Walmart Management Analysis - Wal-Mart Essay Example
Company: Wal-Mart Introduction Wal-Mart Stores, Inc - Walmart Management Analysis introduction. is an American public corporation that runs a chain of large, discount department stores. It is the world’s largest public corporation by revenue and is founded by Sam Walton in 1962. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business. Wal-Mart operates each store with the same philosophy, provide everyday low prices and superior customer service. Today, this retailing pioneer has annual revenues of over $100 billion, 3,000 stores and more than 750,000 employees worldwide.
Planning Wal-Mart has many different levels of management planning in place to follow through on its goals and objectives. There are many factors that influence its strategic, tactical, operational and contingency planning. Wal-Mart has been a very successful corporation. Their slogan is “save money, live better. ” Saving people money so they can live better was a great goal when Sam Walton envisioned opening the first Wal-Mart store. This mission is embedded in their business and empowers them to meeting customer needs.
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They are combining their role as a retailer with their responsibility to help people improve their situations and build better lives. Wal-Mart hold two main objective and providing the customers what they want, when they want it, all at a value and treating each other as we would hope to be treated, acknowledging our total dependency on our associate-partners to sustain our success. Because of customers always want high value products, good customer service and lowest prices. They are also highly regarded in the strategic planning stage.
In the cost leadership, they have few managerial layers in order to reduce overhead costs and also simplified planning practices to reduce planning costs. On the other hand,they used intense and effective training programs to improve worker efficiency and effectiveness. Cost Leadership is more focused on the lowest-cost products as raw materials and frequent evaluation processes, and also investments in technologies has been became important in order to reduce manufacturing cost. In the Differentiation strategy, prompt understanding customer’s purchasing preferences and producing high-quality products.
Besides, the management uses the subjective rather than objective performance measures and encourages worker creativity and productivity. They focused on the highest-quality raw materials and purchase of highest-quality replacement parts. Differentiation strategies are more on uniqueness and allow the firm to produce highly differential products. Wal-Mart is expanding internationally, which has become a global leader in corporate sustainability. Walmart has taken an innovative approach to becoming a more sustainable company that has cut waste, improved energy efficiency and built a more environmentally friendly product line.
Moreover, they has launched a supplier innovation programme in their website called “Get on the shelf”. This idea encourages suppliers to come forward with new ideas. They are looking to give those that don’t get the chance an opportunity to showcase their skills, and also involving the general public who vote for their favorite ideas to decide what they want to see in the shops. Wal-Mart is the largest company in the world, with slightly more than $400 billion in on annual sales. It has aggressively entered into the international market by opening up new stores in many countries of the world.
There are more than 8,500 departmental and warehouse stores that operate under 53 different names in 15 countries. They used different strategy in different country where have a different name and different quality according to the preferences of customers. For instance when this company entered into Korean market in the year 1998 and therefore started offering high quality products to the Koreans in order to compete with Korean companies. But they also have to install fish tanks and display uncovered meat in China because Chinese customers preferred choosing their own live fish and other seafood.
Wal-Mart Company operates in China is different from the Korean based on different consumer group. Wal-Mart Company takes accommodative stances. Sometimes exceeding its legal and ethical requirements. Wal-Mart promises the customers “Always low prices. Always! ” Providing low price to customer and high return to stockholders. Therefore, Wal-Mart is not offering too many company benefits to their employees and even cutting wages. according to statistics,full-time employee working at Wal-Mart only make $8 an hour, while only 45% of the workers can afford to be covered by health insurance.
Wal-Mart is increase profits for its stockholders and didn’t lead to the greatest collective good for society. Leading Mike Duke has been the Chief Executive Officer (CEO) and the President of Wal-Mart Stores Inc. since February 1, 2009. This person has 23 years of experience in working with Wal-Mart Stores Inc. on different positions and in various departments. In spite of his 60-year-old age, Mike Duke does everything fast and with high efficiency. Lee Scott, the predecessor CEO, calls Mike Duke “a doer” (O’Keefe para. 4). He is characterized as a person of an action.
