Wal-Mart Case Study

Wal-Mart Case Study

History and Development Over Time

Wal-Mart, founded by Sam Walton in 1962, has become the most profitable corporation on Earth. In 2002, Wal-Mart topped the Fortune 500, which was the first time a non-manufacturing firm has done so. Sam Walton built his business on three basic principles: 1) respect for the individual, 2) service to the customer, and 3) striving for excellence (Mikeman, A., Floyd, W.).

Capitalizing on those founding principles, Wal-Mart has become the largest retail company in the world, earning over 244.5 Billion dollars per year. Wal-Mart offers low prices on everything from groceries to electronics. From its humble beginnings, the company is now a force to be reckoned with in both national and international markets. It now has stores in more than ten different countries with more on the way. As a result of its size and consistently low prices, Wal-Mart is driving smaller companies out of business.

With over four thousand stores and 1.3 million employees worldwide, the company serves more than 100 million customers weekly, in all fifty states, Puerto Rico, and several nations around the globe (www.walmart.com, Fact-Sheet – Wal-Mart at a glance, 2002).

Relevant Issues Delineated in the Case Study

Wal-Mart domestic sales have flattened and the discount market is saturated. This is the primary reason why the company is seeking opportunities for further expansion and growth. In its effort to dominate the retail market everywhere, Wal-Mart is breaching out into new sectors of retailing such as grocery sales, automotive repair, pharmacies, and home improvement (www.fortune.com).

Internationally its expansion strategy has been very aggressive and powerful. Wal-Mart gains entry into a nation by corporate takeover of a national retailer, such as Woolco, in Canada, Wertkauf Hypermarkets, in Germany, and ASDA, in the U.K (Griffn, 2006).

The company then takes the existing store and turns it into a Wal-Mart store. This strategy places Wal-Mart in an advantageous position as it quickly and effectively eliminates competition by the bought out retailer and it gives Wal-Mart real estate, human resources, and a massive presence in its target location.

By retaining the old familiar outlet, the company begins building brand familiarity and soon makes a profit. It can then slowly transform the original storefront to that of a Wal-Mart store. Eventually the company will be able to build new and larger stores in the new market. Wal-Mart is now the largest retailer in Canada and the U.K.

The sheer size of the company has opened it up to criticism, both at home and abroad. Among the top issues I found in my research were extensive labor relations, community relations, and miscellaneous PR problems. It seems like the route of all these issues is Wal-Marts need to dominate at all costs.

Labor groups in the United States have accused the giant of abuses with wage issues, shift scheduling, and workplace rights. The company is in frequent court battles with regulatory and union groups as well. All this may stem from the fact that Wal-mart is generally against Unionized Labor.

Among the retailers most ferocious critics are the small business that are put out of business as a result of Wal-mart’s unbeatable low prices and wide product mix. The company does this by using its size and volume buying power and earning profits on its increased sales.

Wal-Mart may do itself justice, with respect to its international expansion, by taking a closer look at the needs and desires of its international customers. Given the cultural, business and political differences, Wal-Mart may have difficulties in the future following the same strategic plan it has in the United States.

Such things as store size, hospitality protocol, and policy/regulations may need to be studied by management in order to more effectively reach foreign markets. With strong leadership, brand recognition, and relentless marketing, Wal-Mart is sure to bring further change to the retail industry, particularly in foreign markets.

Identification of Options or Alternatives

Wal-Mart must learn to manage its global workforce by recognizing cultural and geographic differences in an effort to unite employee behavior and direct it toward collective goals (Maidment, 2004, p.175). It is important for the organization to balance standardization with customization through distributive management, centers of excellence and corporate vision (Maidment, 2004).

Wal-Mart’s success in the United