Wal-Mart

Joel Clark Paragas Emg216/COM Case Analysis #8 – Wal-Mart Stores, Inc. in 2008: Management’s Initiatives to Transform the Company and Curtail Wal-Mart Bashing Overview Before year 2008, Wal-Mart has undergone a lot of pressure against their rivals, economically, socially and politically. Wal-Mart’s Strategy is categorized under Best-Cost Provider, which in turn made them successful during the past 25 years. This success keyed in from the company’s culture, and good leadership. However, the way of governance Wal-Mart has been following has maturity and needs to cope up with the present situation. This case analysis will let us see what actions Wal-Mart should consider in order to stay ahead in the market and maintain their competitive advantage. In June 2008, Wal-Mart’s CEO Lee Scott along with the top executives presented a transformation strategy for Wal-Mart’s business model. Due to the Top executive’s transformation strategy for Wal-Mart, the following initiatives were formed: 

Change the company’s mission to “Saving People Money So They Can Live Better”



Revise Wal-Mart’s logo to better mirror the company’s shift in emphasis away from “always low prices” and “ we sell for less” to the broader mission “Saving People’s Money So They Can Live Better”

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Make a special effort to convince Wal-Mart’s 2.1 million associates why the company’s new mission was more than a hollow statement

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Broaden Wal-Mart’s appeal to existing customers and attract new customers to shop at Wal-Mart

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Initiate a flat price of $4 for the generic versions of some 200 common prescription drugs

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Increase green merchandise offerings and promote their use to customers

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Launch a multifaceted “Zero Waste” campaign

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Institute ways to make Wal-Mart stores both more energy efficient and supplied by 100 percent renewable energy

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Make Wal-Mart an even better place to work

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Drive Growth in the company’s international operations via both acquisitions of foreign retailers

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Make a positive contribution to the quality of life in every community in which the company conducted business

The above table summarizes the transformation initiatives to three categories (environment, Customers, Employees)

Company Mission Wal-Mart Stores, Inc. mission was change from “always selling less” to “Saving People’s Money So They Can Live Better”.

Internal / External Analysis

Financial Ratios (2000-2008) Current Ratio

Return on Assets

Return on Shareholder's equity

1 0.9

0.9

0.9

0.9 0.8

24.50% 10.10%

2000

20.70% 9%

2002

22.40%

22.90%

22.00%

21.10%

9.70%

9.30%

8.80%

8.40%

2004

2006

2007

2008

The above financial ratio of Wal-Mart tells us that their growth from year 2000-2008 is not healthy. All the presented ratios are on a downside trend which shows that the company should do revisions either on policies, procedures, processes and so on whichever is necessary.

SWOT Analysis

Strenghts • best cost provider • technological developments • supply chain • range/ collection • brand name • Strong management commitment on company cultures • Management are flexible on deciding strategy for the company's improvement

Weaknesses • wages, social benefits • Declining Image • no trainings for associates • focus of cost savings

Opportunities • choice of location • demand for discounters • Regain and improve WalMart's good reputation • Diversify • Improvement on products sold • Company culture improvement

Threats • competitors (Target, Kmart) • relations to suppliers • public critics • impact of lobbying • labor unions

The SWOT analysis shows that there are lots of opportunities for improvements on WalMart’s part. Having a management team that is flexible on developments and strong commitment on management cultures, Wal-Mart should employ people involvement not just on top executives but also on their stakeholders. This is vital since Wal-Mart executives are initiating a good platform for improvements.

Source: Zenith Management Consulting (2005) The Graph above shows how Wal-Mart and their competitors are meeting their core competence. Wal-Mart should improve on their service, quality and scope of products. They may have the best-cost advantage but they are not making much effort for the important aspects which consumers today are also considering (Value for Products).

Strategic Implications After analyzing Wal-Mart Stores Inc.’s from the previous analyses, it is important that the chosen strategies take into consideration: •

Continuously improve and lead as best-cost provider while attempting to implement new structures for the company

•

Enforce relationship on stakeholders through better supply chain, employee and customer involvement to outwit powerful competitor

•

Portray a sincere change through Top Management guidance on new missions of the company

•

Find more supplier that fits quality requirements with lower cost or diversify/acquire other suppliers for the company’s advantage

•

Improve company reputation standings on the customer’s point of view (through advertisement and Infrastructure)

•

Develop a fun-atmosphere workplace where employees will enjoy working

•

Formulate a better reward system on employees

Recommendations Lee Scott’s platform on June 2008 meeting from the company’s stakeholders will lead to a better Wal-Mart. I recommend that Lee Scott should get the Stakeholder’s buy-in on his platform and continue to keep an eye on economic and social trending. Be flexible on WalMart’s environmental changes but maintain the best-cost leadership amongst its competitors. Also Wal-Mart’s top management needs to focus on their core competencies and their company’s culture.

References Thompson, A.A., Jr., Strickland III, A.J. & Gamble, J.E. (2009). Crafting and Executing Strategy (17th Edition). New York: McGraw-Hill/Irwin.