Crafting and Executing Strategy: Case Analysis of Wal-Mart Stores, Inc.

1.0 Source Problem

Wal-Mart has been able to achieve almost legendary because of its low-priced products. It is said
that Wal-Mart aggressively maintains unique distribution systems, lower labor costs, which give the
company more edge than their competitors. However, it can be said that this approach of the company
has been also the root of the problem facing the company in terms of dealing with their profits and their
competitive position in the retail market.

2.0 Secondary Problems

It can be said that retail industries are prone to a higher competition because of the issue of
market saturation. In the given case, there is an evidence of both short and long term issues which has
been experienced by the company.

2.1 Short-Term Specific Problems

Based on the given case, one of the short term problems facing Wal-mart is in line with their
strategy of cutting their prices. This issue is threatening the sales and profits of the company, since they
are not able to meet their target profit because of this price cutting. Another problem that can be
attached is the inability of the management to sustain their competitive advantage because lowering the
price of their products may compromise their competitive advantage in terms of considering as a
company that provides quality products. This will have a connotation that customer loyalty in Wal-mart
is at large because of the low price but not because of the quality of their products.

Aside from this, other problems may also arise in line with the inability of the management to
provide adequate salary or compensation for their labour forces because of their cost strategy or
approach.

2.2 Long-Term Specific Problems

 For this case study, the long term problems that can be attached with Wal-Mart are in terms of
the criticisms of the people internal and external to the company. Because of the strategy of Wal-Mart
many business are affected most especially the small business since Wal-Mart are enjoying high
competitive entrants. The company's price advantage extends to groceries, particularly in the large
footprint format. Dunkley, Helling, and Sawicki (2004) summarized the evidence on scale economies in
grocery sales, arguing that larger stores enjoy cost economies, have more room for high-margin items,
and may be more attractive to some consumers.

Another long-term problem that can be attributed to Wal-Mart, is in line with their management
approach. It is shown that Wal-Mart’s managers are dominated by men; this situation on the other hand,
leads to problems like biased promotion decisions (Thompson, Strickland & Gamble, 2007). This issue
clearly speaks of unjust employee treatment and work discrimination, particularly among the members
of the management. While the company has employed useful promotional policies for the benefit of the
employees, the lack of fair implementation makes these policies ineffective; moreover, the lack of
appropriate managerial approach on the observance of these policies widens the gap between the
management and the lower level employees of the company. Indeed, certain actions should have been
done to avoid this matter from happening.

3.0 Analysis

Based on the given case, in spite of the awareness of Wal-Mart in the consequences of their business
strategy, they are still continuously using this approach to sustain their competitive advantage. One
problem which is considered is that of Wal-Mart’s being replicable in the sense that competitors or new
players find it easy to imitate Wal-Mart’s ability to attract suppliers by offering higher cost and value for
their products. This becomes an unintended problem for Wal-Mart because it compromises the
reputation of the company of offering quality products because consumers always attached the company
in offering lower prices. Being so, Wal-Mart’s specialty of offering its customers the lowest price in the
market still remains a problem that should be given attention.

Its major problem which can be at the same time considered to be a threat, remains to be that of
the competitors who are striving hard to reach what Wal-Mart has attained. Wal-Mart has been
considered a veteran and a notorious in the game, running over even those that have been long there
before its arrival. These stores end up closing because Wal-Mart incredibly beats them. In fact, to
prevent Wal-Mart from monopolizing businesses, small-town locals have turned down proposals of
building a Wal-Mart store in their area.
In terms of employee and promotion issues, such as those among women and minorities, this has also
been observed in Wal-Mart’s initial operations. Discrimination for women and minorities for the
business’ leaders have been evident as Sam Walton prefers other individuals for managerial positions.
The literature indicating the wrongness of this act has probably influenced the business to do away with
this conventional practice and belief (Thompson, Strickland & Gamble, 2007).

From the cited case and nature of promotional policies at Wal-Mart, the root cause of its problems on
granting promotions appear to be the managers’ lack of ability to make appropriate personnel decisions.
As they are the ones interacting with the employees, it is natural that they are given the responsibility to
decide who among the employees should be promoted. However, it is also important that the managers
are subjected to proper trainings, particularly how to accomplish performance appraisals of the
employees. Clear, specific and definite performance indicators that will make an employee eligible for
promotion should also be established initially before the positions are filled in. Another problem
with the previous management of the company is its failure to stick to its own policies.

4.0 Criteria for Evaluation

Based on the analysis above, it can be said that the main goal is to enable Wal-mart to have a strategy
that will enhance their reputation in the market and to solve the issue for employment biased and
discrimination. In this regard, there is a need of a strategic change which enables Wal-Mart to sustain
their competitive advantage in the market. The management of the company should focus of pricing
approach and employment promotion and motivation approach.

5.0 Alternatives

Based on the given case, there are various alternative strategies which can be considered in order
to solve the short and long term problems of Wal-mart.
5.1 Short-Term Alternatives

In terms of pricing or cost based approach, it can be noted that Wal-Mart should be able to use a
new approach of pricing that will enable the company to be benefited as well and enjoying much profit.
With this the company may consider the use of expense control. This would be helpful in ensuring that
the company still maintains low price for customers and low operating.

