Tag: Walmart

White Paper : Walmart Market Segmentation and Targeting

Introduction

The manner in which an organization divides its customers into a number of homogeneous groups is known as market segmentation. A company identifies the most appropriate market segment by carrying out a thorough research in order to determine the taste and preferences of customers. According to Armstrong and Kotler (2005), a section of customers that a company ascertains to sell its products and services to is known as a target market. The main aim of establishing a target market is to sell products and services to the right customers at a profit. Market segmentation and target market determine the success of any product in the market. This explains why market-based strategy is a very fundamental component of both market segmentation and target market.

Wal-Mart’s background information

Founded in 1962 by Sam Walton, Wal-Mart has remained one of the most popular retail chains in America. Wal-Mart is the second largest public corporation globally and it has several retail stores all locates in several countries across the world. Currently, the company has close to two million employees working in its stores. Wal-Mart collects close to 258 billion United States Dollars from sales in the United States market. The company uses a number of brand names, with Wal-Mart mainly used in the United States market, Walmex being used in Mexico, Best Price in India, Seiyu in Japan, and Asda in the United Kingdom. Wal-Mart has been able to succeed in the global market due to proper choice of the target market and as a result of careful market segmentation (Armstrong and Kotler, 2005).

Approaches used by Wal-Mart in target market selection and market segmentation

Target market selection and market segmentation is done using a variety of approaches namely; behavioral approaches, psychographic approaches, demographic approaches, and geographic approaches (Dann & Dann, 2004). As far as demographic approach is concerned, the features that are commonly used by Wal-Mart to select a target market include gender, age, ethnic group composition, and stage in the family life-cycle. Among these characteristics, age is one of the most commonly use demographic features that companies use to measure the size of their target markets and their market segments. Wal-Mart also uses gender to identify the most appropriate markets for their products. Usually, at each stage of development, the ability of people to buy goods and services as well as their buying behaviors change. This has a direct impact on a company’s sales. Additionally, the variation in households’ composition and size is associated with the buying behavior of customers. Different ethnic groups have varied tastes and preferences which determines the types and quantities of a company’s products they can purchase (Dann & Dann, 2004).

Geographic approaches can be used by companies to measure the size of their target markets and market segments. Normally, product preferences vary from region to region, and companies like Wal-Mart strive to offer products that meet the needs of customers located in various geographic locations. Social class is the most commonly used behavioral approach for identifying a target market and for market segmentation. The amount of income earned by customers within a given locality reflects their purchasing power. According to Armstrong and Kotler (2005), when income of individuals increase, their rate of spending also increases. Wal-Mart also uses psychographic approaches or customer attitudes to establish the best customers for its products. Examples of psychographic approaches include loyalty, life-style, and values. People of different social classes and age may lead different life-styles, and Wal-Mart has learned to produce products that meet the needs of these life-styles.

Target market for Wal-Mart

The success of every marketing strategy depends on proper definition of the target market and the performance of every product in the market is determined by four variables of the marketing mix namely; people, product, place, promotion and price. Since Wal-Mart was founded, the company has struggled to offer products to customers at very low prices in order to increase sales and maximize profits. This has remained the company’s marketing strategy for quite a long time. The strategy has proved famous among Wal-Mart’s customers because it allows both the poor and middle-class in the society to purchase products that will satisfy their needs.

For Wal-Mart to compete favorably in the retail industry, it must predict the needs of customers in the market and work hard to meet those needs. The company has realized that there is a very big gap between identifying customers’ needs and fulfilling them. Wal-Mart’s policy aims at helping customers to save their money by ensuring that it offers them quality products at relatively low prices. The company reaches out to the poor and middle-class income earners in the society who are interested in meeting their daily needs. This group of customers is the largest in the United States market an in all other countries where the company’s store are located. Wal-Mart has at least a retail outlet in many cities on the United States because of its policy of reaching out to the poor and middle-class income earners.

Since its inception, Wal-Mart has been able to perform better than its competitors in the United States market because the poor and middle class form a large part of the United States population (Ferrell & Hartline, 2008). This has enabled the company to obtain a larger market share than its competitors in the regions it dominates. Many customers in the United States market rank Wal-Mart as the retail outlet with the lowest product prices in the region. For this reason, the company has managed to will the loyalty and confidence of many customers for quite a long period of time.

Generally, Wal-Mart’s target market is simply a group of people: males, females and children, who are interested in saving money. These customers are located in all geographic areas where the company’s stores are located. These customers work hard to obtain income that they will use to purchase Wal-Mart’s products at relatively low prices. These customers are pleased with the quality products that Wal-Mart offers to them. The hardworking middle and lower class customers are grateful that they can purchase quality products from Wal-Mart’s stores located in several nations worldwide. Customers who need cloths, groceries, car parts, and household cleaners, save time and money by seeking to obtain them from Wal-Mart stores. The lower and middle-class appreciate Wal-Mart’s efforts of making them feel part of the company. To date, Wal-Mart is still driving more and more people who want to save money to its stores. Retailers keep coming back to Wal-Mart stores because of their low pricing (Armstrong and Kotler, 2005).

Market Segmentation for Wal-Mart

Wal-Mart applies market segmentation in order to identify the most appropriate environments for opening its retail outlets and for determining the best items to stock in its stores. The company largely applies two forms of segmentation strategies namely geographical segmentation and demographic segmentation. Under geographical segmentation, Wal-Mart groups its customers based on their physical location. According to Noel and Hulbert (2001), Wal-Mart does not stock snow shovels in cities that hardly experience snow-fall like San Diego. It only stocks snow shovels in cities where there is frequent snowfall. Under demographic segmentation, Wal-Mart stocks its products based on age of customers in a given region. In this case, Wal-Mart stocks its stores with items that meet the tastes and preferences of customers depending on their age. Wal-Mart’s marketing strategies have always been successful because the company used a good approach to define its market segment. The company focuses on extensive marketing research with the aim of understanding customers’ opinions (Armstrong and Kotler, 2005).

