Term Paper on "Wal-Mart Case Issues: CI#1: Consumer"

Term Paper 15 pages (4206 words) Sources: 1+ Style: APA

[EXCERPT] . . . .

Wal-Mart CASE STUDY

CASE ISSUES:

CI#1: CONSUMER SAFETY

The Wal-Mart Stores have been severely criticized for their intense desire to present customers with the cheapest products on the market and in order to do this, they tend to neglect the quality and safety of the merchandize.

CI#2: IMPACT on LOCAL COMMUNITIES

Communities generally object to the opening of a Wal-Mart store in their region. Citizens fear the impact the store will have on their lives and the environment, while local entrepreneurs fear the possibility of going out of business.

CI#3: EMPLOYEE TURNOVER large majority of Wal-Mart employees is dissatisfied with the wages they register and the benefits, including health care, they get and the conditions they work in. This generates massive personnel fluctuations.

CURRENT SITUATION

Wal-Mart embodies the ultimate epitome of business success. The company is the largest retailer in the United States, with a market share of approximately 20%. They operate in a total of 2,701 stores spread across all American states and other 13 countries. Fiscal year 2006 brought about strong financial highlights, such as net sales worth of $312.4 billion or net income of $11.2 billion. (Wal-Mart Annual Report for 2006)

A. CURRENT PERFORMANCE

The end of the fiscal year 2006 was marked by a 44.9% increase in free cash flow which reached the total value of $4,498 million as compared to $3,105 million in 2005. Wal-Mart has also registered high performances due to a 9.5% increase in net sales and a 9.4% increase in net incomes. (Parmelee, 2007)

In the previous year, Wal-Mart continued their territorial expansion by adding five more countries to their portfolio. They increased expenditures, mainly employees' wages and conducted intensive marketing studies to identify and satisfy customers' needs.

B. STRATEGIC POSTURE

1. Strengthen and maintain leading position in the United States and become leader on the international market

2. Continue territorial expansion to other countries and further increase revenues

3. Use and promote environment-friendly procedures and sustain community development (CI#2)

4. Respect all employees (CI#3)

5. Satisfy all customers (CI#1)

MISSION

The Wal-Mart mission includes the following:

Provide sustainable, healthy and value-oriented products to meet customers' needs." (CI#1) (Wal-Mart Annual Report for 2006)

Give ordinary folk the chance to buy the same thing as rich people" (1994-2007, Center for Business Planning)

Save people money so they can live better" (Website of Wal-Mart Stores, 2007)

As a company committed to environmental responsibility, Wal-Mart desires to be a leader in building and operating retail facilities that minimize the usage of energy and natural resources" (CI#2) (Website of Wal-Mart Stores, 2007)

Our mission is to enhance and integrate our supplier diversity programs into all of our procurement practices and to be an advocate for minority- and women-owned businesses." (Website of Wal-Mart Stores, 2007)

The mission of the Global Ethics Office is to promote and facilitate an effective global ethics program. Global Ethical principles are designed to assist our associates and suppliers with making the right decision and doing the right thing." (Website of Wal-Mart Stores, 2007)

Focusing on the environment is the key to our mission to improve the quality of life for people around the world." (CI#2, CI#1) (Website of Wal-Mart Stores, 2007)

OBJECTIVES

Increase the number of Wal-Mart stores across the globe

Increase customer satisfaction and safety (CI#1)

Reduce employee turnover and the adherent costs of replacing the personnel (CI#3)

Support the development of communities by creating additional jobs, by presenting locals with a wide selection of cheap products and through the involvement in charitable events (CI#2)

STRATEGIES

1. Offer customers cheap and high quality products:

Improve the quality of the sold products (CI#1)

Improve the logistics processes

Import products from countries with comparative advantages at low prices and resell them on the United States and other foreign countries' market

2. Territorial expansion:

Open at least 305 new stores, relocate other stores in more commercial areas and expand the already successful stores located in welcoming communities

Open at least 30 new Sam's Clubs - this strategy not only sustains Wal-Mart territorial expansion, but it also sustains the development of small local businesses which can now get their supplies at lower prices from Sam's Clubs (CI#2)

3. Sustain the development of communities by: (CI#2)

Creating new job opportunities

Paying increased taxes to the local budget

Getting involved in charitable events and sustaining environment-friendly procedures

4. Human resource: (CI#3)

Wal-Mart is basically interested in reducing personnel expanses

They generally employ part time workers which do not get full benefits

Wal-Mart discourages over time

The stores offer specialized trainings to all employees

POLICIES

Pricing policies:

Every day low price

Rollback: reduces the Every day low price even more

Special buy

Return Policy:

Basically all purchased items can be replaced or refunded within 90 days since the purchase date, provided that the customer still possesses the receipt

Exceptions are: computer components and computer accessories (45 days); camcorders and digital cameras (30 days); computers and postpaid mobile phones (15 days). (Return Policy, Wal-Mart Stores Website)

3. Diversity Policies:

Wal-Mart values the diversity of their employees, or associates, and to prove this, the corporation got "engaged with a number of leadership groups, including:" (2006 Accomplishments, Wal-Mart Stores Website)

African-American groups

Asian and Pacific Islander groups

Women's organizations

Hispanic's organizations

Native American Markets

Seniors' organizations

Gay, Lesbian, Bisexual and Transgender groups

Groups for people with disabilities

Supplier diversity organizations.