Seeing a problem, he solves it. O’Keefe describes him as a “low-key and friendly that you might mistake him for the company’s human resources chief… he’s a demanding boss and a tough negotiator. He’s constantly coaching everyone around him. He trusts but always verifies. And he typically has a smile on his face, even when he’s doling out blunt feedback” (O’Keefe para. 6). He is a strict and disciplined leader. Looking at his work and the results he has obtained, it is possible to conclude that Mike Duke uses transformational and transactional leadership styles.
Transformational leadership is expressed via Duke’s ability to change the lives of employees. Increasing the scopes of sales in the company, the employees get much benefit from it. Concerning some particular actions, transactional leadership style predominates, especially in cases when a company needs to gain some particular activity in sales. Managing such a huge company with thousands of employees, Mike Duke sometimes checks the results of completed tasks himself, speaking to the staff. The effectiveness of Duke’s leadership strategies may be seen in the increase of the company’s profit.
His attention to detail is magnificent as these details comprise Duke’s success. Remembering the example with the price on bananas in China, when Duke in a couple of hours changed the supply mechanism of bananas to Chinese Wal-Mart stores which increased the company’s income, it is possible to state that this person is a global thinker. Speaking in numbers, the total sales of the company rose 5 % (up to $466. 11 billion) this year. The sales at Wal-Mart US also increased by 3. 9 per cent and now comprise up to $264. 19 billion (Reuters para. 3).
To understand the financial situation and the changes Mike Duke brought to the company, the five-year financial summary may be considered. Fiscal years ended January 31| 2012| 2011| 2010| 2009| 2008| Net sales| $443,854| $418,952| $405,132| $401,087| $373,821| Net sales increase| 5. 9%| 3. 4%| 1. 0%| 7. 3%| 8. 4%| Increase (decrease) in calendar comparable sales| | | | | | in the United States| 1. 6%| (0. 6)%| (0. 8)%| 3. 5%| 1. 6%| Wal-Mart US| 0. 3%| (1. 5)%| (0. 7)%| 3. 2%| 1. 0%| Gross profit margin| 24. 5%| 24. 8%| 24. 9%| 24. 3%| 24. %| Operating income| $ 26,558| $ 25,542| $ 24,002| $ 22,767| $ 21,916| Inventories | $ 40,714| $ 36,437| $ 32,713| $ 34,013| $ 34,690| Property, equipment and capital lease assets, net| 112,324| 107,878| 102,307| 95,653| 96,867| Total assets| 193,406| 180,782| 170,407| 163,096| 163,2| Long-term debt, including obligations under capital leases| 47,079| 43,842| 36,401| 34,549| 33,402| Total Wal-Mart shareholders’ equity| 71,315| 68,542| 70,468| 64,969| 64,311| Figure 1: Five-Year Financial Summary (Wal-Mart). The results of Mike Duke managing the company are expressed via the company’s activities, its income and increase in sales.
Moreover, the compensation of the CEO in 2013 (for 2012 fiscal year) has comprised $20. 7 million. It is difficult to enumerate the main activities of Mike Duke. He has directed many efforts at expanding the market to China and India. Much attention has been paid to making sure that people save with Wal-Mart. Employees’ motivation is conducted through making them feel a part of the company. In this case the company’s success is their personal success. The teamwork is based on the same activities. Feeling a part of the family helps employees succeed in working process.
The role of Mike Duke is incredible here. Controlling: Controlling helps the organization adapt to environmental change, limit the accumulation of error, cope with organizational complexity and minimize costs. For example, the central goal of Wal-Mart is to keep retail prices low. Wal-mart uses Consumer-driven health plans and Associate satisfaction to monitor cost control. Healthcare is one of the most information resource issues facing Wal-Mart. People’s perception of wages and benefits is a key driver of Wal-Mart’s overall reputation.
Several groups are now mounting attacks against Wal-Mart focused on healthcare offering. These increasingly well-organized and well-funded critics – especially the labor unions and related groups, such as Wal-Mart Watch – have selected healthcare as their main avenue of attack. Moreover, federal and state governments are increasingly concerned about healthcare costs, and many view Wal-Mart as part of the problem. On a global scale, Wal-Mart should use strategic alliances. Wal-Mart is a first-mover in upgrading and improving its technological capabilities.
