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Business Research: The Wal-Mart Company

Abstract

Wal-Mart is the fastest growing public company in America. Wal-Mart is a public company that runs a chain of stores. According to the 2008 Fortune 500 companies Wal-Mart is the largest discount department store owner. It is also the biggest grocery retailer and employs more people than any other company in America. The company has had more success than any other companies in the United States. It is best known for the cheap prices and value for customer money policies.

The Wal-Mart policies and ideas that have made it the fastest growing company were introduced by Sam Walton. The stores were originally known as the Walton 5& 10. In 1962, Sam Walton came up with the idea of under cutting his competitors by reducing the prices of his product. The profit margin lost would be recovered from increased sales. In the mid 60’s Walton inspired by the success of his ideas left the employment of Walton 5& 10 which were at the time owned by J.C. Penny and began his own line of stores. He called the stores the Wal-Mart. The tore chain grew very fast and by 1968 there were 24 Wal-Mart stores, and the sales of the company had

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reached $12.7 million.

In 1975 Wal-Mart began venturing to new markets; stores were introduced in Missouri, Texas and Kentucky. The company also began acquiring other companies in an effort to diversify its sales. The first company to be acquired was the Mohr –Value stores in Michigan. Acquisition of new companies allowed Wal-Mart to venture to new markets such as pharmacy, gas provision, jewellery and the auto service market. By the 1980’s Wal-Mart was operating in 28 states. By the early 90’s the stores had moved beyond the American border into Mexico and Canada. In 1997, the company recorded its highest profit ever of more than $100 million. The company was in 2008 ranked fifth in thee fortune 500, magazines.

Competition and the Wal-Mart Environment

Wal-Mart operates in a highly competitive environment. The company considers all retailers as their competitors; however this is not entirely true. Each area where the store has opened, Wal-Mart faces different competition. In North America for example the main competition arises from Kmart, Target and Meijer departmental stores. Main competitors of the Wal-Mart stores have recently introduced the lower price policy of Wal-Mart.

The entry into the grocery market in the 90’s both in America and Canada, set the company against grocery supermarkets that had already acquired loyal customers. The competition against Wal-Mart has been so tough that they have been forced to close some stores. In 2006, after serious competition from the topmost food store Aldi that owned 19% of the market against Wal-Mart’s 2%, the company sold all its stores to Metro chains and withdrew from Germany permanently.

Some of the products that the Wal-Mart stores are known for are:

Grocery items: Wal-Mart stores store all forms of grocery whether produced locally or imported. The most unique idea for marketing the grocery products has been the inclusion of simple and easy to use recipes with the products. The grocery items are mainly meat, seafood, poultry, eggs, cheese, canned food, cereals, bread, cakes and beverages. In addition to providing recipes, the Wal-Mart grocery products also include tutorials on the nutritional value.

Auto service products: The Wal-Mart stores allow consumers to access cheap and easy service for their cars. The stores have a wide stock of car batteries, oil, lube and tires for the customer’s needs. The stores have also employed mechanics trained to service vehicles properly at much lower costs than private mechanics.

Gas:  The Wal-Mart gas is provided to the consumer in collaboration with the Murphy oil cooperation (Soderquist 2005, 151).

Jewellery:  The stock includes bracelets, earrings, pendants, necklaces, rings, watches, cuff links and any other body jewellery one would wish to purchase. There are the original jewelleries often targeting high and middle class earners and the synthetic jewelry which is much cheaper and targets some of the middle class and low class earners.

Personalized gift items: During specific days such as Mothers and Fathers day, the stores provide a wide range of ready made personalized gifts that are very popular.

Their low prices have also attracted schools and colleges that purchase their membership rings from the stores. The rings are usually pre-ordered and therefore available in bulk.

 Product Innovation and Competition

Wal-Mart stores have a passion for excellence. The products stocked in the stores are reviewed to ensure that they meet the standards demanded by the consumer.

The Wal-Mart stores have set the customer needs above and beyond everything else. Client and customer complaints are taken very seriously. There have been times when Wal-Mart has recalled goods because they believed them to be of lower quality than advertised. For example in 2004, Wal-Mart recalled all the Zatarin dirty rice for poor packaging and labeling. The consumers were all refunded their money when they presented the proof of purchase, (Hitt, Ireland and Hoskinson 2009, 382).

Recently the Wal-Mart company has reduced the prices of its grocery products even further. The strategy has been adapted to increase sales by making products more affordable to the customers. The tough economic times have seen some grocery chains match the lower prices by Wal-Mart to attract customers, and therefore the company has had to reduce their prices even further to maintain their clients.

