Contents Marketing concept of the founder of walmart compared to the current marketing philosophy.2 SWOT analysis,profile and possible approaches Walmart would use in dealing with competition.3 Core competencies of Walmart.4
I.T. applications within Walmart corporation.4 Walmarts reputation to customer service and the impact of customer service performance on future growth.4 Walmarts reputation to employee relations and the impact of employee relations on future growth.5 Developement of logistics management within Walamrt to international trends.6 Walmarts performance in the fields of enviromental protection and C.S.R.as the largest retailer in the world.6
Marketing concept of the founder of Wal-Mart compared to the current marketing philosophy.
Sam Walton the founder of Wal-Mart marketing concept at the beginning of Wal-Mart was fairly simple. He believed in word of mouth marketing and that his quality products and low prices Would speak for themselves. To date the marketing concept is still the same but with a modern twist. The use of modern advertisement such as t.v., internet and phones has helped Wal-Mart To expand in an overcrowded and difficult market place but the founding concept is pretty much alive and relied upon, word of mouth marketing.
Wal-Mart is the biggest corporation in the United States and in the world in terms of revenues and number of employees.
It keeps growing at a rapid pace, showing no sign of letting up. In the first decide of the twenty-first century it appears as if no other company has a chance of catching up to it.
What is the secret of Wal-Mart’s success? Its philosophy, first set its motion by its founder, Sam Walton, is to offer the lowest prices to its customer, thereby undercutting all of its competitors.
Wal-Mart’s basic approach is to minimize margins and maximize returns (i.e., it emphasizes the speed with which goods more through the store over the profit it makes per unit).
Wal-Mart manages to keep its prices low by keeping its own costs down. This is achieved by abstemious management practice (limiting lavish spending by managers) and by keeping down the wages of its workforce (called “associates” by the company).1
SWOT analysis, profile and possible approaches Wal-Mart would use in dealing with competition.
Strengths.Weaknesses. •Low cost products. •Large number of suppliers. •Stable business.•Negative public perception. •International growth. •Slow reaction to market demand and customers’ needs.
Opportunities.Threats. •Internet sales. •Organic sales. •Local food suppliers.•Intense competition. •Unions. •Zoning and restrictions.
Wal-Mart’s profile is split in to three tiers, sectors or segments. •Wal-Mart U.S. •Wal-Mart international. •Sam’s club.
They all aim to bring quality products at low prices to help grow and expand Wal-Mart’s profile. Each tier in Wal-Mart’s profile can sell the same or separate products depending on demand Which has helped Wal-Mart’s profile to grow in over 27 countries with 10,000 plus stores?
Wal-Mart uses a shock and awe tactic when dealing with competition. While competitors are keeping their prices on products the same or if not highering them Wal-Mart continue to open new stores, drop prices and have special offers across a wide range of their products even if this means a loss on some products their overall sales would increase.
Core competencies of Wal-Mart.
Wal-Mart competencies consist of 3 factors. •Employees are hard working and believe in the same goals as Wal-Mart have towards customers by supplying fast, friendly and competitive services for customers across there chain of stores. •They make sure to supply lower costs on consumer products and use low cost but efficient operations/procedures to ensure that customers receive lower costs and higher savings.
•They use an integrated I.T.system to communicate with suppliers to make sure products are always at hand for customers. Wal-Mart’s Core Competencies:
1. Culture- One core competency Wal-Mart has is its culture. Wal-Mart’s employees are hardworking, efficient, and process oriented. In the video “The Age of Wal-Mart” it pointed out that Sam Walton, founder of Wal-Mart, called his employees associates and treated them as partners. He wanted their input and ideas on how to make the company better. Also, no matter what Wal-Mart you go into across the country, Walton wanted you to know you will ALWAYS receive low prices, excellent customer service, and feel at home. From door greeters to big charity contributions, this type of culture is rare and difficult for competitors to imitate.
2. Low Cost Operations- As the video pointed out, Sears was a leading retailer during the 70’s, but was greatly affected by the recession. They targeted middle class families, expanded their overhead, and developed in larger cities. Wal-Mart focused on small towns and lower overhead during this time. As the economy worsened, people began looking for lower prices and moving to smaller towns and suburbs. Today Wal-Mart can generate big sales volume which allows the company to gain profits with low profit margin giving it an advantage over its competitors.
3. Distribution- Wal-Mart operates an unrivaled global network of 146 distribution centers (Troy, 2003). Because of this, the trickle-down effect happens. Trucks do not have to travel long distances to make deliveries which helps to reduce lead times for the... [continues]
I.T. applications within Wal-Mart Corporation.
