CAMBODIAN MEKONG UNIVERSITY

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Group Assignment
Submitted in Partial Fulfillment of
The Requirements for the Subject
MN 301: Strategic Management

Topic: Walmart Company Toward Sustainable Competitive Advantage

Through Its Cost Leadership

SUBMITTED TO
LECTURER: MR. SEA SOKHON

GROUP MEMBER

Mrs. KIM SOCHEA ID: 20181573

Mrs. SIM CHANTHEA ID: 20181362
Mr. BUN CHHAY ID: 1256170759

23 APRIL 2021
ACADEMIC YEAR: 2020-2021

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 ABSTRACT
As American’s most popular retail stores, Walmart is also gaining momentum in e-commerce. There are
many organizational strategies behind how Walmart be able to overcome in competitive markets through its
cost strategy. Besides its strengths and opportunities, Walmart is also facing a certain number of challenges
throughout its structures and ways to adapt in to new markets. These challenges are the main focus on this
research study due to the whole processes from upper management levels toward dealing with issues of
customers and employees. Moreover, this potential research has given the dramatic rise of concerns which
Walmart is dealing with in order to continuously receiving its competitive advantage with its lower price
vision. In addition, we use data from online resources for SWOT analysis, and the analysis of strategies from
functional to business and corporate levels that concerning the weaknesses for global purpose as most
supplies come from China in order to meet its lower price competition. Also, we analyze how organsational
structures of Walmart response to issues regarding to low paid labors, poor working conditions and its lack
of innovation to increase its future businesses. Our findings indicate the rough ways of how Walmart
responding to its future sustainable competitive advantages, as well as applying its sustainable strategy of
pricing to overcome its competition.

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 TABLE OF CONTENTS

1. Introduction of Walmart 03
1.1 Business Model 03
1.2 Vision, Mission, Value and Goals 03

2 External Environmental Scan – Opportunities and Threats 03

2.1 PESTLE 04
2.2 FIVE FORCES 06

3 Internal Analysis – Strengths and Weaknesses 07

4 Functional-Levels Strategies 08

5 Business-Levels Strategies 08

6 Corporate-Levels Strategies 09

7 Global Strategies 10

8 Governance and Ethics 15

9 Designing Organizational Structure and Culture 17

10 Designing Organizational Controls 18

11 Conclusion 19

12 References 20

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1. INRODUCTION

1.1 Model of Business:

Walmart is the name of a global retail stores that supply countless products range from bathroom accessories
to any kinds of accessories need for housing. It was found in Bentonville, Arkansas (USA) approximately 50
years ago by Sam Walton and his brother Bud. With estimate sales worth $300 billion annually which is
ranked in the one of the tops valuable companies in the world. There are more than five thousand stores across
the world, 80% of those are in the USA alone.

1.2 Mission, Vision and Long Term Goal:

Walmart’s corporate mission is to “to save people money so they can live better”. Based on this statement, it
is clear that Walmart’s business strategies involve using price as a selling point to attract target consumers.
This competitive advantage reflects the company’s strategies one of which is marketing mix or 4Ps that
involves low prices as a main strategy. Customers can save a lot of money because they spend less for the
same of similar products at Walmart comparing to other high-end stores. In addition, their vision is to
becoming the worldwide leader in retailing by providing the same model and its brand all across the globe.
According to both of its mission and vision, it clearly show that Walmart’s long term goals are to becoming
sustainable operation, strengthening communities where they operate, and to create economic opportunities
for their associates.

2. EXTERNAL ENVIRONMETNAL SCAN

Walmart’ opportunity is to expand globally. It has entered over twenty countries worldwide with bases on the
provision of the products at an affordable price for people from all walk of life. This global expansion is to
take a step ahead of its potential competitors along with its intention to maintain its cost leadership as its core
competency in pursuing aggressive stores expansion globally as well as growing global supply chain.
However, the most prominent external threat facing Wal-Mart is competition, from local and international
companies (Stankevičiūtė, Grunda, & Bartkus, 2012). In addition, the company has been faced with attacks
regarding unethical practices. The company has been accused of providing low pay and poor working
conditions to its employees. The other sources of external threat are the environmental issues, hidden legal
barriers in countries such as France, and political instabilities in countries such as Kosovo and political
turbulence in France have been major causes of external threats to the company.

