Category: Walmart

Walmart is where we find anything and everything within considering our budget. A place for a middle to lower class person to manage their household. A place for brand and utilities. One could opt for luxuries like organic food and also get everyday necessities like a clearance section for groceries. The ability to reach every crowd has made Walmart rank 1 in top fortune 500 companies with a revenue of $500 billion .

What is it offering that none other companies could survive with such competition? How is it able to afford quality within the price range? The company that we know today went through many ups and down to stand out. There are huge retail chains like Costco, target, Kingsooper, wholefoods, Safeway, and many more to compete with Walmart, yet it remains unbeatable.

According to the history on Walmart’s website, Walmart’s started with Sam Walton in 1962 . Sam Walton was born in Oklahoma in 1918. He served in the military for 4 years and then moved to Newport Arkansas. His wife wanted a small town living which gave opportunity for him to explore a different lifestyle. After working in small business and understanding the market, Sam opened the first Walmart on July 2nd, 1962 in the southern state, Arkansas of the United States of America. The main idea behind the establishment of the company was low prices and great service. Many Competitors only used high branded products in their store, however, Walmart focused on all brands at a lower price. People did not mind traveling long distances to get high-quality products at less price. The market did not expect the company to reach such heights, yet, Sam Walton’s vision not only did great in financial terms but exceeded everyone’s expectation in respect of growth .

After his success in America, Walmart expanded and branched out in Mexico, Canada, Germany, UK, and China. By 1997 it reached around $100 million in just sales. Within the first 20 years, Walmart opened its first superstore Sam’s Club. Walmart not only provided amazing products throughout the world but eventually hired many employees. By 1999 Walmart was the largest private employer in the US .

Sam had three goals when he started his company: Every individual is important; customer service should be great, and one should strive for excellence . He worked towards reducing the prices of each item. He believed in buying in bulk which reduces the price in total and sells the item for cheap. Through this method, the company earned less on each item but earned more when sold in bulk. For his service in retail, he received the presidential medal of freedom by George bush in 1992. His acceptance speech “lower the cost of living so that everyone can save money and have a better life’ became the purpose of the company till today. He died the same year after receiving the award, but Walmart is still growing because of his dreams and values.

OPPORTUNITY

Today we can find Walmart within every few miles in every state in the United States. In the mountains where there is no shopping mart or grocery store, Walmart has been delivering goods and services which includes groceries, clothing, furniture, beauty products, gifts, electronics and automobile parts to name a few. In a few states, one could also buy guns in the store. Walmart has always tried to advertise its branded as a place for family to shop. They also refused to sell any movies or games that were not children friendly or erotic.

Walton leveraged the opportunity when he first started his business in Bentonville, Arkansas. He explored the rural and suburbs regions rather than aiming at big urban centers. Kmart, Sears was one of the major retail centers at that time. He went in a direction no one dared to and provided branded products at cheaper costs. The strategy that Walmart still earns from is the “lowest price’.

In terms of opportunity, Walmart might not be the one to take on new opportunities but when someone else succeeds at a strategy, then opt it immediately. After Sam Walton died, management took loans to expand their store worldwide. Through this company owned a huge amount of debt which could only be paid if their strategy worked. Management kept the business alive based on Sam’s vision and the idea of the lowest price and today it’s the highest revenue earning company. In 2007, Walmart changed its slogan from ‘always low prices always” to ‘save money live better’ . In 2016, Walmart introduced Walmart pay for its customers to pay their bills through smartphones. 2017, it entered the business of video streaming. It also tried to improve the technology used in cash registers to increase the speed and reduce the time for transactions .

There is no other window that sells branded items for a lesser cost. Walmart has a strategy that targets areas where no other marts are open, and every store has almost everything for a lesser price than provided by other stores. Throughout our couse EMEN 5400 Product Development and design, we have learned that a company needs to understand the customer’s requirements to sell the product or gain trust .

Walmart’s business model comprises 3 areas: Walmart US which is 64% of the sales, Walmart international for example ventures with other companies in the world like Flipkart in India which accounts for a total of 24% of the sales and Sam’s Club which is 12% of the sales . Today Walmart has 270 million customers in both instore and ecommerce. This is because of the infrastructure of the store and online websites. Many of the Walmart stores are opened 24×7. Walmart tries to incorporate new strategies every day to meet customer demands .

There were many strategies that companies follow but below are the one that I believe created an impact on their sales and account for their success.

1. EDLP – Everyday low price. Few stores give discounts on the items a few days in a month to increase their sales, however, Walmart provides them every day.
2. Rollback – Few products whose demand is less is sold for less price than marked in the product. These products can be found on the clearance sections specifically dedicated to selling last and few items.
3. Online delivery – In this digital world, it’s hard to succeed by not making a presence online. Online shopping and delivery system remove the need for the customer to rush early morning to get the necessary groceries. If the product is not available in one branch of the store, one could get delivery from the other store. People now want to spend less time in activities that could be completed with a click of a button and free delivery is an added bonus. People are moving towards it. Walmart introduced online shopping in 2007 . Online shoppers might not be as many as instore shoppers, yet they contribute a significant amount in revenue as seen below. Below are the statistics based on the 2019 survey conducted by U.S Census Bureau data.

WALMART BUSINESS MODEL

To understand the business model, firstly we need to understand the strategy Walmart is following to grow its company world-wide, secondly, we need to understand the failure it faced while trying to implement a new strategy and finally the measures it takes to overcome those failures. Walmart has been leading in its famous EDLP (Everyday Low Price) strategy. Below are Walmart’s pillar’s is presently working on

1. Lowest Price

Walmart buys products worth billions from its suppliers which gives the edge on bargaining. Additionally, they use cross-docking to reduce the price. In Cross-docking, shipments arriving from the suppliers are directly unloaded in trailers at the Walmart distribution centers . There are 42 distribution Walmart centers with a total of 50million square feet of the area .

2. One-stop shopping experience

Walmart has always been a family shopping store and they refuse to sell any products which are not children friendly. The store aims to provide everything so that one doesn’t go to another store for any product. The store is arranged in a format that when the shopper enters the store, he/she is lured into looking at other sections. Traditional shoppers like us look at the products for examining the prices and end up buying things off our list. Many of the Walmart stores are open 24×7. Although there are few customers at night, yet Walmart doesn’t miss a chance if there is the potential of customers shopping at night.

3. Competitive

Walmart has its stores in all 50 states. 2.2 million people are working in Walmart today. 1.5 Million in U.S and 700,000 internationally . Sam started his journey with “Five and Dime” stores and dreamt of discounted stores. He did not find anyone to back him on his journey, so he traveled to remote places. He believed that by lowering the mark up on each product one could earn more through volume. He first started his work with Ben Franklin where he used his strategy and grew the sales by 350% in just 3 years . He successfully opened around 14 five and dime stores under the Ben Franklin franchise. He suggested his strategy to the butler brothers of the ben franklin franchise, but they declined the proposal. So, Sam left the company and opened his first Walmart.

Walmart’s business model first step was acquiring companies. They made their first acquisition of 16 Mohr Value in Michigan and Illinois, in 1974. Now, Walmart is trying to compete with all the e-commerce sites like Amazon. In 2016 Walmart acquired Jet.com an online shopping site. Walmart believes in acquiring the stores and setting them up that are in the secluded areas rather than setting up a whole new facility. This ultimately saves them time and cost of the new set up.

Many stores are in the cities where there are just a few grocery stores in 22 miles radius. In a few months, Walmart beats the prices of local stores. As a result, all the stores run out of business . Walmart remains the sole provider of all necessities and commodities. The establishment brings joy to the local community because it provides jobs, savings and opportunities. Each store earns a lot through this method.

So, the question is why Walmart is closing so many of its stores?

Walmart, a supercenter that has transformed the way one goes shopping suddenly started closing stores in 2016. The company closed 154 stores in the United States and 115 stores internationally. These not only affected the localities where Walmart made its presence but also around 16,000 employees were either laid off or restructured .

The major reason is Amazon. It’s all interconnected. Amazon is the company that is challenging the core of Walmart which is the lowest price. As we have learned in EMEN 5090 Marketing and technology Ventures, one needs to adapt to continuous market change and needs to prosper in difficult times . Walmart started an online business in 2007 and grew ever since. To expand its e-commerce Walmart bought Jet.com and an online shopping site. Now, Walmart is trying to analyze the products requirement in-store and online. It wants the customer to get the same services as Amazon. However, to deliver such services one needs huge inventory and sellers. Walmart now faces the issue where either their inventory is overfilled or underfilled. The items they aren’t able to sell are stocked up in the clearance section.

Walmart is trying new ways to get customers in their stores. In 2011, Walmart opened Express stores in urban markets but eventually closed all the stores in 2014. Walmart tries to lure the customers, but when they fail, they quickly move to the next one rather than trying to decrease the impact of closure like unemployment or reduce the dependency of the localities.

Now they are shifting their focus to online delivery and pickup. Walmart has just exhausted all the store locations. Now they are looking to close stores where there is less potential, and stores are not generating revenues as expected.

CORE COMPETENCIES

Core competencies of a business/venture are the characteristics or vision of that company that stands out in the market. For any business to succeed in the longer run, one has to understand the vision it wants to create for its business. Sam Walton’s vision was to expand the company worldwide and beat the competition. Today, Doug McMillon is the CEO of the Company and his vision is to beat the online retail industry like amazon. Walmart’s main core competencies are the Lowest price which they achieve by reducing their expenses, buying the products in bulk and carrying operations through distribution centers. Walmart employees stay at a cheap hotel and every employee is being treated the same way no matter the rank.

