This action might not be possible to undo. Are you sure you want to continue?
Presented By: Md. Soheb Ahmed (EMBA 8th Batch #04)
This case discusses:
Introduction to Wal-Mart
History of Wal-Mart Corporate Strategy
The Criticism and the Challenges
Wal-Mart’s PR strategy The Road ahead
Wal-Mart – An Introduction
American public corporation that runs a chain of large, discount department stores World's largest public corporation by revenue Largest private employer in the world
Fourth largest utility or commercial employer
Largest grocery retailer in the United States ( 20% ) Largest toy seller in the United States ( 22% )
a family fun center. a branch of a local bank . a video rental store.What is Wal-Mart • • • • • • • • • • World’s biggest retailer Sells Grocery & General Merchandise One Hour Photo Studio Pharmacy & Optical Centre Tire & Lube Express Gasoline station Fast Food Outlet Garden Centre Pet Shop Also feature hair and nail salons.
Arkansas. Live Better . USA(1962) by Sam Walton .A.5 billion (2007) Net income Total assets Total equity .US$ 12. Products Revenue .Save Money.Bentonville.WE SELL FOR LESS every day! .US$ 374.The Lowest Prices.Wal-Mart at a Glance Founded Headquarters .US$ 64.S. Super centers.US$ 163.6 billion (2008) Slogans .Discount Stores.5 billion (2008) . Neighborhood Markets .7 billion (2008) . U. Guaranteed! .Arkansas.
) List of Assets (2008) In U. Wal-Mart Discount Stores are 971 Wal-Mart Super centers are 2.447 Wal-Mart Neighborhood Markets are 132 Sam’s Clubs are 591 Internationally Stores outside U.A.S.S.Wal-Mart at a Glance (contd..A are 3121 .
"Each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community. First job – at JC Penney at $ 75 a month Gave up job and opened his first store in Arkansas in 1950. Opened 1st Wal-Mart At the opening. Oklahoma on March 29. 1918 Graduated from the University of Missouri in 1940.Walton’s 5 & dime 11 stores by 1962. Walton stated." .The man behind it all Born in a farmer’s family in Kingfisher.History of Wal-Mart Sam Walton .
reporting an annual sale of $44 million Focus on overseas expansion in 90’s In 1998. Walton had established 18 Wal-Mart stores..6 million in 1967 to US $315.3 billion in 2007 . H.) By 1969.History of Wal-Mart (contd. and WalMart's sales increased to $165 billion Sales increased from US $11. Walton was included in Time Magazine's list of 100 most influential people of the 20th Century In 2000. Lee Scott became President and CEO.
The Corporate Strategy Sam Walton gave 3 policy goals to define Wal-Mart's business – # Respect for the individual # Service to customers # Strive for excellence Walton’s practices# Consistently stock the shelves with a wide range of goods at low prices # Keep the store open later than most other stores.Pass on the savings to the customer . especially during the Christmas season # Discount merchandising.Buy wholesale goods from the lowest priced supplier .
and associate the retailer with the reputation of offering the best prices Branching out into new sectors of retailing such as pharmacies.The Corporate Strategy (contd. 2. 4. and grocery sales . automotive repair. Dominate the Retail Market wherever Wal-Mart has a presence Growth by expansion in the US and Internationally Create widespread name recognition and customer satisfaction with the Wal-Mart brand. where the strategy is implemented successfully 1. 3..) Strategic Goals Three successful elements of strategy formulation and a fourth element.
. outsell competitors. Whether you walk into a Wal-Mart store in your hometown or one across the country while you're on vacation.The Corporate Strategy (contd. our success will always be attributed to our culture.) Competitive StrategyDominate every sector where it does business Measure success in terms of sales and dominance over competitors (doesn’t mind putting some of them out of business) Sell goods at low process. you can always be assured you're getting low prices and that genuine customer service you've come to expect from us.As Wal-Mart continues to grow into new areas and new mediums... make existing stores bigger. and to expand into other sectors of retail Company Mission. and to expand a typical Wal-Mart model is to build more stores. You'll feel at home in any department of any store.that's our culture .
