Wal-Mart – Competing in Global markets 1. INTRODUCTION 1. 1 Company Profile Wal-Mart is a multinational company. Wal-Mart operates with 69 different names in 27 countries. Wal-Mart serves around 200 million people for a week. 2. 2 million Employees work at Wal-Mart. Wal-Mart supplies products and services of several sectors such as retail, health, electronics and automobiles etc. Main motto of Wal-Mart is to provide the products at a cheaper price than its competitors. 1. 2 Products and Services Wal-Mart offers a variety of services. Some of them include retail goods, wireless, pharmacy, photo lab and financial.
Retail Goods: Retail goods are available in a variety of categories. Wal-Mart sells electronic products such as computers, printers, digital cameras, mp3 players. Wal-Mart also offers books, movies, jewelry and music downloads. Wal-Mart also offers home furnishings, sporting goods, baby products and grocery items. Photo Services: Photo lab Services are provided in the store and online. Store Kiosk is a special service provided by the Wal-Mart where in the customers can drop their photographs for developing. Once the photographs are developed, Wal-Mart provides an option to send them to their home or pick up at store.
Prints are developed in the lab in one hour. Financial Services: Financial Services provided by Wal-Mart include debit cards, credit cards, check cashing, money transfers, bill payment and check printing. The annual fee is waived for customers with credit cards. Debit or credit cards can be applied online and also by coming to the store. MoneyGram, a money transfer service is provided at a very cheap rate. Customers can purchase gift cards, money orders and cash checks. Wireless Service: Wal-Mart provides wireless phone service by partnering with smart mobile.
Wal-Mart provides unlimited talk and text offer at very low rates. Pharmacy: When the pharmacy program was started at Wal-Mart, it offered prescriptions for $4. Today, for long term medications, Wal-Mart offers monthly prescriptions for mail order and pick up in store services. 1. 3 Company’s vision and Mission, Objectives and Strategies Vision: The Wal Mart Vision statement states that “The vision of the Global Ethics Office is to support ownership of Wal-Mart’s ethical culture to all stakeholders globally. ” Wal-Mart believes in 3 principles * Respect for individuals * Service for our customers Striving for excellence Mission: Wal-Mart’s mission is to provide quality products to customer at low rates. Their mission statement is simple “people, saving money, and a better life”. In order to achieve their mission, Wal-Mart has developed procedures, policies, rules and principles. Open door policy: Higher management doors are always open for the employees. Servant leadership: Leaders are always available to serve the team. Sundown Rule: Customers or employees’ questions are answered on the same day of receiving. 2. Company Strategies and Globalization 2. 1 Competitive strategies within the company
Best competitive strategies adopted by Wal-Mart are Big Box Phenomenon, Low – Cost Leadership and Differentiation Strategy. Big Box Phenomenon: The retail industry had a major revolution with the evolution of Wal-Mart. Big retailers have their store established in 50, 000 sq. feet. Most of these retailers are large windowless buildings which are single storied. All Business article published Wal-Mart emerged as the number one among all the retail giants like Toy “R” Us, home depot, target, best buy and Lowe’s. Since Wal-Mart has big box status, it made huge profits compared to other retailers.
Wal-Mart earns major profits on low- price items which are sold in huge volumes. Low Cost Leadership: Wal-Mart slogan is “Spend less. Live better. Wal-Mart provides low cost items and has pride in itself in beating out the other retailers for earning huge profits. Since the economy is slowing down, Wal-Mart is the best option for the customers to buy the groceries at low cost. For example, Wal-Mart offers $ 4 for pack of soda bottles and $ 1 for ketchup bottles. During recession, Wal-Mart was benefitted because of its variety of offers and low prices.
Differentiation Strategy: Wal-Mart creates a service or product to customers that are unique by using the differentiation strategy. According to the differentiation strategy, products should be marketed in such a way that they should be considered by customers as exclusive to Wal-Mart. This strategy was successful by offering brand images and warranties. Wal-Mart creates an impression that they are providing something extra to the customers when compared to other retailers. 2. 2 Incorporating Information Technology IT played a huge role in the growth of the Wal-Mart.
The life of the employees became much easier to sell the products with the help POS systems. Most of the products in the Wal-Mart are associated with RFID. Employee scans the product and the respective charge is displayed on the POS system. These systems reduced human effort to large extent. IT also played a major role in human resource management. Special software was developed to manage this critical function. Automated selling of the goods is one of the best features. Customers need not wait in line to buy the products. They can buy the items by placing the products on automated scanning machines.
Thus saving the customer time. 2. 3 Company’s Production Chain as a result of Globalization By taking the advantage of economic globalization, Wal-Mart was successful in “revolutionizing the logistics of supply chain management”. Wal-Mart implements two major strategies: * It imports the products from countries like China where the human labor and raw material is available at much cheaper rates. * Wal-Mart increases the efficiency and pushes the suppliers in the North America to lower the prices. 2. 4 Role of Human Resources in globalization As Wal-Mart is a multinational company operating in 27 countries, there is a uge role for human resources. Since globalization refers to flow of resources between different nations, organization structure should be in such a way that it should manage the increasing network of international transactions and economic activity. Business environments have become more competitive in these days because of globalization. Big giants like Wal-Mart have to focus on competitive strengths to develop long term strategies. Since business is developed through people. They should be well trained in understanding the global needs and increase their horizon.
