Corporate Communication Strategy of Wal-Mart
The importance of communication strategy in a business environment is undeniable, especially in the age of information as happen today. As companies become more complex and the search for competitive advantages become more intense, the value of information has been enhanced significantly.
In their effort of creating additional competitive advantages and contribute to corporate value creation, a chief information office (CIO) has many strategic applications to consider. The aim of these strategic applications is to discover and implement a communication strategy that will support the company’s business objectives for its customers, workforce, and partners. Very few companies are able to gather and motivate the best people to solve problems, identify and communicate manufacturing issues with the right people or establish a real-time communication channel to resolve issues.
Concerning the issue, this paper discusses communication strategies of Wal-Mart. The purpose of this paper is to elaborate how communication strategy is implemented in a successful giant company and how the applied communication strategy fits the principles of communication management.
II. Communication Strategy
Communications strategy is the branch of a more wholesome perspective called communications management. Communications management is the discipline of managerial science that includes systematic processes involving communication channels of an organization.
Companies generally has communication managers, whose tasks are to design the structure of organizational communications, define principles and standards of communications, formulate goals of the communication management, control and monitor the flow of information, organize communication training, etc (‘What is’ 2007).
II.2. Types of Communication Management
The aim of communication strategy and communication management is to generate effective business management practices. In business, however, there are actually various types of communication, they are:
Human Relations and Team Building
Communication Technology and Electronic Communication
(‘What is’ 2007)
Each of these communication management strategies have their own ways of contributing to the operational aspect of a company. Therefore, they all possess different activities and goals.
For example, in an organizational communication, communication management could contribute to enhance corporate processes by communicating: vision, philosophy, information and organizational messages, etc. The goals of organizational communication are to generate credibility, distribute message, maintaining communication channel, saves time, and enhance operational effectiveness.
III. Wal-Mart Communication Strategy
Wal-Mart Stores Inc. is the largest retailer in the world. Discovered in 1962, the company grew endlessly because of its business philosophy, ‘low prices, always’, inherited from Sam Walton, the founder of the company. In 1967, the company has managed to maintain 24 stores across Arkansas, Oklahoma, and generated $12.6 million of sales. It was not until 1968 has the company expanded outside of Arkansas and gained more profit from the rest of US regions.
The company is famous for many of its brilliant strategies in marketing, such as expanding to small cities instead of large ones and providing lower prices. Among other strategies, this is a smart decision that will generate customer loyalty and reduce the intensity of competition. Today, the company operates approximately 38 stores with 1,500 employees and generates a sales number of more than $44 million, annually. Wal-Mart’s merchandise is designed for local markets (‘The Wal-Mart Story’, 2007)
III.2. Communication Strategy in Wal-Mart Competitive Advantages
As mentioned previously, Wal-Mart is famous for a number of competitive advantages that excelled the company in their markets. For instance, the effectiveness of Wal-Mart inventory distribution and storage management is said to be unchallenged within the industry. In this chapter, we will discuss the role of communication strategies in supporting that competitive advantage and also other competitive advantages of the company.
III.2.1 Managerial Communication Strategy in Wal-Mart Inventory Management
As mentioned previously, Wal-Mart inventory system is known as one of the most effective and efficient of all. In this subchapter I will elaborate the reason. In Wal-Mart, a single product is indexed over a thousand stores. Each store is designed and fine-tuned to meet local needs rather than following a general policy. The authority to decide which items to display is given to store managers, in order to provide the types of services that best suit local preferences. Even the shelf spaces are allocated based on local demands.
Furthermore, Wal-Mart designed its pricing policies at local levels. This way, managers of the local stores will have the power to react over local changes in terms of prices. Local pricing decisions are also designed to minimize expenses and maximize sales volume and turnovers. In other words, in Wal-Mart the prices of products vary from one region to another. The strategy resulted positive effect in terms of financial performance. Wal-Mart’s stores generally have one of the most competitive prices in the markets they served (‘Wal-Mart Facts’, 2007).
As displayed above, Wal-Mart applies a decentralization strategy in managing inventory and making price decisions. The implementation of this highly decentralized system is affected terminally by Wal-Mart’s managerial communication strategy. Wal-Mart entrusted most of the goods management authority to local managers (‘Wal-Mart Facts’, 2007).
However, prior to their ‘reigns’ these managers are trained and well informed of the vision, mission of the company, and how they should strive to achieve them. In a sense, Wal-Mart depends considerably to its communication strategy that creates managers with full knowledge of corporate objectives and cultures. In the absence of such communication strategy, Wal-Mart’s decentralization strategy will backfire and resulted problems in local levels (‘Wal-Mart Facts’, 2007).
III.2.2. Organizational and High-Tech Communication Strategy in Wal-Mart’s Operations
Another competitive advantage of the company is its operational strategy. The company owns multiple distributions centers. However, all of the activities within these distribution centers are coordinated to fit one another and achieve maximal efficiency. For example, the distribution centers are able to manage their inventory to reduce floor space for inventory and enhance space for display.