Driving costs out of its supply chain.Business Model & strategies Traditional components Low cost-leadership strategy. constantly implementing ways to operate more cost-efficiently Offering customers worldwide a broad range of merchandise at appealingly low price Opening stores in more and more places to serve an ever growing customer base .
Sam’s Club. Supercentres. Neighborhood markets Wide product selection and a mix of name brand and private -label merchandise .Newly adopted components Commitment to protect environment and practice of green business activities Multiple store formats: Discount stores.
smile.The Corporate Strategy (contd.. and attend to a customer in a store when within 10 feet of them .) Practices followedAggressive hospitality # Using door-greeters # Patriotic themes and displays in stores # Compels its staff to engage in morning cheers Affiliations with charities The United Way and Children's Miracle Network Sundown Rule All customer and supplier requests or queries must be reasonably answered within 24 hrs by all employees Ten Foot Rule Store employees must greet.
Relationship with suppliers Scale of operation helps to bargain with suppliers to get the bottom prices Procurement personnel spend a lot of time with the vendors to understand the their cost structures and to get the minimum price in a win-win situation Encouraged its vendors to contribute ideas about how to make its store more attractive insofar as their products were concerned Vendors were encouraged to voice any problems in their relationship with Walmart and to become involved in in Walmart’s future plan .
Standards for Suppliers Walmart has certain standard for suppliers in relation to wage and working condition Walmart has teams for direct control of factory audits and for monitoring factory compliances Conducts training for foreign supplies to ensure compliance and standards .
Supply chain Management: Use of Cutting edge Technology Probing. identifying slow-selling items to reduce costs Walmart has introduced Electronic Product Code (EPC) and Radiofrequency Identification (RFID) systems.000 associates engaged in logistics and information systems activities for effective and cost-supply-chain management .000 suppliers which allow them to avoid both stock outs and carrying access inventories. testing and then deploying the newest equipment. With the help of EPC and RFID. retailing techniques. computer software programes etc to increased productivity and drive costs down the company has sophisticated Information Technology and online capability for real-time access to detailed figures on most operations The company can track down the movements of goods through its entire value chain Walmart has data sharing systems and Retail Link System with 30. the company can track movement of any items in real time The company has more than 88.
Power E-business .Ununionised & Strict labor laws .International laws against anti dumping . .Increase in consumer purchasing .Service innovation and technology .Unable to adapt to different countries .Growth through adaptability.strong penetration strategies Infrastructure (financial strength) Weakness .Were unable to handle media .Late entrant in international market.Campaign against anti competitive practices .Terrorism .Low penetration in European union Opportunity .Many countries have Unorganized retail .Targeted marketing .Globalization (diminishing trade barriers) .Competitors Threats .E-tail’s continued development Least cost of packaging .Efficient supply chain management .High law suits against the company.SWOT Analysis Strength .Negative publicity . . .Cold Storage market .Poor public image .
Strength in Supply Chain Efficient consumer response Vendor-Managed Inventory Enterprise resource planning Customer relationship management Sales force automation .
The Cookie begins to crumble .
Professor of Economics at Iowa State University found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening → Traditional Mom‟s & Pop‟s forced out of business . Kenneth Stone.Criticism of Wal-Mart Local communities Store openings→ At sites of archaeological relevance in Mexico → At American Indian burial grounds and a Civil War battle site in Tennessee Economic Impact→ In a paper published in Farm Foundation in 1997.
Criticism of Wal-Mart Pricing and Competition Issues → Sued by many competitors for intentional low pricing (intentionally selling a product at low cost in order to drive competitors out of the market) → Investigated by the Federal Competition Commission for “monopolistic practices” → Retailer pressured suppliers to sell goods below cost or at prices significantly less than those available to other stores → in 2003. the German High Court ruled that Wal-Mart's low cost pricing strategy "undermined competition" and ordered WalMart to raise it’s prices → Wal-Mart sells all its stores in Germany .
in part. low-benefit model of employment. but the basis is a very low-wage.the largest nationwide civil lawsuit against a private company ever. I can take advantage of that. We're going to be successful.Criticism of Wal-Mart Employee and labor relations: → Wal-Mart Associates don't earn enough to support a family Sam Walton .“ → Wal-Mart managers are judged."I pay low wages.6 million women workers filed a lawsuit of gender discrimination in 2004 . . based on their ability to control payroll costs → Wal-Mart's 2006 Annual Report reported that the company faced 57 wage and hour lawsuits → 1.