One avenue is using technology in the continuous training, performance evaluation, and tying rewards and incentives to above average performance of associates. Wal-mart as we know is a worldwide retailer and using internal financial control. Year over year, Wal-Mart Stores Inc. has been able to grow revenues from $447. 0B to $469. 2B. Most impressively, the company has been able to reduce the percentage of sales devoted to selling, general and administrative costs from 19. 08% to 18. 94%. This was a driver that led to a bottom line growth from $15. 7B to $17. 0B .
For Sam’s club, after two consecutive years of quality results, it has strong momentum that sets the stage for continued growth in the warehouse club segment. Fiscal 2012 net sales increased 8. 8 percent to $53. 8 billion, while operating income grew 9. 0 percent to $1. 9 billion. Walmart is a kind of centralized corporation. They also have certain decentralized elements to their organizational structure. The store operations, for example, are decentralized. Walmart has established four global merchandising centers for general goods and clothing, including an office in Mexico City focused on emerging markets.
It is also planning to shift to direct purchasing of its fresh fruit and vegetables on a global basis, rather than working through import companies and agents. The move to more direct procurement will be facilitated by greater centralization of its sourcing operations. Organization Management in any organization plays a vital role in contribution to its success. Management occurs in different dimensions starting from human resources, monetary terms, and physical assets. Also enough knowledge and improvement in technology acts as a strong base in an organization to achieve its stipulated goals and objectives.
The presence of various resources in Wal-Mart organization contributes important roles which lead to its success as a company in the world at large. Availability of technology and knowledge makes organizational functions in Wal-Mart management possible (Tracy, 5). Despite organization, knowledge and technology are ever changing thus making an organization to quickly adapt and consequently adjust its content. Wal-Mart has been one of the most successful organizations in the world because of its ability to go hand in hand with the changing knowledge and technology which ensure goals are met to the latter.
Since the time it was opened in 1962 the company has kept her promises not to adjust its products’ prices which keep many customers always in demand of their goods. Wal-Mart organization experienced fast success which made the company to have 276 stores only in 11 estates within a period of ten years. Today Wal-Mart has expanded all over the world for instance commencing up a Sam’s Club warehouse, Supercenters with grocery section as well as general merchandise apartments (Rachael, 20). This was realized due to utilization of knowledge and technology.
Knowledge in Wal-Mart implies its organizational function of the entire management before it was started. From the time when the founder of Walmart (Sam Walton) created the organization, he had enough knowledge of people around him and what they would require from the retail. The knowledge of customers’ demands in this company was an advantage in order to improve its management. Management in Wal-Mart was a key role as well as a planned strategy for its achievements because they knew what they needed for the company and also on how to bring customers ogether so that the company products will have demand. Knowledge acts as source for global organizations as well as strength. It is an asset which organization should embrace. In order for management knowledge to be useful and add value to the company it should be well organized. Walmart efforts in developing as well as nurturing its management knowledge focus on the organizational goals that emphasized on improvement of the business performance. It also put in place innovation capabilities, advantage brought by competition in the business and dynamic business improvement on its operational processes.
It stressed on discussion forums, mentoring programs, formal apprenticeship and professional training of its employees. The company moreover employed computer supported cooperative work in the organization, knowledge basis and support systems which enabled high returns to the organization products. Wal-Mart stores have effective management knowledge programs which has lead to its competitive advantage even at the time where there is trouble in economic situations. The objectives of the company are being achieved by following strictly its goals and ensuring that economic growths are well balanced with its operations.
Assignments and projects in the store are adhered to ensure progress and productivity of the products. In the company jobs are always notified to make sure that employers and the available staff achieve the same objectives (John, 28). Wal-Mart applies both direct and indirect forms of management knowledge. Direct management ensures the company maintains collaboration with expert programs which promotes efficient in the organization. On the other hand indirect methods transform knowledge by means of study and relevant use of resources. SWOT SWOT analysis chart
Internal environment| Strength· Great Pricing, wide range of products·Global expansion·Use information technology to support its international logistics system·Good strategy for human resource management and development| Weakness·Huge span of control·Products across many sectors·Global but few countries Worldwide| External environment| Opportunities·Expand to other countries·Expanding Chinese consumer markets·Continue with current strategy| Threats·The target of competition, locally and globally·Political problems in the countries that you operate in·Intense price competition| Strength: 1.