MANAGEMENT & CULTURE

Walmart dominates when it comes to Management. In the past, Walmart was believed to be the place for any employee to work because of the benefits and training programs. However, recently the ugly truth comes out as one dig deeper into its history with employees and services at the store. Walmart’s main purpose is to keep the stakeholders happy and suppliers in control. When Walmart enters a location, it not only puts all the shop owners out of business but also dominate the suppliers by paying the minimalistic cost. In terms of employees, Walmart never entertains labor unions or complaints of the employees against management. When the situation goes out of hand, the company does everything possible to win the case. Walmart is represented by the best law firms in the country and many of the lawyers are in the house. One can also assume that’s it’s almost impossible to win a case against Walmart. When the situation worsens Walmart has an amazing public relations firm to get Walmart out of any negative publicity.

Walmart has a huge history of discrimination against employees based on gender, race, orientation, and age. Many cases were filed by female employees claiming they were paid less compared to the men for the same job. There are many cases where employees have sued the company for discriminating based on orientation. Apart from the discrimination, Walmart was sued for not paying employees for their break time. According to the Walmart labor handbook, employees should be paid for their break which depends on the length of their shift. Ultimately, the court favored the employees and nearly 187,000 employees were paid a total of $188 million dollars. Walmart does not like losing, so it filled the case in the supreme court which rules against it and employees were then paid $224 million.

The management problem is just not with its employees, the problem has also been with its customers. There is no proper training given to an employee who Walmart treats as associates. There is a guessing game that goes on when an associate faces a problem with the customer. In such a situation, you could be at Walmart all day trying to find a manager to solve the problem. The main reason Walmart is unable to manage its employees and customers is because of the old book methods it follows . With the changing time, one needs to understand the requirement of customer service, equality, and respect in business. Respect for individual users to be one of the core business strategies of Walmart. Today there is no scope for inconvenience to the customer. A company could easily lose customers by causing problems and it wouldn’t matter if they apologize. In our course, EMEN 5830 Engineering Communications, we learned that a project or company could only move smoothly if effective communication is present. This communication could be between management and its employees or employees with customers . If one lacks the ability to communicate it could result in misunderstanding which could in worst case scenario also leads to lawsuits. The policies that are working today might not work tomorrow. Walmart is able to lure customers because of their past reputation and still unbeatable prices. However today, one could easily manage to disrespect someone and then hiring lawyers to defend.

CONCLUSION

In conclusion, Walmart is at the top in fortune 500 companies, but amazon is catching up at 5th rank. Walmart is trying to incorporate all the ecommerce strategies to expand their stores worldwide and explore new markets every year. They also try to expand the services and products they deliver. There are approximately 35 million merchandises sold on the online store whereas a typical supermarket would have 120,000 products depending upon the area and market.

With this growth comes controversies. Walmart is now America’s biggest employer. With this comes responsibility of treating their employees with respect. In EMEN 5030 Introduction to Project Management, we have learned that a company needs to consider their employees in their path to success . Today we might not know the exact change in the management but due to bad past and press, Walmart has to work hard to improve their reputation if they want to grow. Many individuals and unions have complained against Walmart. Business owners have also claimed that Walmart forced them out of business and eventually left the locality, creating a havoc in the town. These issues came to notice when public became more concern regarding their issues and unions encouraged people who were suppressed of their rights and privileges. In an CNBN interview with Doug McMillan, he emphasized that employees are being trained more and paid more than minimum wage. Company is also sponsoring education to the who would like to continue their education with their work . As a result, Walmart has to be more concerned regarding their laws and ways to maintain their reputation.

In terms of community, competition is cutthroat now. If Walmart will not occupy the community, other’s will also not miss a chance. Walmart in reality helps the community to save some money in their daily expenses. However, the problem arises when the local stores run out of business because they are not able to compete with the prices. In such situation Walmart is at the top of the retail chain. Community starts to get dependent on it for jobs and commodities. Then at one point the store saturates and the revenue decreases. When this happens, Walmart closes its branch and move to a new location. Employees are given the option to move to the new branch, but can every employee live in this unstable situation. Few stores don’t even survive for more than 1 year. People live in communities and there are old people as well who lived in that community for their entire life but sustain on Walmart’s monthly paycheck. Severance won’t help them in their longer run, but jobs would. When Walmart’s enters a community and all the other run out of business, there is nothing Walmart could do to stop that because that’s competition and business, but the issue lies when they leave them hanging with no support.

After all these controversies regarding labor and product quality, Walmart still stands at the Top in retail business. Sam Walton could never have imagined the length his business he once started has reached.

WALMART: About

Walmart International has had net sales of $125.9 billion in 2012, making it the world’s third-largest retailer (behind Walmart U.S. and the French retailer Carrefour). According to the case it had sales that increased 15% over 2011, and operating income grew 10% to reach 6.2 billion dollars. Walmart is a huge international company and has entered more than 30 countries. In order to globally expand it has taken part in joint ventures, acquisitions, and natural/organic growth.

PESTLE:

There are political factors associated with Walmart. If Walmart wants to expand globally, political stability in foreign countries is vital. According to the case, NAFTA, North American Free Trade Agreement created a trade bloc with US, Canada and Mexico and opened up the Mexican economy which created price wars to occur between Walmart and smaller retail companies in Mexico. Walmarts ventures in China were mostly partnerships since regulations permitted foreign retailers to have joint ventures with local partners in order to conduct business. There are economic factors as well. Walmart has the EDLP strategy- where it offers lower prices as a competitive advantage. Walmart uses a cost leadership strategy in the US and in other countries- it has everyday low prices which offers convenience and operational efficiency. Unfortunately, since Walmart is so global, if there is a recession in any country, it can affect the demand for Walmart’s products. Walmart also has sociocultural factors. These social factors are company culture, product mix based on customer preferences and lifestyle, and proper etiquette and behavior in stores. Since Walmart is so global, it has faced many cultural differences with its products and its values/manners in other countries such as Germany. For example it was not right in Germany when employees smiled at customers or helped them bag their groceries like they do in the US. All these factors contributed to Walmart leaving the German market. Also, more consumers are shopping online now so societal trends such as online shopping and health conscious customers represent changes to Walmarts socio-cultural sector. On a legal aspect, Walmart is subject to regulations and laws in different countries it has entered. Walmart is technologically succeeding with robotic equipment and automation processes, which they expand globally as well.

SWOT:

Strengths: It has globally expanded to more than 30 countries. Also, Walmart has an efficient supply chain. This supply chain is efficient because of robust distribution methods and advanced automated technology. Walmart offers a diversified line of products from furniture, consumer electronics, clothes, groceries, pet supplies and much more.

Weakness: Since it uses a low cost strategy, it has low profit margins which might lead to losses so it has to depend on larger volumes of sales. It also faces huge competition with other companies who value product differentiation and upscale products instead of low cost products.

Walmart also uses its US style methods globally, which might not work for all countries. Walmart in Mexico had US style large parking lots where low income customers would afford to only take buses. In Brazil, Walmart was slow to adapt to the local tastes and culture of Brazil. For example, the product mix Walmart offered was not tailored to what consumers wanted in Brazil because of cultural differences. Products included golf clubs and baseball gloves which is an American sport so the company was not profitable in Brazil. In the Chinese market the retail market was very fragmented and there were many more small mom and pop stores to compete against Walmart compared to the US. Chinese consumers also made more trips to the grocery store, but bought less on each trip, so less sales per trip.

Walmart’s US strategy of low cost leadership did not work in China. Instead, in China, Walmart heavily focused on high class differentiated goods that appealed to the middle class, but due to low sales went back to low cost leadership. Another weakness was that store managers were given more freedom, but this was counterintuitive as they used their freedom to attack the company employees forcing Walmart to centralize its operations.

Walmart expanded in African countries as well, mostly in South Africa. However, in Africa Walmart’s sales have been low due to issues like lack of proper infrastructure and corruption.

Opportunities: Walmart has had huge opportunities to expand globally in other countries by acquiring companies, forming joint ventures or through a natural/organic growth. Walmart also has an opportunity to improve the quality of its products.

Threats: According to the case, the NY Times said that in Mexico Walmart’s executives in charge of real estate for the stores bribed government officials in Mexico which is a huge violation of the US Foreign Corrupt Practices Act. Walmart had many competitors such as Zellers in Canada, Target, Amazon, Costco, Best Buy etc. Other Competitors of Walmart in Chile included Home Depot and JC Penney. Competitors in China are Metro, Tesco, Taiwanese retailers and family stores.In German, Walmart faced competition from local retailers such as Aldhi and Likdl. Walmart also faces threats such as competitors and online retail companies. Small and large online sellers sell products to customers which is a threat to Walmarts brick and mortar stores.

Walmart in South Korea was doing worse than ever because Korean customers wanted luxurious, high scale service shopping- or more differentiation instead of low prices. Walmart suffered huge losses in South Korea, for example of 9.9 billion dollars loss in 2005. At first, Walmart was not doing well in Japan since Japaneses customers associated low quality goods and low cost, so Walmart’s value proposition would not have fit. However, over time Japanese consumers were able to be more price conscious due to a worsening economy. Regulations such as ban on plastic shopping bags in China also made consumers want to buy less per trip to Walmart which decreased the sales amount.