night-time employees were locked inside. → A report by Congressman Miller alleged that in ten percent of Wal-Mart's stores. 200 workers at Wal-Mart Super Center.Criticism of Wal-Mart Working conditions: → In 2000. a California court ordered Wal-Mart to pay $172 million in damages for failing to provide meal breaks to nearly 116. holding them prisoner. Wal-Mart paid $50 million to settle a class-action suit that asserted that 69. shouting "We want justice“. walked out in protest against new store policies and rallied outside the store. 2006.000 hourly workers → On October 16. .000 current and former Wal-Mart employees in Colorado had been forced to work off-the-clock → In December 2005. Florida.
Criticism of Wal-Mart .
and low premiums.371 instances of minors working too late. Wal-Mart had approximately 1."In some of our states. during school hours.650 for 1.Criticism of Wal-Mart Child labor violations and Illegal workers: → Internal Wal-Mart audit conducted in July 2000- # 1. the public program may actually be a better value .436 violations of child labor laws in Maine for the period 1995 to 1998 Health Insurance: → Wal-Mart reported in January 2006 that its health insurance only covers 43% of their employees." .540 to settle child labor violation charges in January 2005 → Wal-Mart has also been fined $205. or for too many hours in a day → Wal-Mart agreed to pay $135.with relatively high income limits to qualify.39 million US employees that time → President and CEO Lee Scott in 2005.
Criticism of Wal-Mart Labor Union Opposition → Efforts of UFCW (United Food and Commercial Workers Union) to interact with workers. Wal-Mart responded a week later by announcing the phase-out of its in-store meat cutting company-wide. foiled each time → In 2000. a small meat cutting department successfully organized a union at a Wal-Mart store in Texas. → Wal-Mart has issued "A Manager's Toolbox to Remaining Union Free“ .
on average: . This cost comes from the following.750 per year.5 billion → One 200-employee Wal-Mart store may cost federal taxpayers $420.Criticism of Wal-Mart Taxes → The estimated total amount of federal assistance for which Wal-Mart employees were eligible in 2004 was $2.
and we don‟t buy from any vendor that uses child labor. NBC showed “Made in USA” labels being hung over merchandize bought from overseas in most of the WalMart stores.” During the interview. CEO David Glass on non-American labor and low wages and child labor-”We are equally dependent on American factories and „Buy American‟ is still active” Not satisfied. in an interview with NBC program Dateline.“Its some sort of a mistake at store level.Agreed to pay 5% more for products made in US. Glass is shown videos of child labor working in plants.The Wal-Mart Reaction Sam Walton launched the “Buy American” campaign in the 1980s. What does Glass say?? “We take care that we rely least on child labor” . In December 1992. Glass said.
and walks out.same story Interview with “60 minutes” (the most reputed news show in the USA) in 1994. . Another interview…. Glass maintains there's no child labor in Bangladesh stores. NBC shows videos. saying he wasn’t prepared with the facts the last time. Fair enough. says Wal-Mart Few weeks later. Wal-Mart held its silence. Glass fumes. Wal-Mart charged with impairing growth of small stores.The Wal-Mart Reaction “No Comments”. saying videos were doctored. NBC says. On launch of Supercenters in mid-1990s. local officials responded vaguely to media queries and directed them to their annual reports. No more details revealed to the media. Glass returned for another interview.
”Executives skirt major questions”. The National Organization for Women demonstrated in front of Wal-Mart stores. company officials seemed very unsure and dubious during a press meeting. the executives faltered. But Who Pays?” Protests begin to mushroom from every corner. Not for long though . distributed cards reading – “Wal-Mart: Always Low Prices.The Wal-Mart Reaction Even in the situations when PR could’ve helped the company. Wal-Mart still holds its silence. When Wal-Mart entered Canada in 1995. calling it “Merchant of Shame”. Result .Newspapers carry out articles ridiculing the company’s poor public relations-”Short of substance”. “Circumspect”.