Fishman (2006), the Wal-Mart chain of stores have introduced policies of individualized customer care. Clients feel important that their needs are being considered personally. This has led to a wide loyal customer base for the stores. For example in China Wal-Mart customers complained that they liked to choose their own fresh sea food. In return Wal-Mart built fish tanks in the stores allowing customers the privilege of picking their fish literally. Wal-Mart sales went much higher, (Pg. 222).

Once Wal-Mart realized that there was a wide market for personalized gifts, they introduced a department that dealt with gist items only. Their much lower prices have attracted institution and individual customers, (Fishman 2006, p. 225).

Finally the Wal-Mart company has partnered with other service providers to ensure their customers get products they may need at much lower prices. Wal-Mart has partnered with Murphy Oils for example to provide gas for their customers at cheaper rates.

Strengths of Wal-Mart

Soderquist (2005), Wal-Mart is the largest company in America. It has a wide consumer base that is maintained by its reputation for valuing money. Consumers can rarely miss a product in Wal-Mart stores; they are well stocked with a wide variety. Its global expansion has additionally granted the company access to new markets and producers.

The company has a staff that is competent in the use of information technology. Through the programs installed by the company, it can be able to monitor the progress of different products in different stores countrywide and internationally very easily.

Wal-Mart possesses the resources to train their employees constantly. Improvement of staff skills often means much more customer satisfaction. The trainings also provide an opportunity for bonding and team building.

Wal-Mart Weaknesses

As the largest grocery retailer, Wal-Mart is often left weak in some security areas because of the large span of control. If for example the IT network is infiltrated the company may find they behave acquired quite a loss in some few minutes, (Quinn 2005, 73).  The Wal-Mart company stocks a wide range of products meaning that unlike their competitors, they are less flexible. More focused competitors can easily affect the sales in specific departments.

Maintaining Business during Recession

Wal-Mart has continued with its policy of lower prices and value for money. The customers in Wal-Mart stores are often treated to a wide range of products at lower prices. While many companies have introduced these policies recently, Wal-Mart has gone a step further to make their product prices even lower.

The Wal-Mart company has researched and introduced cheaper alternatives to high cost products. The stores have taken to importing and acquiring suppliers with cheaper alternatives for their consumers. For example in the pharmacy department, the stores stock not just original drugs but also the cheaper generic products.

Analysis and Opinion

Lessons from the Company

It was shocking to learn that the Wal-Mart stores have been unable to penetrate and succeed in other countries. The failure of the German and Korea chain of stores is somewhat surprising. Wal-Mart seems to succeed in every community they venture into. Even with the research and analysis that was conducted before the opening of the stores, coupled with the aggressive advertising that took place in the countries the stores still failed.

The Company and Its Products

There may have been complaints about the quality of products in the Wal-Mart stores, including the recent claims that the Wal-Mart gas included more ethanol than the standard requirement. It is my observation that this is more of an exception than the rule. Wal-Mart has mastered the art of providing quality goods at low costs.

Suggestions

The Wal-Mart stores should develop a uniform way of placing their products. These way buyers frequenting new stores do not waste a lot of time trying to find products. With a uniform stocking method customers save much more time and enjoy their shopping more.

Although the Wal-Mart advertising Television network was introduced to make customers aware of new Wal-Mart products, most of the customers find them annoying and disruptive. The stores need to consider doing away with them or finding a way to make them more acceptable to customers. The biggest customer complaint arises from the long queues they have to contend with in the stores. For special days such as Pay days, and special occasions such as Christmas, mothers and fathers day, the stores should consider introducing policies for hiring extra casual help to man the registers.

Conclusion

Wal-Mart is one of the companies that will not stop growing even in difficult economic times. The Wal-Mart company ahs introduced competitive strategizing for grocery companies and others. Everywhere there is a Wal-Mart store there is increased employment and development. The stores provide opportunities for employment for everyone including the unskilled workers. They also provide wide scale opportunities for suppliers to expand their business. The Wal-Mart company is a model that other companies strive to emulate.

References

  1. Fishman. C (2006). The Wal-Mart Effect: How The World’s Most Powerful

Company Really Works. New York, Penguin Press. 222,225-227

  1. Hitt. M, Ireland. D And Hoskisson. R (2009). Strategic Management:

Competitiveness And Globalization 8th Ed. Oklahoma, South Western

Cengage Learning. 379, 382

  1. Quinn. B (2005). How Wal-Mart Is Destroying America, 3rd Ed. California,

Tenwood Press. 72-73

  1. Soderquist. D (2005). The Wal-Mart Way; The Inside Story Of The Success Of

The World’s Largest Company. Tennessee, Thomas Nelson Inc. 151-153

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