Introduction
Wal-Mart Stores probably is the most successful and largest retail chain operating in the whole world with operation spanning the countries of United Kingdom, Canada, Japan, Mexico, Brazil and China (Datamonitor, 2007).
Its operation of retail stores takes different formats including being in supercenters, discount stores and nearby markets. Though it has many branches scattered all over the globe, its main operation is still based in United States. Its headquarter is located in Bentoville, Arkansas. As of the present it employs an estimated two million people under its payroll.
As an overview, the company of Wal-Mart has recorded an earnings and revenue of $348,650 million in the fiscal year of 2007. This earnings is an increase of approximately 11.7% over what it had earned during the fiscal year of 2006 (Datamonitor, 2007).
In the fiscal year of 2007, the profit by which the company operates is pegged at $20,497 million, while the net profit has reached $11,284 million, which is an upsurge of 0.5% compared with previous fiscal year (Datamonitor, 2007).
This success of Wal-Mart as a company and what can be termed as its firm-specific advantage can be attributed to its business philosophy and strategy of reduction of operational costs so that it can generate it “always low prices” formula for its merchandise (Rugman, 2005).
Even though Wal-Mart with its status and capability of earning a revenue can be considered the world’s biggest company, what with a record sales of $285 billion in the previous fiscal year of 2001, the retail firm is can still be categorized as a home region multinational (Rugman, 2005).
The Term Paper on Sam Wal Company Walmart Department
Walmart is a highly successful discount store based in whole on its founders beliefs and convictions. Sam Walton wanted to make a difference amongst the retail dynasty. A great foundation was implemented for his customers, associates, and community. These beliefs are what today still keeps the store sky rocketing to successful measures. Walmart first department stores opened in a small lower ...
While it is true that it has expanded in several regions around the world to spread its tentacles of proven business strategy, it still faired low in terms of sales in these countries like Japan and other countries. It is tagged as a home region multinational company since huge chunk of its sales and earnings, about 80% — if based in its annual sales for the year 2004 to 2005 – still come from United States, its homebase (Rugman, 2005).
Company Profile
Given that Wal-Mart as the largest retailer in the whole world, its business operations falls under three business segments: Wal-Mart Stores, Sam’s Club and the international segment. It operates more than a thousand discount stores in 47 states in United States wherein it offers a various value-priced general merchandise that ranges from “family apparel, automotive products, health and beauty aids, home furnishings, electronics, hardware, toys, sporting goods” and other similar items. At the same time the company retailer employs an estimated 225 associates.
Wal-Mart Stores has more than 2,200 supercenters. In addition to the general merchandise that it offers the public, it also provide bakery goods, deli and frozen foods, and fresh produce. Looking at the overall ownerships and operation of the Wal-Mart Stores segment, it has 40 general merchandise distribution centers, 38 grocery distribution centers, seven apparel and shoes centers and 12 professional services and specialty distribution centers in these 47 states in United States (Datamonitor, 2007).
Threats and Challenges Faced
There are several threats that Wal-Mart now faces and it is only expected of such a giant company like itself. First and foremost, the retailer company is facing a stiff competition from large number of retailers in the market worldwide. These competitors include Carrefour, Tesco, Target, Home Depot, Sears and other local companies. The segment Wal-Mart Stores competes with other retailers offering discount, department stores, drug, variety and specialty stores. Among these list of competitors, the one that threatens the firm’s most is Carrefour. Carrefour stands as the world’s second largest retailer in terms of revenue earnings. It has an approximate 7,000 stores scattered strategically in 29 countries around the world (Datamonitor, 2007).
The Term Paper on Wal Mart Case Argentina Company Disco
... with a mix of Wal-Mart and Sam! |s Club stores. Company policy had always required that all Wal-Mart projects, regardless of ... Wal-Mart had become America! |s leading retailer, with net sales of $67 billion from its Wal-Mart stores, Sam! |s Clubs, and Wal-Mart Supercenters. The Company ... took office, Argentina was immersed in hyperinflation, and the state was insolvent and incapable of paying its debt ...
Carrefour poses as a serious threat to Wal-Mart since the former is more successful in the aspect of doing business internationally compared to the latter. Carrefour also holds the leadership position in retail business in China.