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 2.1 PESTLE

Walmart should make good use of the opportunities and minimize the number of threats facing by its company.
Analyzing PESTEL/PESTLE is the key element which will help Walmart leaders and managers to prioritize
factors needed in strategy development. This external environmental analysis will also help Walmart to
develop its future competent strategic plan as well as to sustain a competitive advantage over its potential
competitors.

- Political Factors: Walmart need to ensure that it is aware of the political situation and complies with
all the government policies of the countries where its organization operates business and makes sure
that it stands in a good position with regards to political problems. Most of the time, Walmart is ready
to confront any issues that might arise amid its operation concerning political sector. The following
are the political external factors in Walmart’s remote/macro environment

• High stability of politics (opportunity)

• Political support for globalization (opportunity)
• Political pressure for higher wages (threat)

Higher wages appear to be a potential threat that seek immediate solutions from Walmart since it goes against
Walmart’s cost leadership generic strategy that is the minimization of potential cost.

- Economic Factors: Although Walmart is economically stable and doing so well, significant pressure
from economic changes requires Walmart to always checks first if the economic status of the countries
where they are planning to operate its business or decide to open the branches are stable. Walmart
usually takes its company situation into its consideration to see if it fits well with the selected countries.
The following are the economic external factors in Walmart’s remote/macro environment:

• Stability of major economies (opportunity)

• Continued growth of developing countries (opportunity)
• Decreasing unemployment in the United States (opportunity)

These economic factors offer Walmart an opportunity exploit the fast-growing economies of developing
countries, which have surging in needs for items from retail firms like Walmart.

- Social/Sociocultural Factors: Walmart makes sure that all the products provided by its company are
widely accepted by the society and avoid authorizing delivering the products which are at risk of
compelling or complaining to the society where its company operates in. Walmart also takes part in
social activities in the purpose of maintaining good relationship with different sectors in society and

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 specifically its clients. The following are the social or sociocultural external factors in Walmart’s
remote/macro environment:

• Healthy lifestyle trend (opportunity)

• Cultural diversity trend (opportunity)
• Urban migration (opportunity)

These social/sociocultural factors present opportunities for Walmart. Therefore, the company can raise the
supplies, and produce a variety of healthful products to satisfy the demand of various cultural preferences in
the surrounding cities or areas.

- Technological Factors: Walmart usually incorporates advanced technology into its industry aiming
to introduce new concepts to its clients and partners throughout the globe. Advanced cash register and
better performing slot machines are the good examples of up-to-date technology that Walmart brings
into its operation in order to adapt to the rapid changes. The following are the technological external
factors in Walmart’s remote/macro environment:

• Increasing business automation (opportunity)

• Business analytics or big data (opportunity)
• Increasing mobile device usage among consumers (opportunity)

Walmart investment should be increased in factors mentioned above. The increasing number of customers
using gadgets offers an opportunity for Walmart since making online marketing available to customers can
also generate Walmart’s revenues.

- Ecological/Environmental Factors: Walmart try its best to make its business environmentally
friendly; due to the fact that, Environmental conservation has becoming a popular business concept.
The following are the ecological external factors in Walmart’s remote/macro environment in the
PESTEL/PESTLE analysis model:

• Business sustainability trend (opportunity)

• Environmentally friendly products trend (opportunity)

Walmart need to enhance its operational efficiency in order to obtain business sustainability. Technology is
the key to improve both efficiency, policies and standards of products sold at its retail stores complying with
ecological factors.

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 - Legal Factors: Walmart makes sure that its industry complies with all the rules and regulations passed
by the government of the countries they are operating their business in. Since local and international
laws have a strict regulation for retail stores. The following are the legal external factors in Walmart’s
remote/macro environment:

• Food safety regulations (opportunity)

• Employment regulations (opportunity)
• Tax law reform (threat)

Tax reform is a potential threat if it leads to higher tax rates. Walmart can exploit the regulation of food safety
to improve quality standards. Employment regulations is another key aspect that Walmart can take advantage
from based on its human resource management practices.

2.2 FIVE FORCES

Forces of Competition: A five force analysis of Wal-Mart Inc. in its industry external environment based on
the model outlined by Porter reveals the implications of competitive rivalry, bargaining power of
suppliers/buyers, threat of new entrants/substitutes and threat of substitutes. All these elements have an impact
on the success of the company. However, the intensity of competition and threat of new entrants are the most
significant for the company’s growth.

