Wal-Mart Background, Mission, Vision Today Wal-Mart Is Thesis

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Wal-Mart

Background, Mission, Vision

Today Wal-Mart is the world's largest retailer, a true economic force and a cultural phenomenon, as well as a lightning rod for controversy. It started due to the simple vision of its founder, Sam Walton: to offer shoppers the lowest prices, lower than they would get anywhere else. This simple strategy shaped the company culture and driven its growth. It also made the company mission to be: "To help people save money so they can live better." (Wal-Mart, 2009, p.2; Wilbert, 2006, p 1).

In 1950, Sam Walton opened his first five-and-dime, with the vision to keep the prices always as low as possible, aiming to gain from high volumes and not large margins. During the beginning of the 1960s, he opened his first Wal-Mart store in Rogers, Arkansas and continued its growth. In 1970 it went public and every year opened more and more stores. In 1990, it surpassed in size its main rival Kmart, and two years later, Sears.

After his death in 1992, the company continued its rapid growth, and now operates 4309 retail divisions in the U.S. (Wal-Mart Super Centers, Wal-Mart discount stores, Neighborhood Market stores and Sam's Club warehouses), plus an additional of 3913 stores in 15 countries outside U.S. (Wal-Mart Stores Investors Relations, 2009).

Analysis of the top leader

Even if the company has seen by now other three "Top Leaders," and has since January 2009 a new CEO -- Mike Duke, the author considers Wal-Mart's Top Leader to be Sam Walton, its founder and the driving force and inspiration of what is even today, Wal-Mart.

Sam Walton continued driving an old truck and sharing budget-hotel rooms with its colleagues during business trips, even after becoming very rich due to Wal-Mart. He demanded from his employees the same culture of keeping expenses to a bare minimum: a mentality that is still part of Wal-Mart culture and sometimes cause of many critics (Wilbert, 2006, p 2).

He was the one creating elements of company culture (such as "plus one" philosophy, grass roots process, 3 basic beliefs and values, 10-foot rule, servant leadership, etc. -- to be further described in the paper) that remain alive even today, at almost two decades since his death.

Strategy and Organizational Goals

Wal-Mart has defined its strategies through the differentiation between their Business and Marketing focus.

As part of its corporate strategy, Sam Walton first created three policy goals to actually define his business: respect for the individual, service to customer, and strive for excellence. They were kept alive by certain practices pushed through the whole organization: consistently stock the shelves with wide ranges of goods at constant low prices; keeping the stores open later than most of the other stores, and especially during Christmas season; discount merchandising by buying wholesale goods only from the lowest priced suppliers, thus passing on the savings to consumers (Mohideen, 2009, p. 9)

Consequently, four strategic goals emerged, successfully implementing a shark-like strategy:

"Dominate the retail market wherever Wal-Mart has a presence"

"Growth by expansion in the U.S. And Internationally"

"Create widespread name recognition and customer satisfaction with the Wal-Mart brand, and associate the retailer with the reputation of offering the best prices"

"Branching out into new sectors of retailing such as pharmacies, automotive repair, and grocery sales" (Mohideen, 2009, p. 10)

Its very aggressive strategy can be easily perceived from Wal-Mart's former CEO, Lee Scott, speech: "When a store is in place, its goal is to dominate its local competition in every department of merchandise sold, to become the number one retailer in that sector."

Wal-Mart Culture

Corporate culture focuses on watching every expense, cutting down costs as much as possible. The company has been many times criticized for the low wages and meager health care plans it offers. It has been accused of demanding its workers to put overtime without pay… and significant amounts of overtime, if one can say. Store managers are said to often work more than 70 hours per week and to be expected to reduce costs wherever they can, even on elements like heating and cooling of stores (these are being kept at 70 degrees Fahrenheit in the winter and 73 in the summer) (Wilbert, 2006, p 2)

The same culture can be seen at the company's HQ, situated in Bentonville, Arkansas and not in an expensive city like New York, its building "drab and dull" and not glossy and shiny… its executives fly coach and many times share hotel rooms with colleagues while on business trips. They work long hours, start very early in the morning and work also half-days Saturdays.

