Strategic Management and Walmart
Founded by Sam Walton in 1962, Walmart has grown tremendously, enabling it to become one of the largest companies in the world. With more than 8,416 stores in 15 countries, close to $401 billion in sales and over 2. 1 million employees; it is clear that has been extremely successful at expanding its operations and expansion plans for over 300 new stores in the U. S and approximately 150 international stores in pre-existing markets (Walmart, 2010). Despite this success, Walmart must take into consideration increasing competition.
As the domestic market reaches saturation, the main issue facing Walmart is how to sustain its extraordinary growth. To ensure that it maintain its growth at a rate equal to or better that its sales, it will have to implement a strategic plan that address internal and external opportunities and threats. Lastly, I will perform a SWOT analysis of the company’s strengths and weaknesses opportunities and threats. History: Walmart is a general merchandise discount retailer, which was incorporated in 1962. Walmart’s history is based on Sam Walton, who changed the way retail business is conducted.
Sam Walton first entered retailing when he was a management trainee at J. C. Penny Co. in 1940 in Des Moines, Iowa (Walmart, 2010). After serving in the Army in World War II, Walton acquired a Ben Franklin variety store franchise with his brother James Walton in Newport Arkansas, until they lost the lease to the store in 1950. By 1962, the first Walmart Discount City was opened in Rogers Arkansas. Limited pricing, low gross margins, and high inventory turnover characterized these stores (Walmart, 2010).
Walton’s focus in 1976 changed on to the emerging Walmart stores and he came to the realization that successful discount retailing did not just involve getting the best price from suppliers, but also meant passing those savings onto customers. In 1978, the first distribution center was built, followed by the first Wal-Mart Supercenter in 1983 and a Sam’s Club in 1988 (Walmart, 2010). Strategic Planning: A vision statement presents the firm’s strategic intent that focuses their energy and resources of the company on achieving a desirable future.
However, in practice, the mission and vision statements are frequently combined into a single statement. When they are separated, the vision statement is often a single sentence, designed to be memorable (Pearce, & Robinson, 2009). Walmart does not have an official mission statement on their web page, but they do have a section that is titled about us. Saving people money to help them live better was the goal that Sam Walton envisioned when he opened the doors to the first Walmart more than 40 years ago. Today, this mission is more important than ever to our customers and members around the world.
We work hard every day in all our markets to deliver on this promise. We operate with the same level of integrity and respect that Mr. Sam put in place. It is because of these values and culture that Walmart continues to make a difference in the lives of our customers, members and associates. Saving people money to help them live better was the goal that Sam Walton envisioned when he opened the doors to the first Walmart more than 40 years ago. Today, this mission is more important than ever to our customers and members around the world. We work hard every day in all our markets to deliver on this promise.
We operate with the same level of integrity and respect that Mr. Sam put in place. It is because of these values and culture that Walmart continues to make a difference in the lives of our customers, members and associates (Walmart, 2010). Walmart has always been about low prices and saving the customer money every since Sam Walton started Walmart. Most companies have mission statements and like Pearce and Robinson (2009) state: “The company’s mission describes the company’s product, market, and technological areas of emphasis in a way that reflects the values and priorities of strategic decision makers”.
Everything you read on their web page is all about low prices and customer satisfaction. A key element in Walmart’s long term objectives instilled by Sam Walton back when he started Walmart and still true to this date with Michael Duke CEO and President of Walmart Inc. Internal Analysis: A scan of the internal and external environment is an important part of the strategic planning process. Environment factors internal to Walmart are classified as strengths (S) or weaknesses (W), and the factors external are classified as opportunities (O) or threats (T), otherwise known as a SWOT analysis (Pearce, & Robinson, 2009).
The SWOT analysis provides information that is helpful in matching the company’s resources and capabilities to the competitive environment in which it operates. Walmart’s SWOT analysis is below. Strengths: 1. Buying power 2. Reputation for keeping prices low. 3. Wide geographic distribution coverage and effectively use of logistic management techniques. 4. Walmart production skills result in reliable yet affordable Walmart brand products. 5. Combining retail shopping with groceries and a pharmacy and a optometry all in the same store. 6. Wal-Mart has grown substantially over recent years, and has experienced global expansion. . A focused strategy is in place for human resource management and development. “
People are key to Wal-Mart’s business and it invests time and money in training people, and retaining a developing them”. (Stewart & Brown, 2009) 8. Customer service. Under the “ten-foot rule”, any member of staff within ten feet of a customer must offer them assistance (Walmart, 2010). 9. Its labor relations are exceptional. Workers are not plain employees but “associates”, eligible for a share of the profits and stock options in the company (Walmart, 2010). Weakness: 1. No formal mission statement 2. Anti-union 3.
Weak reputation due to various unethical problems such as unfair benefit retirement, health care, insurance policy, underage labor, illegal immigrants, discrimination, glass ceiling, etc. (Kummer, 2005) 4. Unsatisfied employees due to lower salary (Kummer, 2005). 5. Decline in sales growth, higher turnover rate. (Pearce & Robinson, 2010) 6. Reputation for being a “bully”. For example: putting smaller business out of business and treating supplier with dropping their product if they don’t get what they want.