VALUE CHAIN:

In Mexico, Walmart also partnered with other companies to have a smooth running and efficient supply chain. Globally, Walmart forms many strategic partnerships with vendors. Also, according to John Dudovskiy Walmart uses cross docking as an inventory tactic. Dudovskiy mentions that “cross docking is the direct transfer of products from inbound or outbound truck trailers by unloading items from a semi truck and loading these items directly into outbound trucks, trailers or rail cars with no storage in between”( 1). Walmart also has efficient operations. Its operations are divided into Walmart US, Walmart International and Sam’s club.

VRIN:

Walmarts VRIN: Walmart has diverse product mix and offerings which is valuable. It also has access to human resources and efficient distribution which is valuable. Both of these are not sustainable competitive advantages since they are not rare and can be easily copied( imitable). Walmart also has a strong brand value in all the countries it has entered which is valuable, rare, inimitable and has no substitutes. Walmarts international supply chain is also a competitive advantage as well as it data capabilities and automation.

MAIN ISSUE:

One of Walmarts main problems was that domestic growth was slowing( growth in the United States). Also, Walmart has many competitors, one of them being smaller retail companies which cause price wars between them. Also Walmart uses its US strategies internationally, which might be problematic since there are cultural barriers and different manners of right and wrong as well as different consumer preferences for products based on diverse cultures. Another issue of Walmart is that it offers low cost prices, so low cost products which might mean lower quality. Its products are not as differentiated and upscale as other companies might offer globally. Also, with low costs, Walmart has low profit margins, so it has to depend on large volumes of sales to avoid losses.

RECOMMENDATIONS:

To boost sales, improve the quality of products so low cost strategy does not mean low quality products as well. To boost sales at home and abroad, Walmart should offer more upscale products to appeal to different consumer segment. The company needs to have more differentiation and enhancements. Company should make its human resource department more efficient and automate its processes and technologies. Before entering a new market in a new country, Walmart should study the consumer’s preferences, the countries culture, and values in order to reduce barriers and problematic situations.

Introduction to the Company

Walmart Incorporated (hereinafter “Walmart”, “Company”) founded in 1962 and incorporated 1969., is an American multinational retail corporation. It operates a vast, extensive and formidable chain of discount stores and hypermarkets, and is currently of the largest retailers on the planet. To be more specific, Walmart holds first place as the biggest company in the world by revenue and the number of employees, as well. Walmart’s headquarters is in Bentonville, Arkansans, and despite its initial efforts to target geographical areas to HQ’s vicinity in the South and Midwest, Walmart has throughout the years expanded not only all over the United States but has entered 27 different countries all around the world.

Walmart, since its very inception, has sought to lead on price while simultaneously differentiating on ease of accessibility and delivering a positive, accommodating and memorable experience. The core of Walmart’s strategic excellence lies not only within their everyday low prices (“EDLP”) cultural mentality but also within their modus operandi toward customers. Namely, according to Sam Walton, the very founder of Walmart himself, “every associate is reminded daily that our customers are why we’re here. We do our best every day to provide the greatest possible level of service to everyone we come in contact with.” Such way of interacting with customers, one which tends to exude mutual respect, undoubtedly represents one of the key differentiating approaches when it comes to its industry peers. Walmart’s vision statement best describes the observable characteristics of this retail giant: “Walmart helps people around the world save money and live better.”

To fulfill such high ambitions postulated in the vision statement, Walmart’s operations are comprised out of three reportable business segments.

• Walmart U.S., the largest segment operating across all 50 states
• Walmart International, comprising of 27 different countries
• Sam’s Club, consisting of membership warehouses

SWOT framework analysis

1. Strengths

As far as Walmart’s strengths go, there’s plenty of material. Not only are they in pristine financial health, with historically stable yet substantial profit margins (5.1% and 5.2% net profit margin for years 2013 and 2014, respectively), but they’ve also achieved operational excellence with the superb use of their own distribution centers, efficient supply chain, and innovative approach toward IT implementation.

2. Weaknesses

Continuing with Walmart’s internal capabilities, albeit on the negative spectrum, we can observe its negative outlook on its employees. Namely, with relatively low pay, high expectations and a stressful environment, the reason why Walmart has been included in multiple labor-related lawsuits is beyond obvious. On top of that, through its past (unsuccessful) endeavors, Walmart has demonstrated an inability to replicate achieved success in domestic market in some other international markets such as Germany.

3. Opportunities

For a company like Walmart, especially in nowadays market landscape, many opportunities arise due to financial stability and sheer company size. Walmart, even though it has already entered international markets, still has an opportunity to exploit the growth of established markets. Additionally, further establishment of supplemental sale channels in the form of online shopping platforms might fuel Walmart’s growth in the future if they can stay competitive.

4. Threats

On the other hand, despite the enormous potential of online retail opportunities, there exist an equivalent threat of e-commerce giants; e.g. Amazon. On top of that, due to developed internationalization, risk of unstable, volatile and fluctuating currency pairs might present a problem which can, however, be minimized with thorough hedging. Finally, certain movements, such as labor unions, or simply governmental legislative measures, in the form of restrictions (monopoly restriction) might present problem in the foreseeable future.

Performance

What one can incredibly quickly realize upon examining Walmart’s performance is that it’s nothing short of stellar. This retail giant’s Return on Equity has ranged from 21% to 24.6% in the previous 12 years which is, as observable from the exhibit below, way higher than Walmart’s respective industry peers, especially on a such a long-term timeframe.

To top it all off, Walmart’s growth hasn’t displayed signs of stopping. Even though it has been growing at steady, but confident pace (app. 5.92% CAGR) which can usually imply detrimental effects to sustainable profitability, Walmart’s ROE has remained somewhat constant.

However, in order to explain such movements, it is necessary to not only consider firm-level resources and capabilities but also evaluate the environment in which Walmart competes in – we will begin with the industry analysis.

As postulated at the beginning, Walmart operates and competes in the retail industry. Based from the case alone, it’s rather difficult to completely asses the attractiveness of the industry as a whole, however, we shall once again consult the differences in ROE benchmark (Exhibit 2.) between Walmart’s closest competitors – Target, Dollar General and Costco, respectively. What is, once again, immediately observable is Walmart’s dominance. More specifically, Walmart’s ROE outperforms its respective peers by roughly 10% in the worst (Dollar General) and almost 100% in the best (Target) possible case. Therefore, once could assume that, instead of complete industry attractiveness, it’s actually Walmart’s resources and capabilities which are the main drivers of Walmart’s success.

In order to examine the complete industry profile, Exhibit 4. displays the adequate framework for an analysis of such nature.

Although concise and somewhat condensed, the attached framework analysis suggests that there has to be an additional factor for Walmart’s individual success – one which isn’t industry related for it implies the industry is highly competitive.

As far as advantages that give Walmart the competitive edge versus its respective competitors on the company level go, they can be observed within a plethora of different key performance indicators.

Walmart is virtually outperforming every competitor (except Costco) on every financial metric both in the terms of (lower) costs and turnover performance. Since we have considered slightly more extensive collection of metrics, and Walmart still comes out on top, we might conclude that Walmart’s very resources and capabilities are responsible for creating a competitive advantage. However, in order to further elaborate the sheer essence of Walmart’s competitive edge, further analysis of Walmart’s principal activities is needed.

Analysis of principal activities

1. Purchasing

What distinguishes Walmart and ultimately gives it elaborate purchasing power is the sheer size of its respective purchasing activities. In other words, Procter & Gamble, Walmart’s largest supplier, accounts for ONLY 3% percent of Walmart’s sales. Once centralized purchasing and Walmart’s involvement into suppliers’ employment policies is taken into account the overall environment intricacies become clearer. On top of that, acting as a technological pioneer, Walmart has introduced electronic data interchange (EDI) by collaborating with its suppliers. Since such actions cut costs, they benefit both parties and undoubtedly aided Walmart in increasing its purchasing power.

2. Distribution and warehousing

Pivotal characteristics which distinguish Walmart’s distribution and warehousing activities from its peers are so called “hub-and-spoke” configurations. Namely, 82% of Walmart’s purchases are shipped to Walmart’s own distribution centers and only later distributed to Walmart transportation vehicles. Such centers, which operate 24/7 and serve between 75 and 100 stores, offer numerous benefits to Walmart:

• Truck unloading and reloading is expedited due to cross-docking;
• Walmart has complete control of import logistics in international markets since the procurement system purchases directly from overseas suppliers;
• Similar to the introduction of EDI with its suppliers, Walmart has also implemented radio frequency identification (RFID) for logistic purposes.

3. In-store operations

Walmart’s in-store operations can be somewhat exhaustively divided into two sections:

• Decentralization of store management: Store managers enjoy a higher degree of autonomy when making decisions regarding merchandising and pricing. Such infrastructure allows Walmart’s operational units to be more flexible to local conditions regarding increasing sales and cutting costs.
• Customer service: Even though Walmart’s key competition strategy is cost leadership, they also seek to leave a substantial impression to its customers with proactive, personal and preferential treatment. Such a differentiation strategy undoubtedly has a positive influence on the targeted customer base.

4. Marketing and External Relations

Walmart’s key positioning is centered around their slogan: “Everyday Low Prices”. By thoroughly competing with an emphasis on this strategy, they avoid excessive advertising expenditures compared to its rivals (Walmart’s advertising/sales ratio in 2012 was 0,55% while its peers outperformed the ratio by a factor of 3 and/or 6).