An increase in competition from both the local retailers in United States and Carrefour can have a bad effect on the revenue base and capability of Wal-Mart to profit.
At the same time, one of the hardest challenges that the company has to face is the proliferation of counterfeit goods (Datamonitor, 2007).
The prevalence of these kind of products, goods and accessories is direly taking a tool on the sales of the company of Wal-Mart since it is affecting the sales of branded accessories. For the first six months of 2006, there have been more than 760 incidents of intellectually property theft that focused exclusively on copyright and trademark that have been recorded. There is a total value of approximately $700 million calculated for seizures and losses from sources scattered in 69 countries. This is the main problem of Wal-Mart: counterfeiting. Since this type of theft is more prevalent in fashion accessories like watches, shoes and hand bags. As a result the company is losing so much money for the lost of sales of these products.
Furthermore, this problem on counterfeit goods created a problem for the Wal-Mart when in 2006, Moet Hennessy Louis Vuitton, owner of the Fendi brand, brought Wal-Mart Stores in a federal court for allegedly selling counterfeit Fendi bags and wallets. The reported counterfeit items were sold lower by 68% than the actual price of the original products.
Another threat to the company is the growing opposition and resistance from communities. As Wal-Mart plans for expansion that would lead to opening of new retail stores in the country, this business plan may have the possibility of facing opposition from local communities. Small retailers located in these target places fear that the competition that Wal-Mart will give them will make them run out of business. Another problem in some states is the concern of residents and local government that the presence of Wal-Mart in their area will bring congestion due to increased traffic. As an example, the local government of Inglewood, California denied the application of Wal-Mart to open a store there due to the same reason mentioned above. Another case that came out with the same negative result was when the company attempted to open new stores in Queens, New York.
The Business plan on Wal-Mart Case
Wal-Mart Stores, the world’s largest retailer, owns more than 4,800 stores, including 1,475 discount stores, 1,750 Wal-Mart Supercenter combination discount and grocery stores, and 540 Sam’s Club warehouse stores. It is the leading retailer in both Canada (236 stores) and Mexico (633), owns almost 40 percent of SEIYU, a Japanese Supermarket chain, and has stores in Argentina (11), Brazil (144), ...
Another issue that threatens that Wal-Mart leadership in retailing is when consumer fraud investigators in Wisconsin released findings after a long, arduous investigation alleging that the giant retail store throughout the state had misled consumers by misidentifying food items as organic. If these fraudulent practices on the part of Wal-Mart continue to persist then this could adversely affect the image of the company.
Wal-Mart’s Attempts to Leadership
In October 24, 2005, Wal-Mart CEO Lee Scott made a speech to the public which he entitled “Twenty-First Century Leadership” (Scott, 2005).
In this statement to the public Scott presented his visionary outlook on what should be the core responsibility of the company towards its associates – a term the company uses to call its employees – and the community in general. In this address, Scott proudly stated the prevailing culture of his establishment as not just a company set out in the market and industry of retailing to earn revenue for its own sake but to help marginalized people get the same opportunity to products that the majority in the cities of United States gets. Like the original mission of the firm’s founder Sam Walton, the retail company is still set on the goal of being radical in terms of giving services to the people of America. Scott stated the legacy that Walton left in the company in pursuit of trying to run a business against the tide of the industry. Moreover, Scott was proud to say that the objective and unconventional business style of the firm’s founder is the reason as to why the company at the present was enjoying an unprecedented continuous growth in the retail industry.
The Business plan on Sears Company Analysis Wal Mart
1 I. Executive Summary Sears began as a small retailer but as the years have gone by, they have become the second largest retailer of the national chains. In the environmental analysis you will discover that Sears' marketing toward women differentiated them from their competitor's and increased their sales as well as their market share. They have had many social / cultural problems that they have ...
But the crux of the speech of Scott was the firm belief of his company to dedicate and allocate its resources to the protection and support for environmental issues that has been plaguing the world, particularly the United States. To push this new philosophy of his company, he gave as an example the recent tragic event of the Hurricane Katrina that devastated the country. He added that the world saw the picture of “suffering and misery” but they at Wal-Mart experienced this devastating natural catastrophe.