” .“ “The sleeping giant has to be awakened and has to emerge with a defensive posture and a take-no-prisoners attitude. Save our Community . Wal-Mart has been notoriously tight-lipped.” -Gail. A 2004 report prepared by McKinsey & Company for Wal-Mart found that 2% – 8% of Wal-Mart consumers surveyed have ceased shopping at the chain because of "negative press they have heard. PR Expert. It is going to be a tough sell on their part. Chairman. University of Florida “I think they are going to have a tough time suddenly overcoming the perceptions of some people. F.Larry Bevington. baker.The Wal-Mart Reaction For most of its 43 years.
Corporate Affairs. a PR team is put in place A PR campaign is launched in over 100 newspapers under CEO Lee Scott on January 13. CEO. said campaigns aimed at long term solution to improve the tarnished image.The Wal-Mart Reaction Wal-Mart does wake up…But is it too late?? “For too long others have had free rein to say things about our company that just aren‟t true.” .” . 2004 Jay Allen. NOT a response to “any specific charges” raised recently. Senior VP. With newspapers including New York Times and Wall Street Journal among others. criticism on money “wasted” CEO issued an open letter in the ads stating that the company provides “good jobs with excellent advancement opportunities. We‟ve decided it‟s time to draw our own line in the sand. A “DO or DIE” situation for the giant retail chain To face the communication crisis.Lee Scott. Wal-Mart Inc.
The Wal-Mart Reaction Wal-Mart’s Benefits Manager sent a letter to New York Times. became the first Wal-Mart person to address the National Retailer Federation Trade Group. “If our policies had been so bad. company focussed on creating goodwill to restore its image.” Moving away from the low prices. CEO. TV commercials showed employees giving testimonials about the benefits they get at the company . Lee Scott. then the chain wouldn‟t have grown to this size. attracting such a large customer base. ascertaining that the company provided health benefits to its employees. condemning the media’s wide coverage on lawsuits against the company. District Manager wrote a similar letter to The Salt Lake Tribune.
Was Wal-Mart’s sheer size the main problem?? “Wal-Mart‟s very success may be working against it. Lawsuits kept on increasing by the day. Big empires are hard to manage. Wal-Mart announced in radio shows about being a good employer and bringing job opportunities and quality goods and services to local communities Began offering scholarships for journalistic studies in about 10 universities all across the USA But despite all this. the problems didn’t die. and the public tends to mistrust institutions that get too mighty” – A brand analyst .The Wal-Mart Reaction Accelerating the image makeover. anti-Wal-Mart communities began to grow. Wal-Mart increased its political donations to $1 million In an alliance with NPR (National Public Radio).
millions of Americans opened their morning papers to find a full-page ad declaring.On January 13. . Lee Scott appeared on Good Morning America. "WalMart is working for everyone. His lowkey manner in the face of critical allegations came off as dispassionate.The Wal-Mart Reaction Wal-Mart recruited former presidential advisers. his smile thin and forced. Same morning. Deaver (Ronald Reagan's image-maker). including Michael K. On-screen he was reserved and careful. Fox News. Scott didn't pull it off. and CNBC Scott called the company's carefully orchestrated PR campaign "an outreach.“ BUT. 2005." and signed by Lee Scott. His gaze was flat. Result. and Leslie Dach (Bill Clinton's media consultant) to set up a rapidresponse PR team in Arkansas.
it thought the image would automatically be restored if the facts were made available to the people. But from one interview to the next.com. Scott said he didn't know. it became clear that the retailer only wanted to tell part of the story and share “certain” facts When asked on Good Morning America how much Wal-Mart imports from China. walmartfacts. Had links to all the labor policies.Coming from a company known for tracking practically everything. pretty much yes. This resulted in the launch of a website. Wal-Mart believed the cause of the bad image to be the lack of awareness among the public. .. ABSURD??. lawsuits.. benefits to the employees and philanthropic activities undertaken by the company.The Wal-Mart Reaction Scott kept promising to tell the real story and provide the real facts. So.
