THÁCH THỨC TRONG QT CHIẾN LƯỢC (THAM KHẢO)

“Wal-Mart Stores, Inc: New Set of Challenges?”

1. Analyze the company’s history, development, and growth.

            Wal-Mart Stores, Inc., company that operates a variety of retail chain stores, based in Bentonville, Arkansas. Wal-Mart is one of the world’s leading retailers. Wal-Mart’s operations comprise Wal-Mart discount stores, Wal-Mart Supercenters, Neighborhood Market stores, and Sam’s Club warehouse stores. Wal-Mart Supercenters are the combination between Wal-Mart discount stores with full-service supermarkets. Sam’s Clubs are dealing with warehouse facilities. In 1945 Sam Walton, Wal-Mart’s founder, became manager of a Ben Franklin variety store franchise in Newport, Arkansas. In 1950 Sam opened the so-called Walton 5 & 10 in Bentonville, Arkansas. By 1962 he ran 15 Walton 5 & 10s. That year, Sam and his brother James “Bud” Walton opened their own store, Wal-Mart Discount City, in Rogers, Arkansas. In 1969, operating 18 Wal-Mart Discount City stores (now called simply Wal-Marts) while still managing 15 Ben Franklin stores, Sam Walton incorporated the company as Wal-Mart Stores, Inc. In 1970 the company started selling its first stock to the public and launched its first distribution center and home office in Bentonville. In 1972 the company was listed on the New York Stock Exchange (NYSE). With the operation of its own warehouses, Wal-Mart could purchase large quantities of goods and reduced cut costs. The company set up stores within a short interval to its warehouses and used an automated and computerized inventory and distribution system for the fast stock. In 1983 Wal-Mart introduced its Sam’s Wholesale Clubs discount membership warehouse stores (later known as Sam’s Clubs). In 1987 the company launched Hypermart*USA stores as a joint venture with Cullum Companies, a supermarket chain based in Dallas, Texas. Hypermarts combined groceries and general merchandise along with restaurants, banks, video rental stores, and other businesses, all in the same building. In 1988 the company renamed Hypermarts as Wal-Mart Supercenters. Among the businesses operating within Supercenters are McDonald’s and Taco Bell restaurants, and Blockbuster video stores. Also in 1988 Sam Walton stepped down as Wal-Mart’s chief executive officer (CEO). In 1992 Sam Walton died of bone cancer. Wal-Mart’s expansion continued in the 1990s. In 1990 it bought the McLane Company, a grocery distributor, for $274 million. That acquisition gave the company more than 50 additional distribution centers. A year later it bought the Wholesale Club, Inc., for $162 million and incorporated the firm’s 28 warehouse stores into the network of Sam’s Clubs. In 1993 the company added 99 Pace Membership Warehouses, purchased from competitor Kmart Corporation, to its Sam's division. In the 1990s Wal-Mart began to expand into other countries. In 1997 Wal-Mart stock was added to the Dow Jones Industrial Average, the most important indicator of U.S. stock market performance. In 2003 Wal-Mart sold its McLane stores to Berkshire Hathaway, Inc. In the early 2000s trade unions began efforts to organize Wal-Mart workers. Wal-Mart faced criticism for paying low wages and for hiring workers part-time as a deliberate strategy to reduce the expenses for health and other benefits. The company responded with an aggressive public relations campaign and denied that Wal-Mart workers, known as associates, were exploited. In 2004, Wal-Mart bought $18 billion worth of goods directly from China. (Encarta : 2006)

2. Identify the company’s internal strengths and weaknesses.

Strengths: Wal-Mart has brilliant strategy in doing business by selling cheap items both in retail and wholesale, it is excellent in arrange various stores in short interval which can satisfy all the wants and needs of the residents in the neighboring. The company shares market with the choice of small towns where it can be the unique. It carries out the atmosphere of closeness by using employees greeting customers at its stores’ entrance. And it can reduce the costs for advertising by using activities to make its trade-mark unshakable.

