A Strategic Audit of the WalMart Corporation

What is WalMart's Distinctive Capability? WalMart has the goal of providing "quality goods at low prices, responsible manufacturing, and opportunities for growth" (www.walmartstores.com). Due to their expansive nature and broad customer base, they are able to provide a large discount on many of their products. They are also the leading employer in the United States of African Americans, Hispanics, women and senior citizens.

What Business Are We In? WalMart is in the business of providing high quality products at affordable prices. They do this through three branches: WalMart Stores, Sam's Club and their International Division. WalMart is the leading provider for many different corporations, such as Proctor and Gamble. They provide the opportunity for one stop shopping and economic value.

Who Are Our Customers? WalMart's customers are the individual, the family, and the small business owner. They provide the ability for an individual to get their tires and oil changed while shopping for everything from groceries to diapers to school clothes to toys. They also provide a pharmacy, a makeup area, jewelry and even furniture.

Through their Sam's Club subsidiary, WalMart provides bulk items to individual members and special benefits for their small business owners. Purchases from Sam's Club include food, restaurant supplies, furniture, hardware, office supplies, pharmaceutical supplies, jewelry, electronics and other items based upon season.

The International Division focuses on globalization. There are very few areas in non-third world countries that an individual would have to drive more than sixty miles to the nearest WalMart. With the exception of Germany, WalMart has permeated the European market and is established somewhere on every continent except Antarctica. Costs

WalMart has many ways in which it makes its subsidiaries cost effective investments. Companies such as Proctor Gamble actually have a stocking agreement with WalMart. This agreement means that they keep track of their supplies in the WalMart warehouses and re-stock shelves as products ship. This saves WalMart in manpower and technological expenses.

Another way in which WalMart saves costs is sheer volume. Because they are often a company's largest distributor of goods, those companies find it beneficial to supply WalMart their products at a good value. WalMart even has its own 'off-brands' such as Sam's Choice and Home Trends. By effectively managing the supply chain, they keep costs to a minimum.

Now. have consistently kept WalMart as a leader in its field. He also believed that it could be done with a focus on family values and valuing employess. you don't need it!" The value found at WalMart is competitive pricing. Through this new technology.C. Strategic Directions WalMart's competitors used to be J. A person can place their business order for Sam's Club online and pick it up in store. they receive tax breaks. as well. New Economy WalMart has bowed to technology and embraced the changes in their business infrastructure caused by the focus on it. but tried to maintain the standards of quality instituted by the founder. WalMart has employee programs through which they donate money into the community. WalMart can literally scan an entire eighteen-wheeler's trailer full of inventory and know exactly what is on board. Photos can be ordered and printed and mailed to one's doorstep. Leadership WalMart's senior officers and board of directors is comprised of a variety of different backgrounds and experiences. It can also inventory entire store rooms. This fit is defined by an organization's "distinctive capability. they are largely the only store who in their league. its value and its variety. Fit As with any firm. Its reputation is for great prices and one stop shopping. "If you can't get it at WalMart. One can also access the store inventories and order online and pick things up in store or have them delivered. customer service and products. Kmart and Target. WalMart must within the market in which it is doing business. It is considered a family store. Their new CEO has moved the corporation into a more liberal place and expanded their product line." WalMart's niche is carved out by several factors. This technology will soon be worldwide because they will be moving towards making it a requirement for all products. its reputation. first by Sam Walton and then by successive CEOs. In exchange for providing employment and products and investing in the local economy. WalMart is also embracing RFID technology. As one person said. Corporate Culture WalMart has a strong corporate culture. Penney's. This gives them tax deductions. Target is moving towards adding grocery . Every product for every room is available. not just local people. Sam Walton believed that discount retailing should be available to every person. Under the leadership of Sam Walton. Sam Walton's visionary approach is what set WalMart apart from Target and Kmart which were started the same year. Its leadership. Strategic Assets WalMart's strategic assets are its leadership. The final niche that WalMart has created for itself is that no one can compete with their prices. The variety of products found in the store are also a huge draw. it was based on Christian principles and focused on quality. integrity in business and marketplace manners.WalMart also makes deals with towns that are more rural. WalMart will actually decrease their profit margins on some products to get people into the store and the value on these products is often enough for the customers who frequent their stores. Its organizational structure makes things easy to find and there is also a flow through the store layout. Sam Walton's vision was personal service on a large scale.