Great Pricing, wide range of products As we know, Wal-Mart is a powerful retail brand and it has a reputation for value for money, convenience and a wide range of products all in one store. 2. Global expansion Recent years, Wal-Mart has grown substantially, and also has experienced global expansion. For example, ASDA, which then owned 230 stores, was purchased by Wal-Mart of the United States in 1999. 3. Use information technology to support its international logistics system Wal-Mart company has a core competence involving its use of information technology to support international logistics system.
For example, it can see how individual products are performing country-wide, store-by-store at a glance. Additionally, IT supports Wal-Mart’s efficient procurement. 4. Good strategy for human resource management and development A focused strategy is in place for human resource management and development. Employees are key to Wal-Mart’s business and it invests time and money in training their employees and retaining a developing them. Weakness 1. Huge span of control Wal-Mart is the World’s largest grocery retailer and control of its empire.
Despite its IT advantages, it is still weak in some areas due to the huge span of control. 2. Products across many sectors Since Wal-Mart sell products across many sectors, such as clothing, food and electronic products. It cannot have the flexibility of some of its more focused competitors. Opportunities 1. Expand to other countries To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. 2. Expanding Chinese consumer markets
China has already been a big develops market of Wal-Mart and China agrees Wal-Mart in online shop. Therefore Wal-Mart’s international market has a tremendous opportunity for future business in exploit Chinese market. ( REUTERS’ article) 3. Continue with current strategy Opportunities exist for Wal-Mart to continue with its current strategy of large, super centers. Threats 1. The target of competition, locally and globally Being number one means that you are the target of competition, locally and globally.
For example, Target caters to a similar “money-saving” market, but offers a very different value proposition, focuses on different capabilities and has a different product portfolio. (Harvard Business Review’s article) 2. Political problems in the countries that you operate in Being a global retailer means that you are exposed to political problems in the countries that you operate in. For example, Chinese polity is different from US, so Wal-Mart need solve these problems. 3. Intense price competition The cost of producing many consumer products tends to have fallen because of lower manufacturing costs.
Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat. Thought the SWOT analysis and its planning, leading, organizing, controlling. We can easily know the internal and external environments of Wal-Mart. We have to say Wal-Mart is a very successful company. Wal-Mart’s success doesn’t just stem from impressive logistics, aggressive vendor management and its position as a low-cost retailer.
What really underlies Wal-Mart’s advantage is a coherent and differentiated approach to the market. We believe that all successful companies know precisely how they provide value for customers, like Wal-Mart. They make a deliberate choice about their “way to play” in the market, guided primarily by what those companies do uniquely well: their distinctive capabilities. The Most important is Wal-Mart avoid markets, products or services that require new or disparate capabilities, and thus threaten the company’s focus. Wal-Mart has the right organizations.
For example, it use horizontal structure to manage the human resources and its strength is based on latitudinal expansion and coverage; it also use matrix organization and mechanistic organization structure to manage his business. Wal-Mart also uses the suitable leading method to motivate and communicate with employees. For example, Wal-Mart CEO Duke uses transformational and transactional leadership styles and may be seen in the increase of the company’s profit. Wal-Mart now meets many challenges. Firstly, the challenge is from its competitor.
For example, in product and service mix, Target is similar to Wal-Mart in many ways, but Target satisfies the needs of its younger, image-conscious shoppers by stocking more furniture, clothing and exclusive designer merchandise than Wal-Mart. We think facing the challenge, Wal-Mart can try to keep the lower cost and pay attention to different age’s customers thought, what products young people like and what products are suitable for old people. Furthermore, when Wal-Mart expands its business overseas, for the culture shock and government’s pressure, it should cooperate with local company.
Works Cited O’Keefe, Brian. “Meet the CEO of the biggest company on earth: full version. ” CNN Money Fortune 9. Sept. 2010. Web. 23 Apr. 2013. Reuters. “Walmart CEO’s pay jumps 14. 1% to $20. 7 million. ” The Economic Times. 23 Apr. 2013. Web. 23 Apr. 2013. Wal-Mart. “50 years of helping customers save money and live better. ” 2012 Annual Report. Web. 23 Apr. 2013. Stephanie Clifford, “Same-Day Delivery Test at Wal-Mart”. The New York Times, 9 Oct. 2012. Web. 28 Apr. 2013. Susan Chambers, Reviewing and Revising Wal-Mart’s Benefits Strategy.