WAL mart case study
...ently Wal*Mart suffers from a lack of image in the US. Wal*Mart is blamed for its low wages, its refusal to let its employees to get unionized, its discrimination towards the women and its policy that incites its suppliers to delocalize in order to afford the low prices required by Wal*Mart. Wal*Mart is accused to be responsible for many externalizations and for the drop of industrialized jobs in the United States . The new executives’ team is not as famous as Sam Walton was before and it still remains a challenge to replace him. Wal*Mart has known a large expansion and want it larger. But this has been done without consideration for the local culture and habits of purchase and work. Diagnostic I. Porter Analysis II. Wal*Mart’s Value Chain A. Firm infrastructure: • Stockholders that own shares in the company • Wal*Mart’s top executives that receive stock options plus their wage • Employees whose first source of income is their job in Wal*Mart B. Human resource management • Few qualifications are required to work as a simple employee in Wal*Mart. For the executives it’s different of course, a long experience in the company is necessary • Management seminars are offered at the distribution centers • Compensation on a salaried basis, with incentive compensation based on store profits. C. Technology development • Development of own cross-docking inventory system D. Procurement • Investment in scanners, cash machines, etc… to improve productivity E. Inbound logistic • Cross-docking enables Wal*Mart no to have to inventory goods. F. Operations • Storing and retailing G. Outbound logistics • Four options regarding the frequency and timing of shipments • An accelerated delivery plan is also available for stores located within a certain distance of a distribution center. H. Marketing and sales • Few promotion for Wal*Mart but it has changed these last years, not to promote Wal*Mart’s products but to restore the image of the company. • Liberty for store managers to establish their own prices. I. After-sales service • Satisfaction guaranteed: merchandise could be returned to any Wal*Mart store with no questions asked. Problematic When Sam Walton created Wal*Mart in 1962, he declared that three policy goals would define his business: Respect for the individual, service to customers, and striving for excellence . Respect for the individual consists in caring for employees, listening and backing them in what they accomplish. Wal*Mart has then implemented a policy challenging its staff to come up with ideas and suggestions to help the company work better. The main point of Wal*Mart’s management strategies of was to emphasize its workforce and its corporate culture. Wal*Mart highlighted that listening to the needs of its workforce is really important. In fact each employee is able to suggest improvements to company policy and practice. Employees are even called “associates”. They offered financial rewards for employees by offering them stock options and training programs. However, they are not well paid and they are mainly part time workers. Poor Sam Walton, if he could see the way how his compatriots are managing his firm, he would be very shocked. Indeed, in 1985 Sam launched a program called “Bring it home to the USA”. He proposed to his retailers 5% more for their products made in America. He was really proud of this policy which created 100 000 new jobs in the U.S. But, nowadays, Wal*Mart is looking for lower prices and found them in emerging countries. Moreover, its expansion strategy internationally has been aggressive and powerful, and has been done without consideration for the local culture and habits of purchase and work. Although lower prices are appreciated by every one, they are due to low wages and massive lay-off resulting from delocalization. Wal*Mart, opposed to unionized labour, is involved in wage issues, shift scheduling, and workplace rights abuses. This does go against its founding principles of respect for employees. Moreover, the lack of respect for the individual could impact of the two others policy goals which are service to customers and striving for excellence. • How to re-establish Wal*Mart’s corporate culture, as strong as it was with Sam Walton? Options I. Financial Reward The most obvious solution is the financial reward an employee can obtain. If you give more money or social advantages to them, they will be encouraged to work more (especially in the US). Increases in salary, bonuses, security care, health insurances, are some examples. A. Advantages: • Employees will have the feeling to be appreciated at their own value. By this way, employees feel more useful, necessary for the well being of the firm. They become a real link of the chain and not only an average employee. • The health care system is not well developed in the US and the possibility to have an access to it. Employees will be in a safer environment. As a result they will be more willing to take part to the life and success of the firm B. Drawbacks: • Security care is an expensive system. The number of employees is so huge that it will be even more costly. • This system is really hard to set up. It requires many improvements. • The profit margin (which is the key of Wal*Mart success) will considerably decrease. • Some employees could abuse of the system by simulating illness… II. Corporate Culture Another solution could be to increase the importance of employees, by a non financial way. Employees are not only working for wages, but other elements are important for men, such as recognition, interest of the work, excitement at work, and responsibilities. A very important point, which was understood by Sam Walton, is that listening to employees and challenging them is a key element of success in management. It would be essential to re-establish and develop these principles of management. Giving challenges to workgroups is frequently used by firms to motivate their people, and it seems to be very efficient. For instance, they could set a challenge between all the stores, the highest turnover on a month is the winner, and they will get a credit to do their shopping in Wal*Mart. It could be done as well with customer satisfaction, of sales in a specific category. These challenges could be reinforced by other actions. People could be given more responsibilities, and more honouring titles. To emphasize the corporate culture, Wal*Mart could develop their training programs, and prefer internal upgrading to external recruitments. At the time being, Wal*Mart is almost entirely non-union. Going union will attract other employees and make current employees more confident. A. Advantages: • Low wages will be compensated by a strong corporate culture. In fact, they will be happy to work for such a generous worldwide company. • This is not an expensive strategy to set up, but employees will be excited by their work, and enthusiastic to go to work. • People will feel more responsible and integrated in the company’s strategy by participating to challenges. Workgroups have the abilities to motivate people to do a good job. • Labour unions will give benefits and compensation plans to the employees. B. Drawbacks: • Before Sam Walton’s death, the corporate culture was really strong. Nobody has been able to replace him, and be as good as he was as a manager with a strong identity....