Essay on Wal-Mart Strategic Management - Management Assessment Answers

December 21, 2017
Author : Julia Miles

Solution Code: 1ACHE

Question:

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Task

You are required to write essay oneitherStrategic ManagementorSustainability as follows:

  • Use an organisation that is or has been in the news during the past two years (work-related learning) as an example of strategic management practices. Failing that, select an organisation with which you are very familiar such as your current employer.
  • Apply and evaluate at leastthreetheoretical concepts toeitherStrategic ManagementorSustainability.
  • Go on to examine and evaluate critically how these theoretical concepts influence managerial practices in your chosen organisation with reference toeitherStrategic ManagementorSustainability.
  • Critically reflect on these practices and compile a series of recommendations that would enhanceeitherStrategic ManagementorSustainability practice in your chosen organisation.
  • Academic and professional communication skills: You must follow an essay structure that is at a minimum an introduction; a main body that outlines the argument, analyses the material you have researched and assesses this according to the guidelines above; and a conclusion.Your writing style must follow professional literacy: Citations and a final reference list that follows the APA 6 guidelines accurately; the quality of writing and presentation: accurate mechanics (spelling, grammar, punctuation etc.); use respectful language to discuss all people; avoid emotive language; employ inclusive, non-sexist language. Use a minimum of ten (10) citations/references.

In short, you will need to demonstrate an understanding and critical analysis of the theories surrounding the topic, as well as evaluating the practical reality in the workplace. Please refer to relevant academic literature and source materials, as well as drawing upon your knowledge of the organisation.

Presentation

Presentation requirements are as follows :

  • The Assessment must adopt an essay structure and not that of a management report.
  • Writing style must follow professional literacy.
  • Citations and a final reference list mist be included that follow the APA6 citation guidelines accurately.
  • The quality of writing and presentation: accurate mechanics (spelling, grammar, punctuation etc.); use respectful language to discuss all people; avoid emotive language; employ inclusive, non-sexist language.
  • Minimum of ten (10) citations/references used.

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Solution:

Introduction

Wal-Mart is the largest discount store in the world. The chain of supermarket has been on the news for its impressive performance in the last two years. The company was founded in 1945 and has its headquarters at Arkansas. The company has chains of supermarkets all over the world. Currently Wal-Mart has over 1209 discount stores and 1980 super centers. After being in the market for a long time the company resolved to have two channels of operations. In 2006 January the company launched the Sam’s Club which is involved in the selling of assorted product lines like hardware, household appliances, children’s wear, and women’s wear amongst others (Brian, 2014). The vision, mission, values, corporate governance are some of the elements that have strategically been important in shaping the success of the company. Wal-Mart is also well known for its lowest profit margin. The pricing strategy has always worked well for the company as the company is able to enjoy the competitive advantage on the economies of scale such as buying in bulk. The company has employed over 2 million associates in the world and over 250 million customers visit the company’s store in a week. The company has currently invested in 11 countries through the e-commerce websites (Canadian Press, 2015).

Vision, Mission and Values

According to Hoskisson a vision statement is an important element that strategically shapes an organization. The vision statement at Wal-Mart has been one of the driving factors that has made Wal-Mart the most successful company in the world. The vision statement at Wal-Mart has always been directed at promotion of ownership of ethical culture. The mission has always assisted the company to operate globally while considering ethical issues and incorporating cultural values to its employees (Hayden, 2014). Through that Wal-Mart has always been able to help its customers to embrace cultural diversity while conducting its operations throughout the world. The three main magic words of respect for individual, service to customer, and striving for excellence are currently used by Wal-Mart as their mission statement. That means that the company is loyal to its customers and hence the reason behind the 3 beliefs. The company is always focused on providing exceptional services to its customers with the lowest prices possible. The company has the lowest price margin and customers find it easy to shop at Wal-Mart stores because of their low prices compared to other stiff competitors like Shoprite (Thomas, 2014). The top level management team have also been working hard to preserve the values and loyalty to customer in addition to offering good customer care.

