, which gives individuality to one organization over its business rivals. The major core competency of the Wal-Mart is that it is known as the largest and the low- priced stores in the North America. Wal-Mart's idea has come up so successfully that they have many years of profitability with such a simple and unique vision. The most prominent evidence of their distinguished vision is that they posted the profit even in severe financial crisis, while all other businesses are either filing chapter eleven or cutting their costs by cutting the salaries of their employees. Cost and Differentiation Strategy According to Michael Porter of Harvard, competitive advantage stems from a company being able to create value in its production process. There are two well-known methods of creating value. First, Reduction in cost can or creates value. Second, value can also be created by adding or providing something extra which cannot be offered by the competitors. This has ultimately guided towards the two basic strategies. According to Porter, the 'overall cost -leadership' strategy focused on becoming the lowest cost producer in an industry. This strategy is achieved by constructing efficient, large scale facilities, by reducing cost through capitalizing on the experience curve, and by controlling overhead cost and cost in such areas as Research & Development, Services, Sales Force and Advertising. This strategy provides above average returns within an industry and it tends to bar other firm's entry into the industry, since the firm can lower its price below competitor's cost. For example, IBM - clone computer manufacturers like Dell and Compaq have captured an increased share of Personal Computer market by offering Personal Computers at a lower cost than IBM and Apple. The differentiation strategy, according to Porter, attempts to create the impression that the company's product or service is different from that of others in the industry. If a company succeeds in differentiating, it will achieve above average returns and the differentiation may protect it from price sensitivity for example, IBM has consistently emphasized its brand image and its reputation for superior service while charging a higher price for its computers. Wal-Mart uses cost strategy by reducing cost of most of the household items to attract more customers. Building a team The development of the thinking, vision and mission statements were made possible by the company who were not only dedicated with their staff members but also believed in implicated in person. That moment in which they were mutually obligated and their efforts to do something revolutionary to achieve their targeted number of companies, to build their organization more efficient and ideally perfect. Valuing interpersonal skills The prototypical characteristics of triumphant individual or team is well trained and skilled and eccentric to those who have little knowledge of supple emancipation. The brilliant communicators of the company are involved to narrate to companies, to verify their requirements and give espousal. Build an advantageous and demanding culture for their better learning. But confront not over until they do not become a group member instead of a sole agent. They have to interact with their colleagues and other staff members to aid them, to communicate the ideas with each other, to give information and to proffer feedback. Forward planning The interpersonal skills are not the only ability to run a winning virtual organization and at that moment the manager has to play a crucial role with the vision and forward planning. A leader required leading them in a right direction, and equipped them with the assurance of availability of required resources, by the means of furniture or training. The team looked for the development of their abilities of confidence, of direction and of empowerment. The development of philosophy, values and mission was worked out by the manager and his team. Then they resolute functions and errands - often-changed responsibilities given the flux in staffing, alters to program and needs from industry. But first they documented these alterations and changes were agreed by everyone. The kind of variation is just another chance for workforce to be multi-skills and their become career more receptive. Human resource management The construction plan of Human Resource Management depends on solid groundwork achieved by this vital effort. To accomplish the program's goal and given preferences to whole of employees instruction needs, workforce training needs and individual educational needs. To acquire the skills and expertise to congregate personal, team and program objectives, suitable workshops were then held. Wal-Mart believes in participation of employees in decision making. Participation encourages the members of Wal-Mart to influence and contribute to decisions. Different organizations use different level of participations among their employees. Some organizations take all employees on board in taking a decision while some others do not even bother to consult their employees. Organization in which participation is at a minimum are said to be authoritarian. Organization with greater participation are to that extent democratic (Emery & Tuggle, 1976). Such organizations which use authoritarian style, the decisions are imposed from the top. One or two tope executives take the decisions, and such organizations requires strict and complete obedience from their employees (Stone, Lederer & Christie, 1993). Change is always resisted. Planning often depends on the recognition of needed change: that many would prefer to ignore (Ackoff, 1970). In planning a merger of two companies, the planners know that their jobs may be in jeopardy. Involvement of those affected and full communication with them helps to reduce this problem. Control is essential for strength and morale of an organization. Members do not like things to be out of control, for they cannot predict what will happen to them. The manager is likely to be considered unfair, for in the absence of control they cannot be sure that everyone is treated equally. Morale falls when the manager has no way of discriminating between the honest and the not-so-honest excuses. The success of a person or an organization greatly dependent on the attitude of the employees towards control. Some executives are hesitant to exert control; they ignore deviations, hoping that self-correcting influences will save the day. In part, this reluctance to control results from an awareness that subordinates resent control, particularly if it is heavy-handed. Even where there is respect for order and control there is also, in society generally, a sentiment against control that supports opposition to it. Some persons are disorderly in their work habits and thought process; some use disorder and confusion as a strategy for manipulating and controlling a situation for private benefit. The manager who creates confusions that only he can understand thereby becomes indispensable. Developing an inclusive communication network To be a part of communication network the efforts were made simultaneously without any difference of role and location of team members. The assurance of smooth working of system and to ease for the people a lucid design of communiqu was introduced - as well as reliance, joint effort and admirable working affairs. Trust can be built, among the employee, by including internal communication in the performance management system. Consider a system through which every employee can evaluate the manager and the whole management including manager's evaluation of the owner of the company. The basic purpose of this routine is to check the details of manager's unique strengths and position him based on these strengths (Kramer 1999). In the present scenario, after considering what