Human resource planning is a critical function to manage in every organization. In a giant organization like Wal-Mart it’s too complex to manage. A proper plan can yield better results to the organization. 2. 5 Social Responsibility Every organization should have the social responsibility to balance between ecosystem and economic system. Some of the social benefitting plans adopted by Wal-Mart are Instilling Confidence in Young Minds: invests in next generation leaders. Under this program, Wal-Mart provides opportunities to develop constructive and practical solutions.
Wal-Mart Better Living Business Plan Challenge: A forum wherein college students can best provide their ideas. Sam’s Club Environmental Sustainability Challenge: Sam’s club associates and college students’ work together effectively implementing environmental sustainable practices to raise their standards of living in their communities. Wal-Mart Brazil Sustainable Retail Award Program: Discussion on the retail industry at the academic level. Awards are awarded to the people who won in the discussions. 3. Analysis and Audit Reports 3. 1 SWOT Analysis Pricing is the main motto of Wal-Mart.
Products are provided to customers at low prices always. Strengths: * Information technology supports its international logical system. * A strategy is in place for development and resource management. * For Wal-Mart’s business, people are the key. It invests money and time in training people. * Wal-Mart is growing in a huge way globally in recent years. Weakness: Since Wal-Mart sells all products, it might not focus on a particular sector. So, it doesn’t have the flexibility of its competitors which are the giants in a particular sector. Wal-Mart is facing competition from stores like Target and Kmart.
Also small retailers like dollar general and family dollar we’re able to create their impact on the home consumer sales even though Wal-Mart was successful. Opportunities: * Can merge with other global retailers and create strategic alliances with retailers in a particular category. * Wal-Mart stores are currently only in some countries. There is a huge scope to expand the business in several countries. Threats: As Wal-Mart is number one, it is the primary target for all its competitors. Since Wal-Mart is trying to expand globally, there might be several political threats to operate the store. 3. 2 Five generic competitive strategies
Trying to be different is a competitive strategy which Wal-Mart follows. * Low- Cost Provider Strategy: A strategy wherein the products and services are provided at lower costs than all its competitors. * A Broad Differentiation Strategy: Differentiating the products from the rivals in such a way that the scope gets increased to many buyers. * A Best Cost Provider Strategy: Primary focus is to provide products with comparable attributes to customers at a lower price than rivals. It provides more value to the customer’s money. * A Focused Strategy Based on Low Costs: Focusing on the narrow buyer segment.
Providing products at lower prices and out-competing the rivals. * A Focused Strategy Based on Differentiation: Focusing on the narrow buyer segment. Out-competing the rivals by providing customized attributes that meet the requirements of the customers. 3. 3 Offensive and Defensive strategies Wal-mart and Target are the best and closest competitors in providing retail marketing services locally and many other locations in the world. Even though both the companies markets its products with a low price strategy, Wal-mart has scored maximum market share. Wal-mart had geographically located in many places and globalizing its stores.
Wal-Mart could not translate its merchandising strategy wholesale to another country and succeed because every company has its own government policies, political agendas, cultural background, morals and other labor capabilities. Where as the same kind of strategy can be followed only in similar kind of developed countries but expanding our business in these developed country drives us into more risks as there would be already well habituated and settled retailers who attracts most of the customers and gives us very hard time in competing in these kind of countries.
Low Cost Strategy: Wal-Mart started to merge many small scale industries and many farming communities to reduce the manufacturing cost and provide its products for a cheaper price. By using and marketing its products which are manufactured of low cost raw materials which does not harm the environment, it gains an additional step in marketing strategy as an eco-friendly. By reducing the manufacturing cost and selling at cheap prices it gains a good market share. Direct Competition: Wal-Mart started to manufacture alternate products for every product with average quality which costs low price.
So people are always having a chance to select the main product or look for Wal-mart subsidiary brand good value at a much cheaper price. Target and Kmart has tried to implement this strategy, but had many issues due to improper selection of small scale industries to merge. Even Wal-Mart produces its own products, its retail industry still markets all the competitor products. Hence we can guess that Wal-Mart only produces these products which can be used as subsidiaries but not as competitive.
Along with the Low Cost strategy and Direct Competition, I consider taking some other offensive strategies like Continuous product innovation and Adopting next generation technologies. Continuous Product innovation: Every product needs to be updated with new features using latest technologies and provide satisfaction to its customers. Look and feel, the quality of the products needs to be updated frequently and should be tougher competitors when compared with other retail store products. Along with other retail stores, Wal-Mart stands first in innovating new features in store creating much easier for the customers.
One of the best examples is self check out, these kiosk’s are located at end of counter where customers can scan the products and pay by using their credit cards. These created a tremendous response and attracted many more customers. Adopting New Technologies: From past few years, along with providing its services on its own products, Wal-mart also provides Smartphone applications where users can use his Smartphone rather than driving to a store. Every customer can select his nearby store and search for his products and go through the complete specifications, features, price range and they can easily ship to home.
