Running Head: WALMART’S PROCESS STRATEGY

Walmart’s Process Strategy

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Introduction

Walmart is an American-based multinational retail company, controlling large chains of

discount stores and silos stores. The company was formed by Sam Walton in the year 1962 and

became a corporate company on 31st October 1969 and started trading in the New York Stock

Exchange in 1972 (Taillie, Ng & Popkin, 2016). Walmart is a family-owned business under the

control of the Walton family in which the family owns 48% of ordinary shares. The Headquarters

of the Company is in Bentonville, Arkansas and has been termed as one of the most valuable

organizations worldwide. Fortune Globe listing of 500 best companies ranked Walmart as the

second largest public company in the world. In the ranking, it was established that the firm owns

the biggest grocery retail stores in the United States of American (USA). For instance, it hit a

remarkable growth in its revenues to 51% from its US$258 billion sales from grocery enterprise

alone in 2009. Additionally, the Company owns Sam's Club retail silos located in North America.

Achieving this milestone can be linked to the corporate strategy that the company implemented

in recent years since its inception (McGee, 2018).

It is the desire for every organization to expand both locally and internationally. To

realize such goals, businesses adopt a strategic framework that works best to ensure such goals.

A business strategy is necessary for any given company. Before the adoption and implementation

of business strategies, an environmental and organizational analysis is necessary. It is worth

noting that for a business to be outstanding among competitors and steer motivation for success,

viable strategies must be ensured. Conversely, miscalculated strategies can cause a company to

be out of the business direction. Therefore, is important to consider the factors responsible for

building a high-performance culture in an organization (Tsai & Shih, 2013). At some point in an
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organization, internal and external changes are important and are better ensured through strategic

planning and implementation.

The market today is complex and highly competitive such that strategic planning is

critical for the survival and growth of companies. Strategic planning adequately and clearly

defines organizational goals and objectives as well as the assessment of environmental situations

for more workable strategies.

The process strategy of Walmart

The process approaches include product focus, process focus, mass customization, and

repetitive focus. Process focus refers to a job shop, low volume, and high variety; repetitive is an

assembly line including moderately homogenous commodities with choices from components;

the product is for low-variety, and high volume (Adamides, 2015). Establishing long-term goals

and objectives for a company is important because it defines the path the company will take to be

successful. Setting long-term goals makes the company have a vision it is working towards.

Long-term goals and objects define the mission of a company and where they would like to be in

a couple of years down the road and what they want to better themselves in. Establishing long-

term goals and objectives for a company allows the company to have a plan they can follow

instead of searching aimlessly for success. Once a company decides what its vision and mission

is as a company, it sets up a strategic plan to accomplish its goals and objectives. This strategic

plan consists of actions that emphasize the energy and resources of a company to meet those

goals. The strategic plan reinforces company procedures and ensures that employees and other

stakeholders are working towards achieving the same goals.

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Walmart’s Mass Customization

Mass customization refers to making custom-intended products and services to serve a

wide market for individual consumers (Schnurr & Scholl-Grissemann, 2015). Flexible

production enhances mass customization in any firm. Given the precise customer requirements,

flexible technologies may form customized products as fast as possible. Mass customization is

not a new concept to business managers who understand the importance of being able to focus on

customer needs by providing products tailored specifically to them. Walmart has embraced the

need for product customization and has implemented new programs and procedures that are

intended to produce a variety of low-cost, high-quality products to meet customer demands

across its product line. However, for many companies, providing elevated levels of product

customization has led to a wide range of extra costs and complexity within their manufacturing

processes due in part to not anticipating and researching the potential impacts to their overall

business. There are four strategies that Walmart has followed to meet customer expectations

while balancing potential impacts to its business; including collaborative, adaptive, cosmetic and

transparent (Salcedo, 2017). These varying strategies allow Walmart to either work directly with

customers to ascertain their needs, provide customers with facilitating products that allow them

to modify themselves, provides different products to different customers as well as modifying the

product without the customer’s knowledge. With a strategy in place, Walmart can increase its

product and service offerings while making sure that the quality and costs are acceptable.

Walmart's all-time long-term goal and the objective are to keep its products competitive,

yet the company knows that low prices will not be sufficient to maintain the lead as a top retailer

(LeCavalier, 2010). In 2011, Wal-Mart stakeholders gathered for the corporation's yearly meeting

to discuss company issues and plans. In this session, the shareholders discussed the retailer
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store's long-term objectives. Their goals included: Growth of business by opening new stores,

reducing the costs and transferring the investments to the consumers, forming a worldwide

Internet trade, and intensifying the company’s sustainability efforts. Walmart wishes to expand

into yet explored consumer markets such as Latin America and Asia. The efforts of expansion

will be made by a heavy, worldwide internet presence. Walmart Company announced that part of

these goals was due to the development of technological advances and the faster accessibility

they have to reach their customers. "We are right in the sweet spot of the next generation

customer. But to succeed, we must also be the best at how we run our business," Walmart said,

referring to new and growing generation of online customers. For these goals and objectives to

be reachable Walmart must depend on the newest technological advances to reach this new

population and regions. The must research what kinds of products and services to offer the new

markets. Walmart must have the capabilities of comprehending culture, values, beliefs, customs,

the standard of living, styles, and preferences of the new customers they are trying to reach.