He thus started stating the role as a leader that the company should play under this light. The CEO of Wal-Mart enumerated the company’s dedication to the preservation of the environment and its plan of using technology as a way to protect green house effect and to minimize waste production coming from his company. True to this statement, Wal-Mart at the same year tested two pilot stores in Dallas, Texas and Colorado where the operation ran by 30% more efficiently using less energy and thus producing same rate of less greenhouse gas emission (Payton, 2005).
Part of this prototype program was to achieve the goal that its stores should be supplied by 100% renewable energy therefore creating zero waste and at the same time selling products that could sustain the environment and resources (Payton, 2005).
Scott further elaborated his environmental plan of his firm to be the leader in fighting the challenges of: 1) increase in air pollution that leads to asthma and other respiratory diseases, 2) water pollution that is on the rise while safe fresh water supplies are reduced and water-borne diseases that is the cause of millions of death among children, and 3) the destruction of critical habitat that pose as a threat to the diversity of life (Scott, 2005).
As he stated, “As one of the largest companies in the world… environmental problems are OUR problems” (Scott, 2005).
To further this plan of taking a lead role in the preservation and protection of environment, CEO Lee Scott even allowed himself to be interviewed by Business Week regarding this social responsibility being taken as an obligation by the company of Wal-Mart. In the transcript of the interview with the magazine, when Scott was asked why after a long time of ignoring critics, his company was now reaching out to them. His answer to this hard question revolved around the success that Wal-Mart was experiencing and on the things that causes harm to everybody and what responsibility one should take and can do to solve them “Lee Scott On Why,” (2005).
The Essay on Wal Mart Labor Employees Prices
This paper explains that Wal-Mart, in the search for cheaper goods, aggressively pushes its suppliers to cut wholesale cost, causing factory jobs to move from one poverty-stricken nation to another and failing to meet the labor standards set by human and labor rights activists and yet attained by other prominent companies. The author points out that, although Wal-Mart provides job opportunity, ...
Furthermore, Scott was proud to tell the staff of Business Week that the retail company was continuing to growth and evolve in the manner on how it operates and on how it interfaces with society at large “Lee Scott On Why,” (2005).
Pursuing his environmentally-wise move of his establishment, Scott, as was part of his speech in October 24, 2005, was proud to tell about the packaging alteration his company was doing to be environmentally correct. He elaborated this point by saying that:
“If you are large, every negative attribute that comes with being large naturally accrues to you. That is where something like [environmental] sustainability is a wonderful opportunity. As we do the right thing, we also have an impact across so many industries [and] countries. We are finding tremendous cost savings while doing better things for the environment” “Lee Scott On Why,” (2005).
More than this, CEO Lee Scott in his speech also stated his plan of action regarding the flight of the company’s associates, its employees. Since the company is reaping the benefits of the dedicated work of its employees he enumerated the assistance that the company is willing to give to them. This assistance that Wal-Mart was aiming to give to its associates/employees would come through intelligent healthcare program that would benefit them.
In Scott’s statement he emphasized that healthcare was another area for the company and to the nation in general and that the firm of Wal-Mart take this with all seriousness. In his action plan for his associates/employees he stated that the company would make quality healthcare options “more affordable and accessible” to them (Scott, 2005).
He further added that the company was committed for creating innovation programs and this he would start by taking care of the retail’s own employees through a series of steps, namely:
The Essay on Unfair Business Ethics for the Employees of Wal-Mart
Wal-Mart is a superstore that has facilities all over the world. Wal-Mart is known as the friendly neighbor superstore. But until recently Wal-Mart has found it's self not so friendly and is battling in unfair labor practices.An employee working for the Wal-Mart in New York has accused the world's top retailer of unfair labor practices. The suit, which seeks class action status, was filed in a New ...
1. to bring health insurance within reach of all the employees
2. to offer this ingenious healthcare plan for a cheap price of $11 a month
3. to increase the options of healthcare benefits for the employees
4. to provide tools, education and incentives so that employees can take more personal care regarding their health (Scott, 2005).