5. Human Resource Management

It has been mentioned that Walmart, as one the most fundamental principles of its HRM policy, values proactivity, flexibility and motivation. Their employees are given more responsibilities compared to industry peers which they, in turn, reciprocate by immersing themselves into a responsible modus operandi when interacting with both customers and business operations, as well. On that note, the reason why Walmart’s HRM yields positive results is the fact that 75% of Walmart’s managers are comprised of employees which started as mere hourly employees. This strategy incentivizes advancement through upholding Walmart’s culture and values – “thrift, hard work and friendliness.”

6. Information Technology

Information technology is, rightfully so, an area in which Walmart has not only been a leading pioneer, but also a role model when it comes to the successful implementation of multiple IT solutions to various stages of the supply chain. Walmart has demonstrated its ingenuity with the implementation of EDI with suppliers and RFID for logistics etc. Most of these tools allow real-time inflow/outflow of information which facilitates the decision-making process.

7. Organization and Management

Walmart’s key differentiator is the management style it employs within its organization. As postulated beforehand, unlike other retailers, Walmart managers are often previous hourly employees with highly applicable local knowledge and expertise. They offer flexibility and responsiveness, and additionally also share gathered insights on weekend meetings. Those managers, which rose through the ranks with dedication and hard work now make decisions during the weekend meeting, and upon returning to their local unit they are able to implement new strategies to preserve the competitive advantage and stay relevant with respect to current market needs.

Sustainability

With such a formidable position in the marketplace, one which hasn’t ceased to improve, a logical question arises as to what extent can Walmart sustain its competitive advantage. One way of approaching this question lies in the extent of replicability of Walmart’s principal activities. Since the principal activities which yield the competitive edge have been defined in the previous segment, estimating the possibility of replication presents no difficulty. On that note, virtually all of the activities, especially infrastructural and operational ones, can be easily replicated with enough resources from a particular company. However, while doing so, companies might deteriorate their future growth, and development and lose market share. For example, imitating Walmart’s “hub-and-spoke” systems or IT capabilities might get competitors closer to Walmart’s efficiency, but in the process they might inflict irreparable damage to their pre-existing infrastructure. Other activities, like HRM and purchasing, are more difficult to replicate. HRM is deeply rooted to Walmart culture postulated by Sam Walton himself and virtually all of Walmart’s organizational structure is based on it. While other retail chains prefer to employ people outside of the company, Walmart’s agents have matured, developed and risen through the ranks – Walmart is essentially their home. As far as purchasing goes, it is highly unlikely another company, especially among Walmart’s competitors, reach such tremendous volume.

Challenges and Recommendations

As this retail giant grows in size numerous challenges are bound to emerge. Especially regarding its unique culture and value system. The more Walmart expands outside of it original location, Bentonville, the more it risks diluting the corporate value systems. A potential remedy might present itself in the forms of internal trainings, open communication channels and promoting employees based on merit. Although minimal, Walmart is also exposed to risk of imitation which will most likely arise from so far unpenetrated markets. Walmart needs to keep a close eye on the market situation in unexplored countries and act quickly with either a partial or full acquisition. Additionally, a risk that has already presented itself in the past years is the risk of unionized workers and governmental pressures. Growth might, especially in the following decades, slow down to an extent that might deteriorate profit margins, and in turn, deteriorate the opportunity for advancement, overall motivation and willingness to excel in daily activities. Finally, there always exist a risk of a better competitor or, more specifically, a competitor with a better strategy. Much alike how Walmart seized the market with its superior strategic frameworks, there exist a possibility of a new strategy emerging, one we might not even conceive at this moment, which can inflict a hit on Walmart’s market share. However, given its size, Walmart can surely utilize its increasing disposable cash flows and acquire a stake in such a company – one could say that as long as Walmart upholds its values, it’s too big to fail.

A letter of interest has caught my attention that the Walmart Company is looking to hire an advertising manager. This position is of much interest to me, and I would like to express my interest by first describing my qualifications for the job. I have been employed by the Walmart Company for the past ten years now, and I have learned skills and knowledge through this company that is of much greater value compared to other firms I have worked with.

My experience as the sales coordinator has attributed to much of my growth as an aspiring businessman and has successfully equipped me to complete and resolve all projects, tasks, and issues at hand. As Walmart Company’s sales coordinator, I have been exposed to many different settings and situations. Being placed in such different situations, I have learned how to adapt myself to many kinds of environments while continuing to progress at each stage of the marketing process. My strengths as a sales coordinator are my ability to work well with individuals and my aiming for high-level goals and performance.

My prior experience with Walmart company has given me an advantage and extensive knowledge of the company that enables me to learn the job quickly, allowing the company to save time and expenses that would otherwise be spent on training and other areas of human resources. Hiring me would be very beneficial for the company both financially and for time efficiency. I have found that my current position qualifies me for the role of advertising manager because both departments require the same skills and areas of expertise for high levels of performance. Although I would have to adjust and expand my role within the company, this position would enable me to expand my knowledge and responsibility in the company. I fully believe that I am the best fit for this position because of my dedication, loyalty, and commitment to the company already.

Having been with Walmart Company for the past ten years, I am a firm believer in the company’s mission statement, values, vision, and beliefs. I would like to take this opportunity to further involve myself in the company and to take the company further, specifically in the marketing and advertising department. Attached is my resume and work experience. I can be reached via phone at (585) 5791-7577. 7 and by email at mh.almutairi0@gmail.com. Thank you for taking the time to read my letter of interest, and I look forward to arranging an interview with you soon. Sincerely, Muhammed AlmutairiSales coordinatorWalmart Company

History

Sam Walton started Walmart 57 years ago and now it’s one of the biggest companies in the world. Walmart has been a very successful company because they care about the customer. The organizational effectiveness is that their best to have the lowest prices out of all the retail companies. Walmart wants its costumer to save money as much as possible. Sam Walton came up with the acronym EDLP and this company thieves on this, EDLP means everyday low price and the company tries to have the lowest prices no matter what. The company started in Bentonville Arkansas and it’s where their main corporate offices is. Sam Walton success came from many key factors he had a vision and goals to achieve, some of his ideas was Customer focused advertising campaigns, particularly direct mail ads. He also A focus on controlling the price by purchasing and selling low cost imported goods this goes back to EDLP. Sam Walton also builds warehouses close to the stores so it’s easy and cheaper for the company to distribute It’s good in the fastest way possible. Walmart became very Successful in the areas they focused on above. The more successful the company became they began adding new stores outside of Arkansas. The different stores were across the Deep South and Within 20 years of its existence the company had rolled out the first Walmart superstores which you know them as Sam’s Club. Sam’s Club is their bulk item stores which is now spread all across the United States and other countries as well. According to BRIAN O’CONNELL By 1990, Walmart had become the largest retailer in the U.S., and began to branch out internationally. The company eventually open a new store in Mexico and regionalized and then began to globalized open more stores in the U.K., Germany, China, and Canada. Walmart doubled its sales in the year 1995 three years after the sad death of founder Sam Walton. By the year 1999, Walmart growth was substantial and now had the title of the biggest companies of the year and was the only the largest

Mission /vision

Walmart’s mission is “to save people money so they can live better.” Since the inception of Wal-Mart, its entire purpose was to establish network that allowed people to be consumers at the lowest prices this is an example of organizational life cycle.By cutting out the middle man, he was able to create a system that did not require paying other people to manufacture and source his products. In this way, Wal-Mart has continued to be one of the largest corporations in America by selling all of its products at the lowest prices. Additionally, Walmart’s vision is in line with its mission statement. The most recent vision statement reads “be the destination for customers to save money, no matter how they want to shop.” This requires not only having low prices but also having a variety of goods for people to consume. It also requires marketing, as the company must have visibility to the general public in order to become the most popular destination for consumers. Finally, they must be accessible, providing locations for people to buy their products through the country and in each state.

The organization’s core values are “fairness, honesty, accountability, customer first, frontline focused, listen, innovative & agile, inclusive, and high performance. All of these values are concepts that contribute to the mission statement. Being customer centered, fair, accountable and inclusive attracts a wide variety of people to their place of business. Innovation, agility and high performance allows Walmart to compete with other large retailers, such and Target and Amazon, to provide the best consumer experience for the public and to constantly be on the front line of change to continue to lead. private employer in the U.S. Almost 2 years later it became the largest company in the entire world Walmart also surpassing very big companies at the time.

Environment

In most recent years Walmart has set its eyes on being eco friendly to help protect the environment. structural contingency theory- is the theory states that there is no optimal way of functioning that applies to all organizations because optimal functioning is contingent on the organization’s environment, organization’s size, and other external factors (Hatch, 2018). Walmart uses many methods to promote being an environment friendly company, back in 2005 the company went to LED lighting because the light uses 75% less energy and generates less heat. These lights are efficient and reduce a lot of maintenance. Walmart also promoting water efficiency. Walmart collect rainwater in an underground tank and save it to water the store’s landscaping. Symbolic and post-modernist demands include more subjective concepts, such as the company positive appearance and good values that can represent the community and use ethical practices. For the sake of communities that struggle with water scarcity water is being recycled by Walmart, other stores opportunities for water savings are in the restrooms, Newly built stores feature high-efficiency urinals that reduce water use by 87% compared to the conventional 1-gallon-per-flush urinal in which Walmart tends to switch most of the urinal out for high pressure urinals. These high-efficiency toilets are going to use 20% less water compared standards toilet that uses much more water than the high-efficiency toilets. Walmart is using this exposed Concert flooring system to reduce surface chemical use on the floors. An example would be to eliminate chemical cleaner, wax and wax strippers and by doing so it’s an environmental safety project that Walmart has taking on. New vests soon to be worn by all employees of Walmart stores. What’s unique about this vest is it will be crafted from a fabric made from recycled bottles, yes recycled bottles I feel that this is an awesome step in being environmentally friendly. The lightweight vests, made from a material called Repreve, I have seen and felt some these vest and I can say they are really lightweight it really feels like nothing is in your hand. The Walmart vest is environment friendly and also comes with a better style than the older vest. The vest has upgraded some of the colors with very bright green, pink and orange which gives the vest a stylish look for Walmart employees. The company Unifi, which is a textile company who manufactures the product called Repreve, says it has recycled more than 14 billion plastic bottles. According to the company that manufacturer the product it states that, “compared to making virgin fiber, making Repreve uses less new petroleum, emitting fewer greenhouse gases and conserving water and energy in the process.”