employer and what employees want, the success of any business depend much upon the loyalty and trust of their employees. The ability to trust is the basic difference between a bureaucrat and an entrepreneur. They both are different in a way that entrepreneur trust his associates and risk failure also, while the bureaucrat minimize risk. The relationship between companies are established and connected by means of trust not just by the contact. Wal-Mart utilizes a form of teleconferencing called videoconferencing to enable headquarters staff and store employees to both see and hear each other on television. Wal-Mart uses teleconferencing to broadcast urgent messages, to handle situations in which many stores must converse with headquarters to solve a critical problem, to share merchandising and display information between stores, and to implement training. The satellite technology used by Wal-Mart for teleconferencing also gathers sales and inventory data from stores for the central computer, transmits credit card authorizations and tracks the company's complex distribution system. Developing appropriate policies and procedures To avoid the delay in transmit information some policies and procedures were devised and also to manage the issues of broad range communication - such as presentation, conscription, ensuing etc. email, video conferencing, phone and facsimile facilities are core necessities in connecting individuals to the whole team and a particular team member. The accentuation on communication and connection was significant because an individual, who's geographically stationed in a small regional campus, can be unseen. With the help of staff uniting and circulating feedback to all team members, supervising and examining were constant. To developed the values, reliance and the environment of mutual support was established by some extra efforts such as further training, given supplies where required, and by the modification of programs. Wal-Mart uses Cost leadership strategy to keep its costs as low as possible. It has parlayed cost leadership into a $32 billion retailing empire that is now the nation's largest. Wal-Mart managers keep a tight lid on merchandise and store operating costs so that they can offer low prices, and they continue to work on additional warehouse and distribution efficiencies. Role of a Managerial Leader The purpose of managerial leadership is to integrate the interests of the individual and the organization. This integration can take the form of translating Wal-Mart's requirements into how they will affect the individual and the nature of the work to be done; setting overall goals and directions important both to the unit and to the individual are also important elements in managerial leadership. Vital too, is the most humanistic side, the personal relationship between leader and follower. What the managerial leader does is important to Wal-Mart's satisfaction and commitment to mission related issues and objectives. A good leader functions as a buffer that absorbs shocks from either directions, as well as serving as a formal link to the other specialization and levels of authority within the organization. In all these roles, the managerial leader's interest in, and commitment to, the well being of his or her followers is essential. The performance of a good manager can be measured by the extent to which those goals that are important to the group are met (Fiedler & Chemers, 1974). The manager's effectiveness is measured by how well formal goals are met through the productive efforts of subordinates. The managerial leader should be evaluated for effectiveness on both sets of criteria, both formal (task) goal accomplishment and informal (personal and group) goal accomplishment. Personality traits display inconsistencies and weak relationships with leadership. It can be said that dominance, introversion-extraversion, sociability, and aggressiveness cannot be concretely linked to leaders as identifiable or predictable traits. In other words personality traits cannot be reliably used to distinguish leaders from followers or good leaders from bad leaders. An effective manager must behave in some consistent set of ways in order to interact with followers, solve problems, or encourage enthusiastic participation in important activities. If sets of behaviors could be found that distinguished between effective and ineffective leaders, then ineffective leaders could be taught how the effective leaders acted and thus become more effective. Thus, in my opinion, the managers of Wal-Mart must possess the following characteristics, which can make a manager an effective manager: Representation: speaking and acting as the representative of group Demand reconciliation: reconciling conflicting demands and reducing disorder to the system Tolerance of uncertainty: ability to tolerate uncertainty and postponement without anxiety or being upset Persuasiveness: using persuasion and argument effectively, exhibiting strong conviction Initiation of structure: clearly defining the leader's own role, and letting followers know what is expected of them Tolerance of freedom: allowing followers scope for initiatives, decision, and action Role assumption: actively exercising the leadership role rather than surrendering leadership to others Consideration: regarding the comfort, well being, status, and contributions of the leader's followers Production emphasis: applying pressure for productive output Predictive accuracy: exhibiting foresight and the ability to predict outcomes accurately Integration: maintaining a closely-knit organization, resolving inter-member conflicts Influence with superiors: maintaining cordial relations with superiors, having influence with superiors, the leader is seen as striving for higher status Successful Managers should be judged from the results accomplished in performance and in building an effective work group. A successful manager will exhibit some or all of the following characteristics: Make good decisions Motivates people to work with him Has control of the situation Assume responsibility Fair in his treatment of subordinates Inspire confidence The style of the leadership puts into practice in a given situation is intertwined with the substance of that job to which a manager directs his attention. Therefore the content of the job and the style must be looked at together and not just the style alone in assessing managerial overall performance. Each employee has a leadership role and management should recognize this. Each employee has the opportunity to demonstrate leadership ability in two major areas of responsibility: 1. The development of sufficient technical job knowledge and skill to satisfactorily perform a complete job 2. The development of the ability to produce job results by working with and through others. Conclusion The concept of customer satisfaction has become increasingly critical in the present business world. At one time the accepted philosophy was expressed as "let the buyer beware". In contrast, today's newer philosophy holds, "let the seller beware". Today's sophisticated buyers feel they should be able to purchase products that are safe, reliable, durable, and honestly advertised. It is almost impossible to create customer's satisfaction without efficient, effective system and competitive and reasonable cost and price structure. All the transactions with customers must be completed on time and to satisfy all the concerned persons. The processes must be well conceived and well executed. Customers trust those organizations where their expectations met. So well execution of a transaction is not enough. Any organization's ability to meet these new and higher expectations distinguishes it from its competitors. References Ackoff, Russell, L. (1970). 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