But was the extensive PR campaign serving its purpose or was it adding on to the never ending woes of Wal-Mart?? .000 new jobs in the United States in 2005 Promoted more than 9.The Wal-Mart Reaction Wal-Mart also bought paid search ads from Yahoo! and others A basic search on Yahoo! resulted in a sponsored link to the site walmartfacts. “Who drives Wal-Mart? Want to know the facts? Go to walmartfacts.000 people from hourly jobs to salaried management jobs and made sure that this deed was made known to the entire nation through advertisements in both TV and print media.com saying.com” Wal-Mart planned to create 100.
com doesn’t. to bring to light the facts the public didn’t know about Wal-Mart Wake Up Wal-Mart . founded in April.a union-backed campaign group affiliated with the UFCW. formed in the spring of 2005. a non-profit organization studying the impact of large corporations on society . 2005 The centerpiece of the organization is its website WakeupWalMart. Wal-Mart Watch.com Exposes all the facts and problems which the website walmartfacts.Anti-Wal-Mart groups Over the years. several groups had come up. is a joint project of The Center for Community and Corporate Ethics.
small business owners.Anti-Wal-Mart groups Wal-Mart: The High Cost of Low Price. presents an unfavorable picture of WalMart's business practices through interviews with former employees. The movie has been seen by millions and has been highly acclaimed critically as well. and Wal-Mart executives. . But couldn’t undo the magnitude of damage already done. defending its practices entitled Why Wal-Mart Works. New York Times had this to say . a documentary film released in 2005.“BREATHTAKING” Wal-Mart came up with its own DVD film. and Why That Drives Some People C-R-A-Z-Y.
it hired a rogue's gallery of spinmeisters who've worked for Reagan. Be prepared to accept responsibility. and construct a plan for productive change. Kerry. Clinton. Begin a truly transparent process Fire your consultants: For years. But when it did. collected fat checks. 2. consumers don't pay attention to all those fancy words. . All they did was reinforce Wal-Mart’s defensive posture. Stop defending and start examining: “You can't address what you don't acknowledge”. Wal-Mart stayed clear of any form of PR. They go for fairness.Ten Steps to Turn Around Wal-Mart 1. and Bush. following Sam Walton’s policy that it’s a waste of money. and tried to win debating points in the consumer culture Remember. acknowledge difficult truths.
. Support the communities you do business in by using your infrastructure and helping local school districts pool their buying and save on textbooks and other merchandise.6 million employees in unexpected ways : Make Wal-Mart an employer of choice instead of the exhaust system of the American economy. knowing its providing for health care for families. It’s time to think about the impossible: a solution that would let the unions in. Leverage your size to help your 1. Talk to the unions : You've spent years fighting and villainizing them. Consumers wouldn’t mind spending an extra penny. 4.Ten Steps to Turn Around Wal-Mart 3.
.Ten Steps to Turn Around Wal-Mart 5. Customers get bored by the same products on the shelf and they want to see you reach out to everyone. start a referral network Let the customers know where they can find the stuff you are never going to store. Support mom and pops : Start helping mom and pops in some imaginative ways. Expand your vendor base : Actively seek out small. For eg. and help them grow. innovative companies with exciting new products. You end up making two friends – the local store and the customers.. Help the new entrepreneurs get stronger. 6.
Encourage your employees in entrepreneurship. . Take pride in how many employees start a new company each year. Install “factory-cams” at your captive manufacturing plants around the world. Act like you have nothing to hide. You lose employees but it’s great PR to lose good people for the right reason Open up your business : Become less impenetrable.Ten Steps to Turn Around Wal-Mart 7. Stop treating your employees like commodities : Demonstrate your commitment to getting people out of the minimum wage sinkhole as quickly as possible. so anyone can check out the conditions 24/7 on your website Let management and store personnel blog Talk to the reporters 8.
Offer discounts on future purchases. upon a single purchase above a certain amount.Ten Steps to Turn Around Wal-Mart 9. Instead. 10. run advertising that shows how Wal-Mart democratizes the holiday for real people. instead of a feared one. . Make Wal-Mart an admired company. Kill the big holiday TV campaigns : You can’t afford health care benefits but you can afford to pay over-priced celebrities to dance around the TV screen?? No one would believe that these celebrities shop at Wal-Mart. Use your extended warranty marketing as a model for other new services : Don’t give a chance to consumer advocates to raise a finger on the credibility of these policies.
Thank You .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.