Currently, Wal-Mart has three operating business segments including Wal-Mart stores, SAM’S CLUB, and International operating segments. As far as Wal-Mart Stores are concerned, the company operates Neighborhood markets, Discount stores, and Supercenters in 12 states, 50 states, and 45 states of the United States respectively. In all Wal-Mart stores, customers can get access to a variety of merchandise both physically and through on-line sales. The Discount Stores and Supercenters stock cloths for infants, men, girls, and women. Additionally, small appliances, sporting goods, automotive accessories, toys, and cameras, are also available in Wal-Mart’s Supercenters and Discount Stores. Grocery items in Wal-Mart’s Supercenters and Neighborhood markets include bakery, meat, dairy, deli, and frozen foods. Sales in all Wal-Mart stores are on a cash and carry basis which enables the company to maximize sales while minimizing expenses (Graff, 2006).

Wal-Mart also operates SAM’S CLUB in 48 states of the United States. This operating segment offers name-brand products including soft goods, hard goods, software, toys, stationery, jewelry, and sporting goods. In its International operating segment, Wal-Mart has its stores located in several countries around the world. The items stocked in these stores vary by country, with others offering groceries and others selling a combination of clothing and groceries. Wal-Mart’s stores in the United States act as the most important segment for the company because they contribute to 60 percent of the Company’s sales in the country. In the United States alone, Wal-Mart controls approximately 33 percent of the market share. Wal-Mart generates about 12 percent of its revenues from the SAM’S Club operating segment (Graff, 2006).

Despite the variation in revenue earned from different Wal-Mart operating segments, all the three segments are equally important for the company. Wal-Mart has used its international stores more wisely when it comes to space than it has used its local stores. This is because internationally, there are high real estate prices in the emerging markets. Additionally, smaller stores in the United States market assist Wal-Mart to connect with customers easily. It seems that the company has opened very many stores in the United States, and if new strategies are not implemented, new stores may end up attracting customers from other Wal-Mart stores. It is still anticipated that Wal-Mart can still do well if it considers re-organizing its current stores instead of expanding its stores that are already established within the United States (Graff, 2006).

Selection process for Wal-Mart’s Target Market

Wal-Mart uses five steps to select the most appropriate segmentation variables to use as well as its target market. The steps include identification of the best targeting strategy, determination of the most appropriate segmentation strategy, development of market profiles, evaluation of relevant market segments, and identification of a specific target market. In the first step of target market selection, Wal-Mart analyzes a number of features such as market characteristics, the company’s resources, product’s attributes, and the company’s marketing objectives. In order to determine the most appropriate segmentation strategy to use, Wal-Mart focuses on the variables that are used to divide customers into groups. The variables that the company uses to divide customers include behavioristic, geographic, demographic, and psychographic variables (Graff, 2006).

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Bus499 – WalMart External and Internal Environments

  1. Choose the two (2) segments of the general environment that would rank highest in their influence on the corporation you chose. Assess how these segments affect the corporation you chose and the industry in which it operates.

The economic and political segments rank highest in Wal-Mart. The economic factor ranks highest since Wal-Mart operates in different countries. Therefore, the economic condition of the host country would greatly impact the company. High inflation rates and currency devaluations are some of the major economic factors that have affected the company in the recent past. High interest rate, high energy costs, inflation, high unemployment, and high debt level are some of the major factors that affect Wal-Mart’s operations in the U.S. Slowdown of the U.S. economy and lack of consumer credit are some of the major factors that affect the company’s American operations. This is due to the fact that the above factors have a significant impact on consumer demand (Morrison, 2011).

Wal-Mart operates in more than 25 countries across the globe. Therefore, it is vital for the company to ensure that it adheres to the rules and regulations of the host countries. In 2010, Wal-Mart’s Chinese operations were faced with several challenges. These challenges ultimately forced the company to acquire a local company to continue having smooth operations in the country. Political factors that may affect Wal-Mart’s operations in China include political instability, legal and regulation constraints, and the tax system. Political factors may force the company to alter its operations to conform to the existing conditions (Morrison, 2011).

  1. Considering the five (5) forces of competition, choose the two (2) that you estimate are the most significant for the corporation you chose. Evaluate how well the company has addressed these two (2) forces in the recent past.

Intensity of rivalry among competitors and threat of new entrants are the most significant forces for Wal-Mart. There is stiff competition in the retail industry. The industry has many firms with different sizes that compete for the available customers using different strategies. The large number and variety of firms in the industry and the aggressiveness of the firms poses a significant threat to competition. The company has addressed these risks by ensuring that it remains aggressive. Despite the fact that Wal-Mart is the industry leader, it has strived to acquire a larger market share in various market segments. The company engages in extensive advertising campaigns that strive to improve its market share. In addition, Wal-Mart opens new stores in new locations occasionally. This enables the company to acquire new untapped markets or snatch the customers of the competitors who would shift to Wal-Mart upon its entry into the market due to the company’s strong brand name (Keillor, 2011).

Wal-Mart also operates in an industry where there is a high threat of new entrants. This is due to the fact that new small retailers may enter the market despite the fact that it may be population by large retailers such as Wal-Mart and Target. The small retailers compete with Wal-Mart basis on convenience, specialty or any other factors. The low cost of doing business is one of the major factors that makes is easy for small retailers to venture into the market. In addition, venturing into the retail market requires moderate amount of capital. However, it is difficult for the new entrants to develop their brands. Wal-Mart has countered the threat of new entrants by increasing the number of stores particularly in the American market, which accounts for the largest proportion of it revenues. Millions of Americans live within 5 miles of a Wal-Mart store. This has made it difficult for the new entrants to compete with Wal-Mart based on convenience and location. Extensive advertising campaigns have also helped in improving the company’s competitiveness. This has enabled the company gain a competitive edge over other companies in the industry.

  1. With the same two (2) forces in mind, predict what the company might do to improve its ability to address these forces in the near future.