Wal-Mart faces stiff competition within and without the United States. In the U.S target market, the major
competitors include Macy’s, Best Buys, Kmart, and Sareways stores. The company’s Sam’s Club faces stiff
competition from BJ’s Wholesale club and Costco. Regionally, in North America, the company faces
competition from Target and ShopKo. In Canada, it major competitors include Giant Tiger, Hart and Canadian
Superstore. In South Korea, the company was not able to withstand the competition and had to withdraw from
the market. In Germany, the company withdrew from stiff competition and sold its outlets to Metro, a local
retail company. Afterward, Wal-Mart has been able to overcome the threat of competition owing to its
competitive prices (Burton, 2011). The company enjoys bulk purchase and thus receives huge discounts from
its suppliers, allowing it to offer lower prices, which are passed to its customers. In addition, the company’s
large size and competent executive has allowed the company to manufacture its own brands and makes
purchases from local suppliers in bulk, which its supplies in retain.

The other force of competition that is of high significance to Wal-Mart is the threat of new entrants. The
company deals in a variety of consumer goods that include groceries, home furnishings, hardware, hardliners,

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entertainment, apparel and pharmaceuticals. These ranges of product portfolio are in market segment that is
easy to penetrate. The groceries market segment possesses little barriers to entry and thus exposes the company
to the risk of competition. However, the company has shielded itself against potential entrance to new players
in the industry through its competitive prices. The lower prices that the company offers makes it hard for new
entrant to gain significant market share. Moreover, the bulk purchases places the company at a significant
advantage over new entrants as the company can attain outrageous discounts thus allowing it to offer lower
prices. Finally, the ability of the company to diversify its product portfolio offers an edge over new entrants.
The large product portfolio creates product differentiation which makes it difficult for new entrants to compete
with the company in the market.

3. Internal Analysis

Walmart’s strengths are all related to the size of its business. These competitive strengths enable the company
to withstand threats despite its weaknesses as a low-cost retailer. For exploiting global expansion
opportunities, Walmart’s strengths for further global growth are:

 Global organizational size

 Global supply chain
 High efficiency of supply chain

Walmart’s global organizational size gives the business deep pockets to fund growth and expansion. The
global supply chain also provides business resilience from market-specific risks, such as disruptions in local
supply chains. In addition, Walmart’s supply chain has high efficiency because of advanced technologies for
monitoring and controlling the movement of products from suppliers to its stores. In this SWOT analysis, such
organizational and business strengths provide competitive advantage, especially against smaller retailers

Nonetheless, its weaknesses impose challenges on the firm’s ability to withstand the threats also identified in
this SWOT analysis. These weaknesses are directly related to the company’s generic strategy and its
implications in business development, capabilities, resources, and profit margins. Walmart uses the cost
leadership generic strategy, which leads to the following weaknesses:

 Thin profit margins

 Easily copied business model
 Competitive disadvantage against high-end specialty sellers

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Thin profit margins are a typical effect of using the cost leadership strategy. Because Walmart minimizes
selling prices, it also needs to minimize profit margins and rely more on sales volume. The cost leadership
strategy also makes Walmart’s business model easy to copy. The firm does not have significant competitive
differentiators, except for its business size and prices. Furthermore, high-end specialty retailers have the upper
hand in attracting quality-seeking buyers who have low sensitivity to price. Thus, the weaknesses presented
in this SWOT analysis of Walmart reflect business vulnerability to innovative competitors and disruptions in
the industry environment, especially in the presence of major e-commerce firms like Amazon.

4. FUNCTIONAL LEVEL STRATEGIES OF WALMART

An approach that functional area takes to achieve corporate business objectives and strategies by maximizing
resource productivity is Functional strategy which supports the business operation in a number of ways:
- Keeping a considerably low labor cost is one of Walmart human resource strategic management. There
are only a few layers of management process that allows Walmart to cut down on the cost of labor in
its operation. When the employees tried to unionize in Canada, Walmart impose a nonunion stance
and even closed a store in response to that union. Manager’s offices equip with inexpensive furniture
and when the mangers travel they only stay in cheap hotels and sometimes stay in a shared room.
- Walmart focuses its attention on the cost reductions for all sectors in its operation even in information
technology and operational areas. Therefore, real-time data provided to Walmart customers and
suppliers through a lower information technology to sell and order the products.
- When purchasing products from suppliers Walmart purchasing department bargain the price
aggressively. Walmart uses its buying power to influence the suppliers to lower the prices for the
products it intended to buy as well as imposes a product mix that appeals to customers that sensitive
to prices.