5.2 Long-Term Alternatives

With regards to the long term problems faced by the company, the alternative solution for this is
to have a good promotional and motivational approach. It is then recommendable that company
develop means that will ensure that its set policies, such as in personnel promotion, are strictly followed
by the managers. All job openings should then be posted by the managers and should be communicated
well with the employees. The determinants for promotion should also be relayed to all employees.
Moreover, all eligible employees must have an equal chance for the position offered. Trainings or
seminars that could help the employees to improve them further should not be granted to a select few.
In order to facilitate the development of the employees, a superior whom they can share their concerns
with should be accessible.

6.0 Recommended Strategy

6.1 Short-Term Recommended Strategy

For this, the recommended strategy is to have enhanced the value of their low prices with other
differentiating through product diversification. The company is then recommended that ensure that they
must be able to determine whether their price adheres to the quality of their products and that this
would not affect the overall reputation of Wal-mart.

6.2 Long-Term Recommended Strategy

 For the long term approach, the company is then recommended that amend their employment
policies and make sure that the management is following such policies to avoid discrimination among
women and minorities.

7.0 Justification of Recommendations

Based from the analysis of the case study, it is then appropriate to recommend that the pricing
and employee development strategy be applied by Wal-Mart, considering that these factors serve as the
core factors affecting its growth and progress. With this type of strategy, Wal-Mart can increase its sales
by means of modifying or enhancing its existing products and services. This strategy has been
recommended as it has the ability to support the company’s potential to reach greater markets. Wal-
Mart has multiple product lines that will be affected by this strategy. With the analysis, it is appropriate
that the company starts off the development with its prime product lines. Through this, the company will
have sufficient funds to support other relevant activities in the future. The competitors of the company
targets similar markets. However, by means of this strategy, Wal-Mart will be able to strengthen the
market position of each of its product divisions, resulting to greater hold to these specific markets.

Similar to all other aspects of the company, Wal-Mart must also consider their employees as an
important factor sustaining their competitive growth. For this reason, the company is recommended to
be committed to solve the issue of discrimination through promotion and employee motivation. Theory
has indicated that motivation of employees used to be focused on the provision of financial benefits. In
the case of Wal-Mart, this conventional belief must be applied in motivating the employees. However,
while this is evident, there have been significant changes that need to be done. For instance, rather than
just giving the employees due recognition and monetary rewards based on their performance, the
employees are also treated as an important part of the business’ success. This practice should be further
emphasized by Wal-Mart by treating its employees as important associates.

Wal-Mart must be able to apply the theoretical perspective by combining both the new and
conventional belief on motivation. In addition to profit sharing and other financial benefits, Wal-Mart
must also reach out to its employees and treat them importantly, which in turn serve as a form of
motivation. With this example, Wal-Mart must be able to show that money is not the only form of
motivation business owners can give to their employees. Similar to Maslow’s theory, there are other
needs that employees have to satisfy other than material possessions.
8.0 Implementation, Control and Follow-up

Wal-Mart is indeed one giant retail company whose position in the industry is more or less
assured. Nonetheless, there will always be internal and external factors that would affect it and may
result to business problems. However, by means of optimizing the company’s available resources and
considering its environment, it is possible for the retailer to overcome its present as well as future issues.
From this analysis, it has been stressed that the success of the company is actually derived from multiple
resources. It is then essential that Wal-Mart and companies in general identify these resources, and use
them towards continuous success.

From the results of the analysis, Wal-Mart is left with not much alternative but to pursue this change
management approach. In this regard, a good change management play should ensure the management
should choose the most appropriate management team which will enable them to sustain their
organisational objective. In this action plan, the company must also give emphasis on the problems that
may arise during the implementation plan like the completion of the tasks provides unmet schedules and
revision of original plans.

Upon its implementation, the management who will handle the change process must continue to
evaluate, monitor and control this change process to ensure that they are in the right path. The
management should also consider contingency planning to solve the possible risks and resistance to
change which is more probably to occur in the company. In this regard, the decision stage must be done
by the management of the company, from the higher level down to the marketing and production
division to ensure that their organisational goal and objective for change will be successful.

References
Burgelman, R.A., Maidique, M.A., Wheelwright, S.C. (2000). Strategic Management of Technology and
Innovation. 3rd Ed. New York: McGraw-Hill.

Dunkley, B., Helling, A., & Sawicki, D. S. (2004). Accessibility versus scale: Examining the tradeoffs in
grocery stores. Journal of Planning Education and Research, 23 (4), 387-401.

Gosman, M. & Kelly, T. (2002). Big Customers and Their Suppliers: A Case Examining Changes in Business
Relationships and Their Financial Effects. Issues in Accounting Education, 17(1), 41+.

Govindarajan, V. & Gupta, A. (2001). The Quest for Global Dominance: Transforming Global Presence into
Global Competitive Advantage. John Wiley & Sons, Inc.

Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2007). Crafting and executing strategy: The quest for
competitive advantage (15th ed.). New York: McGraw Hill Irwin.

Wal-Mart. (2008). Wal-Mart Stores, Inc. Retrieved May 22, 2008, from
http://walmartstores.com/media/resources/r_2571.pdf

Wal-Mart. (2008). 2006 Annual Report: Building Smiles. Retrieved May 22, 2008, from
http://walmartstores.com/Media/Investors/2006_annual_report.pdf