Four Approaches to Walmart’s Customization

Transparency

Walmart employs a “Just in Time” inventory approach that enables the firm in

minimizing losses and raising efficiency through materials according to the customers’ demands

(Aghazadeh, 2001). The main element in this approach is the application of tell zone scanner and

barcodes. This enhances an incessant apprise of the catalog, confirms a high-income rate and a

proper inventory combination required in reducing the costs. An Alternative and significant

component of cost control is the influence and power the Walmart has attained as compared to its

competitors. The firm has the ability to command the price in the industry and this can be

influenced by cost the company incurs in producing its products, totally overlooking the costs the
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competitors' experience in the production of their products. This leads to a change in the

stability of power from production to the global stores, and a variation from pull to push

production. The stores are the determinants of what is being sold and determine the production

capacity.

Diagram: Four Approaches to Walmart’s Customization

Collaborative

Wal-Mart’s outstanding approaches in handling its supply chain include developing

strategic alliances the sellers through continuous replenishment strategy, quick response strategy,

long-term agreement, and vendor managed inventory. The objective is to form a long-term

collaborative relationship with the aim of improving operational abilities that help both suppliers,

and the company itself (Desoutter & Lavissière, 2018).

Strategic alliances are made between corporations for the benefit of all businesses

involved. Without exception, Walmart creates these partnerships to secure their success as a
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company such as Walmart’s association with Humana, a healthcare industry. By creating a

partnership with Humana, Walmart customers will have the chance to fill medicament for

Medicare patients who use Human help (Phillips-Angeles et al., 2013). With this partnership,

Humana and Walmart customers are offered a lower copay for patients filling at Walmart

locations. This agreement causes both corporations a chance of increasing the customer base

(Humana and Walmart Announce Innovative Medicare Part D Prescription Drug Plan with

Lowest National Monthly Premium Offered in all 50 States and D.C.). Walmart Company also

has strategic alliances with both Stanley Works (manufacturer of industrial tools and household

hardware) and Li Fung (leading consumer goods sourcing and Logistics Company) which are

trustworthy global corporations. Walmart's associations with these businesses promise its

strategy of providing quality products at everyday low prices.

Instituting goals and objectives for a company are essential because it will define the

route the corporation takes to be prosperous. Establishing goals within an organization allow for

a vision to be formed of where the company wishes to be in the future. Once a business adopts a

vision and mission they must set up a strategic plan to achieve their goals and objects. This

strategy plan entails the actions and resources used by the company to meet those goals. The

strategic plan supports company procedures and guarantees that employees and other

stakeholders are working to achieve the same goals (Almaoui, Saouli & Sinha, 2015).

Adaptive

Walmart has been a subject of criticism and pressure for more ethics and social

responsibilities and in January 2012, issued guidance for the operationalization of overseas

supplies (Wood, 2015). The Firm responded on these pressures by ensuring compliance with

local laws and regulations regarding volunteer employees, working hours and improved working
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conditions. The Company ensured that staff wages were improved and their welfare is taken into

consideration by putting in place health and safety facilities and policies. The employees have

been given freedom of association and allowed to form employee unions to give them collective

bargaining advantage. Nonetheless, the company has forbidden its suppliers, sub-contractors and

its basic tertiary suppliers from disclosing any information relating to the nature and scope of the

transactions. Though the firm has shown the willingness to respond to ethics and social

responsibility pressures these attempts are adequate neither are they appropriate. The fact that

staff motivation is not only achieved by increasing their wages but rather it is important that

employees’ sentiments are taken very seriously. As a matter of fact, employees are the most

valuable assets in any company. My other reservation about Walmart is its reason not to let those

it relates with to share nature and scope of their relationships. Information is power and

important for making informed decisions.

Cosmetic

Walmart has captured value by opening stores in third world countries such as Asia and

Latin America and offering to keep their prices low (Nayyar, 2016). Opening stores in these

countries have also created jobs in those areas. In the area of creating value for their customers,

Walmart works with manufacturers to keep prices low; they can get low prices for the product

and pass on the savings to the client. Another way that Walmart works to save their customer

money is by working with manufacturers and influencing them to produce their product in a

more environmentally friend way and at the same time reduces unnecessary packaging that saves

money in the final product. Walmart uses their power as a top retailer around the world to obtain

their goods at low price from manufacturers which is one of the main reason for their low prices.