5. BUSINESS LEVEL STRATEGIES OF WALMART

Walmart most effective business strategy is based predominantly on the philosophy of the company which is
“everyday low price”. Let’s put it this way, the economies of scale derived by the company in a significant
extent allows Walmart to pursue cost leadership business strategy. Walmart.com has an online sale of 75%
comes from non-store inventor that shows an efficient utilization of online sales channel contributes to the
level of cost-efficiency of retail operations. Walmart relies on cost leadership as its competitive advantage
that management level consistently aim to associate with the price access, assortment and experience. Since

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his appointment as CEO in February 2014, Doug McMillion introduced important changes in Walmart
business strategy in the following three directions below:
1. Increasing focus on customer services: in February 2015, USD1 billion investment in U.S. hourly
associates to provide higher wages is announced by Walmart to increased opportunities to build a
career and more training with Walmart.
2. Improving Groceries: Walmart shifts its focus on increasing its range of organic options and fresh
produce complying with the new trend that aiming to increase level of health-consciousness of
consumers.
3. Enhancing the flexibility of the shopping experience: Noticeably, Walmart is attempting to incorporate
physical store with digital business. For instance, Walmart physical store is a place where the
customers can come and collect their online orders and when every order made by the customers will
be notified by a text reminder so that the customers remember to pick up their orders.

Overall, the competitive advantage that Walmart uses can be sustained in the global marketplace in long-term
perspective. The programs called “we operate less, and we buy for less” can save US USD150 million in
China alone. This strategy is replicated to all the Walmart stores so that they can gain and sustain cost
advantage.

6. CORPORATE LEVEL STRATGEIS OF WALMART

Walmart has two different types of corporate-level strategies, such as the single business strategy and public
affairs strategy. The public affairs strategy of this firm is important for its long term success in that it creates
room for expansion into other sectors, as well as into foreign countries (Dess, 2012). This strategy enables the
organization to partner with politicians, who help it to achieve the set goals by offering financial support.

There are many reasons why this is a good choice made by the management of Wal-Mart company. Firstly,
by taking the public affairs approach, this organization is forced to focus on customer satisfaction, as well as
getting involved in other community activities that will help it gain a good name. As today, people are
becoming more conscious and supportive of businesses that help to make the society a better place, rather than
those who seek to destroy them. Therefore, people will feel like shopping at Wal-Mart provides them with an
indirect opportunity to also contribute to the positive changes that the organization will later enhance. Aside
from that, the company is less likely to be sued by environmentalists and activists who seek to ensure the
protection of the environment and human rights (Global Responsibility, 2013). This is because the firm will
be focused on productivee factors that will ensure gain in the long run.

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7. GLOBAL STRATEGIES OF WALMART

In a span of ten years, the company had diversified to major cities in United States and had 11 branches.
According to Fortune 500, 2002 to 2010, the company is the leading retail outlet in the world. It specializes
in different merchandise from electronic to toys.

The profits made by the company rose from $219.81 billion in 2002 to $405 billion in 2010 despite the world’s
economic situation. Furthermore, the number of employees in the same period rose from 1.29 to 2.1 million,
as well as the company has over 8,747 retail units situated in 15 countries and operating under 55 different
banners. Therefore, the quality of managerial decisions has led to the company’s success and it adopts strategic
management systems in all its operations as below:

The organizational structure:

Walmart understands that not all countries can be effectively tapped with a similar organizational structure;
with this in mind, the company has some unique systems of structure that are relevant to the kind of market
that the company is operating. The company’s structure established three main systems, Wal-Mart Stores,
Sam’s Club and International Store; the difference of the stores is on the approach they take to sell the
company’s products. Under the structure of Walmart Stores, the company is further dividend into Discount
Stores, Supercenters and Neighborhood Markets, the above structures offers different shopping atmosphere
that assists the company divide the market on income lines; this is the main structure operated in the United
States. In addition, Sam’s Clubs are membership clubs where the company targets the well to do in the society;
the stores are run on subscriptions and pay some returns to the members, they are common in Puerto Rico.
International stores are divided further to retail stores, restaurants, discount stores, Sam’s Club and
Supercenters; the main reason for the division is to ensure that the company can sell the products to different
countries using the format that can suit the demands of the country.