Weaknesses: Wal-Mart has been criticized as sweat-shop with the employment of part-time employess. Illegal music proliferation technologies – severe price competition on CDs from Wal-Mart. Another weakness is that its employees cannot get paid as they would be paid by other firm.

3.      Analyze the external environment: Instead of spending money on advertissing, the company set up charitable fund for community and the grants of college scholarships for selected senior students. The company also sponsors the local events. The above-mentioned factors is its impact on its society.  

4. Perform a SWOT analysis.

a.           Strengths: Wal-Mart is strong in its brilliant distribution system to consumers, its farsighted managers have done nothing less than democratize the American dream. Its low prices are spurring productivity and helping win the fight against inflation. It is obvious that America’s most admired company, that is, Wal-Mart Stores Inc.  

b.      Weaknesses: Wal-Mart’s Sam Walton believed that leadership consisted of providing employees with the products, training, and support needed to serve customers and then standing back and letting them do their jobs. The more America talks about Wal-Mart, it seems, the more polarized its image grows. Its executives are credited with the most expansive of visions and the meanest of intentions; its CEO is presumed to be in league with Lex Luthor and St Francis of Assisi. It’s confusing. One consistent refrain is that Wal-Mart squeezes its suppliers to death. (Kinicki-Williams)

c.       Opportunities: Wal-Mart has lots of opportunities in doing charitable activities as well as sponsorship scholarships to create the intangibles for its good-will.

d.      Threats: It is necessary to consider the advantages such as a decline in the life expectancy of local businesses after Wal-Mart moves in as one of the threads. Moreover, Wal-Mart has lots of strong competitors such as Target, K-Mart, and Costco. But above all is its bad image. 

5.  Analyze corporate-level strategy (Company as a whole):           Sam Walton’s guiding philosophy for his stores from the beginning was to offer consumers a wide selection of goods at a discounted price. The company got profit by making advertising costs low and sold retail shopping to small towns’ residents. The company operated the stores as friendly, local businesses. In the Wal-Mart spirit, employees often greet shoppers at the store’s entrances. Since their early days, Wal-Mart stores have concerned to specific community needs and wants, it often sold local merchandise along with items sold throughout the chain. Moreover, the company granted college scholarships to selected graduating high school seniors, and the stores sponsors various community events. Wal-Mart’s corporate community spirit began to exert an influence on public policy in the 1990s. Wal-Mart decided on banning the stickered albums altogether from their stores, and succeeded in influencing many record companies to release clean versions of stickered albums. Wal-Mart has remarkable impact in the music industry, largely because Wal-Mart  shares about one-tenth of compact discs sold in the United States. In 1996 the company joined with the U.S. Drug Enforcement Administration to prevent the bulk sale of over-the-counter drugs used in making the more dangerous, mood-altering drug methamphetamine. Wal-Mart received both applause and criticism.  

6.      Analyze business-level strategy (The particular company division or component the case is concerned with): The success of the Wal-Mart chain has been extensively studied, and its outstanding financial performance is said to be based upon six strategic concepts that combine to produce large sales volumes and low operating costs at each of the stores because of the following reasons:

• Wide selection; • Low pricing; • Niche placement; • Accurate data; • Direct shipment.

• Central purchasing.

(www.walmartstores.com)

7.      Analyze and correlate the company’s strategic plan to that of its structure and control systems: Wal-Mart maintains its strategy of the rule over small towns, lower prices, satisfaction to customers, lower taxation, doing charitable activities and granting scholarship instead of marketing campaigns to strengthen its image and good-will.

8. Make recommendations

a.       Consequences of recommendations: Wal-Mart should research its impact on local economy, and other firms. Additionally, Wal-Mart should permit its employees has trade union and get good salary.  

2. Pros and cons: In doing the above-mentioned policy, Wal-mart can get more customers.

Follow-up plan and schedule: Wal-Mart should share some operations with local firms on mutual interests. For example, when Wal-Mart wants to set up any new store the task of construction will be contracted with local companies.

References

Microsoft Encarta 2006.

Kinicki-Williams, Management: A Practical Introduction, Second Edition.

www.walmartstores.com