Case Study – WalMart
Wal-mart, indeed the most powerful company not only on the local but also in the international market. With the large market share that it has and the influence that it can impose on the market, Wal-mart is currently making its way to its peak of growth. Compared to other retail companies in the market, competition is not the one that brings problems to Wal-mart. There are a lot of different kinds of problems that contributes to the “headache” of Wal-mart’s top management.
One of the problems that the company faces is its suppliers. Wal-mart’s suppliers are complaining the demands of the company, demands that bring growth to the company. It is said that Wal-mart tries to demand more but pay less. Well, my view point regarding to this claim is that, in the first place, the company should not sign the contract with Wal-mart if at the middle of the performance of the contract they know that they will be the one who gain less. Setting aside my opinion, the bargaining of suppliers to Wal-mart made the company to find solution that would somehow compromise the demand of their suppliers. The question now is- HOW? This question is
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Another problem that is being faced by the company is the complaints of the workers regarding their unpaid overtimes. It was reported that many employees of Wal-mar was forced to work overtime and worse than that, the unfortunate workers was not able to receive the payment for their overtimes. This made a big controversy to the general public and Wal-mart is afraid of the possibility that consumers would sympathize with their workers. There is a great possibility that due to the said controversy, sales and revenue of the company would negatively be affected. In addition to this, there is a threat for the government to impose them sanctions that would affect their financial stability. This are the reason how workers become one of the major problems of Wal-mart.
Economically speaking, most of the economists were claiming that there would come a time wherein Wal-mart could no longer sustain the pace of their growth for the past years. These make a big uncertainty for future investors of the company. They would become threaten by those statements and thus, would negatively affect the demand of the investors to the company’s stocks. In effect, prices of company’s stocks would decrease giving Wal-mart with less capital to fund its operation. Having a big capital in the company would mean a lot to them especially they are operating internationally. They need to have more stockholders in order for them to finance the day-to-day operations of the organization as well as to fund their plans for expansion. Reputation and stability of the company is the one that determine the demand of the stockholders. From their point of view, it would be risky if they invest on a company that is unstable and do not have any less reputable. This is why Wal-mart becomes threaten by this kind of statements. They have to find ways in order to convince investors that Wal-mart would bring them capital gains so as to maintain their stockholders and to attract more.
An additional problem that Wal-mart have encountered was the claim of Dollar General, one of Wal-mart’s competitor, that Wal-mart’s customers sometimes feel lost inside their store due to its large size. Well, thus is not a major problem to consider, but perhaps Wal-mart should address this matter in order for this issue not to get worse. Small problems should be solved immediately in order not to trigger another problem, this happen sometimes.
Internally, Wal-mart is facing a problem alleging them for discriminating women of their top level positions. Based form the data that have presented, 90% of the associates of Wal-mart are women but only 15% of the total top position in Wal-mart is represented by women. This issue would somehow create distortions on the harmonious working relationship of employees inside the company and could negatively affect the efficiency of workers as well as their effectiveness in their respective units.
Based from the given problems that Wal-mart is facing, I believe that the major overriding issue in the case is the dilemma on the accusation of lower level workers on their unpaid overtime wages as well as the discrimination of Wal-mart to women. The said two problems created an internal conflict that negatively affected the performance of workers on their respective units as what I have mentioned earlier. As a consequence of this dilemma, total productivity of each workers starts to decline and this in return cut the sales and revenue turn outs of the company (Love, 2005).
One of the challenges that Wal-mart should address is their relationship to the lower level management. The inability of Wal-mart to extend its relationship to low level workers made a gap between the top and low management of the organization. This becomes the root of their internal problem that severely struck the major retailer.
Inability for the company to find other ways of cutting their labor costs. This issue forced Wal-mart to mandate their workers to work overtime without offering overtime pay. With this, they only acquire lots of lawsuits from various employee entities that eventually make scandals for the entire management of Wal-mart.
Wal-mart has to convince the capitalist group to invest into their company in order to give them enough funds for their expansion and finance their international investments to various countries. Due to the scandals that were associated to Wal-mart, it created large degrees of uncertainty on what would be the effect of those issues to the response of the general public for Wal-mart. This dilemma still remains due to the sluggish response of Wal-mart.
Wal-mart has been know for having the largest market share in the market and this can be used by the company in order to influence the market behavior. One current effect of this market dominance of Wal-mart is the ease of competing with other retail companies. Retailers such as Tesco and Home Depot would not cause much threat to the company since they have more market share that brings tremendous amount of profits to Wal-mart.
International expansion is also an opportunity for Wal-mart since it could now invest to other countries where market conditions are on its good status. Large part of Wal-marts revenue comes from their international operation, and in order to make this grow, they have to increase their investments abroad. One of the possible markets is India wherein there is a large available of potential market greater than of the US.