When in the international scene, a company is affected by cultural believes, the countries living standards, the
perception of the people among other factors; to be successful in different countries, there is need to develop
the best organizational structure that reflects the needs of the particular market. Walmart management has
recognized human resources needs and conducts an in-depth market analysis to know the best approach to the
particular market (Kotter and Schlesinger, 2008).

One of the main benefits that the company gets from the structure is that it is able to learn a certain market
and establish the best approach they can have for the particular market. When an area low-income people, the
company ensures that the structure is responsive to the needs of that population in the form of costs and the
packaging that they adopt.

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Integrated global supply chain management:

With the thousands of products that the company stores; it ensures that every store has the right quantity and
quality of products using a computerized supply chain management system (Haag, Cummings, McCubbrey,
Pinsonneault and Donovan, 2006). One of such strategic managed areas is supply chain management.

The company have 40 Regional Distribution Centers, which each covers an area of over one million square
feet’s, inside the distribution centers, there are five conveyer belts that move over 9,000 merchandise, they
operate 24 hours, seven days a weeks (Wal-Mart Corporate Website, 2011). The supply chain management
operated by the firm is among the largest in the world.

Efficiency is crucial in ensuring that the company retains its leading position. In a single shop, the company
operates eleven sections for the purposes of managing supplies. Section managers with a full team of
procurement and supplies operate each section. The division ensures that the same manager manages similar
goods because their trend in demand is likely to be the same.

For example, all Christmas merchandise are under one micro management and house hold goods under
another. Demand for these departments varies with seasons. Procurement manager in every department is
supposed to manage the stocks kept and ensure it satisfies its customer’s expectations. When a certain order
need to be made, he liaises with the head of procurement for purchase (Kouvelis, Chambers and Wang, 2006).

The division is a mechanism to ensure that each section is management is efficient. (See the appendixes1 and
two for the company’s domestic and international supply chain systems). Head of procurement department
have two major departments, the procurement section and traffic/freight. Traffic head ensure that he allocates
each department the right number of trucks to transport good from the suppliers or to customers or otherwise

This kind of approach ensures that at any one time the company has the right number of stocks and delivers
timely to its customers (Larson and Halldorsson, 2004).

For an efficient supply chain management, the company has developed certain strategic functions, which leads
to overall efficiency.

Inventory management: Walmart has a just in time supply inventory management mechanism; this means
that it ensures its goods are delivered when they are needed; its aims at ensuring that there are no goods lying
in the warehouse; goods are either on shelves displayed for sale or in transit. In order to operate such a system,
the company has updated information about the market. It knows when a certain good is in high demand and
when it is not. With that kind of approach, the company is able to order for goods in the right quality and
quantity.

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Cross-docking logistics: This is a logistic mechanism where a company does maintain limited number of
warehouses. This ensures that between loading and unloading of goods, there is minimal storage and this
system of supply ensures that Wal-Mart suppliers get their goods timely in their best state. An efficient method
ensures that there is fast delivery of materials and supply of goods to the final consumer.

To support this strategy, the company has employed dedicated drivers who have undergone training on
customer service and time management courses. The system also saves the company warehousing costs like
rent, maintenance and other associated costs. The expectation and conduct of a driver is stated in Walmart,
The Private Fleet Driver Handbook, it states how robust a driver should be to ensure that he delivers goods at
the right time from or to the company.

Procurement and strategic alliances: The relations that Walmart maintains with its suppliers give it an upper
hand. This is where the suppliers are willing to supply the company with goods; Walmart respects contracts
of supply, for example, it pays its suppliers in time. In order to be on the save side, the company contracts at
least two suppliers for the same commodity, though this may be of different brands. For example, it stocks
Samsung and Sony electronics, which to a certain extent they are, substitutes. In times of high demand, the
company procures from both companies.

Green supply chain management: This system ensures processes of a company are environmentally friendly.
The kind of trucks that the company uses are highly fuel efficient with most of them using modern fuel
efficiency mechanisms. The company services its trucks regularly to ensure that they are fuel-efficient. When
procuring for goods, it only contracts those suppliers who respect the environment. If the production method
adopted by a supplier pollutes the environment, then the company avoids such a supplier.

