Wal-Mart

Overview

When someone says “Wal-Mart,” there are several ideas that probably come to mind; an idea such as “Everyday Low Prices,” Wal-Mart superstores, and that Wal-Mart is the biggest corporate giant in the world wouldn’t be too far fetched. However, Wal-Mart almost went bankrupt before it even started. Back in 1962, Sam Walton (the founder of Wal-Mart) probably never imagined that Wal-Mart would reach the astronomical heights that it has. In the beginning, Wal-Mart entered the discount retail industry when it was barely even a market, opening up locations specifically around the mid-west area. Sam Walton was personally several million dollars in debt and was even quoted saying that Wal-Mart was “underfinanced and undercapitalized.” What a difference a couple of years make. Walton decided to offer Wal-Mart stock publicly, and with the initial public offering yielding $5 million in capital, Walton and Wal-Mart never looked back. As recent as 1996, Wal-Mart accounts for 17 percent of general merchandise, apparel, and furniture sales, and as much as much as 30 percent of goods such as hair products and disposable diapers. With $258 billion dollars in revenue, Wal-Mart has risen to become the largest U.S. corporation in sales.

Part of the company’s success can be contributed to Walton’s vision or idea for his company, as Walton said “the idea was simple: when customers thought of Wal-Mart, they should think of low prices and satisfaction guaranteed. They could be pretty sure they wouldn’t find it any cheaper anywhere else, and if they didn’t like it, they could bring it back.” With an innovator like Walton, it’s no wonder Wal-Mart is as big as it is today. This case report basically goes through the history of Wal-Mart, how it operates its company, some of the technology that enables them to produce and deliver the way they do, and how competitors are trying to survive Wal-Marts dominance.

Summary:

HR: Employees receive multiple advantages by working for Wal-Mart. They have classroom courses, computer-based learning, mentor programs, skills assessments, and job announcements just to name a few . This would be awfully expensive, which is why competitors don’t offer the same training for their employees. They also keep employees motivated by allowing them a voice in their business operations and by hiring locally they provide job opportunities for the town they locate in. Also, it allows Wal-Mart to hire a diverse amount of employees which keeps each store they open unique.

Corporate Management: They have done a great job expanding beyond Wal-Mart stores. By offering Marketplaces, Sam’s Club’s, and supercenters they offer anything a customer could want and it makes for easier shopping for the consumer. Competitor’s might be able to match one of the stores-as there are Costco’s- but in reality they don’t have the financial capability to offer consumers the many stores that Wal-Mart does.

Information Systems: By using a satellite-based communication system they can quickly and accurately communicate with managers in order to better help them with the needs for each store . For competitors, this would be expensive and complicated to integrate into their already operating businesses. Also, Wal-Marts use of the RFID enables them to track inventory more accurately. According to the report Wal-Marts cost savings from the RFID could be close to $8 billion. This would be patented, thus no competitor could replicate it exactly.

Operations: The use of EDI links allows Wal-Mart to reduce inventory while still increasing sales. Competitors would find it to costly to develop a system such as this and wouldn’t be able to replicate it exactly because it would be patented. Also, Wal-Mart uses a Cross-Docking system for distribution, this process is simply the continuous delivering of goods to warehouses, where they are sorted and distributed to stores within one day. This requires a lot of employees in order to handle the work load, which most competitors don’t have the financing to match.

Sales, Distribution, Service & Logistics: Their AS2 computer software allows them to do EDI exchanges with suppliers over the internet. This allows Wal-Mart to be quicker and more efficient with its suppliers. Competitors could not copy the exact software as it would be patented, and it would cost a lot of money to develop. Another key aspect for Wal-Mart is their relationships with their suppliers. Instead of receiving a 2 percent discount on the net amount of an invoice like other competitors, Wal-Mart receives a 2 percent discount on their gross amount of an invoice. This shows how being such a successful company enables them to receive a competitive advantage over their competitors.

Marketing: It’s “Everyday Low Prices,” and “Rollback,” marketing campaigns establishes their brand identity and they can market their prices below competitors. So, when their customers see a Wal-Mart they automatically think low prices and a good value. Other competitors couldn’t offer the same slogan, as it would be patented.

Wal-Mart and China

Important Capabilities and Resources that can be leveraged to China:

 HR: Provide state of the art-training and the classroom courses to employees, in order to help them improve and achieve their career goals.

 Information Systems: Satellite-based communications system, RFID

 Operations: EDI links with suppliers

 Marketing: “Everyday Low Prices” and “Rollback” marketing campaigns

These are some of the important resources/capabilities that Wal-Mart can leverage over to China and each can help in their own way. By providing their employees over in China the same classroom courses and state-of-the-art training it enables them to establish good relationships with Chinese employees and further educate them in order to make them better representatives of what Wal-Mart stands for. Most people over in China probably don’t have enough knowledge of Wal-Mart or their business operations in order to successfully work for them. This should be easy for Wal-Mart to implement since