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Background

      

Headquarters: Bentonville, Arkansas Founded by Sam Walton NYSE:WMT Industry: Retail; Largest Retailer in the World Sales: $256.3B (2004) Employees: 1,500,000 (2004) WalWal-Mart Stores, Inc. operates Wal-Mart Stores, WalSupercenters, Neighborhood Markets and SAM'S CLUB locations in the
United States Puerto Rico Canada, China Mexico, Brazil United Kingdom Argentina South Korea.

1. 2. 3. 4. 5. 6. 7.

Background Cont. 


Leader in defining corporate trends Pioneered Use of Universal Bar Code (UBC) system

Question 1

Applegate·s change elements
1. Strategy 


Organizations are now thinking globally and acting locally. Firms must change the way they are organized and employees at all level must become information and knowledge literate.

2. Structure  Adopting a hybrid organization model called the ¶information age organization·.  Organizations are now structured as flat, fast, flexible and focussed on areas of core competencies. 3. Operating and Management process 4. Distribution of Power and Authority 5. Core beliefs and values  Have respect for the individual.  Practice excellent customer service.  Strive for excellence in all that we do .  Information age organization represents an interesting blend of tradition and transformation

WalWal-Mart's Strategies 


Site selection. WalWal-Mart benefits from economies of scale in manufacturing and logistics They are leaders in the field of vendor managed inventory Aggregation Effect: whereby Wal-Mart sells as many different Walitems as possible. This allows the company to grow revenue over its fixed cost base (more sales out of the same store). Information Systems: Wal-Mart helped push the retail industry Walto adopt UPC codes and bar-code scanning equipment. Also, barWalWal-Mart's plans to use RFID-based Electronic Product Codes RFIDto lower the costs of supply chain management. 

 

WalWal-Mart's Strategies Cont. 

Cost Control: Wal-Mart watches controllable expenses very closely. Hourly Walemployees can be reprimanded or terminated for having unauthorized overtime. WalWal-Mart also squeezes out any inefficiencies in the business, such as reducing paper consumption by using a computerized process. WalWal-Mart's sophisticated distribution system and information technology to track inventory has significantly improved its efficiency and productivity making it far more profitable than other retailers. WalWal-Mart began an internal "survival of the fittest" competition among individual stores. By building more stores than necessary, store managers felt a strong incentive to "crack down on workers and improve the efficiency of their store to stay alive" .   

Question 2

When Wal-Mart comes to town Walcompetitors: 
  

Seek Local Government help Decide to adopt size caps, better wage laws, or other rules under which Wal-Mart store would not be admissible WalTry to fend off new Wal-Mart stores by showing that the proposed stores¶ Walplans are inadequate to address storm water runoff, increased car traffic, and other. Competitors consult attorneys help you figure out the legal weaknesses in WalWal-Mart¶s proposal, incase they do not to fit within zoning regulations for the size and intended use of their development.

If Wal-Mart has already come to town, Walcompetitors:
Change:  Treatment of labor force  Management styles  Type of clientele targeted  Performance of present stores  Advertising strategies  Store décor  Invest in re-positioning their brands by modifying store locations, hiring reand motivating staff employees, and promoting the brand through advertising to their target segment

Question 3

Business Strategies 


Global centralized information system for our operations Universal systems and platforms First two philosophies have enabled Wal-Mart to drive costs down and helps maintain Walefficiency. 



Merchants first and technologists second Third philosophy is to develop easy to use systems; developers have responsibility and obligation to understand the business Minimal transition to transfer people The processes and the systems are generally the same. Easy to transfer people from one store to the other, and they're able to pick up right where they left off. Therefore, no significant downtime or startup time in the transition.  

For business acquisitions, eliminate before automate practice with IS/IT Development.
Define success; eliminate before automate; business process overview The next step is to eliminate before they automate. Eliminate steps, processes, reports, keystrokes; eliminate any activity can possibly be eliminated. 

Power/Authority
They follow a model of decentralized decisions but centralized systems and controls. They have a common system and a common platform, but we have to allow a great deal of flexibility in their systems.

Walmart Tesco ± Costco - Target
Products and Services: 
 

WalWal-Mart: Sells a high range of products, ranging from house hold appliances to car-parts, stationary, carcosmetics, furniture, food products, art, home décor, etc. Tesco: Mainly food, But has moved into areas such as clothes, consumer electronics, consumer financial services, internet service and consumer telecoms. Costco: Initially preferred to sell only boxed products , but now sells many other products that are more difficult to handle, such as fresh produce, meat, seafood, fresh baked goods, flowers, clothing, books, software, home electronics, jewelry, art and furnitureAlso has expanded towards tire garages, pharmacies, Hearing Aid Centers, optometrists, photo processing, gas stations and ready-to-eat ready-toRotisserie Chicken.

Clientele : 


Tesco : Sells brands to appeal to upper, medium and low income customers in the same stores. WalWal-Mart and Costco : Both aim the low-income group, who are ready for quantity over quality. low-

Adverstising: 


WalWal-Mart spends only 0.3 percent of its revenue on advertising Its competitors spend 2.3 percent on an average. Infact , Tesco has very sophisticated marketing campaigns with improved promotions reporting and performance tracking.