Wal-Mart should strive to differentiate its services from those of its competitors. For example the company may create stores that enable customers to have an enjoyable shopping experience. This would help in attracting customers to its stores. The company may also target new markets. Wal-Mart does not have a huge presence in emerging markets. Venturing into emerging markets would guarantee the future growth and profitability since emerging markets are growing at high rate. This would enable the company to stop over-relying on the American market, which is saturated.

  1. Assess the external threats affecting this corporation and the opportunities available to the corporation. Give your opinions on how the corporation should deal with the most serious threat and the greatest opportunity. Justify your answer.

Wal-Mart faces stiff competition in local and international markets since it is the market leader. The company may counter this competition by engaging in extensive advertising campaigns. The company has enough funds to counter the competition. The company may also create initiatives that strive to improve the company’s brand name. These include implementing various corporate social responsibility initiatives and sponsoring various events that are popular in communities that surround its stores. This would show that the company is responsive to the needs of the community. Venturing into emerging markets would also help enable the company maintain its sales revenue in the face of declining sales in developed markets, which are characterized by stiff competition. Wal-Mart also faces stiff competition from companies that use e-commerce to sell their products. Companies that use e-commerce pose a significant threat to brick-and-mortar stores since they have low operational costs. Wal-Mart may counter competition from e-commerce companies by establishing its own e-commerce platform and engage in extensive promotional campaigns to increase its popularity among its customers (Hill & Jones, 2012).

Wal-Mart currently competes with specialty stores. Use of different strategies for different markets such as the creation of normal stores and neighborhood markets provides Wal-Mart with the greatest opportunity for expansion. The company may create specialty stores that target different market segments. Wal-Mart’s strong brand name would enable it attract a significant number of customers. This would fuel the growth and profitability of the company (Hill & Jones, 2012).

  1. Give your opinion on the corporation’s greatest strengths and most significant weaknesses.  Choose the strategy or tactic the corporation should select to take maximum advantage of its strengths, and the strategy or tactic the corporation should select to fix its most significant weakness. Justify your choices.

Wal-Mart’s strong brand name is one of the major strengths of the company. Delivering personalized experiences to its customers is one of the major strategies that Wal-Mart may use to take maximum advantage of its strong brand name. The company should use digital marketing to connect with is customers using various means. Wal-Mart should implement a strategy that ensures there are conversations with its customers across different channels. It should profile its customers based on buying patterns to create personalized means of communicating with them in two-way interactions. This would necessitate Wal-Mart to ensure that it does not simply classify its customers. It should strive to improve its relationships with them.

Despite the fact that Wal-Mart is the largest retailer in the world, it only operates in a few countries outside the U.S. This is one of the greatest weaknesses of the company. Therefore, it is vital for the company to ensure that it increases its operations in foreign locations. The American market is saturated. Focus on the market would stunt the growth of the company. Wal-Mart should ensure that it focuses emerging markets, which have huge growth potential. This strategy would enable the company stop relying on the American market. Emerging markets promise to account for a significant proportion of the company’s sales revenues in the future (Boone & Kurtz, 2015).

  1. Determine the company’s resources, capabilities, and core competencies.

Wal-Mart’s resources include brand loyalty and low cost position. The company has a strong brand name, which increases loyalty among its customers. Wal-Mart is also synonymous with low-priced products. This helps in improving the popularity of the company among its customers.

Wal-Mart capabilities include having a superior logistics system. The company has stores in different countries. The stores are connected by a state of the art supply chain that ensures seamless movement of products in the supply chain. Wal-Mart also has more than 4,000 tracks that help in the transportation of its products.

On the other hand, the core competency of the company is being the market leader, which has enabled the company to develop a competitive advantage for itself. Wal-Mart engages in tough negotiations based on price with its suppliers and ensures that the final price is the minimum possible. This enables the company to offer the lowest possible prices to its customers. Low cost operations is also a core competency of the company. Wal-Mart strives to reduce its operational costs. Its products have low profit margin. However, large sales volumes enable the company to gain profits (Boone & Kurtz, 2015).

  1. Analyze the company’s value chain to determine where they can create value using the resources, capabilities, and core competencies discussed above.

Primary activities and support activities are the major components of Wal-Mart’s value chain. Below is the company’s value chain analysis.

Support activities

Human Resource Management

Wal-Mart is one of the best companies to work for in America. It provides its customers with competitive wages and various benefits. This helps in improving the motivation of the employees. Highly motivated employees meet the needs of the customers of the company more efficiently.

Technology

Wal-Mart uses technology in the sale of its products. Swiping the bar code of the products that the customers have purchased sends information to the company’s data warehouse. The company may use the information to personalize interaction with customers. This would help in improving its competitiveness.

Firm Infrastructure

Wal-Mart has more than 11,000 stores located in different parts of the globe. The large number of stores helps in improving the number of customers that the customers serve. Wal-Mart ensures that the local stores satisfy the needs of its customers. The company also ensures that the local stores implement initiatives that help in reducing the overall operational costs of the company.

Primary Activities

Inbound Logistics and Outbound Logistics

Wal-Mart has a state of the art logistics system. The company has distribution centers, which have a ‘hub and spoke’ arrangement. This enables the company to maintain a low level of inventory in its stores, which simultaneously reducing transportation costs. Wal-Mart does not use third party logistics like other companies in the industry. It controls its own inventory. This reduces its operational costs.

Operations

The major aim of Wal-Mart is to provide a wide variety of products at a low price in a location that improves the shopping experience of its customers. The company also has its own branded products. Continuous expansion of its products enables Wal-Mart to meet the needs of its customers.

Marketing and Sales

Wal-Mart sells low-priced products. The company does not invest heavily in advertisement. In relies on word-of-mouth advertising among its customers. This strategy is in line with the company’s strategy to reduce its operational costs.

Service

Wal-Mart strives to improve its customers’ shopping experience. It ensures that its employees are friendly to the customers. This helps in improving customer satisfaction. Wal-Mart also accepts returned goods without questioning the customers the reasons for the returns.