Another opportunity for the great retailer would be the availability of systematic distribution channel. Suppliers are starting to use Wal-marts distribution channels to deliver their merchandise to the retailer. This only means that Wal-mart could generate income from their delivery channel, or most likely, develop their distribution channel into a separate business entity that would offer distribution services to other companies. With this, Wal-mart could now start is ways on engaging into other business line. But still, the main objective of their distribution team is to serve first Wal-mart before other companies for the not to defeat the purpose of their existence in the market.
Improving their discounting approach to its merchandise would mean more revenues to the company since there would be more customers that would be attracted from buying their cheap products as compared to other retailers. Good pricing scheme would easily affect the behavior of the consumers in such a way that that they could easily give up their brand loyalty in exchange of saving as much money as they could.
· One of the possible threats that Wal-mart should address would be the stability of dollar exchange rate relative to other foreign currencies. Frequent fluctuation of the dollar exchange rate could cause losses to the company. It is important for the company to keep track the performance of the dollar currency.
· Another threat would be the competitors of Wal-mart. Although currently, Wal-mart could handle the competition in the market, it is still necessary of the organization to keep an eye on the strategies being imposed by their competitors in order for them to make the appropriate solution that would neutralize the effects of their competitor’s existence.
With regards to the legal responsibility of Wal-mart, it is said by the law that Wal-mart should give their workers compensation at a minimum of $14,630 per year. But based from the data that were given, only $13,861 per year is only being received by their workers. With this, Wal-mart has been involved to a lot of lawsuits regarding their unlawful compensation scheme.
In terms of the economic responsibility of Wal-mart, it is said this company help the economy boom by lending a hand to various manufacturers in the economy for them to achieve growth and experience acquiring a lot of profits. Like what it did to Rayovac in which Wal-mart help it to increase its sales and revenues. With this, the US economy benefited by having a lot of profitable businesses that would provide jobs, investments as well as infusing capitals to the US market. With these economic activities in US market would definitely increase giving way for it to boom rapidly.
Speaking with the leadership responsibility of Wal-mart to its constituents, they did give enough support in order to give their employees better careers. Most of the top managers of the company start from being just an ordinary employee before being promoted into various managerial positions. Wal-mart fills in their top level positions by internal promotion. This only means that ordinary workers have equal chance of handling a unit or department or the organization. Moreover, Wal-mart also offers trainings that would increase the productivity as well as enhancing the skills of their employees.
All of the employees of Wal-mart were taught of being thrifty in order to save money as they could. With this, operational costs of the organization remains low and give positive effects on their revenues. One of the instances that their employees could be frugal would be during the times when managers have travel. They only avail economy class flight and get cheap motel accommodations. Another value that was instilled into the employees of Wal-mart would be being polite and warm with their customers. Greeting their customers visiting their store would somehow give the customer a feeling of “closeness” with the staffs and other employees of the store.
In terms of its marketing responsibility, Wal-mart seems to be relaxed in implementing publicities into the market. They only a lot small portion of their budget for advertisement expenses. Furthermore, they are also not using much of famous models from Hollywood in order to indorse their store. Instead they use their employees as covers and models into their publicity materials. In short they are not using the normal way of advertising their store as compared to other companies in the market. But this strategy brings some positive effect into the company. Only those employees with good performance could only plat a model into their advertising materials. This only means that this serves as a motivation of for their employees to work well in order for them to be featured in magazines or articles.
Based from the given facts and stands above, I would recommend that Wal-mart should now start making its effort to extend its hand for the lower level workers in order to establish good working relationship environment inside the organization. With regards to the issue regarding the not paying of the company of overtime payments to workers, I think the management should make a self investigation on this case to verify the claims of the workers. It the workers claim is true, then, the management should pay the overtimes of their workers. This is also one way of working out their relationship to their low level workers.
If the claim regarding the discrimination of Wal-mart is true, then, the company should now start giving those women managers with equal chances of assuming top level positions just like men do. But if the allegation is not true, then Walmart should intensify its equality in giving chances to women to assume position in order not to give other people ideas that they discriminate women in managing the company. Through this, issues would be lessened and internal conflicts would now be minimized. But I would no longer advise for Wal-mart to pursue this strategy since they is a certainty that the company would know the answer to this problem.
The management of Wal-mart should also encourage the investors to put their capitals into the company for the company to have funds to finance its expansion programs. But this alternative is not that significant since with the current level of revenue the company receives everyday it would be enough to finance their expansion programs and no need to rely on investors in the market.
Love, J. (2005). The Importance Of Having Dynamic Relationships In The Workplace [Electronic Version], 1. Retrieved 9-16-07 from http://ezinearticles.com/?The-Importance-Of-Having-Dynamic-Relationships-In-The-Workplace&id=119930.