Research Paper on "Strategic Research: Analysis of Walmart"

Research Paper 5 pages (1681 words) Sources: 3

[EXCERPT] . . . .

Strategic Research: Analysis of Walmart

According to the official Walmart website, their mission statement is the following, "We save people money so they can live better" (walmartstores.com). However, according to the researchers with about.com, the greater vision that overlaps with that mission statement is "If we work together, we'll lower the cost of living for everyone…we'll give the world an opportunity to see what it's like to save and have a better life" (retailindustry.about.com). Thus, the company has certain policies in place to foster these objectives. For example, their open door policy means that all managers have to keep their doors open to the needs and questions of employees of all levels at all times (retailindustry.about.com). Furthermore, the sundown rule means that questions from consumers, workers and suppliers have to be answered on the same day the questions are received; likewise, the belief in the importance of the grass roots process means that ideas are captured from members of the sale staff and people on the front lines because they are the ones with firsthand insight about things that need to be changed inside and outside of the store (retailindustry.about.com). Further shaping this mission statement are the beliefs and values that one must have respect for each individual (both the customer and employees), strong levels of service to the customers, and an overall objective of fulfilling excellence in work (reatilindustry.about.com).

In order to bolster a sense of personal service, the company has employed what they refer to as the 10-foot rule, this rule refers to making eye contact, greeting customers warmly and putting forward offers to help customers who come within ten-feet (retailindustry.about.com). The company also has a system of what they refer to as "servant leadership": under this concept, leaders aren't the ones making commands or demands to their team members, but the ones in service to the employees who work under them (retailindustry.about.com). Lastly, the Walmart cheer was designed by Sam Walton to boost morale each morning so that employees were jazzed about getting work done.

While these are a range of very multi-faceted goals, it's worth examining if the core objective that Walmart has are currently being fulfilled: saving people money so that they can live better lives. Even though Walmart may be saving their consumers money to a certain extent, they're by no means the leader in the discount shopping industry. "Wal-Mart's slogan may be 'Save Money. Live Better,' but rival Target is challenging it by offering even lower prices on everyday products. Two recent price comparisons of grocery and household goods revealed that Target's prices are lower than at No. 1 retailer Wal-Mart" (Kavilanz, 2011). Kavilanz explains how a study was conducted comparing 22 grocery items between the two retailers such as milk, bread and rice, as well as home furnishing items and personal and beauty products (2011). Target's total goods cost $269.13 just slightly lower than Walmart at $271.07 (Kavilanz, 2011). Thus, one could argue that while Walmart is saving people money, it's not the leader in the discount shopping arena. On the other hand, one could argue that the two superstores are so comparably priced that and that the difference between them is negligible and that they're both essentially succeeding at their goal and mission statement.

Porter's Five Forces Model

Examining the success and progress of Walmart in terms of competitive strategy demonstrates how well and how strategically they've cornered the market in their arena of retail. "Michael Porter's five forces is a model used to explore the environment in which a product or company operates to generate competitive advantage.

Five forces analysis looks at five key areas mainly the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry (advantage)" (RapidBI & Morrison, 2011).

When it comes to Walmart, the threat of another competitor entering the market is always a possibility. While an individual cannot open up a discount superstore on a whim, corporations can, particularly if they've well-researched the market. However, in a situation like discount store shopping, there often there is customer loyalty to a particular store, a form of brand loyalty. Analysts are generally very positive about Walmart's performance as a stock now and in the future and still consider it a safe investment; however, regarding threat of entry, it still has numerous competitors (seekingalpha.com). "For instance, PriceSmart, the 'Costco of South America' is a company that missed earnings expectations, yet still continues to impress investors because of its gutsy decision to implement a thin-margin strategy in an attempt to increase traffic through its doors. Despite the fact that it missed earnings predictions, PriceSmart surpassed revenue forecasts by some $10 million and grew in revenue by 22% last year alone" (seekingalpha.com). This is just one example of a company that is rapidly gaining leverage in the arena of discount shopping.

One advantage that Walmart has over its competitors revolves around the fact that it's willing to engage in strategic thinking. For example, Walmart is taking a page out of the books of its competitors -- Dollar General Corp., Family Dollar Stores, Dollar Tree and Target -- by opening up Walmart Express stores in major metropolitan neighborhoods (Banjo, 2012). The goal of Walmart is to offer customers the same experience that their superstores can provide with low prices and variety, but in 15,000 square feet (Banjo, 2012). While it will be difficult for the company to yank itself out of the mindset of a monster-sized super store, Walmart is still making a valiant effort to appeal to customers who carry bags, rather than drive SUVs (Banjo, 2012).

Intensive Strategy

Market Penetration

The example stated earlier, Walmart's attempt to snag business from bag-carrying city-dwellers is a clear example of him attempting to engage in a market penetration strategy in that Walmart is clearly attempting to pull customers from competitors in other retail arenas (Jalan, 2005). For example, Walmart Express stores are snagging competition from standard-sized grocery stores and mom-and-pop size discount shops.

Market Development

One could argue that Walmart is rapidly developing its market via these express stores in that it's reaching urban centers where their stores generally don't exist. For example, Walmart has already been developing overseas and experiencing great results: "Double-digit sales gains overseas have been a big driver of results in recent years. Investors are eager to see Wal-Mart develop a strategy for accelerating its U.S. growth" (Banjo, 2012).

Product Development

Walmart has long had a product development team, which is a free resource that it offers all suppliers, particularly the ones that lack experience a chance to figure out how to best force their products to evolve and how to create lasting relationships with managers and buyers (Schmitt, 2009).

SWOT Analysis

The strengths that Walmart has as retail superpower are numerous: it has a trusted brand, consistently low prices, reliability, and easy and safe shopping to offer consumers

Weaknesses

Walmart has a reputation of giving its employees poverty level wages in order to guarantee the low prices that it is so famous for. Walmart has also been accused of using sweatshop labor to make its products. Many neighborhoods have opposed Walmart from coming to their areas because of the very well-founded fear that Walmart will drive local businesses out.

Opportunities

Walmart has a very real opportunity to capitalize on profits and developing markets by taking their core philosophy of offering consumers lower prices so that they can live better and using corporate integrity to back it up. Furthermore, attempting to capitalize on the business of urban dwellers in city-centers is a wise way to increase profits.

Threats

One could argue that the biggest threat to Walmart is Walmart itself. The bad publicity that Walmart receives is largely as a result of its own shady business practices. Having mission statement… READ MORE

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