Integrated supply chain management: It has adopted computers in their supply chain management. This is
where it uses a real time stock managements system, which has set reorder levels of certain goods. After a
sale at the cashier, a code records the sale in the main database. When any good gets into the company’s stores,
it must go through the database section for entering in the system. With such kind of management, Walmart’s
procurements managers at section levels and head office are able to manage their stocks effectively

International marketing strategy:

To stand out surrounded by high competition, Walmart has an effective marketing strategy; the strategy is
responsive to the needs of certain market thus the system may seem different in different countries. To come
up with the specific marketing approach to use, the company undertakes a massive marketing and market
research to establish the best persuasion approach they will use in the particular market.

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In particular the company adopts 4p marketing Mix approach were it ensures that the 4p’s (Pricing, products,
promotion and place) have been addressed accordingly; the prices set for the same products vary with the
target market and the place that the company sells (Mentzer, 2001).

As a policy, the marketing department that is at the head office and represented at every outlet is mandated
with the role of advising the company on the best way they can improve their products and services. For
instance, in some branches, there are personal marketing approaches, while in others there are indirect
marketing methods (Möller, 2006). In addition, the main agenda that the department’s aim at meeting is to
have satisfied and loyal customers; to develop and retain customer loyalty, the company has implement a
CRM (customer relationship management) programs in all its branches.

Diversity management:

Walmart’s management appreciates that it can only offer value and quality services to its customers when it
maintains satisfied, quality and quantity human capital. To meet this noble agenda, the human resources
department ensures that the needs of employees regardless of their location have been addressed effectively
(Renckly and Renckly, 2003). Since it operates in different countries, the management maintains human
capital of different nationality and cultural believes (Triandis, 2006). In every outlet, the management of the
outlet is expected to blend the human capital in the optimal manner possible to ensure that the company
benefits from advantages of diversity as it mitigates against any negative effects like cultural differences
(Smith and Mazin, 2004). However, the salary scale of employees is competitive in different markets and the
management ensures that it has respected the rule of law in the country of operation. When differences in
labor laws prevail, the legal department is always called to interpolate and advise the company on the way
forward. So, a number of motivational measures have been enacted to ensure that employees produce to their
optimal level (Swamson, 2009).

Another thing is that when recruiting employees, the management is keen to looks for such traits that can
move the stores forward, the attitude, experience and education that the person has are some of the
considerations that the company considers when choosing an employee of any rank. After one has been
employed, the company takes into it as the role of motivating and creating an enabling environment for self-
development and knowing of one’s talents, skills and intellectual property.

Low cost strategy:

The marketing and trading approach adopted by Walmart has made the company be able to sell its products
at relatively lower prices than the price sold by its competitors; it low cost strategy has earned the company

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its legendary status. To maintain the prices at a low rate the company has three main approaches, they are
firm-level economies, efficient distribution systems, and lower labor costs.

The large number of outlets makes the company be able to enjoy economies of scale in different manners like
distribution costs and transport. It is also able to buy products at bulk resulting to a reduced cost per unit. With
large sales, the company is able to sell products are lower prices and recover the lost profit from the increased
number of sales.

A study conducted on grocery retail outlets prices in 2002 shown that at Wal-mart super-stores, the prices of
a basket of items cost 17% lower than the cost of similar products in similar chain outlets in the region. The
reduced cost of products is a saving to the consumers thus; customers are more likely to buy from the outlets
than any other outlet (Swamson, 2009).

Total quality management strategies:

To ensure that the operations within outlets in different places are managed effectively, the company has an
effective information and technology system. The system is crucial for customer service, internal process
management, and communication among branches. Information platforms of the company include intranet,
internet, and e-business tools (Walker, Walker and Schmits, 2003).

To make quality decisions, the management has recognized the benefits that can be derived from knowledge
management tools like business intelligence and data mining tools. Before making a strategic decision, the
company ensures it has, quality information needed (Fred, 2008). As an overall strategy, Wal-mart undertakes
total quality managements in its local and international braches; TQM ensures that the company’s operations
are up to the management expected level (Noruzi, 2011).

Weaknesses of Walmart’s Global Strategy:

The pricing strategy adopted by the company has seen it have China supply most of its products since China
is able to offer products at the low costs that the company aims at. When the shelves of the company have
been filled with Chinese commodities, then it risks the chances of negative marketing, perception and attitude
by other nations especially the Americans on Chinese commodities.