Furthermore, the company uses a shelf labeling system which reduces the handling cost of goods and keeping cost lower. This would not happen if the company is to use the individual product labeling as most would have done.
There is a standard electronic tracking system of the inventory at the point of sale. The information is routed to the computerized inventory system. This automated inventory management system lowers the costs of inventory and resulted easier analysis for future references of consumers’ demand reviews. Wal-Mart uses satellite network to collect information regarding sales data and analyze it in order to avoid overstocking or deep discounting (‘Wal-Mart Facts’, 2007).
Although the corporate website fail to mention it, the practice of this operations strategy required significant support of organizational communication strategy and furthermore, a technological communication strategy. The lack of these communication strategies will make it impossible to perform those operational activities elaborated (‘Wal-Mart Facts’, 2007).
For instance, the practice of managing the warehouse inventory system to produce less inventory rooms and more display rooms require a good organizational communication between local managers, local employees and local partners. Each part of the system must be fully informed of the program in order to make the right decisions that enable efficient warehouse inventory management. Each idea, policy and limitations must be routed to all members of the local store to ensure that everything is going according to plan (‘Wal-Mart Facts’, 2007).
In terms of technology communication strategy, the company has also displayed significant attention. As mentioned previously, the company has a high tech inventory system that ease inventory tracking and evaluation, Furthermore, this technological system also enable managers to perform costumer analysis for future references. Wal-Mart has committed significant portion of their resources to provide the automated technology system and support efficiency and cost management.
III.2.3 Human Relations in Wal-Mart Distribution Network and Vendor Relations
Wal-Mart distribution network has been the talk of the decade in the retail industry. The company has a just in time inventory delivery system that allow logistic management that minimize cost of idle inventory in distribution centers. Wal-Mart’s distribution centers are 24-hour and highly automated machines. The company owns their distribution centers to ease control and enhance independency. The system is integrated with the inventory tracking system at the point of sale; thus, allow management to reduce lag time in inventory repletion.
Wal-Mart also manages their vendor relations in a highly competitive manner. Wal-Mart eliminated manufacturing representatives and buying decisions are centralized to ensure purchasing costs are at the lowest. The company communicates with more than 3,000 vendors regarding various issues like inventory orders, forecasting, etc. These relationships are maintained and developed to more profitable relationships. Wal-Mart established a well managed inventory systems with trusted suppliers. This reduces inventory cost and enable supplier to increase product sales (‘Wal-Mart Facts’, 2007).
In order to sustain such management system, Wal-Mart is highly supported with good communication management skills. Managing the distribution system to achieve just-in-time standards require clear and un-tampered communication channels between the company and its partners. In addition to investing millions of dollars for a high-tech communication system, the company has also performed managerial training activities to ensure that all components of the just-in-time system are available. In terms of vendor relations, Wal-Mart has also invested considerably to establish a quality communication channel between the company and its various vendors.
III.2.4 In-Store Communications
In addition to communication strategy on inventory management, organizational and high-tech communication, human-relations, and distribution network and vendor relations, Wal-Mart is known as the best retailer that has excellent in-store communications without the need to spend much money on advertorial/promotion activities.
According to Doyle (2003), Wal-Mart communication strategy is beneficial to consumers since their messages are consistent and discernable in the long term. Their message is “We have got the merchandise and we have got it at a lower price.” The situation drives customers to have similar opinion that Wal-Mart is the cheapest retailers.
In addition, to achieve excellent in-store communication, Wal-Mart develops in-store TV network that informs large number of audiences. To do so, Wal-Mart provides about 125,000 TV screens in their 3,100 stores worldwide. This initiative is excellent since it reaches more than 127 million shoppers each week while giving possibility for Wal-Mart to inform about recent offers and discounts (Weaver, 2007).
This paper discuss about communication strategies that giant retailer, Wal-Mart, performs. Theoretically, there are several objectives of communication management including organizational communication, managerial communication, human relations and team building, report writing, sales communication, international communication, and communication technology and electronic communication.
There are four communication strategies that Wal-Mart does concerning their communication strategies; they are inventory management, organizational and high-tech communication, human-relations, and distribution network and vendor relations, and in-store communications.
Doyle, Mona. (2003). The “don’t be Wal-Mart” strategy – how to compete with Wal-Mart. Shopper Report. September 2003
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What is Business Communication? (2007). Retrieved April 3, 2007 from http://homepages.wmich.edu/~bowman/whatbc.html
Wal-Mart Facts. (2007). Wal-Mart. Retrieved April 3, 2007 from http://www.walmartstores.com
Weaver. (2007). Marketers target Wal-Mart’s in-store TV network. Retrieved April 6, 2007 from http://weaverandspinner.blogspot.com/2007/03/marketers-target-wal-marts-in-store-tv.html
What is Communication Strategy? (2007). Avaya. Retrieved April 3, 2007 from avaya.com/…/assets/whitepapers/Viewpoints-CommunicationsStrategy.pdf