Strategic Management and Business Policy - Essay Example

In 1995 Fortune magazine began to include service companies in its Fortune 500 list and by doing so Wal-Mart entered in at a ranking of fourth. Since then the company has remained on the list, climbing the ranks until it reached number one in 2002, where it remains today, with a growth rate of about 15%. "The revenues reflect domestic and international expansion and an increase in same store sales. Net income also benefited from reduced inventory shrinkage, improved merchandising, and a decrease in interest costs of capital leases.

" (Reuters) Wal-Mart does not formally spend time and resources on developing a corporate mission statement. Nor do they commit resources to research and development. The company follows a 'down home' approach to business woven into the corporate culture by its founder, Sam Walton. His approach to business was personal, with a high amount of resources devoted to community relationship. The retail giant has settled on the market segment which looks for low prices as the most important factor influencing the buying decision.

The result is that Wal-Mart is perceived as a friendly place to purchase goods at low prices. This marketing approach has served the retail giant well. The corporation has a board which consists of internal membe. The internal members are concerned with the day to day of the organization, and the external members can take a wider view of the company's overall image, and influence in the community it serves. This approach to ongoing corporate governance keeps the organization grounded to the community, and allows it to function without the formal mission statement.

The board serves as a rudder in the crosscurrents of today's business environment. III. External Environment. Wal-Mart employs a Buy American program, and stocks its shelves with many American goods. Wal-Mart has gained a lot of popularity through this program, and many Americans applaud Wal-Mart for its commitment to domestic manufacturers instead of catering to cheap foreign suppliers. But suppliers have complained that this has shut out non-Americans companies and suppliers from distributing through the Wal-Mart chain.

This approach to business carries with it both positive and negative consequences. The company has wide product selection at deep discounts, but a slowing national economy could limit product diversity, as well as price flexibility. The company has a strong position in discount retail market but is not engaged in research and development for future market positioning. Wal-Mart is increasing market share, but faces potential market saturation and decreased profit margin without availing itself of increased product diversity.

Within the communities it serves, Wal-Mart provides new jobs, often in rural areas which have limited employment potential. But the consequences of which are that many small businesses are often forced to close as a result of the price competition within a limited market. The unintended results can be development of customer loyalty, or a