Leadership and Management

Corporate governance is very important in shaping the leadership of an organization. Wal-Mart Company is led by Chief Executive Officer, Board of Directors and other senior departmental leaders. McMillon Doug is currently the CEO of the company. In his presentation during the Annual general meeting of 2015 the CEO outlined that the strategy for growth for the company relied on four principles. The principles included winning the consumers on prices, assortment, experience and success. The CEO noted that the company’s customer base was ever growing hence the need to position itself to address the concern through the four mentioned dimensions. The CEO McMillon further noted that customers are currently making their decisions based on the four dimensions mentioned (Rogers, 2015). The company has been making more profits on assessments. In addition, the company has also adopted e-commerce and the CEO attributes increase in sales due to the ability of the consumers to purchase their merchandise online. Through the social media platforms and the websites the company is ever receiving customer demands for more assortments and more wears every day. The CEO also noted that the company is determined to serve all walks of customers according to their income levels (Rogers, 2015). That is because price matters to all customers and so does it for the company. The company CEO noted that lowest prices strategy is always within their DNA. The company is also focused on ensuring that the prices of their products will continue to run lower than they are currently irrespective of the inflation and marketing forces. The company’s CEO also noted that location matters as far as the company is concerned and so does the access (Rogers, 2015). It is for this reason that the company is always involved in opening new stores so that consumers can have easy access to their products. The company goes beyond compliance and is a position to live comfortably with sustainable development within the people it serves. That strategy has promoted a good work culture. The company also promoted 170,000 of its employees last year within the US based stores only. That is not to say that other countries and stores were not prompted. However, that only shows how the company is concerned about elevating the lives of its employees and the customers that it serves. The CEO was also categorical in the management of the company and hinted out that the company will moderate the growth in investments and concentrate more on e-commerce which is performing relatively well (Walmart Annual Report, 2013).

The company has always maintained a strategy of winning by improving its short term performance. Across all the segments short term positive performance is always a priority. The company is currently focusing of being the price leader across the assortment accessories in the world. In addition the company is also strategizing in changing the funding mix so that the company can also fund new growth and opportunities. The company has been able to beat its rivals through combining the pricing, service levels, stocks and merchant skills by generating improved performance in the super stores mainly based in the US.

SWOT Analysis

Strengths

Wal-Mart has strategically managed to beat its stiff competitors like Costco Wholesale Corporation, Dollar Tree, Kohl’s Corporation, and Target Corporation amongst many others through its strategic location and geographical position of its stores. The US presents the company’s largest segment of consumers. For example, the company has retail stores and wholesale stores in all the 50 states in the US (Lutz, 2015). The company has also a large revenue which gives the company a good capital base to compete effectively with its stiff competitors. The company has a revenue base of $482 billion and made net sales of $479 billion. The company also enjoys the advantage through its online shops. That makes the company the largest in the world and also the largest private employer in the world with over 2.3 million staff (Hayden, 2014). Due to that Wal-Mart still remains a major competitor in all the regions it operates. As already noted the company has the lowest profit margin. The company is able to maintain its profitability by strategically taking advantage of the economies of scale. The company also enjoys the ability to efficiently use its resources. That is mainly seen through their information systems, distribution of their facilities in the wider geographical locations. The company has also been engaged in a series of experiments in its retail shops and has always been successful.

Weaknesses

Being the largest retailer in the world the company has consistently faced some technological issues especially in the IT area. The company is also largely based in the US even though it’s the largest in the world. It is expected that the presence of the company be felt in more countries and continents in the world in order to maximize profits.

Threats

The company is hugely threatened by a lot of competition because it’s the largest. In addition, political challenges have also affected the company and some ethical issues. For example, most of the products that retail at Wal-Mart are manufactured in China and then sold in the US. However, the working conditions in China and the amount of salaries and wages have been deemed as very minimal (John Hulbert, 2015). In addition, the company has also been forced to outsource most of its production giving advantage to subsidiary company which may also increase competition. Due to outsourcing the company has also reduced the costs of production. The reduced prices also create intense completion and it is a big threat.

Opportunities

Wal-Mart has the opportunity of taking over the global market and can easily do that through mergers and acquisition. That has been a strategy that the company has used consistently and it has proved to be working. Since Wal-Mart is currently found majorly in the US the company has a major opportunity to widen its stores all over the world. There are a lot of emerging markets in Asia and Africa and the company can take the opportunity of acquiring a market share in those countries. The current strategies are working so well and proving to be of benefit to the company. For that reason, the company has the opportunity to continue widening its scope to ensure sustainable development (Brian, 2014).

Sustainable Development

Wal-Mart through its core values has always ensured that the social segment that is dealing with attitudes and cultural values have always been developed. That strategy has always ensured that the company retain its loyal customers. It is for that reason that the company has consistently expanded its stores at the suburbs areas due to the increasing population and demand for services. Wal-Mart has been on the spotlight for ethical issues like racism. There have been reports that the company is discriminating against women. However, the company has strategically improved its recruitment process and has consistently hired competent and qualified personnel. The company is also in tandem with the labor training laws and adheres well to the taxation laws and even the competition laws in the countries in which it operates (Thomas, 2014).