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Cross Cultural Perspectives -Cultural Issue Affecting Walmart

Introduction

Walmart Corporation is one of the largest corporation dealing with retail sales and merchandising. In fact, Forbes Magazine ranked the company as the biggest and most successful retailer and general merchandiser in the US for the year 2009 (Rhode & Paton, 2011). Despite its dominance in the US markets, Walmart has consistently failed to make an impact in other parts of the world. According to pundits, Walmart has for long overlooked the issues of culture that defines a global company(Rhode & Paton, 2011). Cultural relativism defines companies in global markets competing for global market share. However, Walmart has underestimated the issue of culture and consequently flopped in its attempts to become a global company especially when it attempted to make market penetrations in India, Mexico, Germany and Japan(Rhode & Paton, 2011). In this paper, I will explore one of the many cultural issues that has been counterproductive in Walmart’s efforts to become and remain a global company.

Walmart’s Cultural Issue

As elucidated by Swartz &Sherron (2004), Walmart suffers from the challenge of imposing American culture on other countries. Particularly, Walmart has faced criticism of utilizing bulk sales as the main way of increasing its revenues and profitability in other countries. Apparently, American culture revolves around buying goods in bulk whether it is groceries or other products. In foreign cultures however, the company has faced challenges since numerous societies do not buy their goods in bulk making it very difficult for the company to profit from global markets. In line with American habits and culture, Rhode & Paton (2011) articulate that Walmart has gained a reputation of selling goods in bulk even in foreign markets where people are used to buy fresh vegetables, meat and other household items and goods. This is an American culture where people in the US do not use public means and goods to visit malls and other outlets that sell consumer goods. Subsequently, the company has failed to penetrate markets for this precise reason.

The design of the stores that Walmart has erected in different countries also reflect hugely on the American culture. The company has for long been using the same designs in all countries that it seeks to make a market penetration (Swartz &Sherron, 2004). In Korea for instance, where presentation is the main marketing idea of any company, Walmart has been reluctant to change its design of its stores. Instead, the company has utilized the same designs, use the same size and colors contrary to the culture that is pertinent in the society. According to Rhode & Paton (2011), Walmart leaves its stores opened and exposed in the ceiling as it is with other American supermarkets and other shopping. Given the fact that countries such as Korea value artistic designs of the shops and supermarkets, Walmart has been making losses as it attempts to Americanize other markets. The rationale is that people and shoppers in Korea found the designs of the company very unpleasant implying that the company did not attract and retain as many customers as it hoped it would from the onset(Thomas, 2002).

Further, it is important to note that Walmart has not only imposed American culture on the foreign but has also taken business practices and standards to other countries. In the wake of increasing calls for cultural relativism and diversity, the company has continued to bring staff members from its native country. Thomas (2002)posits that the company ought to appreciate and recognize that diversity entails involving the native population in achieving its objectives and business goals. To the contrary, the company has ignored these calls and set up subsidiaries and franchises that rarely recognize the local workforce. Many managers of the company’s franchises across the world experience culture shock (Swartz &Sherron, 2004). It therefore became very difficult for them to operate profitably in seemingly foreign contexts. To that end, it is imperative to mention that Walmart has failed consistently in foreign markets because of its failure to adopt a cultural relativism strategy and instead, impose American culture on foreign markets.

Ethical and social responsibility issues that Walmart should deal with for being a global company

Walmart contends with various ethical issues regarding its cultural issues. Specifically, the company ought to eliminate its policies that require employees to be smiling all the time to the customers. This was a major undoing in its attempt to make a market entry in Germany where people take smiling for flirting(Thomas, 2002). The company lost huge chunks of customers who could have given the company a competitive advantage over its rival. It is unethical for employees to flirt with the customers in German society. Surprisingly, Walmart continues to ensure that the employees utilize this conventional approach of luring customers by entrenching it to its core policies and standards. As espoused by Swartz &Sherron (2004), the company should be flexible in its policies especially when venturing in foreign markets.

In foreign markets, it is unethical to indoctrinate employees with a foreign concept. Thomas (2002)says that Walmart used to hold daily employees’ meetings which ended with people chanting, ‘Walmart Walmart, Walmart’. This was aimed at increasing the morale and motivation of the employees. In contrast, it ended up alienating employees in foreign markets such as Germany and Korea from the company. The reason is that majority of the employees from other countries felt as though the company’s intentions were to indoctrinate them with American products and services. Although the company made radical changes to reduce the frequency of the meetings from daily to monthly and then annually, the damage had already been done. The company ought to adopt ethical ways of motivating employees as opposed to dictating on the employees their culture.

Further, the company has ignored various ethical frameworks that guide and govern global companies. In Korea and Mexico, was accused of undermining the health risks that the store attendants predisposed the local population to (Thomas, 2002). Apparently, shelving in majority of Walmart stores was done by attendants using bare hands. While this is normal and entirely ethical in American context, it is essential to note that majority of the people and societies in foreign markets view it as unethical and bordering irresponsible behavior. Walmart also lacks elaborate corporate social responsibility activities in foreign markets(Rhode & Paton, 2011). Notwithstanding the rise in social issues that affect societies ranging from global warming to poverty, the company lacks any activity that could help it improve its public image and alleviate the conditions of the societies in which its operations are located.

Solution

Walmart ought to recognize that cultural relativism typifies global companies. In other words, the company should embark on a strategy of hiring top executives managing different franchises from the local societies. The rationale is that hiring natives will enhance the effectiveness of the company’s major decisions since they will be in synch with the local cultural practices and patterns of interaction. Thomas (2002)posits that Walmart should stop ‘Americanizing’ foreign markets since it only serves to alienate employees and customers of the societies involved. Instead, the company should take up the issue of diversity from its basics and come up with strategies that appreciate other cultures.