In general this was the blueprint of the plan contained in the speech delivered by Wal-Mart’s CEO Lee Scott to the public in October 24, 2005. First it was about the role of the company to protect and preserve the environment and lastly its role it would play in giving healthcare benefits to its millions of associates/employees.
The Healthcare Program for the Associates that Came to a Naught
The healthcare assistance and programs set by the speech by Wal-Mart CEO Lee Scott for the company’s associates came into a naught when an internal memo in a retreat held by the top brass of the retail firm was exposed to the media. In a report by the tandem of Greenhouse & Barbaro (2005) in New York Times, the two wrote about the company’s board proposition on numerous ways to hold down spending on health care and other benefits to the employees of the giant retail company.
One of the issues raised by the duo was the recommendation of the board to hire more part-time workers and discourage unfit or not healthy people from working at Wal-Mart (Greenhouse & Barbaro, 2005).
This move would spurt the company of saving several billions on healthcare expenses and on its operational expenditures. It was said that that the executive vice president for benefits proposed a cut of 401 thousand health contribution of the firms employees on health insurance and at the same time the plan to woe younger and healthier people to work for the company in return of educational benefits. In this proposition old employees of the giant retail store would have to stand aside to let this new batch of employees work for the company. The philosophy behind this suggestion was that “workers with seven years’ seniority earn more than workers with one year’s seniority, but are no more productive” (Greenhouse & Barbaro, 2005).
Meanwhile, the discovered memo was a proof that the largest retailer Wal-Mart had to walk on a “fine line” in its plan of restraining benefit expenditure since critics of the company had been attacking it for being stingy on giving wages and health coverage to its employees. Chambers (2006) on her part acknowledge that there were about 46% of the beneficiary of the company’s 1.33 million employees in United States were uninsured.
Wal-Mart’s executives justified the creation of the memo stating that benefit expenditure have increased by 15 percent on the average since 2002 and that the company was being squeezed by the hike in health expenses; the memo if applied would give the giant retailer the opportunity to save more that $1 billion per year up to 2011 (Greenhouse & Barbaro, 2005).
To reduce the heat that the company was getting from its critics, Wal-Mart announced a brand new program where by there would be an increase participation of employees in their healthcare issues by paying a measly sum of $11 a month in premiums. But the scheme still was not applicable especially for full-time associates who only earn an average of $17,500 per annum (Greenhouse & Barbaro, 2005).
In a gist, this leak on the Board Benefits Strategy document created by top honcho of the giant retailer Susan Chambers created an image for the company as a bad employer that goes the opposite direction on its purported claim to take care of its associates that has helped it where it is now today. This document of the Board Benefits Strategy was contrary to what CEO Lee Scott spoke in his “Wal-Mart: Twenty First Century Leadership.”
Strategy and Public Relations
There are new initiatives being done in the organization of Wal-Mart Store. First there is the policy and focus on diversity issues in hiring employees to work for the company. Emphasizing that diversity does not just happen and mere say of commitment to the issue is not enough but should be reinforced with right “systems, processes and leadership” to make it work (“Diversity, n.d.) means that the company is on the right path.
Strategy-wise, this move by the company to embrace diversity in its workforce is a good business maneuver for the company known notoriously for getting too much criticism on its stinginess in giving enough wage for its employees. The embracement towards diversification in the choice of who should be hired by the company has a ripple effect on the multi-cultural population of United States. Wal-Mart Store now becomes closer to most of the people and citizens of the country considering that every ethic minority or race is welcome to work for the giant retailer. The effect of this, business-wise, is that the public consumers which are constituted by different race. The community now sees the establishment as something close and without bias against any race. Since United States is being challenged by the cultural diversity of its demography, this move by Wal-Mart is timely and politically correct at the same time. As mentioned above, since the people now considered Wal-Mart as an amiable firm run by people who does not discriminate, the citizens of the country will be attracted to patronize the company. If Wal-Mart is able to attract people of different cultural background, this only means more and steady earning and revenue for it.