In terms of segmentation the company has always targeted a market niche of different ages and income. Strategically the target market for the company are the households who would wish to do their shopping in the market. With the opening of the Sam’s Club the company has ensured that children, men and women wear target the population expected to put on the wears. Through the inventory data and wealth of sales the company has consistently served its consumers well and satisfied them. Through the cultural strategy the company has always provided its customers with the cultural products based on specific age and their income brackets (Canadian Press, 2015). With the US economy doing very well the low prices that the company offers have always worked well for the company. Technology has been one of the most important strategy that the company has used in order reach its consumers. Through technology and e-commerce the company is capitalizing on the economies of scale by selling most of its products online. The supply chain management has also shortened through technology and service delivery has also improved placing the company at the heart of its consumers. Through technology the company has also effectively responded to the changes in demand and supply in the market. The company is therefore able to strategically plan for the future while acquiring feedback from the consumers through the social media platforms. The ability of the company to differentiate the sales channel from manufacturing to wholesaling and finally retailing has helped the company to serve its consumers. It is for this reason that the company has always grown so fast (Dahlhoff, 2015).

Competitive Strategy

With focus to North America where Wal-Mart has a huge presence Target Inc. is the second largest company in the world after Wal-Mart. It is argued that Target will soon acquire a larger market share in North America. However, Wal-Mart has successfully and continuously beaten Target because it is able to deliver discounts to its consumers while providing high quality goods. In addition, Wal-Mart is also able to offer wider variety of goods compared to Target. That strategy has always attracted the high income segment of customers which consequently leads to the high revenue experienced at Wal-Mart. In comparison, the main customer base generates $50,000 per year compared to Targets which is only $35000 a year (Lutz, 2015).

Business Level Strategy

Cost and differentiation strategy has always helped the company to remain the retail leader in the world. The company also ensures that they provide better quality goods at the lowest price with a wider market margin to outsmart their stiff competitors. The price skimming strategy has given Wal-Mart its competitive advantage. Not even the stiff competitors have been able to lower their prices the way Wal-Mart has been able to do. According to the CEO the company is ever thinking of reducing the prices as low as possible (Brian, 2014). That helps the company to strategically compete through price and differentiation. The company’s supply chain has also ensured that the prices always remain low. The supply chain is effective and in bound logistics that utilizes the just in time inventory hence ensuring that the products reach the consumers at the fastest time possible. The logistics and supply chain department has also ensured that Wal-Mart trucks are efficient in terms of fuel consumption, and have more pallets on load in addition to decreased empty miles. Technology has also helped the company to accurately forecast the supply chain and ensure that efficient transportation routes are utilized.

The corporate level strategy has always ensured that the company makes profits. Wal-Mart always ensures that it is concentrating its strategy on single business. It is for this reason that the company makes 95% of its revenue from the groceries. The single business strategy has ensured that the company diversify and hence reduces risks and increase the chances of growth (Halzack, 2015). Besides that Wal-Mart has always embraced the international business strategy since it operates internationally. The internal business strategy adopted by Wal-Mart is that of ensuring that customers of different countries and culture are treated according to their cultural values. For that reason, each region has its own product references and different stores have all folks of philosophies according to the culture of the community.

Conclusion

Wal-Mart remains the largest company in the world. The company utilizes various strategies that it has adopted that leads to the success. For example, the company ensures that it uses the low prices strategy and differentiation. Wal-Mart offers the lowest prices for its consumers and therefore have low profit margin. However, the company gains its competitive advantage from the economies of scale such as buying in bulk. The company has also an efficient supply chain strategy that ensures that goods and services reach the intended customers at the lowest prices possible. Leadership and management at Wal-Mart has always ensured that price, place, product and promotion is intended to deliver the company’s values. The company has also very strong mission, and vision that always aims at serving the consumers regardless of their cultural values. Wal-Mart has also strategically placed itself in the international arena and locally through corporate social responsibility.

Recommendations

Wal-Mart is facing a lot of competition from other companies like Target, Costco and many others. The best way to overcome this competition is by enlarging their customer base and spreading their wings to other parts of the world. Already Africa and Asian markets have shown strong presence of the middle class people who are upcoming and willing to spend. In addition, the Asian and African markets are dominated by small stores within their countries. Wal-Mart is a big name and its entry into Africa and Asia is likely to be received positively and that will increase the profits for the company. Wal-Mart must also consider their low prices strategy. For example, when the economy is struggling the company makes profits. However, when the economy is doing well some of the consumers have no need of low prices and that can hurt the revenues of the company. Technology is changing very fast in the modern world and so should Wal-Mart adapt and change with the trends in the business world. It is recommended that Wal-Mart should invest more in technology to ensure efficient ways of conducting business. That is through e-commerce in order to strategically beat their rival companies.

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