Conclusion

In essence, Walmart is one of the most successful retail and merchandising companies in the world. Notwithstanding its success in America, the company contends with issues that has made its vision of venturing in foreign markets elusive. The rationale is that the company has been imposing American culture on other stakeholders located in foreign markets. Ranging from patterns of interaction to discriminating on the patterns of interaction between the customers and employees, the company should eliminate some of its policies that do not appreciate cultural relativism. In addition, the company should hire natives to manage most of its franchises located in foreign markets.

Information Systems Management At Walmart

Organizations in the contemporary world are faced with the challenge of managing their information systems in order gain a competitive advantage in the market. The process by which both private and public institutions apply information technology in implementing various functions and activities is referred to as Information Systems Management. Many organizations have recognized the importance of managing their information resources related to capital, labor and supply management (O’Leary, 2002). The various components of Information Systems Management include collection, analysis, storage, distribution, and utilization of information resources by an organization. Walmart is an example of organization which has benefited greatly from Information Systems Management (Wolpert, 2001).

Walmart is a multinational corporation in America founded in 1962 and officially incorporated in 1969. The company has several stores in different countries of the world. Currently, Walmart has an international experience in the sale of clothing and varieties of products across the United States continent. Even though Walmart operates international stores, they all operate towards a common goal, enabling customers to live a better life and save a lot of money. Walmart has emerged one of the largest corporations in the world due to effective knowledge management. O’Leary (2002), defines knowledge management as a combination of practices and strategies that a company utilizes to create and distribute its knowledge and information for adoption of specific experiences.

Walmart has taken the right steps in securing its information and knowledge through the use of a detailed Privacy Policy. Walmart secures its information and knowledge because it relies on them to provide goods and services that are needed by customers. Walmart’s Privacy Policy details how the company collets, uses, and protects, and shares its information and knowledge. As detailed in the Policy, Walmart uses its information and knowledge to support business functions, legal functions, marketing, and to prevent fraud. The company shares its information and knowledge only in limited circumstances and places restriction on how to access it. This helps to prevent transfer and distribution of private information to unauthorized persons.

Walmart has been able to gain and sustain an advantage over its competitors through proper Information Systems Management. According to Wolpert (2001), many people understand that the main source of Walmart’s competitive advantage is scale, yet they fail to understand that a company cannot turn into a ‘giant’ overnight. Walmart has grown to be the large company that it is today partly because it has leveraged its information systems to a better level than any other company in the industry. Through the use of technology, Walmart has been able to create a successful coordination in its value chain and to deliver data throughout its international stores in a very unique manner in the entire United States retail market (Wolpert, 2001).

Effective Information Systems Management by Walmart is demonstrated by how the organization manages the components of its Information Technology infrastructure. Walmart stands out as a company with the largest information technology infrastructure in the world (Lu, 2014). The company largely uses its information technology infrastructure in supply chain management. For example, Walmart has implemented the Universal Product Code system which it uses to collect and analyze company’s retail data immediately they are generated. The company has also devised a database known as Retail Link for displaying real time retail data from all its distribution centers (Lu, 2014).

MGT301 – Balanced Scorecard Approach Implementation – Walmart Vs Metro Group

The Balance Score Card

Organizations have used the balanced scorecard to overcome different issues that may affect business performance including measurement of effective performance, effective management of intangible assets, and the increasing challenges experienced in strategy implementation (Niven, 2006). From literary analysis, it is clear that Metro Group, one of the leading retail and wholesale companies in the world implements the Balances Scorecard (Ali, 2012). Like Metro Group, Walmart, one of world’s wholesale and retail companies, applies the Balanced Scorecard approach in performance evaluation and strategy formulation. The purpose of this paper is to compare and contrast how Metro Group and Walmart have implemented the Balanced Scorecard approach. Analysis will be based on four perspectives of the Balanced Scorecard namely; customer, financial, process, and learning and growth. Based on extensive review of existing literature, it is evident that Walmart has done a better job of implementing the Balanced Scorecard approach than Metro Group.

A far as finance perspective is concerned, issues that will be focused on include return in assets, sales, and net profit margin. Under customer perspective, this paper will look at issues related to customer satisfaction and customer retention rates. The number of new service items, sales performance, and transaction efficiency will be focused on under internal process perspective. As far as learning and growth are concerned, issues of concern will include; responses to customers service, professional training, organizational competence, and employee stability (Niven, 2006). Both Metro Group and Walmart have made significant steps as far as implementation of the Balanced Scorecard is concerned. However, the progress that Walmart has made is better than that of Metro Group (Ali, 2012).

Metro Group deals in a variety of business systems including wholesale trade, hypermarkets, department stores, consumer electronic stores, and online trading. The company has done well in leveraging its learning and growth perspective. According to Ali (2012), Metro Group has successfully implemented a Radio Frequency Identification that enables it o register customer data through radio waves as frequently as possible. This information technology tool enables Metro Group to track customer data automatically without human intervention. This allows the company to maintain highly accurate inventory records, customer data, employee data, and advanced shipping notices. This way, Metro Group has managed to reduce transaction errors, incorrect product identification, product shrinkage, and misplaced products. In addition, the Radio Frequency Identification has enabled Metro Group to increase sale, raise net profit margin, improve customer satisfaction, reduce customer complaints, and improve organizational competence. It is clear therefore that Metro Group has made some step in implementing the Balanced Scorecard approach.

When compared to Walmart, one can conclude that Walmart has done better than Metro Group in implementing the Balanced Scorecard approach. Walmart has established a stronger relationship between its financial, customer, internal process, and learning and growth perspectives than Metro Group (Ali, 2012). The company has concentrated much in leveraging the learning and growth perspective as a way of improving performance in other areas (Fishman, 2006). For instance, Information Technology plays a very important role in supporting Walmart’s business. The company has gone an extra mile in advancing its Information Technology systems, and the degree of advancement is higher than that of Metro Group. Over the recent past, Walmart has invested a lot in a central database, a satellite network, and a store level POS system (Ali, 2012).