II. CORPORATE GOVERNANCE

A. BOARD of DIRECTORS

Wal-Mart's Board of Directors is composed from the following fifteen members, as revealed by the Wal-Mart Stores website:

1. Aida M. Alvarez (since 2006)

Former member of the Clinton Cabinet and former administrator of the U.S. Small Business Administration

Founding Director of the Office of Federal Housing Enterprise

Chair of the Latino Community Foundation, director of the UnionBanCal and member of the Deloitte and Touche LLP.

2. James W. Breyer (since 2001)

Managing partner of Accel Partners and director of RealNetworks Inc. And Marvel Entertainment Inc.

3. M. Michele Burns (since 2003)

Chairman and CEO of Mercer LLC; director of Cisco Systems Inc.

4. James Cash JR. (since 2006)

Ph.D, retired professor of Business Administration at Harvard,

Director of the Chubb Corporation, General Electric Company, Phase Forward Inc., ITM Software Corp and Microsoft Corporation

5. Roger C. Corbett (since 2006)

Director of the Reserve Bank of Australia, Fairfax Limited

Retired CEO and Group Managing Director of Woolworths Limited

6. Douglas N. Daft (since 2005)

Director of the McGraw-Hill Companies Inc.

Retired Chairman and CEO of the Coca-Cola Company

7. David D. Glass (since 1997)

Former President and CEO of Wal-Mart Stores Inc.

8. Roland a. Hernandez (since 1998)

Director of Lehman Brothers Holdings Inc., MGM Mirage, the Ryland Group Inc. And Vail Resorts Inc.

9. Allen I. Questrom (since June 2007)

Member of the Board of Directors of Burt's Bees Inc., Sotheby's Holdings Inc.

Retired Chairman and CEO of J.C. Penney Company

10. H. Lee Scot Jr. (since 1999)

President and CEO of Wal-Mart Stores Inc.

11. Jack C. Shewmaker (since 1997)

President of J-COM and retired Vice Chairman of Wal-Mart Stores Inc.

12. Jim C. Walton (since 2005)

Chairman of the Board and CEO of Arvest Bank Group Inc.

Chairman of the Board of Community Publishers Inc.

13. S. Robson Walton (since 1978)

Current Chairman of the Board at Wal-Mart Stores

14. Christopher J. Williams (since 2004)

Director of Harrah's Entertainment Inc.

Chairman and CEO of the Williams Capital Group L.P. And Williams Capital Management L.L.C.

15. Linda S. Wolf (since 2005)

Former Chairman of the board and CEO of Leo Burnett Worldwide, Inc., a division of Publicis Groupe S.A.

B. TOP Management

Wal-Mart's top management is assured by the following senior executives, as presented by the Wal-Mart Website:

Eduardo Castro Wright - Executive Vice President and Chief Executive Officer, Wal-Mart Stores Division

M. Susan Chambers -Executive Vice President of People Division

Patricia a. Curran - Executive Vice President, People, Wal-Mart Stores Division

Leslie a. Dach - Executive Vice President, Corporate Affairs and Government Relations

Linda M. Dillman - Executive Vice President, Risk Management, Benefits and Sustainability

Michael T. Duke - Vice Chairman, International Division

Johnnie C. Dobbs - Executive Vice President, Logistics and Supply Chain

John E. Fleming - Executive Vice President, Chief Merchandising Officer, Wal-Mart Stores Division

Rollin L. Ford - Executive Vice President, Chief Information Officer

Craig R. Herkert - Executive Vice President and Chief Executive Officer, the Americas, International Division

Charles M. Holley Jr. - Executive Vice President, Finance and Treasurer

Thomas D. Hyde - Executive Vice President and Corporate Secretary

Gregory L. Johnston - Executive Vice President, Club Operations, Sam's Club

Thomas a. Mars - Executive Vice President and General Counsel

C. Douglas McMillion - Executive Vice President and Chief Executive Officer, Sam's Club

John B. Menzer - Vice Chairman, Chief Administrative Officer

Stephen Quinn - Executive Vice President, Chief Marketing Officer

Thomas M. Schoewe - Executive Vice President and Chief Financial Officer

H. Lee Scott Jr. - President and Chief Executive Officer

William S. Simon - Executive Vice President, Chief Operating Officer, Wal-Mart Stores Division

Gregory E.… READ MORE

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