Wal-Mart’s Strengths and Weaknesses
Keywords: walmart analysis marketing, walmart hrm strategy, walmart management
Wal-Mart stores Inc are an American public corporation that operates large department stores and many warehouse stores. This paper critically discusses Wal-Marts’ strengths and weaknesses in marketing, human resources, management, research and development, finance, and other applicable areas. It also analyzes how internal organizational dynamics influence strategic business continuity.
Strengths and Weaknesses in:
Wal-Mart’s marketing nature is in its low price campaign. Wal-mart devised a marketing system that follows price setting, as the management is not at all allowed to hedge prices at any cost. It usually mark percentage discounts. It has a philosophy that states that whenever there was a great deal, it doesn’t matter how much it earns, it just passes it on to customers. It also employs the rollback campaign. This has been applied through lowering prices of goods that had already been lowered. In increasing its patrons, this has been a successful method. This is because, during shopping, customers are always looking for the best deal. Because Wal-Mart has lower priced goods, when the roll their prices, they out-price its competitors.
For many years, Wal-Mart has been known for its approach of customer orientation. It has maintained one of the best customer assured programs, which promotes the goodwill of customers. Simply they take sales return and refund promptly the product price with minimal questions. They have been also embracing customers through ‘ten Foot Rule’ tactic that was derived by Sam. This means that, employees have to great any customer who comes ten fit close to them and inquire if they need any kind of help. Another factor is the creation of ideal one-stop shopping experience. It has ten organized distinct divisions, through which Wal-Mart offers several products. Having such conglomeration of products, customers have no reason of stopping at any other shop for anything that they might need, (Echeat, 2006).
The weakness in Wal-Mart marketing is that many cities have blocked introduction of Wal-Mart due to its effects on small town stores. It has destroyed reputation as they usually forces s mall scale operators out of business.
Wal-Mart revenue has consistently increased since 2000. In the year 2000, the revenues were $ 165,013 billion and in the year 2002, the revenues increased by 24% to $217,799 billion. By looking at the size and scope of Wal-Mart, this revenue growth can be described as astronomical. To the Corporations cash flow, this revenue increase has been very kind. Wal-Mart had a positive cash flow of $4,044 billion in 2000, which increased to $9,961 in 2002. This indicates that, the corporation had the capability of controlling its expenses while growing and expanding their operations. Their net income in 1997 was $3,056 billion while in 2002 it doubled to $6,671 billion, just in a span of five years.
The ratios also show Wal-Mart’s strength. Around every ratio of Wal-Mart is strength when weighted against industry averages. Through its ratio analysis, it is depicted that Wal-Mart is the well-equipped corporation ton succeed in any market place. Another area of strength of Wal-mart is its stock price, over the period of three years, the price has fluctuated has occurred but very minimal, it has only ranged between $45 and $65. Including dividends, investments in Wal-Mart would perform well.
The weaknesses are depicted in three ratios. The fixed asset turn over shows that the firm is not making use of its lots of information. The firm is not earning much cash for every shareholder, hence poor earnings per share. Average collection period shows that, the firm is allowing debtors to carry accounts for an above average period of time, hence increasing the probability of bad debts, (Echeat, 2006).
The existence of designed policies that ensures inclusive and equitable environment, the management solicits feedback from employees, concerning their opinion of their work experience and corporation’s implementation of basic values and beliefs. They also provide education on working with others, equal opportunities for employment, leadership skills among others. Employees are also provided with resources of state-of-art training development to attain career objectives. They have different training tools that that maintains them in front of competition which successfully increases women and minority advancement. Respect for the individual which is one of the corporation’s three main values is reinforced throughout the training process.
The management is also committed to customers and the community that they provide services for. It usually employs locals that represent uniqueness and diversity of every person’s hometown. The family of employees has been changing just as the change in demography of the country. It has also taken the advantage of respectable financial positions to retain and attract workers through the programs of stock ownership and profit-sharing. Employees are allowed to buy shares of stock at a price that is reduced, hence appreciating their portfolio.
