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Crafting and Executing Strategy: Case Analysis of Wal-Mart Stores, Inc.

1.0 Source Problem

Wal-Mart has been able to achieve almost legendary because of its lowpriced products. It is said that Wal-Mart aggressively maintains unique distribution
systems, lower labor costs, which give the company more edge than their
competitors. However, it can be said that this approach of the company has been
also the root of the problem facing the company in terms of dealing with their
profits and their competitive position in the retail market.

2.0 Secondary Problems

It can be said that retail industries are prone to a higher competition


because of the issue of market saturation. In the given case, there is an evidence of
both short and long term issues which has been experienced by the company.

2.1 Short-Term Specific Problems

Based on the given case, one of the short term problems facing Wal-mart is
in line with their strategy of cutting their prices. This issue is threatening the sales
and profits of the company, since they are not able to meet their target profit
because of this price cutting. Another problem that can be attached is the inability
of the management to sustain their competitive advantage because lowering the
price of their products may compromise their competitive advantage in terms of
considering as a company that provides quality products. This will have a
connotation that customer loyalty in Wal-mart is at large because of the low price
but not because of the quality of their products.

Aside from this, other problems may also arise in line with the inability of the
management to provide adequate salary or compensation for their labour forces
because of their cost strategy or approach.

2.2 Long-Term Specific Problems

For this case study, the long term problems that can be attached with WalMart are in terms of the criticisms of the people internal and external to the
company. Because of the strategy of Wal-Mart many business are affected most
especially the small business since Wal-Mart are enjoying high competitive entrants.
The company's price advantage extends to groceries, particularly in the large
footprint format. Dunkley, Helling, and Sawicki (2004) summarized the evidence on
scale economies in grocery sales, arguing that larger stores enjoy cost economies,
have more room for high-margin items, and may be more attractive to some
consumers.

Another long-term problem that can be attributed to Wal-Mart, is in line with


their management approach. It is shown that Wal-Marts managers are dominated
by men; this situation on the other hand, leads to problems like biased promotion
decisions (Thompson, Strickland & Gamble, 2007). This issue clearly speaks of
unjust employee treatment and work discrimination, particularly among the
members of the management. While the company has employed useful promotional
policies for the benefit of the employees, the lack of fair implementation makes
these policies ineffective; moreover, the lack of appropriate managerial approach on
the observance of these policies widens the gap between the management and the
lower level employees of the company. Indeed, certain actions should have been
done to avoid this matter from happening.

3.0 Analysis

Based on the given case, in spite of the awareness of Wal-Mart in the consequences
of their business strategy, they are still continuously using this approach to sustain
their competitive advantage. One problem which is considered is that of Wal-Marts
being replicable in the sense that competitors or new players find it easy to imitate
Wal-Marts ability to attract suppliers by offering higher cost and value for their
products. This becomes an unintended problem for Wal-Mart because it
compromises the reputation of the company of offering quality products because
consumers always attached the company in offering lower prices. Being so, WalMarts specialty of offering its customers the lowest price in the market still remains
a problem that should be given attention.

Its major problem which can be at the same time considered to be a threat,
remains to be that of the competitors who are striving hard to reach what Wal-Mart
has attained. Wal-Mart has been considered a veteran and a notorious in the game,
running over even those that have been long there before its arrival. These stores
end up closing because Wal-Mart incredibly beats them. In fact, to prevent Wal-Mart
from monopolizing businesses, small-town locals have turned down proposals of
building a Wal-Mart store in their area.

In terms of employee and promotion issues, such as those among women and
minorities, this has also been observed in Wal-Marts initial operations.
Discrimination for women and minorities for the business leaders have been
evident as Sam Walton prefers other individuals for managerial positions. The
literature indicating the wrongness of this act has probably influenced the business
to do away with this conventional practice and belief (Thompson, Strickland &
Gamble, 2007).

From the cited case and nature of promotional policies at Wal-Mart, the root cause
of its problems on granting promotions appear to be the managers lack of ability to
make appropriate personnel decisions. As they are the ones interacting with the
employees, it is natural that they are given the responsibility to decide who among
the employees should be promoted. However, it is also important that the managers
are subjected to proper trainings, particularly how to accomplish performance
appraisals of the employees. Clear, specific and definite performance indicators that
will make an employee eligible for promotion should also be established initially
before the positions are filled in.
Another problem with the previous
management of the company is its failure to stick to its own policies.

4.0 Criteria for Evaluation

Based on the analysis above, it can be said that the main goal is to enable Wal-mart
to have a strategy that will enhance their reputation in the market and to solve the
issue for employment biased and discrimination. In this regard, there is a need of a
strategic change which enables Wal-Mart to sustain their competitive advantage in
the market. The management of the company should focus of pricing approach and
employment promotion and motivation approach.

5.0 Alternatives

Based on the given case, there are various alternative strategies which can
be considered in order to solve the short and long term problems of Wal-mart.

5.1 Short-Term Alternatives

In terms of pricing or cost based approach, it can be noted that Wal-Mart


should be able to use a new approach of pricing that will enable the company to be
benefited as well and enjoying much profit. With this the company may consider the
use of expense control. This would be helpful in ensuring that the company still
maintains low price for customers and low operating.

