Thursday, 11 October 2012

Walmart - Research and Analysis of Business Problems

Executive summary
The aim of this paper is the discuss the problems the businesses are facing in general and the the problems which Walmart Inc. is encountering in particular. The company, Walmart Inc. the giant retailer of the world and there are many problems associated with the giant. The paper has an overview of the major problems and focuses on the most critical problems being faced by Walmart Inc. the problems discussed are supported by data and a creative set of solutions have been generated effectively with a purpose to address the problems. The solutions have been generated using effective and proven decision-making techniques. Convincing and evidence-based argument have been made for the allocation of the resources of Walmart Inc. to achieve the maximum benefits. This paper will help the decision makers as a basis for determining whether the project has merit and is worthy of further investment and it will serve as an overview by the decision makers to come to some concrete conclusions. The different sections of this paper discuss different aspects of the issue. In the first section the problems related to Walmart Inc. are discussed and the important problems are identified to be discussed in detail. This section also presents an overview of Walmart Inc. including its mission, vision, values and key stakeholders.

In this section the groundwork for determining the problems are done which are worthy of managerial attention and it also provides details of the information uncovered in the research. The problems cannot be solved completely and properly unless they are identified and defined clearly. The current problems encountered by Walmart Inc. are listed in this paper and the most critical problem is selected from the list to be addressed in this paper. The problem statement is made clear in the section ‘sense’ with symptoms, goals and issues with the actual problem. The tools from the management theories discussed in the class, such as root cause analysis, are also used here to gain a thorough understanding and a solid description.
The ‘uncover’ section of the paper has the detailed additional data gathered from this research to uncover more details about the problem, including more extensive causality analysis. It also considers the possibility of causes which can help uncover potential solutions. The paper presents more than one solution of the problem selected for detailed study. More than one solution is required to provide the user with alternative options. The solution is selected on the basis of the data acquired and the tools reviewed during the term from the uncovered section of the paper and it is also argued to make it convincing. The solution is presented with all the benefits, costs associated and feasibility analysis of the solution with an ethical screen. The solutions will have no meaning for the reader unless they are justified by its feasibility and practicality.

The paper also discusses the procedure of the implementation of the solutions. The implementation process is described step by step to enable the readers understand it clearly so that it can be implemented it effectively. The implementation process is defined step by step with sufficient clarity including a timeline and budget for the implementation. The expected timeline and the budget for the the implementation of the possible solutions are based on hypothetical assumptions made for the purpose. A set of measures has been developed to evaluate the effectiveness of the suggested solution in delivering proposed benefits. The process of the implementation of the solution is evaluated in such a manner that they answer most of the when, how often, and how questions associated with the process.

Position
The end of the first decade of the 21st century and the beginning of the second decade have been a tough period for the business world. The business world has seen the economic crisis of 2008 and the economic meltdown of the major economies of the world influenced the businesses drastically across the world including economies of the US and the European countries. Many financial giants, corporate houses and businesses went bankrupted and millions have lost their jobs and this condition influenced the businesses more. It also had the severe consequences for the comparatively stable retail sector. The retail giant Walmart is also influenced drastically by the fast changing situations of the world. The company was already facing many problems and this situation has added fuel to the fire (Smith).
Walmart Inc. is one of the biggest retail giants of the world serving to customers and its members over 200 million times every week. They are served by Walmart Inc. in their preferred way which can be through retail outlets or online or on mobile devices. The company operates in twenty-seven countries under sixty-nine various banners. The sales figure of the giant for the fiscal year 2100-2012 crossed $ 444 billion and the number of employees associated with the company worldwide is about 2.2 million. Walmart Inc. was established in the year 1962 and was incorporated as Wal-Mart Stores, Inc. in 1969 and it was listed on the New York Stock Exchange in 1972. Within 10 years of its inception the company opened 276 stores in 11 states and its first super center was opened in 1988 which has become the dominant format of the company now. Its products range from complete grocery to general goods. Walmart Inc. went global in 1991 by opening its first Sam’s Club in Mexico.

The mission of the company to save people’s money and provide them a better lifestyle at an affordable cost. The founder of Walmart Sam Walton had the vision to provide the goods of general utility to masses at very reasonable and competitive rates and help them with living in a better style. The vision and mission has become more relevant today with the growing success of the people which now affects the life of a large number of people across the globe. The legal name of the corporation is Wal-Mart Stores, Inc. (NYSE: WMT) and the widely known name Walmart is its trademark.

