Joel Clark ParagasEmg216/COMCase Analysis #8 – Wal-Mart Stores, Inc. in 2008: Management’s Initiatives to Transform the Company and Curtail Wal-Mart Bashing

Overview

Before year 2008, Wal-Mart has undergone a lot of pressure against their rivals,

economically, socially and politically. Wal-Mart’s Strategy is categorized under Best-Cost

Provider, which in turn made them successful during the past 25 years. This success keyed in

from the company’s culture, and good leadership. However, the way of governance Wal-Mart

has been following has maturity and needs to cope up with the present situation.

This case analysis will let us see what actions Wal-Mart should consider in order to stay

ahead in the market and maintain their competitive advantage.

In June 2008, Wal-Mart’s CEO Lee Scott along with the top executives presented a

transformation strategy for Wal-Mart’s business model. Due to the Top executive’s

transformation strategy for Wal-Mart, the following initiatives were formed:

Change the company’s mission to “Saving People Money So They Can Live Better”

Revise Wal-Mart’s logo to better mirror the company’s shift in emphasis away from

“always low prices” and “ we sell for less” to the broader mission “Saving People’s

Money So They Can Live Better”

Make a special effort to convince Wal-Mart’s 2.1 million associates why the company’s

new mission was more than a hollow statement

Broaden Wal-Mart’s appeal to existing customers and attract new customers to shop at

Wal-Mart

Initiate a flat price of $4 for the generic versions of some 200 common prescription

drugs

Increase green merchandise offerings and promote their use to customers

Launch a multifaceted “Zero Waste” campaign

Institute ways to make Wal-Mart stores both more energy efficient and supplied by 100

percent renewable energy

Make Wal-Mart an even better place to work

Drive Growth in the company’s international operations via both acquisitions of foreign

retailers

Make a positive contribution to the quality of life in every community in which the

company conducted business

The above table summarizes the transformation initiatives to three categories (environment, Customers, Employees)

Company Mission

Wal-Mart Stores, Inc. mission was change from “always selling less” to “Saving People’s Money So They Can Live Better”.

Internal / External Analysis

2000 2002 2004 2006 2007 2008

0.9

1

0.9 0.9 0.9

0.8

0.101 0.09 0.097 0.093 0.088 0.084

0.2450.207 0.224 0.229 0.22 0.211

Financial Ratios (2000-2008)Current Ratio Return on Assets Return on Shareholder's equity

The above financial ratio of Wal-Mart tells us that their growth from year 2000-2008 is

not healthy. All the presented ratios are on a downside trend which shows that the company

should do revisions either on policies, procedures, processes and so on whichever is necessary.

SWOT Analysis

The SWOT analysis shows that there are lots of opportunities for improvements on Wal-

Mart’s part. Having a management team that is flexible on developments and strong

commitment on management cultures, Wal-Mart should employ people involvement not just

on top executives but also on their stakeholders. This is vital since Wal-Mart executives are

initiating a good platform for improvements.

Strenghtsbest cost providertechnological developmentssupply chainrange/ collectionbrand nameStrong management commitment on company culturesManagement are flexible on deciding strategy for the company's improvement

Weaknesseswages, social benefitsDeclining Image no trainings for associatesfocus of cost savings

Opportunitieschoice of locationdemand for discountersRegain and improve Wal-Mart's good reputationDiversifyImprovement on products soldCompany culture improvement

Threatscompetitors (Target, Kmart)relations to supplierspublic criticsimpact of lobbyinglabor unions

Source: Zenith Management Consulting (2005)

The Graph above shows how Wal-Mart and their competitors are meeting their core

competence. Wal-Mart should improve on their service, quality and scope of products. They

may have the best-cost advantage but they are not making much effort for the important

aspects which consumers today are also considering (Value for Products).

Strategic Implications

After analyzing Wal-Mart Stores Inc.’s from the previous analyses, it is important that the chosen strategies take into consideration:

• Continuously improve and lead as best-cost provider while attempting to implement new structures for the company

• Enforce relationship on stakeholders through better supply chain, employee and customer involvement to outwit powerful competitor

• Portray a sincere change through Top Management guidance on new missions of the company

• Find more supplier that fits quality requirements with lower cost or diversify/acquire other suppliers for the company’s advantage

• Improve company reputation standings on the customer’s point of view (through advertisement and Infrastructure)

• Develop a fun-atmosphere workplace where employees will enjoy working

• Formulate a better reward system on employees

Recommendations

Lee Scott’s platform on June 2008 meeting from the company’s stakeholders will lead to a better Wal-Mart. I recommend that Lee Scott should get the Stakeholder’s buy-in on his platform and continue to keep an eye on economic and social trending. Be flexible on Wal-Mart’s environmental changes but maintain the best-cost leadership amongst its competitors.

Also Wal-Mart’s top management needs to focus on their core competencies and their company’s culture.

References

Thompson, A.A., Jr., Strickland III, A.J. & Gamble, J.E. (2009). Crafting and Executing Strategy (17th Edition). New York: McGraw-Hill/Irwin.