The main goal of Wal-Mart is to keep the retail prices low, and it is indeed very successful in doing this. It is estimated that the company saves shoppers at least 15% on a typical cart of groceries partly by pushing its suppliers to cut prices relentlessly or increase the quality of their products -- as part of their "plus one" philosophy (Wilbert, 2006, p 2).

On the other side, there are more humanistic views of this culture, such as the Grass Roots Process (as Sam Walton said it: "Listen to your associates. They're the best idea generators," still active today through the associate opinion survey), the 3 Basic Beliefs and Values (Respect for the individual, Service to our customers, Striving for excellence), the 10-Foot Rule (described by the pledge Sam Walton encouraged associates to take with him: "I promise that whenever I come within 10 feet of a customer, I will look him in the eye, greet him, and ask if I can help him"), Sundown Rule, Open Door policy, Servant Leadership, and Teamwork. These elements are all made public inclusively on the Wal-Mart's website (Wal-Mart, 2009).

Motivating the employees

During Walton's time, the bottom line was to acknowledge his workers and make them feel really valued. He knew that only a paycheck and stock options will not guarantee loyalty or high quality work. He realized how important it was that his workers knew they were appreciated. "Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise," he used to say. "They're absolutely free -- and worth a fortune." (Carmichael, 2008).

Today, the company uses both formal and social levers (McKinsey, NA) to improve staff awareness on how their actions effect the final success of the business. Wal-Mart manages this by combining sophisticated store operations management with the needed degree of on-site freedom. Additionally, personal training and development is combined with feedback sessions, target setting and team-based structure. The social levels will be formed from intensive dialogue, high levels of group identity, and mutual responsibility factor. These bring an increased sense of community, belonging, and involvement among employees. Wal-Mart also enforces this feeling in the U.S. through the use of its "Morning Cheer" for the whole store team, through annual meeting in Bentonvill and regular visits by management (McKinsey)

Functions and Roles of the Managers

Sam Walton developed a strategy for Wal-Mart, making the company to be "led from the top but run from the bottom." With recent growth leading to the need of adding more management layers, senior executives strive to maintain the unique culture, described as "one part Southern Baptist evangelism, one part University of Arkansas Razorback teamwork, and one part IBM hardware," which has worked very well to the company's advantage (Saporito, 1994, p. 62).

Managers are now divided on product groups and depending on their levels, they coordinate stores, districts, or regions. They are helped by co-managers at store level.

When it comes to the roles of managers in the retail stores, they have the fundamental purpose of actually creating customer satisfaction. They usually deliver this through the low prices offered, wider scope of excellent products, and the pleasing shopping experience. Three important areas are to be emphasized: merchandising, decentralization of store management, and customer service.

Additionally, executives must continuously keep in touch with customers and the operation responsible in the retail stores, thus leading to an effective communication between each of the stores and the headquarters (Wal-Mart, 2009)

Stakeholders

Wal-Mart has, as expected, a large number of stakeholders. Given the limited space of this paper, they will only be presented divided by the categories they are part of:

Market Stakeholders, having an economic stake in what the company does, are represented by the stockholders, the Wal-Mart executives, the employees, the communities where Wal-Mart is located, the consumers, the non-profit organizations, the other "brick and mortar" and online retailers, and finally, the gasoline retailers.

The Non-Market Stakeholders are formed by the labor unions, international retail stores, and the politicians (Pereira, 2002).

Responsibility and ethical dilemmas

There are at least two elements that question the way Wal-Mart tackles these issues:

Wal-Mart practice of out-pricing local "mom-and-pop" stores and many times driving them out of business. This led to a continuous fight of such small stores to keep Wal-Mart from entering their communities.

Its Labor related Issues: Wal-Mart its not allowing its workers to unionize,… [END OF PREVIEW]

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