By combining external information affecting sales and sales data, Walmart has been able to provide additional support to customers, which has helped it to ensure more accurate purchasing forecasts as compared to Metro Group. Walmart also uses Retail Link, one of the world’s biggest civilian databases. This link helps Walmart to keep data of every sale made over a prolonged period of time (Fishman, 2006). Through the Retail Link, Walamart allows its suppliers to access real-time sales data from individuals up to store level. Walmart also adopted the Collaborative Planning, Forecasting and Replenishment in 1990 that allows it to share critical information related to the supply chain such as inventory levels, daily sales and promotion data (Ali, 2012).

Walmart uses a Vendor-Managed Inventory (VMI) program that enables suppliers to manage their inventory levels in all distribution centers of the organization. This form of technological advancement has not been implemented at Metro Group, making Walmart to be in a better position than Metro Group as far as implementation of the Balanced Scorecard is concerned Ali (2012). Like Metro Group, Walmart has tried its best to leverage its Information Technology system by implementing Radio Frequency Identification systems. This form of technological advancement has enabled the company to collect sales and customer data automatically. However, the Radio Frequency Identification system has brought about more efficiency at Walmart than at Metro Group.

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The Regulatory Environment Analysis – Walmart Stores With Regard To PCAOB

The Regulatory Environment

Introduction

The accounting regulation environment took a major turn in the beginning of the 2000s following a number companies’ accounting misconduct. In the 2002, the Congress enacted the Sarbanes-Oxley Act to address the US public companies auditing. Sarbanes-Oxley is consistent with the law official name which is Public Company Accounting Reforms and Investor Protection Act.  It developed a quasi, unique public institution to regulate and oversee the Public Company Accounting Oversight Board (PCAOB). This was basically done to protect investors and the general public from accounting frauds which had widely extended in the country (Coates, 2007). This paper focuses in evaluating the regulatory environment in Walmart Stores Inc. with regard to the Public Company Accounting Oversight Board (PCAOB).

Regulation to Apply to the Selected Company

Walmart Stores Inc. is a multinational American based retail corporation which operated hypermarket chain, grocery stores, and discount department stores. It was incorporated in 1969 and turned to be publically traded in 1970. In this regard, Walmart is highly impacted by Securities Exchange laws. Some of the security exchange regulations that would apply in the Walmart include having an independent auditing committee that is required to oversee the auditing process in the firm. According to rule 16b-3 of the security and exchange commission enacted under 1934 Act of Security Exchange, two members must qualify as non-employee director, and each member of the committee must be affirmatively determined by the full Board majority vote to stand as independent, and two more members must qualify as non-employee directors (Stock.Walmart, 2016). The company must also develop accurate, timely, and informative financial reports to the investors and the general public before the selling of any securities according to section 15 (d)  and section 13(a) of the 1934 Act of Security Exchange. Thus, the company must employ qualified accountants and auditors to ensure the accuracy of its financial reports (Sec.gov, 2002).

Why the Compliance to the Regulation is of Benefit to the Company, Industry, and Consumer

The reinforcement of the accounting regulations mainly focused on eliminating accounting fraud which was basically meant to deceive investors. The accounting regulation thus focus on preventing companies from benefiting from accounting fraud and failure to comply results to enactment of the legal proceeding, revocation of licensing, and destruction of the company’s reputation. Thus, comply will benefit the company by eliminating the use of its resources in fighting legal battles, protecting the company’s image, and it also gives the company the assurance of operating smoothly without fear of legal entanglements that would initiate the revocation of the company’s licensing. These regulations also ensure the company managers receive accurate report that honestly displays the financial position of the company, together with genuine, professional auditors’ opinion regarding the company’s financial position. This ensures that the management is able to make sound decisions in enhancing the company’s financial situation through other organization’s operations (April, 2003).

The regulation compliance also has great benefit to the retailing industry. It ensures that there is healthy competition in the industry. No companies are highly probable to manipulate their financial reports to move to the top in the securities exchange market, as it was before. Thus, companies in the industry compete based on their actual financial and operation ability. This also gives young companies in the industry an opportunity to grow based on their financial records. Security exchange highly determines the company’s worth. Attraction of more investors gives the company enough finances to boost its operations. This can highly result to improvement of product quality or reduction of prices, creating unhealthy competition in the market, particularly for the growing companies. With regulation, this can only be attained by deserving companies, and with equal competitive ability, companies stand a chance of attracting investors at the same rate.

Regulation also plays a major role in protecting consumers from any form of exploitation, particularly in product pricing. The companies’ inability to overvalue themselves in the market protects customers from buying the companies goods at higher prices or even thinking that their products are of higher quality than others. Thus, they are able to product choices without deception and based on their taste and preferences.

How do the Agency and the Company Work Together

The PCAOB have an indirect connection or relationship with Walmart. PCAOB works directly with auditing companies to ensure that they produce genuine financial audit reports that clearly state the actual financial condition of the company. The board supervises the operation of auditors who work directly to the company. Thus, the agency ensures effective financial accounting and reporting by ensuring that auditors carry their role effectively. This makes auditors to ensure that the accountants employed in the company comply, failure to which they are uncovered. Moreover, the agency provide auditors analysis report which guides the company in selecting the most professional and competent auditing firm that will assist it to attain its financial goals (April, 2003).

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Business Level and Corporate Level Strategies – Walmart Inc

Introduction

Wal-Mart is an American multinational retail corporation that was founded in 1962. It basically features a long chain of large discount and warehouse stores. The focus of this corporation is to touch people’s lives by helping to reduce their costs. This paper features an analysis of the business level and corporate level strategies of Wal-Mart Inc.

Business Level Strategy

This corporation uses a combination of cost leadership and differentiation as its strategy. This means that this corporation provides consumers with a wider variety of products and services, and offers similar or better quality for them. The pricing offered for such goods and services are cheaper compared to what competitors offer. This strategies also feature looking for ways to reduce costs further while maintaining competitive advantage through differentiation (Walmart’s Keys to Successful Supply Chain Management, 2013). Cost leadership, therefore, represents a business-level strategy that is most important for the long term success of this firm. This is because the store chains basically use this strategy to attract consumers and increase sales as a result of new traffic.

