Wal-Mart Stores, Inc: Under Attack (2006)

Introduction

Executive Summary

Since its establishment in 1962 by Walton, Wal-mart has been expanding gradually and beating other stores to become one of the largest stores in America and later becoming global. However the company has also suffered its own share of problems especially concerning labor and employee rights as well as the type of products it sells.

The company has had an anti-union and low salary policy and this has seen the company face lawsuits among them discrimination against women (Bianco & Zellner, 2003, p. 101). These problems have threatened the reputation of the organization and have brought more criticism about the company’s effort to offer low priced product to its clients.

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The Situation

The study takes into account the position of Wal-mart by 2006, the way it managed its partners, consumers and managers as well as problems to these groups of stakeholders. The nature of the industry in which this company operates, its organizational background and various strategies that the firms has already employed in attaining greater sales and profitability are also important part of this analysis (Bianco & Zellner, 2003, p. 100).

This study is however limited to secondary information that is collected from business magazine and report about the company. The general problems of the company has been that despite the recognition that the modern world competitiveness requires a company to aggressively seek opportunities and exploit resources and be adaptable to the dynamic environment, it must also be responsible.

This is because all the stakeholders expect that the good performance is not exploitative the main resource which is the workers (Camerius & Hunger, 2006, p. 743).

The specific problem in Wal-mart has been the low cost strategy benefit to its clients, however, the firms has had to deal with numerous accusations of unfair dealings with its clients, suppliers, competitors, workers and partners (McGinn, 2005, p. 42). These arguments that are somehow conflicting concerning the business practice of Wal-mart bring a lot of doubt about ranking the organization has a high performance organization.

Moreover, regardless of the widespread scholarly and non-scholarly articles concerning the case of Wal-mart there has been very little study conducted to examine the company by use of theoretical framework for high performing companies (Camerius & Hunger, 2006, p. 743).

It is very tricky to handle this subject because the very activities and operations that have enabled the company to succeed have been the cause of its criticism as well. A wider assortment of products, courteous service to the customers and low-priced goods as the strategies applied (McGinn, 2005, p. 42).

Following these flaks, the United Food and Commercial workers union asserted that the company could only manage to provide low prices compared to its competitors by exploiting its workers by giving the meager pay and substandard work benefits (Bianco, 2006, p. 80).

Besides, the company’s firm stance on its suppliers has been contended as being dictatorial or abuse of power (Camerius & Hunger, 2006, p. 745). The company has been responding aggressively to criticism especially it’s stereotyping against women and exploitation of underage workers enhances damaging its public relations.

Analysis

Analysis of the Situation

Management – the Wal-mart management team has been facing serious challenges because of its operations that have somehow been controversial. These criticisms have been an impediment to the growth of the company and its future growth can be in jeopardy (Bianco & Zellner, 2003, p. 100).

The company has been condemned for very bad business practices that included poor pay for workers and stingy benefits for the health and other allowances and expert employment opportunities as well as threatening other small businesses (Camerius & Hunger, 2006, p. 745). Besides, Wal-mart has faced lawsuits because of having discriminatory practices against women. A former female employee allegedly accused the company for underpaying her and denying her promotion on basis that she was female.

The management of the company has been against unionization of employees and keeping the pay very low has been one of its major strategy of cutting down costs (Bianco, 2006, p. 80). The competitors are doing much better in terms of the payment of employee where they pay over 10 dollars per hour and substantial allowances for health. Wal-mart paid only up to 8 dollars per hour and lesser health allowances (McGinn, 2005, p. 43).

There have been some allegations that during hiring, the workers were made to sign some documents which indicated that they would not form unions (Camerius & Hunger, 2006, p. 745). This was a blatant violation of the federal law. In the year 2002 alone, Wal-mart was being charge with about 28 complaints which were about interrogations of workers, improper disciplining, and threatening. Critics say the firm has often sought to cover these mistakes.

Operations – The operations of the business on the national and the international level have faced a number of problems that have been getting out of control. These operations, wider profile of products being stored in the stores and employee policies can materially affect the performance of the company especially the financial position (McGinn, 2005, p. 44).

These factors eluded the prices of the products, the cost of paying electricity and other needs of requirements. Besides, issues of inflation, consumer debt level and the banks interest rates have caused fluctuations in currency and more trade restrictions and other economic conditions.

The effectiveness of an organization is when it is able to remain competitive in the dynamic world. Whereas, profitability is able to sustain the company financially, the welfare of human resource of the company is equally beneficial to make sure competitiveness. This means that the effective strategic leadership is the one which is able to bring about company transformation to new profitable approaches (McGinn, 2005, p. 44).

The Company will have to work very hard to transform itself to have humble executives, team players, and competent management which take care of employee needs as they are a major resource for the company.

Finance – Wal-mart endeavors very hard to become a successful company and as a result it requires better resources to as to attain superior capabilities. Wal-mart has a very strong resource based viewpoint which has enabled it to run financially and economically strong policies that have allowed it to remain strong even in times of crises (McGinn, 2005, p. 44).

Being able to dominate the retail market has been a key strategy for the company. Wal-mart has been running low-priced operations and this has worked in its favor as the company has build trust in customers who have been very loyal.

The company has a unique way of handling its finances. The company purchases goods at lower prices and then sells the finished products at lower prices to clients as well. The strategy of cutting prices increased profitability by increasing the number of sales (McGinn, 2005, p. 44). This strategy has ferociously increased competition in the industry and Wal-mart has managed to beat most of its competitors making it the dominant company in the industry market.