Strategic Posture What are the corporation¶s current mission. and with the internal and external environments? 5. and strategies. market share. Top Management 1. and policies reflect the corporation¶s internal operations whether global or multi-domestic? Corporate Governance A. What person or group constitutes top management? 2. skills. and functional objectives? Are they consistent with each other. 1. and background. does top management have international experience? Are executives from acquired companies considered part of the top management team? . objectives and strategies. Are they clearly stated or are they merely implied from performance? 2. II. Policies: What are they? Are they consistent with each other. with the mission and objectives. Mission: what business(es) is the corporation in? Why? 3.departments. and policies? 1. What are top managements chief characteristics in terms of knowledge. skills. Current Situation A. with the mission and with the internal and external environments? 4. strategies. with the mission. background. Who is the board? Are they internal or external members? 2. Do the current mission. They will continue to do weekly price comparisons on their local competitions and adjust their own product prices accordingly. but has not instituted it on a global basis. What is their level of involvement in strategic management? Do they merely rubberstamp top managements proposals or do they actively participate and suggest future directions? B. Do they own significant shares of stock? 3. Board of Directors. objectives. Also. objectives. How did the corporation perform the past year overall in terms of return on investment. and profitability? B. Is the stock privately held or publicly traded? Are there different classes of stock with different voting rights? 4. do board members have international experience? 5. and connections? If the corporation has international operations. What do the board members contribute to the corporation in terms of knowledge. business. I. Objectives: what are the corporate. and with the internal and external environments? 6. How long have they served on the board? 6. WalMart is one of the only 24-hour places in most towns. and style? If the corporation has international operations. Strategies: what strategy or mix of strategies is the corporation following? Are they consistent with each other.

What is its level of involvement in the strategic management process? 6. How well does top management interact with lower level manager and with the board of directors? 7. Are strategic decisions made ethically in a socially responsible manner? 8. in terms of cash flow. VII. strategies. Are they clearly stated or merely implied from performance or budgets? ii. Has it established a systematic approach to strategic management? 5.). What are the corporation¶s current financial objectives. Are they consistent with the corporation¶s mission. is the company¶s portfolio of products and businesses? i.3.g. restructuring the corporation or instituting (TQM) should be developed to implement the recommended strategy? 2. Who should develop these programs? 3. Programs 1. Does finance provide the company with a competitive advantage? c. policies. Finance a. ad managing foreign currencies. Is top management sufficiently skilled to cope with likely future challenges? 1. ratio analysis. Does finance adjust to the conditions in each country in which the company operates? f. What trends emerge from this analysis? ii. What was the impact of these trends on past performance and how might these trends affect future performance? iv. How well is the corporation performing in terms of financial analysis? (Consider ratios.) how balanced. Has top management been responsible for the corporations performance over the past few years? How many managers have been in their current position for less than three years? Were they internal promotions or external hires? 4. e. policies. Implementation A. Who should be in charge of these programs? B. capital budgeting. objectives. strategies. What role do stock options pay in executive compensation? 9. Are financial managers using accepted financial concepts and techniques to evaluate and improve current corporate and divisional performance? (Consider financial leverage. What kinds of programs (e. What is the role of the financial manager in the strategic management process? g. and programs? i. and capitalization structure. and with internal and external environments? b. common size statements. Are there any significant differences when statements are calculated in constant versus reported dollars? iii. Does this analysis support the corporation¶s past and pending strategic decisions? v. How well does this corporation¶s financial performance compare with that of similar corporations? d. Budgets .