Secondly, despite the world being more inclined to be a capitalist, the company has been blamed for unethical
business processes; some of the commodities are so cheap than the cost that other traders has acquired the

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commodities from the manufacturer, this reduces their competitiveness and they are more likely to be led out
of business.

Alternatively, small-scale business cannot prevail in places that the chain has a store since they will have
issues competing effectively; the result is locking out a number of small traders from business, unfair
competition and job losses (Fred, 2008). The notion that prices should be low has been used to justify the
company’s low wage arte; compared to other traders in the same industry, the company has a low wage rate
and minimal benefits to its staffs.

It is able to keep the low wages because the employees are not unionized; those grocery attendants in other
unionized similar chains earn higher than the pays of Walmart. The retail industry is having an increasing
competition; many players that are coming with their strategies and policies to enjoy the benefits that the
industry seems to be having.

The main competitor of Walmart in the United States is Kmart; the company has a different approach to
business and is likely to be a great threat to the company. Walmart’s lack a visionary strategy; the management
policies have no clear guidelines and set out strategy to see it succeed in the future. They seem to be riding on
the success that the company has attained and lacking ways to create an increased business in the future (Haag,
Cummings, McCubbrey, Pinsonneault & Donovan, 2006).

8. GOVERNANCE AND ETHICS OF WALMART

Walmart continually benchmarks ourselves against other companies and across industries, consults with
corporate governance experts and engages with key stakeholders to strengthen processes at Walmart. To assist
their Board of Directors, the Compensation, Nominating and Governance Committee (CNGC) oversees an
annual evaluation process that is used as a tool for promoting the effectiveness of the Board and Board
committees. The CNGC is responsible for reviewing and advising management regarding the company’s
charitable giving strategy and the company’s social, community and sustainability initiatives. In the
governance structure, the CEO is responsible for the general management, supervision and control of the
business and general affairs of our company, including the execution of Board directives and resolutions.
Their chairman presides over all meetings of the Board and Shareholders, and advises and counsels the CEO
and other officers regarding our business and operations. In addition, the lead independent director actively
participates in the review of Board and committee agendas, presides over the meetings of outside and
independent directors and performs additional duties described in the Corporate Governance Guidelines.

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In order to leverage the Company’s strengths in key disciplines around the world, Walmart aligned its
corporate structure to have the global compliance, ethics, investigations, and legal functions under one
organization, reporting to the Executive Vice President, Global Governance, Chief Legal Officer, and
Corporate Secretary.

• The Global Ethics & Compliance Program is led by the Executive Vice President, Global Chief Ethics
& Compliance Officer (“Global CECO”)who reports to the Executive Vice President, Global
Governance, Chief Legal Officer, and Corporate Secretary, and to the Audit Committee.
• The overall Global Ethics & Compliance Program covers 14 subject matters, including but not limited
to anti-corruption. The Global CECO is assisted in his team by the CECO for Walmart International,
the CECO for Walmart U.S., and the Global Anti-Corruption Compliance Officer, among other
executives.
• Each international market has a CECO who reports directly to the home office through the CECO for
Walmart International.
o Flipkart has a dedicated CECO who reportsdirectlyto the Global CECO.
• Walmart organized ethics and compliance staff based not only on geographic considerations but also
on topic-related expertise.
o Walmart appointed subject matter experts (“SMEs”) in the international markets who
worked collaboratively with the home office to identify and coordinate common standards and
procedures, share best practices, provide training and monitoring, and support each other in
matters relating to their areas of expertise.
• In addition, Walmart continues to have teams of compliance monitors (known as Continuous
Improvement Teams) in the international markets who regularly visit stores, assess the effectiveness
of compliance controls at storelevel, and assist operators in correcting any identified issuesfor many
of the above mentioned subject matters.
o In FY19, the Continuous Improvement headcount in International was over 100
associates.
o The first continuous improvement assessment in International was in 2014. Since 2014,
the team has completed over 16,000 assessments.
o In 2018, the Continuous Improvement Teams in International completed over 1,700
assessments at Walmart retail locations, identified any deviations from policies and
processes,and collaborated with store operators to correct issues.•In FY19,the
International Ethics & Compliance organization headcount was over 1,000 associates.
• In FY19, the International Ethics & Compliance organization headcount was over 1,000 associates.