Opening New Stores :  

WalWal-Mart constructs new stores strategically located near distribution hubs and smaller towns Most of its competitors establish stores near major urban areas with a potentially large clientele base

Employee Benefits : 
 

WalWal-Mart : Known for a very low wage program for its employees. Tesco : High Education Policy, Life Insurance Cover, Medical Insurance, Personal Accident Insurance, Gratuity. Costco : They have a high wage approach for their employees. They have benefit packages including Health Care, Dental Care, Pharmacy Program, Vision Program, Life Insurance, Long Term Disability. Costco believes in ³Paying higher wages translates into more efficiency´.

Target·s Business Strategy 
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Target chose not to go ´head to headµ with Wal-Mart Differentiation: mass Walmerchandiser of affordable chic goods Target outperforms Wal-Mart on specific dimensions: cleanliness of stores, Walshopping environment and experience, and shorter waiting time to pay Target's success was attributable to two key factors: the right kind of differentiation distinctive marketing communications. Target's dedication to match Wal-Mart's prices on like items WalTarget's customers, referred to as "guests," Demographic: on average younger, better educated, and more affluent. Target is often pronounced in faux French, "Tar-zhay," to connote its trendy "Tarsensibility

Question 4

Kmart  Stores located in declining urban areas  In January 2002, Kmart filed for bankruptcy  Brands: Martha Stewart Everyday, JOE BOXER, Jaclyn Smith, Sesame Street and Thalia Sodi, among others. 

Sears  

 

Stores located predominately in malls offoff-mall growth strategy household staples ² food, cleansers and paper products "Come see the softer side of Sears."

Purchased Sears, Roebuck and Co. for $12.3 billion

Strategic Rationale
Merger accelerates execution of pre-existing strategies of both retailers ² Provides Kmart with more unique and differentiated products ² Enables combined company to rapidly grow off-mall in locations closer, more convenient to the customer ² Leverages the scale and financial strength of the combined company 

Real estate strategy ² Significantly expands Sears points of distribution in key markets; High concentration of urban and high-density suburban locations ² Opportunity to monetize non-strategic real estate as appropriate 


Combines wealth of leading proprietary brands to further differentiate stores from competition ² Craftsman, Kenmore, Lands· End, DieHard ² Martha Stewart Everyday, Joe Boxer, Jaclyn Smith, Sesame Street

Strategic Rationale Cont. 
  

The combination of Kmart and Sears will: ² Leverage the strength of two leading retailers ² Create compelling, differentiated customer offerings ² Create shareholder value through significant synergies

Will Sears Holding Inc. be successful?

Question 5

What has been their impact to date? 

Organizing in groups 


walmartwatch.com TUCSON TV Radio Newspaper When the employees are lay off since the join unions To make Wal-Mart pay for the extra hours WalLegal actions in 30 states: To make companies like Wal-Mart pay for health insurance Wal´Anti-big´Anti-big-box" stores laws to ban super center stores. 
 

informing the public: 
  

Take cases to court 
  

Propose and promote legislation as: 


Tucson , TX Clack Country, NV

What do you see as their long term impact on Wal-Mart? Wal

Labor: 

At some point organized unions will finally enter the Wal-Mart workforce. Only a couple of them re Walworking right now but with pressure from the public and better organization by the unions they are becoming part little by little of the company. The flooding of lawsuits is forcing the company to change some of their 'distincting' policies regarding employment and location as well as the way the choose to organize their stores. Future lawsuits will make this changes more important in the future. The company will change some of their policies, as store location and size, so they do not alienate the public as they have done in the pass. Making the communities more pro-Walt mart will be needed to proavoid the present ant-Wal-Mart situation. ant-WalWaltWalt-Mart will loose some of the market share due to how the public looks at Wal-Mart policies and style. WalThis threat will probably make the company change more than lawsuits or new laws. The success of Wal-Mart in other countries, as European ones, is been threat red since workers are Walorganizing even before the company moves to those countries. Harder labor legislation prevents WalWalMart of imposing their labor ethics in those countries and makes them change their approach. 

Company ethos:  

Community:  

Market share:  

International Grow: 

Do you see this grass roots rousing strategy as being more effective than new laws? 

Public strategy: 

Public opinion and union demonstrations can affect the selling ability of WalWal-Mart, affecting the economic benefits of the company and decreasing their market value. These effects will probably force Wal-Mart more than Walanything to change their approach. Laws have the potential of affecting companies as Wal-Mart in a dramatic Walway. On the other hand these multinationals can affect how laws are passed and fight them in the court. Both approaches have advantages and disadvantages. If Wal-Mart Walimproves their PR, then the public strategy will loose its power. Using laws is a more secure way of affecting Wal-Mart but not as powerful as Walpublic discontent. 

Laws:  

Conclusion: 

Will it work with any company who violates cultural norms?