Walmart’s use of the product Repreve is part of its “ongoing mission is to healthy and sustainable items for the people and the environment.

Economics

Walmart economics have a name of in itself, What Is the Walmart Effect one would ask?

The Walmart Effect is a term used to refer to the economic impact felt by local businesses when a large company like Walmart opens a location in the area(Will Kenton). The Walmart Effect is harmful for small businesses in some places, the effect force smaller retail firms out of business and reducing wages for competitors’ employees. The local businesses people do not like the idea of Walmart stores into their territories for these reasons. The presence of a Walmart store can hurt the business smaller businesses in many ways one of them is that companies will lower wages for local workers. Walmart has such great buying power that it harms the small businesses in each and every town til the fact that they would eventually have to close Down. The economics of Walmart also affect suppliers, who must drive their production costs down in order to afford to sell to Walmart (Will Kenton). There is some good far as the economics of Walmart it can curb inflation and help to keep employee productivity at an level that’s very beneficial. As I stated before Walmart is all about low cost the chain of stores can also save consumers billions of dollars but may also reduce wages and competition in an area. There are some advantages and disadvantages to this so called “Walmart effect” for example, Walmart’s wants to keep all of their products at lower prices no matter what, so for the suppliers this means that they have to ultimately find ways to make their products for less money, if the suppliers can’t effectively take on this type of task they could be forced to take losses if they choose to sell through Walmart. This also could be potentially bad for Walmart because it forces the company to use overseas products which could cause consumer backlash because of less expensive materials.

Technology

Walmart do their best to keep up with today’s society and spends tons of money to make sure they have the best technology to keep up with demand. Walmart calls it refreshing the fleet making sure all of there store are up to date. Online grocery shopping is a very big ideal in today’s society and Walmart is very much so keeping up with that demand. Walmart just unveiled a new technology that could help defend its position as America’s largest online and In store grocery store. Technological- allows both the customers and associates to enjoy online shopping without the hassle of being overwhelmed. The new technology is called Alphabot, this technology will be doing amazing things for not only the customers but for the company as well. The Alphabot technology should enable it to pick, pack and deliver shoppers’ online grocery orders faster and with fewer headaches. I know that Walmart has an online grocery department that is run by Walmart associates Which they run around the store for most of their shift picking grocery, this can be a very big headache especially around the holidays. This advanced technology will take the headache away from those associates and potentially make things easier. I bet you are think the Alphabot will take jobs away, the answer is no Walmart states that they will still have associates picking online grocery the technology makes it so much more simple. According to Lauren Thomas In its latest reported quarter, Walmart said it was a strong grocery business that played a ‘meaningful’ role in helping boost its digital sales by 41%. It said grocery comparable sales climbed a mid-single-digit rate, better than general merchandise. Putting those numbers in to contexts the revenue was up by 2.5% which made the company 127.99 billion which is awesome. For Walmart it’s all about the customers they continuing to do research and finds ways to meet their customer needs. Also they find ways through technology to help associates gain an advantage while doing their jobs. An example of this technology , Walmart began rolling out its new FAST Unloader this will aid the associates by helping get product that’s delivered out to the store much faster. The new unloading machine has an automated unloading conveyor system. How this new system works Walmart items are conveyed out of the truck using an extendable conveyor, When out of the truck, a barcode scanner reads the labels and sorts the boxes based on its location in the store. An operator organizes the boxes on standing carts Once full, carts are sent to the sales floor for stocking.

Competition

Walmart has a number of competitors but continue to outgrow and out preform most of them as well. Walmart tends to add 10,000 more jobs and most of its competitors in the retail business are cutting down on jobs.Walmart’s competitors continue to contract and consolidate, But there many reasons as to why these retail companies can’t keep up. Walmart is constantly evolving and other retailers haven’t taking advantage of changing their business. Walmart as a focal organization a competitor organization would be would be Amazon.Walmart biggest competition in the global market is Amazon. Amazon over the past couple of years have been generating great numbers far as business goes.

I feel Walmart is a great organization that keeps both its associates and customer first. Walmart are always researching ways to be a better company for both its customers and associates. The company is environmental cautious As well and do their best to be environmentally friendly.

Overall I think the company do a great job and this is the reason they are one of the biggest retail companies in the world. It all started from an idea that Sam Walton had and now I say it’s one of the most important companies in the United States. I guarantee A person has either heard about Walmart or shopped in one of its stores across the country. As it’s mission statement they promote to save people money and live better and I feel that the company uphold that standard.

Reference

1. Ferguson, E. (2019, February 13). Walmart’s Mission Statement & Vision Statement, Generic & Intensive Strategies. Retrieved from http://panmore.com/walmart-vision-mission-statement-intensive-generic-strategies
2. History of Walmart: Timeline and Facts. (n.d.). Retrieved from https://www.google.com/amp/s/www.thestreet.com/.amp/markets/history-of-walmart-15092339
3. Kenton, W. (2020, January 29). Walmart Effect. Retrieved from https://www.investopedia.com/terms/w/walmart-effect.aspOur History. (n.d.). Retrieved from https://corporate.walmart.com/our-story/our-history
4. Walmart Highlights Economic, Societal and Environmental Progress in 2018 Global Responsibility Report Summary. (n.d.). Retrieved from https://corporate.walmart.com/newsroom/2018/04/23/walmart-highlights-economic-societal-and-environmental-progress-in-2018-global-responsibility-report-summary
5. Walmart just unveiled a new technology that could help defend its position as America’s largest grocer. (n.d.). Retrieved from https://www.google.com/amp/s/www.cnbc.com/amp/2020/01/08/walmart-unveils-a-new-technology-for-its-grocery-business-alphabot.html
6. Walmart’s New FAST Unloader Shows Intelligence of Motor-Driven Roller Conveyors. (n.d.). Retrieved from https://www.pulseroller.com/resources/pulsenews/walmart_s_new_fast_unloader_shows_intelligence_of_motor_driven_roller_conveyors

Sam Walton’s original strategic idea was to sell reduced products and merchandise to southern cities and towns that were not focused on comparable and or rival companies. Wal-Mart was doing great until their competition realized that there are better marketing and selling opportunities in these small cities and towns, which could also help them with their reduced merchandise retail centers.

Wal-Mart was able to strengthen its competitive advantage overtime. Wal-Mart invested in information systems, human resource management, and supply chain management. This helped Wal-Mart have an advantage over other businesses. Wal-Mart providing respect to and importance to manpower gives them more success in the industry, which helps Wal-Mart deal with obstacles or threats caused by their rivals and or what the environment may impose.

During the early 1990s, Walmart was facing limits to its growth in the United States. One thing the company added to the store to overcome those limits was offering diversification. Walmart started to sell merchandise and groceries in the same store. It allows consumers to shop all in one place, with the best prices offered, without having to go from store to store to buy the things a consumer may need. This addition allowed Wal-Mart to gain more profit.

In addition, Wal-Mart again is facing issues of limits to its growth. Wal-Mart is limited to growth in some industries. There are only a certain number of consumers in the country. Wal-Mart may not be trying hard enough to get more consumers. Wal-Mart needs to look at other industries to see in what areas they could gain more profit to fix their limited growth issue. The bargaining power of Wal-Mart’s suppliers is considered reasonably low. Their suppliers as low to moderate bargaining power. One of these reasons is due to the fact it is a big retailer with many products to offer.

Walmart being the largest retailer holds a significantly large market share. Now, since it makes large purchases, it gives Walmart significant buying power. The switching costs for Walmart are low and it can switch from one supplier to another without have incurred any major costs. Moreover, it is easier for Walmart to try backward integration than for its suppliers to integrate forward. A few of its suppliers are large companies which gives them some bargaining power. So, overall the bargaining power of the Walmart suppliers is low to moderate. (Walmart Five Forces Analysis)

Even though the bargaining power of Wal-Mart’s suppliers is substantially low, Wal-Mart still does very well. There are two threats Wal-Mart faces to its profitability. The first threat Wal-Mart needs to worry about is competition. There are a lot of stores being introduced with the same concept of Wal-Mart. Dollar General being one of its top competition to worry about. The second threat Wal-Mart needs to worry about is online retailers of various sizes. Online shopping has drastically increased throughout the years. People and competition is taking advantage of this, which could hurt Wal-Mart’s profitability.

Some of Wal-Marts strategies was definitely planned on the outset. Wal-Mart has been able to venture its business all over the United States market. They also managed to expand the market into other countries. One example of Wal-Mart’s expansion was introducing the grocery section in the 1990’s. This expansion has had such an impact on Wal-Mart’s success. Their strategies in other countries allows Wal-Mart to keep expanding. Wal-Mart has continuously plan and change their plans to keep up with the growing market and be successful. Wal-Mart will continue growing. Especially when it comes to overseas.