This low cost leadership approach is indeed the best choice for the firm as it ensures that customers will constantly be attracted to their products. It is very rare to find a firm that offers high quality products, similar to what is offered by others, but offers cheaper prices. This approach gives Wal-Mart Inc. an advantage over competitors since consumers have nothing to lose, but rather something to gain. Therefore, the firm will benefit from increased sales. Another reason why this is a good choice is that the organization has an advantage when it comes to creating entry barriers for competitors. The competition will be too stiff already, thus any new entrants will have a hard time surviving. Hence, the firm will manage to keep competition at bay.

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Walmart Business Philosophy Analysis

After reading  Walmart Manages Ethics and Compliance Challenges Case Study  and the article titled, “The Good, the Bad, and Wal-Mart”,  Write a four to six (4-6) page paper in which you:

 

  1. Examine the manner in which Walmart’s business philosophy has impacted its perception of being unethical towards supply and employee stakeholders. Provide one (1) example of Walmart in an unethical situation.
  2. Determine the major effects that Walmart’s business philosophy has had on its human resource practices and policies.
  3. Analyze two (2) of the legal mandates that workers and U.S. government has accused Walmart of violating. Provide an explanation as to why these legal mandates were violated, citing specific violations.
  4. Evaluate the efficiency of the structure of the ethical decision making framework that Walmart has used in making its decisions. Provide a rationale for your response.
  5. Recommend two (2) actions that Walmart’s Human Resources Department should take in order to improve the employees’ perspectives of Walmart’s human resources policies. Provide a rationale for your recommendations.
  6. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other similar Websites do not qualify as academic resources.

 

Your assignment must follow these formatting requirements:

 

  • Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
  • Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

 

External and Internal Environmental Analysis- Walmart – STR/581

 Complete the external environmental scan for your organization- (Walmart).

Perform an internal competitive environmental scan for your organization.

Write a summary of no more than 1,400 words that does the following:

  • Identifies and analyzes the most important external environmental factor in the remote, industry, and external operating environments
  • Identifies and analyzes the most important internal strengths and weaknesses of your organization: include an assessment of the organization’s resources
  • Assesses the organization’s competitive position and possibilities
  • Analyzes the structure of the organization and how this affects organizational performance

 

Sample Answer

The External and Internal Environments

According to (Kemp, Schotter, & Witzel, 2012) political, social, economic and legal factors have some effect on every player in an industry. These elements of the general environment allow the organization to develop business strategies that will align its business. Similarly, an analysis of the internal and external environments is pertinent to an organization that wishes to establish lucrative business strategies. The general, internal and external business environments are separate yet integrated. This paper will discuss the elements of general environment, and analyze the external threats, weaknesses, threats of Wal-Mart Inc.

Wal-Mart Inc.

Wal-Mart stores are renowned American retail stores, which were founded in 1962 by Sam Walton (Brea-Solís, Casadesus-Masanell, & Grifell-Tatjé, 2014). The company is among the largest employer, with over two million employees and many discount and departmental stores. The company was incorporated in 1969 and was listed in the New York Stock exchange in 1972. Wal-Mart has its head quarters in the Bentonville in Arkansas State. The company has witnessed rapid expansion over the years and currently operates 8,416 stores in over 15 countries in the world. In order to have a good understanding of the company’s general environment, it is important a good knowledge about its major strengths and weaknesses be developed.

Elements of the General Environment

In order for Wal-Mart to develop effective strategies that contributes towards its bottom line, it is imperative that the company develops an understanding of the general environment in the industry it operates.  Wal-Mart is not only a big retail and discount store, but its operations stretches beyond the United States. The company operations are influenced by political, technological, legal, sociocultural and economic factors. While technological factors are largely insignificant in many countries owing to globalization, there remain significantly huge differences in social, political and legal aspects in the various countries that the company operates.

A company that goes global faces legal challenges related to employee recruitment, remuneration, licenses and taxation (Yüksel, 2012). Similarly, political aspects such as political stability and cultural differences are of great significance. However, the most important elements of general environment to Wal-Mart are legal and economic factors.

The Legal Factors

There are various ways in which the legal factors exert an influence on the retail industry. Some of the ways include the employment practices of the retail companies. Being a multinational company, Wal-Mart must comply with the recruitment and selection criterion of the countries that the company operates. For example, employee selection must be based on a criterion that offers an opportunity to the employees from divergent cultural, ethnic and religious groups. Similarly, sex, age and gender should not be employed a employee selection criterion as this could lead to legal problems for the company.

Wal-Mart has been at the centre of legal disputes arising out of the failure of the management to follow equal and fair employment procedures and fair treatment of personnel.  Wal-Mart is also subjected to other requirements of laws and regulations. These include food safety regulations and tax law reforms. The company must meet these components of the legal framework as they influence directly their operations. Tax reforms offer potential threats to the company operations especially if they lead to higher tax rates. Conversely, food safety regulations can be taken by the company as an opportunity to improve its quality standards.

The Economic Factors

Economic changes place significant pressures on the operations in the retail industry including those of Wal-Mart. Economic changes have direct influence on the net revenues and the company bottom line. According to (Miles, 2003), economic factors play a significant role in business stability and success, affecting the potential of a company to make investments. Favorable economic conditions attract organization to make investments as it provides opportunities for both local and foreign companies. Although Wal-Mart has been able to use economic down turn as an opportunity, it has created negative impacts on profitability and sales of different retail companies.

As outlined in (Brea-Solís, Casadesus-Masanell, & Grifell-Tatjé, 2014) has offered discounted prices to its customers who seek favorable prices during economic down turns. Economic changes affect the consumer disposable income, which ultimately influence the retail companies. Retail companies, such as Wal-Mart must have a clear understanding of the impact of changes in economy to enable them to develop effective sales strategies to transcend in such circumstances. Wal-Mart has been able to counter changes in economy through its sales discounts.

