1.0 Abstract
The purpose of this
individual assignment is to identify, discuss and appraise the different levels
of strategic issues faced by the Company Wal-Mart in the different questions
prepared in the Case Study. Wal-Mart is a 45 year old company with operations
all over the world. Wal-Mart is a multinational retail corporation present in
many countries all over the world.
As we can see more detailed
in the report, Wal-Mart had faced several issues leading from issues about
their financial performance to issues on lawsuits and violations. Moreover,
there were several ways to increase the online same store sales in their
ecommerce business in the report. Ways such as offering promotions and
discounts periods to their customers online or also providing membership offers
to members of the Sam’s Club is one of the several ways that the Company can
increase their online store sales.
Furthermore which
organizational structure would best suit Wal-Marts’ operations was also
mentioned in the report. The organizational structure was based on certain key
issues faced and since the company has operations all over the world, that was
something to take into consideration. Additionally also in the report, it was
added that is Wal-Mart is growing at the right pace, in the right places, and
where would be best for the company to grow internationally.
Finally, the last thing that
was discussed and analyzed was the sustainability of the Company in terms of
the three aspects which are environmental, social and economic. It’s about the
companies’ contribution towards the above mentioned three elements. The
environment in which business take place, the economic that makes profit for
the business and lastly the social that makes up the businesses surroundings and customers.
2.0 INTRODUCTION
Wal-Mart is basically an
American multinational retail corporation that operates a chain of
hypermarkets, discount department stores, and grocery stores in many parts of
the world. The company’s headquarters is in Bentonville, Arkansas, in the
United States. The founder of Wal-Mart was a man named Sam Walton in 1962. Wal-Mart
is the world’s largest company by revenue which is approximately US$480 billion
according to the Fortune Global 500 list in 2016 and as well as it is the
largest private employer in the world with 2.3 million employees worldwide.
As of January 31, 2017,
Wal-Mart has 11,695 stores and clubs in 28 countries, operating under 63
different names worldwide. The Company operates under the name Wal-Mart in the
United States and Canada, as Walmart de
Mexico in Mexico and other Central American countries, as Asda in the United
Kingdom, as the Seiyu Group in Japan, and as Best Price in India. It basically
has wholly owned operations in Argentina, Chile, Brazil, and Canada.
3.0 Finding and Discussions
3.1 Key Issues Faced by Wal-Mart
(Q1: Based on your understanding, determine the main
discussion that has faced by Wal-Mart)
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According to the case study in page 1 paragraph 3, “in 2000, Wal-Mart’s
stock price has dipped about 27 percent, from $64.50 to the $47 range. In the
same timeframe competitors Costco’s stock price has appreciated roughly 20
percent, and Target’s has climbed more than 70 percent”. As you can see in
Exhibit 1, the stock price of Wal-Mart had been decreasing for the last 7 years
where else in the meantime their competitors have been increasing. A company’s
worth, its total value is its market capitalization and it is represented by
the company’s stock price. Therefore this is not a good sign and is an issue
that needs to be dealt with.
Exhibit 1
Ø
In page 1 paragraph 4, it has mentioned that because the company is big
to change. The company has been operating for the last 45 years which is
relatively a long time for any organization. Wal-Mart is so use to their old
ways that they find it difficult to change and develop new ways. Why I say this
is because in page 4 paragraph 3 it was mentioned that ‘what had worked in the
past was no longer sustainable in the current competitive environment’. So
basically the company was still stuck in their old ways. The company did not
adapt to the new technological advancements or even customer choices changes
over time, and many more. This issue was a serious problem for Wal-Mart.
Ø
Another issue that was faced by Wal-Mart was mentioned in page 4
paragraph 2. Mentioned was ‘Opposition has been mounting against not only
Wal-Mart’s practices, but also its very presence, due to multiple relationship
issues with employees, communities, and governments’. And in page 4 paragraph 4
it was also mentioned, ‘Wal-Mart faced multiple accusations, charges , and
lawsuits, many resulting in fines, including environmental violations, child
labor law violations, use of illegal immigrants by subcontractors, and
allegedly poor working conditions for associates’. So we can see here that many
accusations, fines and violations have been made by the company therefore
portraying a very bad image for the company.
Ø
As shown in page 2 on the financial statement of Wal-Mart, the
underlined area is basically the percentage sales of Wal-Mart domestically. We
can see that for the last 6 years the percentage has been dropping which
indirectly means that sales is dropping. This is never a good sign for the
company as this is not a good sign for investors. Investors would not want to
invest in a company where sales are continuously dropping.
Exhibit 2
3.2 Ways
for Wal-Mart Stores and Sam’s Club to increase same-store sales.
(Q2: Explain the possible reasons, how can Wal-Mart
Stores and Sam’s Club increase same –store sales)
Firstly, what is Sam’s Club?
Sam’s Club is an online ecommerce business owned and operated by Wal-Mart.
Sam’s Club has decided to take a step forward by offering a ‘buy online, pickup
in store’ concept which in my opinion is a good way to increase the store
sales. This is because people get to order their items online and just come to
the physical store to pick it up. They do not have to waste time finding
parking, or walking around finding their items or even queuing up in long lines
to buy for their goods.