The company which grew rapidly due to its aim of reaching to the masses and spread to 27 countries, is being opposed at many places due to various reasons. There are a number of issues which have been raised against the company and earned a bad name of the company. Besides these reasons the present worldwide slowdown of the economy has made its situation worse. The secret of the success story of Wal-Mart is its strategy of selling products which are demanded most at a comparatively lower price (Copeland and Larry).

Sense
The problems can be solved if they are identified and defined properly and completely. Walmart Inc. Is facing a number of current problems for which the company has been criticized by many groups and individuals like community groups, labor organizations, religious groups, non-government organizations, environmental groups and customers of Walmart and some of the current problems are related to the policies and business practices of the company which includes foreign product sourcing, environmental practices, treatment with suppliers, security policies of the company and use of public subsidies. The allegations which the company is facing currently are:

Opposition from local communities- as it affects the local businesses, traffic, environment, public safety substantially
Allegations of predatory pricing and supplier issues- Its ‘Miley Cyrus’ product contained toxic metal cadmium
Employee and labor relations- its workers participated actively in ‘Occupy Wall Street’ stir
Wages- its employees are paid 20% less than average retail workers
Working conditions- the company faced many law suits and paid $50 million to settle a class-action suit in 2000
Child labor violations- the New York Times reported child labor violations by Walmart in January 2004
Use of undocumented workers- federal investigators reported use of undocumented immigrants by Walmart
Health insurance- only 44% of its employees are covered as compared to 96% employees of its rival company Costco, by 2005
Imports and globalization- the pressure of Walmart to keep the prices lower has forced the vendors to shift the manufacturing work to China and other countries where wages are low
Overseas labor concerns- it was accused of using prison labor and sweatshops and not providing proper supervision to its foreign suppliers.

Wal-Mart and the futility of traditional management- an article in the Wall Street Journal discovers that a wide range of products of Walmart is 19% more costly than its rival Amazon and this speaks of the failure of the traditional management of Walmart which could not maintain its USP.

The traditional management system of Walmart failed to maintain the USP of Walmart. The the strategic management team needs to review the traditional management system The company failed to maintain its price level and the business reported declining for five straight quarters in its stores worldwide and its rivals captured its market share. The share price of Walmart is stagnant for the past ten years (Sellers).

Chief Executive of Wal-Mart Mike Duke said that “problems at Wal-Mart Stores Inc. have been more severe than management expected and will take time to fix…. Some of the pricing and merchandising issues at Wal-Mart U.S. ran deeper than we initially expected, and they require a response that will take time to see results.”
The statement made by Mr Duke reflects that he was not able to assess the real problem. The real problem of Walmart is not the issues related to pricing and merchandising. The real problem of the company is its traditional system of management which has become a fatal disease for the company and the company needs to make drastic changes in its management system or in other words the company needs to reinvent itself by bringing substantial changes in its traditional management system. It is time to rethink the whole concept of business and take steps to reinvent it (walmartfacts.com).

Solve
There can be many solutions for the problem encountered by Walmart. For my money, the top management of the company can reinvent the company in two best possible ways:
Reinventing the traditional management system.

Out of the two solutions mentioned above the most practical solution is to reinvent the traditional management system and this can be done by strategic planning. Wal-Mart has to analyze its strengths and weaknesses and use the strengths in reinventing and removing weaknesses. The most important strength of Walmart is its tremendous money and assets. In the present business world the bricks are beaten by bytes and Walmart stores are no more the cheapest to encourage people to drive to the store. The real challenge is to earn the lost reputation of being the cheapest stores in the world (Kabel).

Build
The things are changing fast in the world and the business world is not an exception. Reinvention of the traditional management system would be beneficial to the company in many ways. It will bring back the old reputation of the largest and the cheapest store series in the world. It was a valued brand yielding the highest turnover in the retail sector and once the old status of the company is back it can easily overcome all the finances involved in the reinvention process. The reinvention process involves two major expenses – the expenses of the training of the staffs and the expenses on other benefits given to the staffs. Other benefits mainly include hikes in their salary according to the general standard and covering all the staffs under health insurance. As it has been estimated that the payments of the staffs of Walmart is 20% less than the general standard. It means 20% hike in their salary will meet the objective and about 50% of the staffs are already under cover of health insurance and the rest 50% can easily be brought under the cover. This will not affect Walmart considering its enormous money and assets and the returns it will bring to the company (Rodino Associates).