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9. DESIGNING ORGANIZATIONAL STRUCTURE AND CULTURE

Walmart’s organizational structure determines the company’s business activities. Currently, these activities
are mainly in the retail industry, including operations in the e-commerce market. The company’s corporate
structure also imposes limits on how the business addresses its problems. Structural characteristics help
facilitate the company’s strategic implementations in capturing a bigger share of the retail market.

Walmart has a hierarchical functional organizational structure. This structure has two features: hierarchy
and function-based definition. The hierarchy feature pertains to the vertical lines of command and authority
throughout the organizational structure. For example, except for the CEO, every employee has a direct
superior. Directives and mandates coming from the top levels of the company’s management are implemented
through middle managers down to the rank-and-file employees in Walmart stores. On the other hand, the
function-based definition feature of the company’s corporate structure involves groups of employees fulfilling
certain functions. For example, Walmart has a department for the function of human resource management.
The company also has a department for the function of information technology, and another department for
the function of marketing. These are just some of the numerous function-based departments in Walmart’s
organizational structure.

In relation, Walmart’s organizational culture determines the way people respond to challenges in the
workplace. The resilience of the company’s human resources partly depends on the mindset supported through
the corporate culture. Cultural features help the retail business adapt to changes and emerging challenges in
the international market. The long history of Walmart in succeeding and continually growing internationally
shows that the firm’s organizational structure and organizational culture are helpful in bringing competitive
advantages and success. The organizational structure interacts with the organizational culture to maintain the
significant competitive advantage of Walmart against other firms, such as Amazon and Target, as well as
Apple, Google, and other technology companies that have major online digital content distribution operations.

However, Walmart can improve in applying its beliefs in the context of its organizational culture. These beliefs
are ideal. Still, the company is frequently criticized about its failure to address employees’ concerns regarding
low wages. Such criticisms point to the difference between the belief of respect for individuals in the
organization’s culture, and the actual treatment of the employees. Thus, a suitable recommendation for
Walmart is to implement more effective measures for fulfilling the respect for the individual component of
the organizational culture. These components guide employees’ behaviors, which determine organizational
capacities to add value in the provision of retail service and related services to consumers. The cultural
components are also identified as Walmart’s beliefs:

1. Service to customers

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 2. Respect for the individual
3. Strive for excellence
4. Action with integrity

In terms of service to customers, the company prioritizes customers in its operations. Walmart also recognizes
the contributions of each employee to the success of the business. In addition, the firm strives for excellence
in the performance of individual workers, teams, and the entire organization. In terms of maintaining integrity,
Walmart promotes the virtues of honesty, fairness, and impartiality in decision-making processes.

10. DESIGNING ORGANIZATIONAL CONTROLS

Organizational controls are an important aspect of structure of Walmart. Organizational controls guide the use
of the low cost strategy, indicate how to compare actual results with expected results, and suggest corrective
actions to take when the difference between actual and expected results is unacceptable. The fewer the
differences between actual and expected out-comes, the more effective are the organization’s controls. It is
hard for the Walmart to successfully exploit its competitive advantages without effective organizational
controls which are mentioned in the structure and culture design. Properly designed organizational controls
provide clear insights regarding behaviors that enhance firm performance. Firms rely on strategic controls and
financial controls as part of their structures to support use of their strategies. Strategic controls are largely
subjective criteria intended to verify that the firm issuing appropriate strategies for the conditions in the
external environment and the company’s competitive advantages

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11. CONCLUSION

In conclusion, Walmart’s strategic management is a continuous process of identifying the opportunities

and exploiting them to sustain competitive advantage and identify direction in which the organization moves
in future. Walmart’s mission of being brick-and-mortar retail and gaining momentum in e-commerce by using
strategies of external environmental scan and internal strength in order to be able to branch out in various
ways while surrounded by competitions, and improve major issues for customers and employees. Moreover,
it has a number of series of effective decisions which a manager takes and which in return decides the growth
and performance as well as the functional area is synchronized with strategic goal to make effective use of its
resources. In addition, Walmart’s corporate-level strategies would process further through government and
ethics with compliance efforts in U.S. retail operations, E-Commerce business, and international operations
are each led by a Senior Vice President, CECO. Finally, the last focus is on organizational structure in order
to determine the company’s business activities with relation of culture to determine the way how Walmart
responses to challenges in workplaces and international markets through its organizational controls guide the
use of the low cost strategy.

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References: Online Resources

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https://www.coursehero.com/file/p1cpgdd/Walmarts-functional-areas-support-that-strategy-in-a-number-of-
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