Secondly, maybe Sam’s Club
can offer promotions and monthly discounts on their website as that is one of
the most important way to attract customers to purchase online which of course
would eventually increase sales for Sam’s Club. I guess let’s be honest,
everyone loves promotions, sales and discounts therefore people would buy if
they see goods are cheaper
Third, maybe Wal-Mart can offer
items like a member card to customers for membership discounts on items.
Therefore regular customers can apply for this membership card online, and use
their membership card ID to earn points and use the points as discounts also on
other items.
3.3 Organizational
Structure that could help Wal-Mart in strengthens its organization.
(Q3: By relating to challenges faced by
Wal-Mart, suggest the organizational structure that could help Wal-Mart in
strengthen its organization. Support your answers by drawing an appropriate
structure)
An organizational structure is
basically helping the managers with departmental information, which enables
them to do planning and workforce modeling. Moreover, the organizational
structures are ideal for sharing the organizations strategic vision,
highlighting responsibilities and the relationship or dependencies. Furthermore, it will allow the managers or
superiors to guide the subordinates with clear line authority and
responsibilities. In my opinion, multidivisional strategies could help Wal-Mart
in strengthens its organization.
According to Nordmeyer (n.d.) multidivisional strategies will allow a firm to sell various types of
product and services across multiple cities and countries. Thus, this helps
Wal-Mart to perform well and to operate efficiently. Moreover, it is an added
advantage to Wal-Mart, where it will enhance strategic control. Basically it
will be a focal point for the managers to develop corporate strategy.
Furthermore, it will give profitable long-term growth which will contribute in
reducing communication barriers and loaded information. Additionally, it gives
stronger pursuit of internal efficiency. The uncreative use of functional
resources by divisional managers will go unobserved unless the corporate
managers monitor Wal-Mart’s activities.
According to the second
issue mentioned in the first question, Wal-Mart is an older company who did not
want to change their ways of doing things. Therefore we feel that by changing
their organizational structure maybe it would better for Wal-Mart. All this
while they were operating in their old ways but maybe this is a better way for
them to keep up with the competition and eventually beat them.
3.4 Stores expansion, international growth of Wal-Mart and purchasing of
J. Sainsburry by Asda.
(Q4: Discuss the statement
below
“Is Wal-Mart expanding the
right kind of new stores at the right pace and in the right places? How and
where should the company continue to grow internationally? Should Asda buy
J.Sainsbury?”)
At this point in time, I
would say that Wal-Mart is expanding right kind of new stores at the right pace
and in the right places because mentioned in page 23 paragraph 1 where the case
mentioned ‘ The majors appear to include Americans primarily, followed by
United Kingdom and Japan, and as well as China and India’. So in my opinion,
especially India and China are currently expected to be the largest markets in
the world in a couple of years. So having entered these two countries market is
consider to be a good place and the right time to set new stores.
Regarding where Wal-Mart
should continue to grow internationally, well in my opinion maybe the company
can target a large continent like Africa. The company has already covered many
of the other continents. For North America, United States and Canada, for South
America, Chile, Brazil, Mexico, etc, for Asia, the two largest markets India,
China and not forgetting Japan, and for Europe, countries like United Kingdom,
Argentina, etc. Although the company has operations in Africa, maybe they can
expand into more countries there.
In my point of view, I feel
that Asda should buy or acquire J.Sainsbury because for many reasons such as
one, the company gets to eliminate one of its rival competitors. J.Sainsbury is
the three largest retail shop in the United Kingdom. Second therefore by buying
them, they gain all their assets, customers and other form of wealth. Third,
this is also a good way for the brand reputation to increase. For example when
EON acquired Carrefour, it was a way for the company to prove itself and worth.
So same thing applies here.
3.5 Sustainability efforts practiced by Wal-Mart
(Q5: Review the
sustainability effort that has been practiced by Wal-Mart)
Sustainability can be
divided into three elements, which is environment, economic and social.
Basically it’s about the companies’ contribution towards the above mentioned
three elements. The environment in which business take place, the economic that
makes profit for the business and lastly the social that makes up the
businesses surroundings and customers.
There are several efforts
Wal-Mart took to contribute towards the sustainability. As for the environment
it has launched global environmental sustainability initiative in 2004.
Moreover, they also have taken actions towards several sustainability goals by
selling 100 million compact fluorescent bulbs in 2008. Not only that Wal-Mart
has reduced their packaging by 2013 and started to buy fish from certified
fisheries and sell more organic product. The product all was environment
friendly product. Additionally, it made company facilities and trucks more
energy- efficient. Wal-Mart also has started to practices eco-friendly.
Wal-Mart effort practiced
towards the economic is as followed. The
Wal-Mart Foundation 2006 gave more than 415 dollars million in cash and in-kind
merchandise to 100,000 organizations worldwide; making is the largest
corporation rate cash contributor in America. Thus, enables the foundation to
give most of the money to the local level where it can have the greatest impact.
For the social elements of
sustainability, Wal-Mart had beefed up pro-community, pro-sustainability,
pro-health care information on its Website, television ads and its annual
report. Wal-Mart also has launched In Font, which means a 30 minutes television show airing on
the lifetime and USA network that gives a chance to show case its incredible
associates and the variety of ways they gives back to their communities,
bettering the lives of America families.
In nutshell, Wal-Mart is stresses
its benefit to suppliers and communities, as well as its commitment to
providing affordable health care and competitive wages for its associates.
