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Joel Clark Paragas Emg216/COM Case Analysis #8 Wal-Mart Stores, Inc.

. in 2008: Managements 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-Marts Strategy is categorized under Best-Cost Provider, which in turn made them successful during the past 25 years. This success keyed in from the companys 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-Marts CEO Lee Scott along with the top executives presented a transformation strategy for Wal-Marts business model. Due to the Top executives transformation strategy for Wal-Mart, the following initiatives were formed: Change the companys mission to Saving People Money So They Can Live Better Revise Wal-Marts logo to better mirror the companys shift in emphasis away from always low prices and we sell for less to the broader mission Saving Peoples Money So They Can Live Better Make a special effort to convince Wal-Marts 2.1 million associates why the companys new mission was more than a hollow statement Broaden Wal-Marts appeal to existing customers and attract new customers to shop at Wal-Mart Initiate a flat price of $4 for the generic versions of some 200 common prescription drugs Increase green merchandise offerings and promote their use to customers Launch a multifaceted Zero Waste campaign Institute ways to make Wal-Mart stores both more energy efficient and supplied by 100 percent renewable energy

Make Wal-Mart an even better place to work Drive Growth in the companys international operations via both acquisitions of foreign retailers 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 Peoples Money So They Can Live Better.

Internal / External Analysis

Financial Ratios (2000-2008)


Current Ratio 1 0.9 0.9 0.9 0.9 0.8 Return on Assets Return on Shareholder's equity

24.50% 10.10%

20.70% 9%

22.40% 9.70%

22.90% 9.30%

22.00% 8.80%

21.10% 8.40%

2000

2002

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 WalMarts 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 companys advantage

Improve company reputation standings on the customers 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 Scotts platform on June 2008 meeting from the companys stakeholders will lead to a better Wal-Mart. I recommend that Lee Scott should get the Stakeholders buy-in on his platform and continue to keep an eye on economic and social trending. Be flexible on WalMarts environmental changes but maintain the best-cost leadership amongst its competitors. Also Wal-Marts top management needs to focus on their core competencies and their companys 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.