At the same time, this move towards diversification in terms of hiring new employees or associates is a good, deft, timely public relations maneuver for Wal-Mart. The make-up of United States population is constituted of different race and ethnical background, as mentioned above, and this operational strategy of the retailer while broadening its choices for picking a good employee is at the same time broadcasting to the people of America that Wal-Mart is a company that is true to the beliefs of equality among the people around its community and in the United States as a whole. A deft, timely public relations move since Wal-Mart will be endeared to every people of America whatever may be their cultural background.
Another plan that is initiated by the company of Wal-Mart is continuing on the vision laid out in CEO Lee Scott’s October 2005 Leadership in the 21st Century speech. As stated by Scott in his 2005 speech, the company is taking the obligation and responsibility of pursuing its environmental-friendly objective that the CEO saw then as something the firm ought to do for its “customer, communities, associates and suppliers” (“Wal-Mart Expands Leadership,” 2008).
This steady and consistent move by CEO Lee Scott in pursuing his vision of a clean environment that is well protected is a good business strategy move for the company since this will parry the blows the firm is getting and receiving on a regular dose from its staunchest critics and competitors. By focusing on something special a task and objective, the company is doing a business strategy move and public relations maneuver simultaneously that will present and give the giant retailer an image of something humane and not just money-driven company. By doing so, the people and the consumer public will find it easy on them to patronize and buy products from the stores run by the company. Anyhow, the choice of picking the environment as a good subject to be targeted as a means to serve the community and advertise at the same time the company’s name is timely and long called for.
Strategic Social Challenges
Wal-Mart is a giant retail company. This is almost an understatement. According to Head (2004) the company of Wal-Mart is “an improbably candidate for corporate gorilla because it belongs to a sector, retail,” that never produced a powerful company in the history of America. Yet, the retail company grew into a giant company that can compete and rival General Motor’s when it was in its peak. Right now, Wal-Mart is an employer of 1.4 million people worldwide, and this means power. And when a company has power there is also a corresponding social responsibility it has to face as challenges and which the community is expecting it to react and make a move.
If we follow the logic of Bonini et. al. (2006), they said that business leaders ought to involve themselves in sociopolitical debate not only for the purpose of doing it for their respective companies but also for the reason that they have a “strategic interest in doing so.” Since it is already premised that Wal-Mart is already a giant player in its industry, it is safe to say then that the company should engage themselves in sociopolitical debate.
Bonini furthermore added that social and political forces are aspects that a company should ponder with serious attitude since these external forces can affect the industry’s strategic landscape. These forces can damage the image and reputation of a firm that is caught unaware of the situation and blamed as culpable. On the other hand, these forces also can pave the way for valuable market opportunities when unmet social needs are highlighted as well as new consumer preferences.
Basically this is what Wal-Mart for sometime now is working on. Going back to the section where the present initiatives of the company is discussed under the light of strategy and public relations, the giant retailer company has already addressed one sociopolitical challenges that it ought to face sooner or later. This is the diversity of culture of the population of United States.
Gauging by the initiatives that the company is doing, it has able to address this sociopolitical issue when it made a policy the diversification of the employees it hire to work for the company. This is one bold move coming from a company that for sometime since its foundation been only hiring Caucasian in its rank and file and top management positions. With the move for the diversification of its rank and file and other positions in the company the retail store is also parrying the fear of being called biased against certain cultural minorities. At the same time, the move also brings the company almost a family to these people constituted of multiracial composition.
The 2003 Case Study and the Present Challenges of Wal-Mart
In the 2003 Case Study of Wal-Mart, there have been several threats that have been mentioned and lengthily discussed. But probably one of the said threats that have been stated in the said case study is the presence of stiff competition that may bring the lordship of Wal-Mart as the biggest retail store around the world in jeopardy.
True to the case study done in 2003, one of the biggest problem being faced and challenges the existence of Wal-Mart in the industry is the competition being brought by the local competitors and Carrefour, the second leading retailer in the world in terms of revenue earning. Carrefour poses as a great threat to Wal-Mart since the former is doing very well in engaging in business internationally. Moreover, Carrefour holds the leadership in the market in China.
Nevertheless, this threat of competition from rival big retail store is expected to be an ever-present challenge to the business and leadership of Wal-Mart in the retail industry. Any firm engaged in a business is sure to experience a stiff competition from rival players in the industry.
References
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