Walmart will use these cost advantages to keep their loyal customers, but to also attract the new
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market they are trying to reach. Walmart’s corporate strategy is to expand their company reach

while maintaining low prices for their customers. Vertical integration is a business method to

increase the profitability and control the market for their products. Walmart uses vertical

integration in some of the product they sell at their stores with brands such as Sam’s Choice,

Great Value, and recently purchased in 2010 Vudu an online movie streaming company. By

having a vertically integrated company, Walmart can have control over the quality and gain profit

over their products.

Walmart early worldwide expansion strategy into Mexico and Canada can be viewed as

being characterized by the desire of the company to enter into regions with similar

characteristics. For instance, it chose regions that were geographically closest and culturally most

similar. The strategy benefited the organization in that it provided a platform in which Walmart

utilized its existing managerial and financial capitals to tap into emerging markets whilst hedging

against risks that could occur due to the failure of operations in abroad outlets. After establishing

itself in Mexico and Canada, Walmart embarked in a strategy that would allow it to expand into

four more countries; China, the United Kingdom, Japan, and India. This strategy was

characterized by market-seeking initiatives. The Company has a sharp eye for new developments

in the market in relation to the vast market share, growing purchasing power and economic

liberalization (Stankevičiūtė, Grunda & Bartkus, 2012).

The pros and cons of using mass customization strategy

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Customized Product for Customers: The ultimate objective of customization is to

provide a customized product, which is manufactured only to fulfill the specific needs of the

customers.

Reduction in Cost: When the buyer demand customized product for him, it is always

expensive but in case of mass customization, it has been found the buyers get the customized

products at cheaper prices.

Streamline Operations: Majority of the times the demand for mass customization came

from big companies. When all the employees use products of the same specification, then it helps

to streamline the operational process.

Variety Offerings: Every company wanted to include some uniqueness in itself, which

helps to differentiate itself from the competitors. This differentiation can be acquired by the

company when it buys customized products.

Is there a better option than the strategy they are using?

Product Focus

The product focus strategy involves focusing on providing goods and services to a

specific buyer group or consumer segment, within a section of a product line, and or to a certain

geographic marketplace (Samurai Mohd Mokhtar, 2013). Through adopting this strategy, the

company’s corporate approach will be the overall cost leadership, delivering to consumers the

good quality of goods and services at affordable prices in comparison to the firm’s competitors.

The overall cost leadership comprises providing a similar or superior quality of goods and

services at a lower cost as compared to what other firms in the same industry offer. In attaining

the objective, the firm will heavily depend on a supply chain management which makes sure the
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goods are offered to the consumers whenever they are in need. The facilities provided are

reduced into goods and services, which are branded commodities like, “Mainstays, George,

Metro 7 and other approved products from Mary-Kate and Ashley and Disney”. In order to

expand its geographic coverage, Wal-Mart will adopt the domestic strategy of “backward

expansion”. This strategy consists of opening stores in small towns that surround larger targeted

metropolitan cities and saturate each area before moving into new territory. Internationally, Wal-

Mart’s expansion strategy involves entering foreign markets with new store construction and

acquisitions of smaller companies. They will target where people seek cheaper and one-stop

shopping centers and then “remain local” through the employment of local managers. Although

Wal-Mart has very few geographical restrictions, one such restriction is the limited commercial

space in metropolitan areas for its supercenters that require a lot of space. This keeps the

company from becoming an inner-city mainstay. The company may consider using its

neighborhood market and convenience store extensions into these areas. Wal-Mart also uses

demographics to segment its products.

Conclusion

With mass customization, Wal-Mart has the diversity of products to serve a wide market

range. Wal-Mart target marketing recognizes the multi-faceted shopping behaviors and patterns

of female shoppers. Management has aggressively sought out the women's market by offering

alternative product ranges for female teenagers, youths, young adults, middle-aged adults, and

seniors. These strategies are aimed at meeting the needs of a selected segment as well as

definitive groups of female shoppers. Wal-Mart has more male shoppers than its competitor

Target since it has made an attempt to attract more male shoppers by expanding its fishing and

game, men's apparel, hunting, and firearms departments as well as the past recent years the
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addition of the Tire and Lube Center. Walmart thrives well where there are economic crises thus

its future targets are characterized by deteriorating risk profiles. Common in the target countries

is the large degree of volatility which is a function of expected returns. In these economies, there

is the tendency of hedging against additional risks hence requiring higher expected returns. In

general, the risk profiles of the target countries are deteriorating as a result of unfavorable

political, commercial, economic and external developments. However, political risks in the

countries are higher thus supports business expansion while commercial risks are also favorable

for business growth.

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