Overview

This case study the major retailer Walmart and how it has ventured into international business. Starting back in 1950, owner and founder Sam Walton opened a small general store in Bentonville, Arkansas called Walton’s 5&10 (Walmart Corporate, 2019). Inspired by his early success from his dime store, it wasn’t until 1962 that he opened his Walmart in Rogers, Arkansas. From there Walmart has developed into the largest retail store in the world brining in over $480 billion annually. Walmart has almost monopolized the industry in fact, bankrupting several other retailers such as K-Mart, and Sear’s. One of the only major retailers that remains strong today is Target.

Towards the end of the 1980’s and 90’s Walmart thought that it had grown to its max capacity within the United States and began to make plans to grow internationally. Walmart opened its first store in Mexico in 1991. Today Walmart has over 6,300 stores internationally and is continuing to grow at a rapid place. I have even noticed that Walmart, much like Amazon, now sells name brand products as well. You can absolutely buy Nike and Under Armour from Walmart, it will just have to be online and through a third-party seller, much how Amazon does all of their business.

[bookmark: _Hlk24887509] Walmart’s growth internationally did not come without trials and tribulations though. While staying in the America’s it was noticed to be a fairly smooth transition. Of course, there were some growing pains, like the lack of managerial and organizational skills, but for the most part success was able to kick in. It wasn’t until Walmart sought to open in China that it came in contact with issues. Their first being location. Retail much like in real estate, location is the key to success. Beijing had restricted operations for all foreign retailers, including the requirements for government-backed partners and also limited the number and locations for stores (Geringer, McNett, Minor, & Ball, 2016, pg. 255).

Walmart was able to find a home in China in a city named Shenzhen, which is a growing community on the border of Hong Kong. Walmart began to have some serious growing pains while learning how to conduct business in China. For example, Walmart no longer tries to sell extension ladders or a year’s supply of soy sauce or shampoo to Chinese customers simply because the majority of the people in that given location tend to live in apartment complexes with limited storage space (Geringer, McNett, Minor, & Ball, 2016, pg. 255). The next major issue that Walmart ran into with China was that their government wanted the majority of the products to be locally sourced which was an issue since Walmart prided themselves on having the American shopping experience. Because of this, Walmart was to source approximately 85% of its products in the Chinese stores.

The next major market goal for Walmart is the anticipation of opening up to the billion-person market in India. So far strict government barriers have prevented Walmart or any other foreign-owned retailer for that matter from finding success in India but John Menzer, the former head of Walmart’s international operations said “many smart people-much smarter than I, believe that India could be the next China” (Geringer, McNett, Minor, & Ball, 2016, pg. 255).

Walmart views international expansion as a critical part of their strategy, because as I previously stated, there isn’t much more room for growth for them herein the United States. In the 1980’s and 90’s Walmart about maxed its capacity in the United States taking over the retailer business, and discovered that in an effort to continue growth and profit, they needed to move internationally to keep their competitive edge.

Walmart initially found success in Central and Latin America before moving over to China. It found its first form of success with its very first store internationally in Mexico City, Mexico. To achieve this success, Walmart found success in a partner, Cifra, that was able to provide expertise in operating in the Mexican market. From there, Walmart merged with and took the majority of a company called Lojas Americana when it moved to Brazil. Finally, Walmart started its venture in China in Shenshen when it formed a venture with two politically connected Chinese partners. If you notice, there is sort of a trend here. Walmart finds an area, then finds a partner that is the subject matter expert of said area then ventures with that partner to achieve success for both.

I think that Walmart should do exactly what they did in going into China. They should find a partner that has political representation and go about inserting themselves in a legal fashion that keeps them in the good graces of the government. Walmart should also look at the area where they are moving as well. You don’t want a lot of electronic devices in an area where there is no electricity. Unless you start with the selling of portable generators. Bringing people power that do not have it could be a huge success. Any conveniences that are lacking that can be brought for a low price would be a very smart move. Not only will it improve the economy and the lifestyle of the people but it will also build lasting relationships which can definitely help a growing market.

Culture is defined as the customs, arts, social institutions, and achievements of a particular nation, people, or other social group. Understanding the culture of the nations that Walmart wanted to venture into was a huge part of their international success. The text gave a perfect example when it said that Walmart learned early not to offer a year supply of goods or sell ladders in a certain area in china because the majority of the people living in that area had limited storage due to confined space in apartments. However, I wouldn’t rule out the option to be able to order such products for people who still desired them. Another big piece that culture plays into this falls right under customs. for example, should Walmart move into India and sell produce there, in an effort not to offend. They probably don’t want to sell beef there seeing as how the cow is a sacred animal in the Hindu religion.

This is the process by which the economic well-being and quality of life of a group of people whether it be a township, region or country are improved. The text makes perfect sense of this when it says “a nation’s level of economic development affects all aspects of business conducted there, and international managers encounter markets with widely differing levels of development” (Geringer, McNett, Minor, & Ball, 2016, pg. 255). In other words, the products that Walmart sells to a small town in nowheresville where the average person makes $4 a day isn’t going to have the same products for sale or at least not at the same inflated prices as they would in downtown Houston, Texas because the people of the smaller town simply will not be able to afford it.

Political forces are parties, personalities, or pressure groups that strongly influence economic and political stability of a country through action and pronouncements. In the case of this study there were a lot of political force involvement. The text says that “the results of government intervention in trade are well understood. When governments impose trade restrictions, the cost of traded goods increase” (Geringer, McNett, Minor, & Ball, 2016, pg. 135). In this case study that is exactly what happened to Walmart. Initially Walmart received push-back from China stating that they could not be in Beijing, so they found a political partner and was able to use them to find success on where to go and what to sell in the local area.

References

1. About Us. (n.d.). Retrieved from https://corporate.walmart.com/our-story.
2. Geringer, J. M., McNett, J. M., Minor, M., & Ball, D. A. (2016). International business. New York, NY: McGraw-Hill Education.
3. Govindarajan, V., & Gupta, A. K. (2002, June 19). Taking Wal-Mart Global: Lessons From Retailing’s Giant. Retrieved from https://www.strategy-business.com/article/13866?gko=203b4.
4. Nassauer, S. (2018, April 30). Walmart resets its international ambitions. Retrieved from https://www.marketwatch.com/story/walmart-resets-its-international-ambitions-2018-04-30.
5. Our History. (n.d.). Retrieved from https://corporate.walmart.com/our-story/our-history.

Abstract

When it comes to international management one of the biggest challenges is gaining a comprehensive understanding of the local laws and regulations governing your target markets. From tax implications to trading laws, navigating legal requirements is a central function for any successful international business. Eligibility to trade is a significant consideration, as are potential tariffs and the legal costs associated with entering new markets. The U.S. Justice Department and Securities and Exchange Commission have been investigating Wal-Mart under the Foreign Corrupt Practices Act, which prohibits and monitors improper international dealings like bribery. In some areas of the world, bribing officials is an accepted practice to obtain building permits or licensing and to close business deals. It’s not exactly fair from the perspective of the U.S. government, however, as Wal-Mart Stores Inc. and its Mexican division, Walmart de México, have found. U.S. investigators looking into Wal-Mart’s dealings there eventually expanded their investigation elsewhere, including Brazil, India and China. Walmart has agreed to pay $282 million to settle a seven-year bribery investigation by the U.S. government concerning certain payments that were made to foreign officials in places like Mexico and China. The Securities and Exchange Commission said in June of 2019, that it had charged the world’s largest retailer by sales with violating the Foreign Corrupt Practices Act (FCPA), which makes it unlawful for companies to bribe foreign officials.

There are many challenges companies are faced with when it comes to international management. Along with getting your company structure in place, gaining a comprehensive understanding of the local laws and regulations governing your target markets is key. From tax implications through to trading laws, navigating legal requirements is a central function for any successful international business. Eligibility to trade is a significant consideration, as are potential tariffs and the legal costs associated with entering new markets. It is important to note that employment and labor requirements also differ by country. Beyond abiding by official laws, engaging in international business often requires following other unwritten cultural guidelines. This can be challenging in emerging markets with ill-defined regulations or potential corruption. In response, companies doing business in the United States must abide by the Foreign Corrupt Practices Act, which aims at eliminating bribery and unethical practices in international business. A good rule of thumb is to beware of engaging in any questionable activities, which might be legal but could have future reputational repercussions.

So far this year there have been major enforcement actions taken against alleged bribery and corruption in jurisdictions across the world. At present, more than 150 investigations into violations of the Foreign and Corrupt Practices Act are being carried out by the US regulators, the Securities and Exchange Commission and the Department of Justice. Part of the reason for the rise in enforcement actions is that the U.S. is no longer acting alone. The aggressive enforcement of the Foreign Corrupt Practices Act has encouraged non-U.S. authorities to pursue violations of their own anti-bribery laws. Many of these laws include extraterritorial provisions that enable cross-border investigations and enforcement actions in multiple jurisdictions. Companies should apply a higher level of due diligence when doing business in these industries.