Wal-Mart is serving most of the electronics and retail products through online services and creating an easy pick up and shipping facilities to support every customer in his busy day life. Maintaining sufficient stock is one of the key feature of every retail industry. Wal-Mart uses advanced technology which gives them a clear picture of incoming and outgoing stock details, inventory details, expiring products which helps to provide higher quality products. 3. 4 Vertical or Horizontal Integration Wal-Mart pursues a vertical integration strategy.
A new brand name “SAMs” is developed by Wal-Mart to sell the products. Using the brand name developed, Wal-Mart entered into the business of manufacturing things like cereal, soda and dog foods. This is still a form of vertical integration, though Wal-Mart doesn’t grow crops or raise their own livestock. Wal-Mart is highly reliant on its suppliers. The relationship between Wal-Mart and suppliers can be called as vertical integration because Wal-Mart analyzes and improves the manufacturing process of the suppliers effectively. Wal-Mart doesn’t actually follow the horizontal integration strategy.
It competes with the giants in the market and also the superstores but doesn’t actually use the tactic of merging the companies that give a tough competition to it. 3. 5 Managing Ethics Wal-Mart does business in several countries; it has to follow the laws of that country which it operates in. Every year, because of its globalization, Wal-Mart faces complex problems. Ethics followed in Wal-Mart * Every associate in Wal-Mart must abide by Wal-Mart’s statement of ethics. * Wal-Mart believes in supervising the business practices as important as supervising the performance. Wal-Mart has built a global ethics office. When an ethical issue occurs, anyone can contact the ethics office to resolve it. * Wal-Mart believes that if a decision is to be chosen between business objectives and ethics, the latter should be given the priority. * Management responsibility of Wal-Mart is to provide a flexible environment for the employees. 3. 6 Competitive capabilities Competitive environment of Wal-Mart is quite unique. Primary competition from Wal-Mart is general merchandise retailers, supermarket retailers and warehouse clubs.
Growth and change are common in the discount retail industry. The top competitors compete both internationally and internationally. They compete in several fields like pricing, technology and innovation, layout and environment, store size, location and overall image. Wal-Mart’s primary competitors in general merchandise are Kmart and Target. Superstores such as Bed, Bath and beyond and Circuit City also provide retail competition. But, a survey conducted recently provided results that were in favor of Wal-Mart. Most customers prefer Wal-Mart for its low pricing, variety and quality.
Consumer satisfaction should be given the utmost importance in competitive environments. 3. 6 Audit framework In 2011, on 8713 factories 9377 audits were conducted to know whether the suppliers were adhering our standards. International Council of Toy Industries CARE Processor ILO/IFC Better Work Program conducted audits in 855 out of the total 9377. Wal-Mart wishes to participate in such programs to avoid audit duplication. It participates in such programs because of the program’s remediation competition. Based on the results Wal-Mart ceased 155 because they violated its standards.
Factories supplying non branded goods and private –label are audited by Wal-Mart. All audits are conducted by internationally recognized and accredited firms. The ethical Sourcing team at Wal-Mart checks whether the audit firms follow the audit protocol and the reports are published accurately. 3. 7 Action plan and Fiscal Reports: Wal-Mart have several actions plans to be implemented in the future. Some of them are Diversity Action Plan, Management action plan, Wal-Mart freedom action plan. 4. Executive Summary and Conclusion
Wal-Mart reviews performance against three operational goals * Create zero waste * To be supplied 100% by renewable energy * Sell products that sustain the environment and people In the 2011 Global responsibility report, Wal-Mart encompasses on social responsibility and environmental efforts. Some results taken from the Global responsibility report include the following * “Reduced returns of defective merchandise to 1. 76 percent” * “94 % of the direct import factories received the one of Wal-Mart’s two highest audit ratings” * “ Redirected 81 % of waste in California”
Wal-Mart was able to reach the number one status, because of the sheer dedication of its employees and the strategic plans it implemented. Wal-Mart was successful in meeting the requirements of the customer who come to their store. Also it offered special benefits to customers who shop at Wal-Mart. This made Wal-Mart apart from its competitors.
5. REFERENCES Competing in Domestic and International markets. http://www. walmartstores. com/sites/annual-report/2012/WalMart_AR. pdf http://stock. walmart. com/financial-reporting/sec-filings ttp://services. corporate-ir. net/SEC. Enhanced/SecCapsule. aspx? c=112761&fid=8092998 http://www. ehow. com/info_8296998_kind-service-Wal-Mart-provide. html http://retailindustry. about. com/od/retailbestpractices/ig/Company-Mission-Statements/Wal-Mart-Mission-Statement. htm http://www. ehow. com/list_7456440_competitive-strategies-wal_mart. html http://scdgroup1. pbworks. com/w/page/5471059/Supply%20Chain,%20Globalization%20and%20Wal-Mart http://www. ossrea. net/index. php? option=com_content&view=article&id=374