Are adequate control measures in place to ensure conformance with the recommended strategic plan? 2. Is the information timely? 4. as well as threats which could damage a business. to be in a position to exploit opportunities or respond to threats. the organization may elect to perform a strategic audit. However. Procedures Will new standard operating procedures need to be developed? VIII. Can pro forma budgets be developed and agreed upon? 3. a business needs to have the right resources and capabilities in place. Are reward systems capable of recognizing and rewarding good performance? Strategic audits are examinations and evaluations of strategic management processes including measuring corporate performance against the corporate strategy. or an audit firm may be contracted to perform the audit. This may be done with in-house auditors. project. The auditors will audit performance of the organization against the current corporate strategy and seek to identify problems within the current strategy that may be tied or can be traced to poor performance. unit. Information System 1. a report will be created regarding the auditing firm or group¶s findings and submit the report with recommended remedies to the management of the organization.the strategic audit In our introduction to business strategy. Are appropriate standards and measures being used? 3. Is the corporation using benchmarking to evaluate its functions and activities? B. or function? 3. Control Measures 1. Can performance result be pinpointed by area. Upon completion of the audit.1. The organization will then seek to implement the proposed remedies with hopes of increasing organizational performance. Is the current information system capable of providing sufficient feedback on implementation activities and performance? Can it measure strategic factors? 2. The external environment in which a business operates can create opportunities which a business can exploit. . we emphasised the role of the "business environment" in shaping strategic thinking and decision-making. Are the programs financially feasible? 2. Evaluation and Control A. Whenever a deficiency is noted or performance of an organization is sub-par. strategy . Are priorities and timetables appropriate to individual programs? C.

Influential work by Michael Porter suggested that the activities of a business could be grouped under two headings: (1) Primary Activities .a process that is often known as a "Strategic Audit". questions that can be asked that evaluate the overall performance of the business. So the goal is for management to focus attention on competencies that really affect competitive advantage. human resource management).those that are directly concerned with creating and delivering a product (e.How have the resources deployed in the business changed over time. and (2) Support Activities. Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others ("outsourced"). this is "historical analysis" . You can read more about resources here.An important part of business strategy is concerned with ensuring that these resources and competencies are understood and evaluated . You can read more about Value Chain Analysis here. value chain analysis and core competence analysis help to define the strategic capabilities of a business. Senior management cannot focus on all activities of a business and the competencies required to undertake them. (2) Value Chain Analysis: Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. which whilst they are not directly involved in production. (3) Core Competence Analysis: Core competencies are those capabilities that are critical to a business achieving competitive advantage. plant and machinery.g. (4) Performance Analysis The resource audit. The starting point for analysing core competencies is recognising that competition between businesses is as much a race for competence mastery as it is for market position and market power. These questions include: . Some of these can be owned (e. You can read more about the concept of Core Competencies here.g. After completing such analysis. It is rare for a business to undertake all primary and support activities. joint ventures or simply supplier arrangements with other businesses.g. trademarks. retail outlets) whereas other resources can be obtained through partnerships. may increase effectiveness or efficiency (e. component assembly).How do the resources and capabilities of the business compare with others in the industry "industry norm analysis" . The process of conducting a strategic audit can be summarised into the following stages: (1) Resource Audit: The resource audit identifies the resources available to a business.wherever .How do the resources and capabilities of the business compare with "best-in-class" .

This is important .How has the financial performance of the business changed over time and how does it compare with key competitors and the industry as a whole? ."benchmarking" . An important objective of a strategic audit is to ensure that the business portfolio is strong and that business units requiring investment and management attention are highlighted. Opportunities and Threats. Larger. Most large businesses have operations in more than one market segment. Weaknesses. . two analytical models have been widely used to undertake portfolio analysis: . diversified groups often have several divisions (each containing many business units) operating in quite distinct industries. Traditionally.The McKinsey/General Electric Growth Share Matrix (6) SWOT Analysis: SWOT is an abbreviation for Strengths. Read more about it here.that is to be found."ratio analysis" (5) Portfolio Analysis: Portfolio Analysis analyses the overall balance of the strategic business units of a business.The Boston Consulting Group Portfolio Matrix (the "Boston Box").a business should always consider which markets are most attractive and which business units have the potential to achieve advantage in the most attractive markets. SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment. and often in different geographical markets. .

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