Of the main legal areas to consider when it comes to doing international business, tax compliance is perhaps the most crucial. Accounting can present a challenge to multinational businesses who may be liable for corporation tax abroad. Different tax systems, rates, and compliance requirements can make the accounting function of a multinational organization significantly challenging. Accounting strategy is key to maximizing revenue, and the location where your business is registered can impact your tax liability. Mitigating the risk of multiple layers of taxation makes good business sense for any organization trading abroad. Being aware of tax treaties between countries where your business is trading will help to ensure you’re not paying double taxes unnecessarily. A focus on tax efficiency is often the aim of international accounting efforts. An obvious risk for international business is political uncertainty and instability. Countries and emerging markets that may offer considerable opportunities for expanding global businesses may also pose challenges, which more established markets do not. Before considering expansion into a new or unknown market, a risk assessment of the economic and political landscape is critical. Issues such as ill-defined or unstable policies and corrupt practices can be hugely problematic in emerging markets. Changes in governments can bring changes in policy, regulations, and interest rates that can prove damaging to foreign business and investment.

Marketers often find themselves at the forefront of a company’s global expansion. The marketing team is usually responsible for carrying out the market research that will determine where a company should expand, and it’s usually charged with creating a plan for attracting customers. When it comes to international business, the most common mishaps are not specifying countries, not paying enough attention to internal data, and communication difficulties and cultural differences. Executives tend to think about overseas markets in vague regional terms, but this oversimplification is problematic. Customers identify at the national level, and marketers need to remember that every country has its own local laws, cultural norms, forms of currency and payment, and unique business practices.

Developing a global market entry strategy requires more complex and specialized market research. In the vast universe of data that can help you figure out which markets are best for you, the most important data points are how much estimated opportunity is available in that market, how easy it will be for your company to do business in that market, and how much success you’ve already had with that market. Many companies, especially Western ones, believe they can enter new markets by following the same playbook that brought them domestic success. While brand consistency is important, different markets favor different sales and marketing approaches. Good communication is at the heart of effective international business strategy. However, communicating across cultures can be a very challenging. Effective communication with colleagues, clients, and customers abroad is essential for success in international business. And it’s often more than just a language barrier you need to think about — nonverbal communication can make or break business deals too.

The best possible outcome for Walmart would be for the statute of limitations to set in. The statute of limitations is a law passed by a legislative body in a common law system to set the maximum time after an event within which legal proceedings may be initiated. The allegations that are being investigated outside of five years cannot be investigated therefore saving Walmart from a huge lawsuit from the FCPA, which prohibits U.S. firms and individuals from paying bribes to foreign officials in furtherance of a business deal. The FCPA places no minimum amount for a punishment of a bribery payment. It would be a smart thing to do if Walmart were to fall back on the statute of limitations because that way they will not have to pay all that money in fines. Since Walmart violates the Foreign Corrupt Practices Act, they may be able to say that they were paying the officials with the facility payment. The facility payment is the only exception to the FCPA and could maybe also save them from the huge lawsuit.

The accounting department should be further investigated to find out who was knowingly involved in these bribes with Mexico. Who covered these bribes up and who was in charge of handling the money that was exchanged? These questions should be further investigated and should be taken very seriously because they have a negative effect on how business affects our global economy. The Department of Justice should attempt to strengthen the FCPA into allowing punishment for companies that have violated the FCPA since its existence. By revising and strengthening the FCPA, the Department of Justice will reduce international corruption overall and possibly prevent violations from companies like Walmart in the future. Strengthening the FCPA could also further the already positive benefits of the FCPA, benefits like U.S. business’ being able to expand into countries where bribery is common. Some other solutions could be incentives to keep these companies on their best behavior. Incentives like tax breaks or more foreign involvement would help the industry to better their habits and strive to do the right thing. Many problems with international management have many solutions, but there’s always ways around it. The best actions to be taken would be to regulate and create laws to protect from these behaviors.

Companies could also take the following approaches to anti-bribery management, monitor developments in anti-bribery laws and standards around the world, put in place clearly-defined internal anti-bribery policies and train and educate staff and business associates, identify the level of risk of bribery and corruption posed by third parties. Factors affecting the level of risk can include the third party’s country of origin and the industry in which it operates. Put in place a due diligence process which allows third parties to be screened against sanctions lists, negative news coverage and legal sources. Commercial databases can quickly screen thousands of names against these lists, and update this system regularly to take into account new enforcement actions and changes in sanctions lists.

Let’s face it, when you do business outside your own borders, a lot of your activities become out of your control due to the vastness of the geographic reach. Add to that an ever-widening supply chain and an indirect route to international expansion and it further reduces effective control measures. Companies should designate someone at the top to be responsible for FCPA compliance and be accountable for the FCPA program. Companies should steer clear of U.S.-centric language in their codes of conduct. Don’t assume that “best practices” for drafting an employee handbook for a U.S. corporation will translate into an enforceable global code of conduct. To be enforceable, a code of conduct must not only comply with U.S. laws, but must avoid violating foreign data privacy and employment laws. Companies should also avoid over-inclusiveness.

References

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Abstract

The globalisation brings opportunities to the worldwide businesses. It is a chance as well as a challenge. The rules and standards are different when situations and places change. Ethics, an intuitive kind of standard, which is widely adopted by the worldwide business to judge about good and bad on the business behaviours. Ethics seems more and more important in this context. By using Walmart’s cost saving strategy as a clue, this report digs into the information about Walmart’s ethics claims and its most recent unethical behaviours. Walmart currently is facing many ethical critics, the report found that most of them are generated for financial and cost reasons. We selected three main points for this issue, i.e. running understaffed stores, gender discrimination, and lower than industry average compensation arrangement. It can be concluded that the cost-saving strategy is quite short sighted. Saving the money ultimately results in more problems that is even harder for the company to resolve in the future. Furthermore, the overall image of the company diminished. Losing customer satisfaction and loyalty result in more lose than the gain. The last part of the report gives several recommendations to help the company regain the focus on its ethical behaviour and moving toward a updated, long term orientational strategy.

Introduction

As the globalisation moves forward, the elevated demand of ethical standard regarding manners and behaviours has been crucial for a firm to survive in the globalised business environment. This report analyzes the ethical claims held by Walmart Inc. and investigates the degree the company has been living up to those claims.

Ethics, in the business circumstance, can be defined as a set of moral standards used to determine the appropriateness for a business manner or behavior. A company that has been being accused of having unethical behaviours is Walmart. Walmart Inc., established in 1962, is the largest company in the world by revenue and one of the most globalised companies as well. As of July 31, 2019, Walmart has 11,389 stores and clubs in 27 countries. The ethical issues have been brought out by various groups and individuals for gender discrimination, charges of racial, employee compensation and work conditions and so forth.

Walmart is one of the largest companies in the world due to its high performance on both business and finance sector. The business success is mainly from its cost control. However, several ethical problems occurred which are highly related to the business strategy conducted currently by the company. Therefore, using the company’s cost reducing strategy as a clue, this report focuses on assessing the company’s ethical issues in running understaffed stores, gender discrimination, and its lower than industry average employee compensation issue.

Discussion

Walmart owns thousands of physical stores around the world which are mainly operated by its own employees. As a promise to the public and its current and potential customers, Walmart claims that each store will have enough workers in order to keep the operations fluent and make sure its customers could get the best shopping experience from its physical stores. Employees are core to keeping the operations in order as well as maintaining a good customer satisfaction. Customer satisfaction is a well-known concept which is especially essential to a business to succeed. Companies such as APPLE and GOOGLE have been using their high customer satisfaction as an important factor to charm more people in their new products initiation announcements. In a retailing business, customers are always in need of help when making decisions from various options. The customer satisfactions in this industry are generally from the service of the retail staff who are supposedly more familiar with the store and the products and usually more experienced on deciding which one is worth of buying so they can give their customers a good guidance. Since most of Walmart’s stores are large, the quantity of employees involved in each store is huge. In fact, Walmart has 1.3 million employees just in the U.S. The employee compensation constitutes a significant part of its overall cost. Therefore, as a part of the company’s cost reducing strategy, Walmart cuts its staff from physical stores. The company calls this strategy as employee restructure, which involves downsizing the store staff and replacing them with updated technology or fewer employees with more advanced skills. This was about to improve the overall customer experience in shopping in their stores. However, the result seems indicate the opposite. A recent survey by Marketforece showing that Walmart has ranked the lowest in the industry in the aspects of customer satisfaction and checkout speed. The American Satisfaction Index gives Walmart 68 out of 100, the lowest of all retailers. This problem is mostly attributed to its understaffed stores. When there are inadequate workers available in a store, customers who are not familiar with the new technology has nowhere to ask for help. As a result, the waiting line is lengthened, and the customers can’t easily get helped since the store is large and the density of staff is low. The problem is not widely recognized by the public and it is actually growing. By looking at the retail footprints between 2005 and 2015, the number grew 45% comparing to the workforce grew by only 8%. It indirectly indicates that customers spend longer time in the store than before because of the understaffing. It reminds us when Walmart just started many years ago, it saw a brand-new orientation for the entire retail business starting by offering the lowest price in the industry because of its cost savings logistic and warehousing. With the competition surged during the years, Walmart kept its cost focused strategy with few other improvements to help business remain competitive. As a result, there comes more critics regarding customer satisfaction and transfers of customer loyalty from Walmart to its competitors.