5.2 Long-Term Alternatives

With regards to the long term problems faced by the company, the
alternative solution for this is to have a good promotional and motivational
approach.
It is then recommendable that company develop means that will
ensure that its set policies, such as in personnel promotion, are strictly followed by
the managers. All job openings should then be posted by the managers and should
be communicated well with the employees. The determinants for promotion should
also be relayed to all employees. Moreover, all eligible employees must have an
equal chance for the position offered. Trainings or seminars that could help the
employees to improve them further should not be granted to a select few. In order
to facilitate the development of the employees, a superior whom they can share
their concerns with should be accessible.

6.0 Recommended Strategy

6.1 Short-Term Recommended Strategy

For this, the recommended strategy is to have enhanced the value of their
low prices with other differentiating through product diversification. The company is
then recommended that ensure that they must be able to determine whether their
price adheres to the quality of their products and that this would not affect the
overall reputation of Wal-mart.

6.2 Long-Term Recommended Strategy

For the long term approach, the company is then recommended that amend
their employment policies and make sure that the management is following such
policies to avoid discrimination among women and minorities.

7.0 Justification of Recommendations

Based from the analysis of the case study, it is then appropriate to


recommend that the pricing and employee development strategy be applied by WalMart, considering that these factors serve as the core factors affecting its growth
and progress. With this type of strategy, Wal-Mart can increase its sales by means of
modifying or enhancing its existing products and services. This strategy has been
recommended as it has the ability to support the companys potential to reach
greater markets. Wal-Mart has multiple product lines that will be affected by this
strategy. With the analysis, it is appropriate that the company starts off the
development with its prime product lines. Through this, the company will have
sufficient funds to support other relevant activities in the future. The competitors of
the company targets similar markets. However, by means of this strategy, Wal-Mart
will be able to strengthen the market position of each of its product divisions,
resulting to greater hold to these specific markets.

Similar to all other aspects of the company, Wal-Mart must also consider their
employees as an important factor sustaining their competitive growth. For this

reason, the company is recommended to be committed to solve the issue of


discrimination through promotion and employee motivation. Theory has indicated
that motivation of employees used to be focused on the provision of financial
benefits. In the case of Wal-Mart, this conventional belief must be applied in
motivating the employees. However, while this is evident, there have been
significant changes that need to be done. For instance, rather than just giving the
employees due recognition and monetary rewards based on their performance, the
employees are also treated as an important part of the business success. This
practice should be further emphasized by Wal-Mart by treating its employees as
important associates.

Wal-Mart must be able to apply the theoretical perspective by combining


both the new and conventional belief on motivation. In addition to profit sharing and
other financial benefits, Wal-Mart must also reach out to its employees and treat
them importantly, which in turn serve as a form of motivation. With this example,
Wal-Mart must be able to show that money is not the only form of motivation
business owners can give to their employees. Similar to Maslows theory, there are
other needs that employees have to satisfy other than material possessions.

8.0 Implementation, Control and Follow-up

Wal-Mart is indeed one giant retail company whose position in the industry is
more or less assured. Nonetheless, there will always be internal and external factors
that would affect it and may result to business problems. However, by means of
optimizing the companys available resources and considering its environment, it is
possible for the retailer to overcome its present as well as future issues. From this
analysis, it has been stressed that the success of the company is actually derived
from multiple resources. It is then essential that Wal-Mart and companies in general
identify these resources, and use them towards continuous success.

From the results of the analysis, Wal-Mart is left with not much alternative but to
pursue this change management approach. In this regard, a good change
management play should ensure the management should choose the most
appropriate management team which will enable them to sustain their
organisational objective. In this action plan, the company must also give emphasis
on the problems that may arise during the implementation plan like the completion
of the tasks provides unmet schedules and revision of original plans.

Upon its implementation, the management who will handle the change process
must continue to evaluate, monitor and control this change process to ensure that
they are in the right path. The management should also consider contingency
planning to solve the possible risks and resistance to change which is more probably
to occur in the company. In this regard, the decision stage must be done by the
management of the company, from the higher level down to the marketing and
production division to ensure that their organisational goal and objective for change
will be successful.

References

Burgelman, R.A., Maidique, M.A., Wheelwright, S.C. (2000). Strategic Management


of Technology and Innovation. 3rd Ed. New York: McGraw-Hill.

Dunkley, B., Helling, A., & Sawicki, D. S. (2004). Accessibility versus scale:
Examining the tradeoffs in grocery stores. Journal of Planning Education and
Research, 23 (4), 387-401.

Gosman, M. & Kelly, T. (2002). Big Customers and Their Suppliers: A Case Examining
Changes in Business Relationships and Their Financial Effects. Issues in Accounting
Education, 17(1), 41+.

Govindarajan, V. & Gupta, A. (2001). The Quest for Global Dominance: Transforming
Global Presence into Global Competitive Advantage. John Wiley & Sons, Inc.

Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2007). Crafting and executing
strategy: The quest for competitive advantage (15th ed.). New York: McGraw Hill
Irwin.

Wal-Mart. (2008). Wal-Mart Stores, Inc. Retrieved May 22, 2008, from
http://walmartstores.com/media/resources/r_2571.pdf

Wal-Mart. (2008). 2006 Annual Report: Building Smiles. Retrieved May 22, 2008,
from http://walmartstores.com/Media/Investors/2006_annual_report.pdf