Walmart Report
Essay by review • March 24, 2011 • Research Paper • 9,043 Words (37 Pages) • 4,549 Views
Introduction
In this report, we would present a case study of strategic audit for Wal-Mart in China. We would begin by discussing the strategic posture, current performance, corporate culture and top management of Wal-Mart in China. Then, we would analyze the external environment of Wal-Mart by performing the PEST analysis and Six-Forces Model analysis. After that, we would analyze the internal environment of Wal-Mart by performing analysis on each of the corporate function. Based on the analysis in the external and internal environment, we would be able to present the SWOT model and identify the strength, weakness, opportunity and threat for Wal-Mart. From the SWOT analysis, recommendations would be made to Wal-Mart. At last, we would suggest ways to evaluate and control the strategies recommended to Wal-Mart.
Strategic Posture
The Mission
The Wal-Mart has a mission of ÐŽ§To give ordinary folk the chance to buy the same thing as rich people."
The Objective
The Wal-Mart China has established an objective, ÐŽ§Create 100 billion revenue in China retaining business.ÐŽÐ
Corporate Strategy
Wal-Mart has adopted the horizontal growth as the corporate strategy in China. Since there is a large demand for consumptions in some smaller cities such as Shaoxing, this offers a good chance for Wal-Mart to expand in China. To meet the demand, Wal-Mart would build stores in several second-tier cities including Yuxi, Yunnan, Weifang, Shandong, Wuhu and Anhui by the end of 2005. In 2006, the number of outlets would be increased from 49 to 62. This allows Wal-Mart to cover a larger geographic area as well as enjoy a larger economic of scale in China.
http://www.chinadaily.com.cn/english/doc/2005-11/10/content_493549.htm
Business Strategy
Wal-Mart has adopted the cost leadership strategy to compete with its competitors. This is because it has applied the ÐŽ§Every Day Low PriceÐŽÐ strategy and chosen to serve the broad mass market. To achieve cost leadership, Wal-Mart has establish efficient logistic distribution centre and large economic of scale to minimize cost. Besides, the top management would hold meeting everyday to review price on market and negotiate price with supplier to achieve ÐŽ§Every Day Low PriceÐŽÐ.
http://www.secretchina.com/news/big5/articles/3/8/26/49430.html
Current Performance
Current Performance in Global
Based on the revenue in global from 2001 to 2004, Wal-Mart had topped the Fortune 500 List from 2002 to 2005 for four consecutive years [4] [5]. In 2004, Wal-Mart achieved a global sales revenue of US 288.91 billion [5] and global profit of US 64.8 billion [6].
4. www.china.org.cn/chinese/HIAW/521246.htm
5 http://news3.xinhuanet.com/fortune/2005-04/05/content_2786744.htm
6big5.chinabroadcast.cn/gate/big5/gb.chinabroadcast.cn/3821/2004/05/14/622@159215.htm
Current Performance in China
In 2005, Wal-Mart has established 49 outlets in China, including Supercentre, SamÐŽ¦s Club and NeighboorhoodÐŽ¦s Market [7]. In 2004, Wal-Mart achieved sales revenue of 76.3 billion and a sales growth of 30.5 % [8]. In addition, based on its operating situation in 2004, it had been ranked 17 in the Chain Operating Enterprises in China. [8]. However, it still has not made any profit in China in the previous years.
7. http://www.chinadaily.com.cn/english/doc/2004-11/29/content_395728.htm
8. http://www.i18.cn/newscenter/news/guoneinews/2005-2-28/21424.shtml
Corporate Culture
The founder of Wal-Mart, Sam Walton, had established special and unique corporate culture among employees (who are called as associates), which contributed to the success of Wal-Mart in US.
Basic Beliefs
There are three basic beliefs related to the Wal-Mart culture:
Respect for Individual
Every individual associateÐŽ¦s opinion is respected. The associates are encouraged to raise questions and concerns in an open atmosphere. Managers are considered as "servant leadersÐŽÐ to help new employees realize their potential through training, praise and constructive feedback.
Service to the customer
The associates would provide the best service to customers so that the customers can enjoy a friendly and pleasant experience.
Strive for Excellence
The associates share an exceptional commitment to customer satisfaction.
Cultural Stories
To build the corporate culture among employees, Wal-Mart has told five culture stories such that the employees can recognize and share the Wal-Mart values easily. Here are the five culture stories related to the corporate culture in Wal-Mart:
The Sundown Rule
The rule means that the associates would strive to answer requests by sundown on the day they receive them.
Exceed Customers' Expectations
At Wal-Mart, associates would provide the best service which exceeds the customersÐŽ¦ expectations. Wal-Mart receives letters daily from customers praising individual associates for giving exceptional service. Sometimes associates write to express their appreciation for services as simple as a smile, an associate remembering their name or someone carrying out their purchases for them. All these show that the associates have given exceptional service which exceeds the customerÐŽ¦s expectations.
The "Ten-Foot Attitude"
The attitude encourages the associates to look at the customerÐŽ¦s eyes and smile to them when the customers are within the 10-foot of the employees. The associates would also take the initiatives to provide help when necessary.
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