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Walmarts Company Structure and Strategic Management

Essay by review  •  February 16, 2011  •  Case Study  •  2,828 Words (12 Pages)  •  1,186 Views

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Wal Marts company structure and strategic management

Wal-Mart is known today as the largest retailing discount store in the world. Wal-Mart was merely a vision to Sam Walton forty-five years ago as being a discount store that could sell products at the lowest price possible. Wal-Mart has grown tremendously over the past few decades by making several wise acquisitions as well as having an unbeatable pricing strategy. In this paper, we will discuss Wal-Mart's history, strengths, weaknesses, opportunities, threats, business level strategy, structure, as well as make recommendations about how the company can increase their profits in the future.

History, Growth and Development

Wal-Mart is the brainchild of Sam Walton. The first Wal-Mart opened in Rogers, Arkansas in 1962. There were 36 different departments in Wal-Mart, selling everything from tires to cosmetics. Wal-Mart's pricing is based on the philosophy that more units can be sold at a lower price; resulting in greater profits than if they charge a higher price. Other retailing stores were marking up their products as much as two hundred percent, but Wal-Mart was only marking theirs up an average of thirty percent. Consumers responded positively to Wal-Mart, and by 1970 Wal-Mart was a publicly traded company with nearly 40 stores in operation with sales over $44 million. During the 1970's and 1980's

Wal-Mart continued to grow tremendously, acquiring Mohr Value stores in 1977 and Kuhn's Big K stores in 1981. By 1988, Wal-Mart branched out into the grocery store business with the introduction of Wal-Mart Supercenters. These Supercenters carry everything that a Wal-Mart Discount Store would, in addition to a full-scale grocery store. Wal-Mart is now the ultimate one stop shopping center.

The 1990's brought Wal-Mart further success with the achievement of several major milestones. In 1990, Wal-Mart became the nation's number one retailer. Then in 1991, Wal-Mart began to expand internationally with their first store opening in Mexico City. By the late nineties, Wal-Mart became the world's largest private employer with over 1,140,000 employees worldwide. The years 1998 and 1999 brought two more major acquisitions with twenty-one Wertkauf stores (a German store), and 229 ASDA Group stores in the United Kingdom. In 2002, Wal-Mart had sales of $218 billion with 2295 Discount Stores and 1521 Supercenters worldwide.

Vision and Mission Statement

An employee of Wal-Mart's corporate headquarters stated that the company does not have a vision statement. This seems odd that the largest retailing company in the world does not have a vision statement, no vision of where they see themselves in the future. Wal-Mart does have a mission statement though; it is "to provide quality merchandise at the lowest cost possible with exceptional customer service" (Crystal, an employee). Wal-Mart's mission statement is an appropriate reflection of what Sam Walton originally intended as the key purpose of the retailing giant. On the other hand, Wal-Mart should have a vision statement to guide the company towards future goals.

Goal

Wal-Mart's goal is not to be the biggest company in the world, but the best in the eyes of their employees, customers, suppliers and shareholders. Wal-Mart performs several duties and responsibilities to make sure that this goal is achieved. Wal-Mart has a very diverse workforce, and does not discriminate against any race. They offer great benefits and 401k plans to all of their employees both full and part time. Wal-Mart is also a very giving company, shelling out millions of dollars each year in grants, scholarships, and to charitable causes.

SWOT Analysis

Wal-Mart has achieved and maintained a leadership position through operational excellence and as a low-cost leader. In doing so, Wal-Mart has established these two value disciplines and strategies as their strengths in providing consumers with competitive pricing on products as well as providing convenience in obtaining the desired wants and needs of consumers. Wal-Mart's investments in distribution technologies, production, processes and systems, and most importantly supply chain management, create dependable delivery at a low-cost. In regards to supply chain management, the company is able to obtain a significant amount of leverage over their supply partners through volume purchases, allowing them to control costs and achieve their mission of being an "everyday low-price leader".

Like any other company, Wal-Mart exhibits some weaknesses. An obvious weakness is that Wal-Mart is trying to be everything to everyone through the Supercenter stores. This may cause some confusion among consumers as to what Wal-Mart's product offerings may actually be. As we all have learned in marketing, you can't be everything to everyone. Furthermore, Wal-Mart's ability to provide a convenient shopping experience is becoming more burdensome to consumers as they experience difficulties of getting in and out of Wal-Mart stores in a time efficient manner. This may be accredited to the expansion of the product offerings that the company provides, such as in food retailing. In short, the low cost of shopping at Wal-Mart may not even be worth it if convenience (like time efficient shopping/checkout) plays a vital role in a consumer's shopping experience.

Wal-Mart's success in driving low-cost and hence low-prices opened new opportunities for the company to expand product offerings by tapping into food retail and mass merchandise to gain market share in these categories of consumer products through the creation of Wal-Mart Supercenters. By expanding on product offerings, an inherent threat of more competitors, such as those in the food retail industry is experienced. However, the company's cost structure of delivering lower prices for consumers has become one that is difficult for any competitor to compete against. Wal-Mart has achieved the number one position as the nation's leading food retailer ahead of competitors such as Kroger, Albertson's and Safeway.

Wal-Mart has taken advantage of the opportunity to conduct business through e-commerce by establishing their presence online. This has generated a slow growth for Wal-Mart in that the company has not yet found their niche online. The investment through online sales may not be effective for Wal-Mart since many consumers view the company as a store in which one would shop to satisfy immediate needs. Therefore, to gain online sales, Wal-Mart has product offerings online that one may find difficult to obtain through store locations.

Wal-Mart may

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