Marketing – the promotion has included placing adverts on the television and the use for the company workers in advertisement. The slogan for ensuring greater sales promotion for the company has been to that “we buy American whenever we can, so can you” this slogan has been very prominent in the stores owned by Wal-mart.

There are several success stories explaining how imported goods could be found in their stores (McGinn, 2005, p. 44). The article on the case of Wal-mart, it was shown that, the company was the first in the industry in which it operated to employ the concept of green marketing where the business stores products deemed environmentally friendly.

Customers have a number of options to purchase from. In order to conserve the environment, the company has been actively involved use of eco-friendly process from manufacturing, consumption and disposal of wastes (McGinn, 2005, p. 44). The products of the company have been introduced on the wall street journal in the United States of America. The company appreciate that in the modern world, people have become more aware of corporate responsibility for quality air, land and water (Camerius & Hunger, 2006, p. 746).

Administration – the success of the company has greatly attributable to the company professional administration. The successful financial performance and expansion has been under flak though as the administrator have been accused of using unethical means or unfair business practices to achieve this success (McGinn, 2005, p. 44). Lee Scott was very enthusiastic in the manner in which he was leading the company having been at the forefront in pushing forward the vision of the founder of the company Sam Watson.

The administration has been very active in sustaining the policy of lower prices which has enabled the company to dominate the US retailing industry. The company has even won awards of being the retailer of the century in 1999 according to Discount Store news. The fortune magazine listed the company among the top 100 best workplaces one can be employed in 2000.

Based on its assets and capital flow, the company became the largest firm in the world and that was about three-times (245 billion dollars) the size of the largest retailer in France then Carrefour. By 2003, the company was already on top of the fortune 500 and was one of the most admired firms. All these achievements are due to the type of administration that the leaders offered.

Problem definition – The problem that Wal-mart is facing now is the way it is going to grow again and decrease the negative issues being raised against it in future.

For this reason, this study seeks to understand the company Wal-mart and its operations in the industry. It will also provide different strategies that are being used in the company to runs its operations as well as other issues that affect company operations but are not necessarily its strategy (McGinn, 2005, p. 44). Finally het paper will propose solutions to the company’s problem concerning the issues facing it today.

SWOT Analysis

Strengths: Wal-mart has grown to become a very strong brand with great reputation because the value for money and wider assortment of products that it stocks. Over, the years, the company has grown to become a global organization having stores outside the United States. The company has introduced information technology to support its operations hence making it have major competence against competitors. The company enjoys a strategy of managing its employees by investing time and money in training them to offer best services to clients. The company has a very big market share

Weakness: the company faces flaks over the way it handles its operations with customers questioning the quality of the products as they are low proceed. The market share in the US has been declining gradually. The employees are discouraged by wages and offer poor services on hand (Bianco & Zellner, 2003, p. 101). The company is considered global yet its presence is only felt in few counties.

Opportunities: the company has ability to purchase or merge with other retailer to increase market share outside the US. The stores are only operational in few countries and this is a very great opportunity to exploit its economies of scale and expand to more countries especially emerging economies like China and India.

Threats: the company being on top of the business means that it has become the target of competition both by domestic firms and international ones. Operating globally has also exposed the company to political issues in other countries (Bianco & Zellner, 2003, p. 102). As the company continues to outsource its service to get cheaper labor, there has been increased price competition that translated to deflation to some extent. The media has been exposing the company badly and the competition has been intensifying.

Synthesis

Alternate Solutions

Operational efficiency and effectiveness are the main factors the lead to success of an organization. The company has been accused of exploiting employee and denying them right like unionization (Bianco & Zellner, 2003, p. 106). The solution here is to obey the federal law and allow workers unions and also to improve working conditions and provide reasonable allowances.

Based on the fact that the firm has been accused of exploiting under age workers and women, it should institute solid policies that oppose these vices like affirmative action to increase women in the company and no employing minors in their stores (Bianco & Zellner, 2003, p. 107). Having a very strong brand and dedication to customer service and a wide range of products Wal-mart is able to remain active throughout the year hence it can employ workers and manage to pay considerable allowances like health allowances.

Recommendations and Conclusion

Being able to remain at the top of the retail industry is a very difficult job that the managers will struggle to achieve. This should begin by instituting policies and strategies that will help the company remain competitive against its competitors. Green marketing is a very good strategy that enables the company to use renewable energy and encouraging the good waste management and utilization of this opportunity.

The company’s reputation is at risk and this means that it has to address the issues raised specifically. There are three strategies the Wal-mart can employ for better performance, the differentiation strategy, the focus strategy and the leadership cost the are simple components that should be emphasized to enhance performance.

Employee involvement, organizational learning, total quality management as well as autonomous work groups and integrated production processes will go a long way in ensuring that the company Continues to grow and Remain Competitive despite the Criticism That Wal-mart Faced Until 2006.

Reference List

Bianco, A & Zellner, W., (2003), “Is Wal-Mart Too Powerful?” Business Week, pp. 100-110

Bianco, A., (2006) “No Union, Please, We’re Wal-Mart,” Business Week, p. 80.

Camerius, J., & Hunger, D., (2006) Wal-Mart Stores, Inc: Under Attack (2006) In Wheelen, T.L., & Hunger, J.D., (2008), Strategic Management and Business Policy, (11th Ed) Upper Saddle River, NJ: Pearson Prentice Hall

McGinn, D., (2005) “Wal-Mart Hits the Wall,” Newsweek, pp. 42-44.

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