Another issue is about its gender discrimination cases. Walmart is the largest retailer in the world by revenue. The company’s business strategy is highly profit focused. As a result, gender discrimination issues often occurred inside the company. Assumptions are made about this situation, saying it is its business strategy that caused this kind of unethical behaviour. Gender discrimination is the actions that intentionally prohibits opportunities, priorities, or compensations to an individual or a group because of gender. Walmart’s ethical behaviours are judged by the Equal Employment Opportunities Committee (EEOC). There are evidences showing the company has been behaving unethically on the gender issues. According to EEOC’s disclosure that Walmart violated Title VII of the Civil Rights Act of 1964 by regularly using “gender stereotypes” for filling certain positions. Over the years, Walmart paid $12 million back in wages and damages in the discriminatory actions which involved denying promotion, hiring, and equal wage of female employees. Since the company’s strategy is too profit concentrated, it made the gender-discrimination issues, especially regarding the employee compensation cases, easy to occur. An evidence found in a 2003 study, saying Walmart’s female employees at all levels earning less than their male counterparts. On average, there is a $5,200 difference between female and male employees in their overall compensations. Lots of evidence showing that the company has been highly profitable and financially stable due to its cost focused strategy. A source from “Statista” (2018) showing that during the year of 2006 to 2018, Walmart’s net sales had grown constantly, from the lowest of $308.95 billion to the highest of $495.76 billion. The success could be attributed to the company’s cost-reducing business strategy. However, the negative effect about the strategy is mainly on their female employees who are treated unfairly in many cases inside the company. Intuitively, we know that having gender discriminatory actions is ultimately bad to a company. The confidence destroyed inside the female employees significantly drops their productivity and efficiency to their work which ends up moving the company’s overall financial and business performances downward. As female employees have become more and more important to the employee structure of a company, the negative effect from gender discrimination is accumulative as time moves forward.

The last discussion is about its overall employee compensation. Walmart, as the current leader of the retail industry, has more than 2.2 million employees worldwide. the company has a strict ethics claims saying the company strictly follows the required minimum compensation standard and make sure each employee, regardless of their working status in the company, will be compensated fairly and reasonably. The facts we have found however, indicated an opposite result. Lots of Walmart employees are compensated not only unfairly, but also inadequately. In the U.S, this situation often happens on part time employees. Since the company has business worldwide, compensation problem is quite complex since its employees are from various countries. The compensation rules vary according to the local situation. Thus, making a certain rule to make everyone satisfied is quite difficult. Many of the developing countries whose compensation level is lower than developed countries and the level of restriction that compels companies to comply with the standard varies.

Walmart has a clear motivation to lower its operating cost from reducing the employee compensation level since the company’s strategy is cost saving focused. Statistics from a book saying in 2006, Walmart’s workers earned an average of $10.11 per hour. This figure is lower than lower than the workers from department stores, grocery stores, and warehouse club, which is a clear indication that employees are underpaid by Walmart.

A call for higher compensation has become more and more urgent for the living standard has outgrown the rate of income raise. Walmart’s business ethics claims include a part which calls for a fair and reasonable compensation to all employees. However, this goal is not met by looking at the low compensation has already caused many problems, including the high turnover ratio which Walmart currently experiences. Employees start leaving Walmart mostly because they have not been paid well. Customers began to criticize for having trouble to find employees in Walmart stores and receiving suggestions from inexperienced staff.

Generally, the demand of better income has become more and more important in both developing and developed countries. The benefits from compensating the frontline workers well are abundant. it is an effective way to improve productivity since the frontline workers are more motivated by monetary compensation. As the problem has been progressively raised from domestic to the international level, the company really has to figure out a way to resolve this unethical issue and comply to the compensation rule more strictly in order to keep the problem from being worse.

Conclusion

On one hand, globalization is helping the world to become more connected and giving businesses more opportunities. On the other hand, it is the ethical problems that raised from more complex situations. For example, different countries, cultures, rules and standards make the ethics harder to be followed for an international company. Walmart Inc, a well-known international company, whose ethics claims are often broken. From analyzing different reports addressing Walmart’s ethical issues, we see some of the unethical behaviours are even intentional rather than accidental. That indicates a great potential to make the unethical behaviours be well controlled by reviewing the ethical standards, the ethical claims and reinforcing the management on the ethical behaviour for the whole company. No critics could be put on a company for being profitable or financially effective. However, following the ethics claims is a strict responsibility for all companies to hold. Ethics not only works as a bottom line for a company to exist in a market. It is seen more importantly to make a company’s operation more effective. Weighting the pros and cons for complying to the ethics rules, we will see it brings more benefits later rather than near. If we put our sight to a longer orientation, we could see how the ethics can positively impact on a company’s operations in a long run. If we can see that clearly, Walmart should do that too.

Reference

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Wal-Mart for the past two decades plus has been the nation’s most profitable retailer, but with time there comes change, the change is now “Amazon” the e-commerce juggernaut that has taken retailer by storm. Walmart started to focus on its online and e-commerce presence in 1999, Walmart.com launched to give the customer the option to make purchases online and pick up merchandise in stores. Over the last couple years, Wal-Mart has poured much of their resources in the e-commerce side of the business because they can see the general public is changing to a digital mobile generation. To keep up with Amazon, Wal-Mart must reinvest into two business models online and traditional retailing acting as one entity by using omnichannel strategy, acquisition of Jet.com, other strategy changes to remain competitive, to enhance sales overall, and focus on longtail markets customers. The writing is on the wall when the dinosaurs did not evolve in the ice age, they did not survive to fight another day so for Wal-Mart to survive the digital age they must evolve now to be the retailer of the future.

Wal-Mart is using omnichannel as a tactic to have a competitive advantage over Amazon in online retailing. The Omnichannel retailing is the fully integrated approach to online commerce that provides customers and shoppers a combined experience across all channels like mobile-browsing, online marketplaces, social media, online desktop, online mobile device, by telephone and in the store. Wal -Mart is changing from the multi-spoked approach of their retail past, to compete with Amazon with the omnichannel approach that would merge websites, emails, remarketing advertisements, social media advertising, and store locations to show better-personalized offers, products, and messages that Amazon.

The Merger of Jet.com in 2014 with Wal-Mart was to move Wal-Mart e-commerce business model to the top of the retail list with Amazon. Jet.com was going to extend Walmart’s e-commerce reach with the new era shoppers and city residents, but Jet.com may have failed to become the leader that it thought it was going to become for online grocery sales, consumer products and grow their market share in urban area locations. By buying Jet.com the CEO ‘Mark Lore is an e-commerce legend and there are few people who, if tasked with doubling or tripling walmart.com, would be up to the challenge. Lore has a long history of successful innovation in e-commerce, which explains why Walmart, picked him and why the retail giant was willing to pay $3.3 billion for Jet.com”(Rash, 2016, para. 8). The Jet.com and Walmart merger was to make Walmart a top online retailer, but it has not worked out that way.

Amazon ‘s strategy for staying competitive with Walmart and other companies start with a simple philosophy of these four principles: hunger for more invention, being obligated to operational quality and long-term goal thinking, to focus on the customer passions rather than their competitors in the physical locations and their online presence. “Walmart’s push into “Omni-channel retailing,” a strategy that lets people peruse, purchase, receive, and return goods through various channels from online to mobile apps to delivery to physical locations”(Derousseau, 2018, p. 29, para. 1). The large storefronts of Wal-Mart have helped them with their competitive advantage with Amazon for the time being. Amazon has a customer factor or focuses called a customer purchase criteria (CPC) that includes doing things better than its competition like reliable service, fast delivery, and price that is tested learned through their pivot strategy to insert their brand name into everyone’s daily habits.

No, Wal-Mart is not taking away from their physical locations by focusing on its e-commerce business unit because Walmart started as a brick and mortar location that must now evolve into an online presence to survive in this new digital world with its social media, emails and on-demand ordering. To be the very best you must compete in all-new avenues, today’s customers want their purchases faster, at a lower price with reliable service and if you are not providing those services than you are not getting their dollars. Walmart can take advantage of its existing network of over 4,700 stores to enhance sales overall is to get their products to shoppers quicker, to have their stores well-stocked, and lower prices in with store discounts. People are still drawn to brick and mortar store locations to make purchases, physically touch items, and process their exchanges, refunds, or returns. Walmart is cutting back on the new stores pace of expansion to focus more resources on their online customers and their brick and mortar customers’ needs. “Walmart and Google are linking up to offer consumers a service that currently you can only get from Amazon: voice shopping. The new agreement will add Walmart to the mix and allow voice ordering from Walmart using Google’s Home device”( Rash, 2017, p.1, para. 2). They are built on the traditional foundation philosophy of their store’s motto that customer satisfaction is priority first.

With the acquires of Jet.com in 2016, Walmart was focusing on the online longtail markets the hard-to-find niche items that many of the city and millennial customers want and need. The purchase of Jet.com was expected to boost Walmart’s reach, particularly with city dwellers and millennial shoppers in urban areas that had higher per capita household average than normal. “Lore’s Jet.com also brought a younger, more affluent consumers to Walmart—a new niche opportunity. This also opened the door for Lore to push Walmart to seek other long-tail niche markets, including higher-priced products and designer brands. We’re making acquisitions primarily in specialty areas that can help accelerate our business in long-tail categories. They’re the high-margin categories where we’ve made a couple of acquisitions already”(Lewis, 2017, para. 12). After the purchase of Jet.com, Wal-Mart focused on another niche or longtail markets like online outdoor retailer Moosejaw, vintage-inspired online women’s apparel site Modcloth, menswear site Bonobos, and upscale department store Lord & Taylor to reach more upscale retail customers with their extra capital.

In the end the most technically sound, customer savvy, and innovation-minded company shall reign supreme in this new digital age, I wish Walmart and Amazon the best in this fight to be the top dog because you will have other contenders coming down the line to take the throne remember customer happiness is always priority one if you can provide them with great prices, an array of delivery options, and outstanding customer service you will have their attention and a lot of loyalty this is just one person’s insight into the future of retailing. So, Walmart and Amazon let the games begin in the battle for the number one retailer of the digital age.