Another strength that Wal-Mart enjoys is the strong community initiative. They usually offer collage scholarships, raise funds for nearby children’s hospitals. They at times carry out education about recycling and other environmental topics that targets environmental conservation. The Wal-Mart’s corporate structure is well rounded and managed by three main values; respect to all, service to customers and strive for excellence. Management forms the backbone of the entire company and the availability of these three key values has propelled the firm to the top of their industry and has the permitted Wal-Mart to be the largest global company.
The major weakness is that the management has no formal mission statement, whilst, they have core values. With this, employees and customers are not are not explicitly told what the business is, as a result, the company has no definition and direction. . On the top management, the weakness is that there are few women and few minorities employed, hence no equity. This is unethical decision for Wal-Mart. Another weakness is that, the firm has no union involved; this has led to poor treatment of employees. This is a weakness as job security is not there, (Sravana, 2010).
Research and Development
The firm’s innovations have kept it in front of retail competitors in the retail market. This is because it is continuously coming up with patents. Innovation and development are very high at Wal-Mart regarding to their product and services, which tends to be a sure strength in its performance generally.
The weakness with Research and Development at Wal-mart is worse as they are not actively engaged in any research and development. They don’t carry out prior market research before opening new stores.
Computer and Information Technology
There are sophisticated systems of satellite-based communications that Wal-Mart uses. There are also safe, secure and complete websites that through which customers can buy products that are found in the store. The website is not only the purchasing place, but also a thorough informational site, (Sravana, 2010)
There was no information concerning Wal-Mart weaknesses in computer and information systems.
It is stated proudly by Wal-Mart on its website that its culture is directed by the three basic values and beliefs, ten foot rules, Sam’s Rules, and Sundown. This has made the firm to consistently appear on Fortunes 100 best firms to work for in the U.S. it usually employees more than 2.2 million associates globally.
The weaknesses in Wal-Mart human resource include: it has remained non-unionized, instead has policies that encourage employees to take their complaints to the management. Also the wages are too low as compared to unionized workers. An average employee makes $12,000 to $17,000 annually. At Wal-Mart, women are discriminated, as they are denied promotions and education. Sexual discrimination has also has also in the past occurred as cases have been filed. The amount paid to female workers is $5,000 less than that paid to male, (Sravana, 2010).
Effects of Internal Organizational Dynamics on Business Strategies
Organizations having inferior management-employee communication adversely affect employee motivation which might lead to difficulties in the implementation of desired business strategies. This occurs when the management fails to communicate strategic mission, vision and goals to their employees that object the alignment of organization and HR strategies. Business strategies in a disturbed environment, is not effectively communicated all concerned departments in the firm, renders the HRM devised policies unproductive in surviving organizational change, (Miles & Snow, 1984).
The treatment received by employees from the management is of crucial concern in determining their contributions towards the attainment of strategic objective that are defined by a certain business strategy. Lack of management collaboration may result to less motivated workers, which hinders effective integration of business targets and HR strategies. Difficulties may arise as a result of low involvement of workers and reduced control of their working practices; as they become de-motivated and not committed to the attainment of set targets. Research has proved that such occasions occur because; more attention has been shifted to financial and technological resources, and inefficient HR utilization. As an effect, major organization challenges are the development of collaborative working environment that entails reasonable employees’ challenges and enhances their dedication towards business strategy continuity.
Competent leadership in an organization connects its workers and their tasks in a meaningful manner. It has been shown that, problems occur in aligning business strategies and the HR strategy, when leaders in an organization become autocratic. Meaning that, tasks are not explicitly defined and explained to the workforce, other than being dedicated in a manner that is ineffective. This renders communication of ideal vision and mission of underlying business strategy to employees to be difficult. Organizations that lack conducive leadership culture on behalf of senior and middle managers, adversely affects HR practices implemented as they will not be effective in delivering the desired outcomes in the business strategy context, hence demoralizing the strategy formulation process, (Miles & Snow, 1984).