Achieve
The solution of the problem needs to be implemented carefully and strategically as it is concerning the most sensitive issue of the organization. As the solution is concerned with the strategic change in the management the top management must realize that it needs to be implemented in a systematic manner step by step without causing much chaos. The first step of the implementation of the solution is the training (Barnaro).

Training: training is the first step of the solution because the employees must be trained about the latest and advanced developments in the management practices to be prepared for the reinvention. Unless they realize the importance and need of the new management practices it would be very difficult to get it implemented through them. Training is an essential and continuous part of any business and it would not require any separate budget allocations. It can simply be managed by diverting the budget towards a different kind of training required at the moment. The training should be accomplished within three months. The training will not bring any fruitful results unless employees are motivated enough to adopt to the changes and the employees can only be motivated if good care is taken of them. The second step is to take care of the employees.

Taking care of employees: Walmart is often accused of the social practices in labor relations and dissatisfied worker cannot be expected to contribute positively to the organization and to avoid such accusations the company need to standardize their salary by enhancing it by 20% and to bring its rest 50% employees under the cover of health insurance. Though these two expenses will give a substantial burden on the budget of the company, they cannot be considered as extra expenses for the innovation or reinvent of the company as it is the necessary expense company must accommodate. This is needed to be done at once (Norman 7).

Creating a positive environment: there has been a lot of criticism in the media about the company which has distracted its customer from it and the company needs to take the services of a public relations firm which would interact with the press and give response to the negative reports of the media. The company should also make arrangements for interacting with the customers directly through blogs, postings, mobile or invitations to visit the store. This can be done without a very substantial expense and without much delay.

Focus on Training: the next step of the company is to focus on training which is a continuous and gradual process. The company should focus on changing Wal-Mart from a quintessential company of the 20th century to a modern company of the 21st century and the training will include certain areas to focus upon:
Delighting customers: Earlier Walmart had no tradition of delighting its customers. Now the employees should be trained to delight customers. “You buy what we sell, because it’s cheaper.” Now the products are no more cheaper and the old business model is shattered.

Offering what the customers really want: the old concept of selling at the cheapest price is no longer required and they need to understand the need of the customers.
Eliminating checkout queues: no one likes to wait at the check out counters which normally moves at snails counters at Walmart stores. They need to make changes in the process which includes training to the employees, opening more counters or installing self-checkout counters.

Changes in the delivery system: Now the customers prefer their orders to be delivered at their desired destination and Walmart cannot sustain in the market without meeting this need of the customers. Hence the employees need to be trained in adapting to such changes. “Mr Duke and his team would need to decide who its customers are, figure out what are the hopes and dreams and fears and irritations and fears, find ways to alleviate those fears and irritations and fulfill those hopes and dreams. They have to be willing to scrap the things that made a winning firm in the 20th Century and instead commit to becoming a genuine 21st Century firm. Only then will Wal-Mart will have a future.” Sellers, 2005.

Walmart needs to understand the importance of ‘Multiple bottom line’ which is also known as “triple-bottom line” and it includes consideration of people, planet, and profit or three pillars which are the criteria for analyzing the success of an organization be it economical, ecological and social.

Bibliography
Kabel, Marcus. "Wal-Mart, Critics Slam Each Other on Web." The Washington Post. July 18,. 2006. Retrieved on July 31, 2006.

Sellers, Jeff M.. "Women Against Wal-Mart." Christianity Today. April 22, 2005, Retrieved July 31, 2006.

Sellers, Jeff M. "Deliver Us from Wal-Mart?." Christianity Today. April 22, 2005. Retrieved on July 31, 2006.

Norman, Al. "The Case Against Wal-Mart". Raphel Marketing, p. 7. ISBN 0-9711542-3-6. 2004

Copeland, Larry.. "Wal-Mart's hired advocate takes flak." USA Today. March 13, 2006. Retrieved on July 31, 2006.

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Rodino Associates. "Final Report on Research for Big Box Retail/Superstore Ordinance [dead link]." Los Angeles City Council. October 28, 2003. Retrieved on July 31, 2006.

Smith, Hedrick. "Who Calls the Shots in the Global Economy?" PBS. Retrieved on July 31, 2006. walmartfacts.com (official public relations website)

Barnaro, Michael. "A New Weapon for Wal-Mart: A War Room." The New York Times.
November 1, 2005. Retrieved on August 1, 2006.

Barbaro, Michael. "Wal-Mart Enlists Bloggers in P.R. Campaign." The New York Times.March 7, 2006. Retrieved on August 1, 2006.