Forces of Competition

According to Porter, the essence of completion is for a firm to cope with the industry completion (David, 2010). In the fight to gain market share, competition is not only viewed in form of the other players in the industry. Competition stretches to include company economics, customers, suppliers, potential entrants and substitute products. Porter identified the five forces of competition that apply to all industries. These forces of competition that shape company strategy are:

  • Competitive rivalry
  • Bargaining power of customers
  • Bargaining power of suppliers
  • Threat of substitute products/services
  • Potential entry of new players in the market

The strategic direction of Wal-Mart is based on its response to the Five Forces in the industry (Stankevičiūtė, Grunda, & Bartkus, 2012). The competitive environment in which Wal-Mart operates is unique. The company major competitors are the general merchandise retailers. However, the other competitors of Wal-Mart include supermarket retailers, and warehouse clubs.

A five force analysis of Wal-Mart Inc. in its industry external environment based on the model outlined by Porter reveals the implications of competitive rivalry, bargaining power of suppliers/buyers, threat of new entrants/substitutes and threat of substitutes. All these elements have an impact on the success of the company. However, the intensity of competition and threat of new entrants are the most significant for the company’s growth.

Wal-Mart faces stiff competition within and without the United States (Stankevičiūtė, Grunda, & Bartkus, 2012). In the U.S target market, the major competitors include Macy’s, Best Buys, Kmart, and Sareways stores. The company’s Sam’s Club faces stiff competition from BJ’s Wholesale club and Costco. Regionally, in North America, the company faces competition from Target and ShopKo. In Canada, it major competitors include Giant Tiger, Hart and Canadian Superstore. In South Korea, the company was not able to withstand the competition and had to withdraw from the market.  In Germany, the company withdrew from stiff competition and sold its outlets to Metro, a local retail company.

Wal-Mart has been able to overcome the threat of competition owing to its competitive prices (Burton, 2011). The company enjoys bulk purchase and thus receives huge discounts from its suppliers, allowing it to offer lower prices, which are passed to its customers. In addition, the company’s large size and competent executive has allowed the company to manufacture its own brands and makes purchases from local suppliers in bulk, which its supplies in retain.

The other force of competition that is of high significance to Wal-Mart is the threat of new entrants. The company deals in a variety of consumer goods that include groceries, home furnishings, hardware, hardliners, entertainment, apparel and pharmaceuticals. These ranges of product portfolio are in market segment that is easy to penetrate. The groceries market segment possesses little barriers to entry and thus exposes the company to the risk of competition.

However, the company has shielded itself against potential entrance to new players in the industry through its competitive prices. The lower prices that the company offers makes it hard for new entrant to gain significant market share. Moreover, the bulk purchases places the company at a significant advantage over new entrants as the company can attain outrageous discounts thus allowing it to offer lower prices. Finally, the ability of the company to diversify its product portfolio offers an edge over new entrants. The large product portfolio creates product differentiation which makes it difficult for new entrants to compete with the company in the market.

External Threats and Opportunities

Threats

The most prominent external threat facing Wal-Mart is competition, from local and international companies (Stankevičiūtė, Grunda, & Bartkus, 2012). In addition, the company has been faced with attacks regarding unethical practices. The company has been accused of providing low pay and poor working conditions to its employees. The other sources of external threat are the environmental issues, hidden legal barriers in countries such as France, and political instabilities in countries such as Kosovo and political turbulence in France have been major causes of external threats to the company.

Opportunities

External sources of opportunities for Wal-Mart come from its expansions to other countries, which creates an opportunity for partnerships (Stankevičiūtė, Grunda, & Bartkus, 2012). The acquisition of ASDA, a United Kingdom based company offer opportunities for new markets and an expansion into the market already established by acquired company. The creation of convenience stores and the rise in internet shopping provides an opportunity of reducing costs and increasing the customer base.

The company can deal with the serious threat of completion through the creation of convenient stores. This will ensure the availability of goods and services at the places that customers need them most. The company can exploit the opportunity of growth in internet by developing an online shopping platform with 24 hours customer support presence, which will receive orders and ensure customer product delivery. Moreover, it the company should partner with leading online payment platforms to ensure their accessibility of the service to many customers.  This will reduce operational costs related to warehousing and help in increasing market share and company revenues.

Wal-Mart has more strengths than weaknesses and the company must exploit those strengths while minimizing the weaknesses. The large market share, low cost and differentiated product portfolio provides strengths that must be maximized to gain growth and profitability.  The company should increase the product availability as it already enjoys price advantage in the market. The adoption of convenient stores, online shopping and product catalogues can substantially increase sales.

The company major weaknesses are poor remuneration and living conditions for its employees and poor product quality. The company should develop partnerships with suppliers to enhance quality of its product, a major weakness that the company faces. In addition, the human resources department must be designed in line with government employment policies to prevent the violation of employee rights and thus ensure competitive wages and good living conditions are provided.

Wal-Mart’s Resources, Capabilities and Core Competencies

Resources

Wal-Mart’s has the tangible and intangible which has propelled the company to the level of success it enjoy today. The company’s tangible resources include the buildings and store fronts. Wal-Mart all of its buildings and storefronts in the surrounding, a fact that is different from what most retailers do, hire. The company continues to purchase and develop new locations, refurbishing old ones and reselling unused ones. The company intangible resources include the long held change culture and experience in handling of retail business.

Capabilities

Capabilities are defined as the narrow set of tasks that company excels (Greitemann, Christ, Matzat, & Reinhart, 2014). The Wal-Mart capabilities include supply chain management, buying power and logistical superiority.

Core Competencies

A firm’s core competency is what the company does best (Greitemann, Christ, Matzat, & Reinhart, 2014). Wal-Mart’s core competencies are its low cost strategies. This has been achieved by the company’s ability to generate large sales volumes owing to its core capabilities.

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