Wal-Mart uses 1 single massive I.T.network/infrastructure within its organisation which communicates between there stores, warehouses, suppliers and delivery drivers. It ensures that when a product is scanned and is running low in quantity the system automatically orders more from suppliers.There I.T. system utilizes a just in time (J.I.T.) delivery process which promotes quality and timely deliveries from suppliers. The introduction of R.F.I.D. radio frequency identification “technology in to their I.T. system enables Wal-Mart to view and track each order from suppliers to ensure a prompt and reliable delivery. 1962
First Wal-Mart opens in Rogers, Ark. 1975 With more than 125 stores and $340.3 million in sales, Wal-Mart leases an IBM370/135 computer system to maintain inventory control for all merchandise in the warehouse and distribution centers and to prepare income statements for each store. Similar to this Article
•How Wal-Mart Lost Its Technology Edge •Think Globally, But Let Managers Decide Locally •Career Equation: What You Know + Who You Know = Success •Wal-Mart: IT Inside the World's Biggest Company •Tag ,You're Late •In Search Of A Standard Electronic cash registers in more than 100 Wal-Mart stores record point-of-sale (POS) data to maintain inventory. RELATED LINKS How Wal-Mart Lost Its Technology Edge Wal-Mart's Leadership Pipeline Managing a Global Company 1977 Wal-Mart builds a companywide computer network and deploys a system for ordering merchandise from suppliers. 1979 Wal-Mart sales top $1.2 billion, making it the first company to reach more than $1 billion in sales in a mere 17 years. The company builds a computer center and installs the first terminal in a store: an IBM 3774. 1983
The company begins to use bar codes for scanning POS data. 1984 Store associates start using Texlon handheld terminals when reordering merchandise. Upon scanning a shelf label, the unit provides a description of the merchandise, information on prior quantities ordered and other data. Bob Martin is named CIO.
1985 Wal-Mart has 882 stores and sales of $8.4 billion. 1987 Wal-Mart completes what is at the time the largest private satellite communication system in the United States. It links all operating units of company and headquarters with two-way voice, data and one-way video communication. A check-in system designed to take full advantage of container bar-code labeling is in the back room of every Wal-Mart store. 1990
A data warehouse prototype is created to store historical sales data. 1992 Wal-Mart deploys the Retail Link system to strengthen supplier partnerships. The system provides vendors information on sale trends and inventory levels. 1993 Randy Mott becomes CIO. 1995
Wal-Mart has stores in 50 states, for a total of 1,995 Wal-Mart stores, 239 Supercenters, 433 Sam's Clubs and 276 international stores. Sales top $93.6 billion. 1996 Wal-Mart makes Retail Link and EDI available via the Internet and begins using the Internet as an application platform. Wal-Mart and Sam's Club launch online stores. 2000 Kevin Turner becomes CIO. 2002
Wal-Mart chooses the Internet for data exchange with thousands of its global suppliers. Linda Dillman becomes CIO. Wal-Mart has its biggest single-day sales in history: $1.43 billion on the day after Thanksgiving. 2004 Wal-Mart announces it will deploy radio frequency identification (RFID) technology on Jan. 1, 2005. 2006 Rollin Ford is named CIO.
Wal-Mart redesigns Walmart.com, starts experimenting with Web 2.0 and social networking tools, and contracts with Oracle and Hewlett-Packard to use their price-optimization and BI retail applications. The company ends the year with $349 billion in sales, nearly 2 million employees and 6,775 stores worldwide. 2007 Wal-Mart launches Site to Store service, enabling online customers to pick up merchandise in stores. SOURCES: Academy of Information & Management Sciences Journal, 2006; CIO reporting; Walmart.com2 Wal-Mart’s reputation to customer service and the impact of customer service performance on future growth.
There have been good and bad cases of customer service within Wal-Mart stores. The main things that I have noticed upon researching are that the bad outweigh the good. It’s not due to Wal-Mart’s brand or products that cause Wal-Mart’s bad reputation but there employees themselves. The employees have such a negative attitude towards Their employers Walmart.Instead of taking or facing their problems to Wal-Mart management itself the employees are taking their frustrations and problems out on customers. Most but not all employees have taking up an attitude of "Wal-Mart doesn’t care for us, why should we care for Wal-Mart."
This in turn has created a massive impact on their reputation and if Wal-Mart does not address the issue fast there will be less and less space for growth as more and more customers will decline shopping at Wal-Mart due to the hassle that it will cause.
Wal-Mart’s reputation to employee relations and the impact of employee relations on future growth.
Apart from 2 or 3 cases that I have read the overall reputation Wal-Mart has among its employees is very negative. Most employees are unhappy with the way Wal-Mart concentrates all its attention on keeping its customers happy and forgetting about their employees who have to serve and deal with customers on a daily basis. It’s a well known fact that Wal-Mart is a highly anti-union organisation. It has been said that any mention of unions is treated hostile and managers try to push those employees out of their job positions.
Employees have no health care options that are affordable, recieve minimum wage and at times not even paid for overtime. Wal-Mart needs to address the issues and concerns of their employees. If they do not there company will cease to grow because if their employees are unhappy they will look for employment else were maybe in competitor’s stores. If there’s no staff and no interest in working for Wal-Mart there will be no staff to serve customers which will mean less sales and less room for growth.
Developement of logistics management within Wal-Mart to international trends.
Wal-Mart’s logistics is one of the biggest in the world if not the biggest to date. hay have over 158 distribution centres which they need to keep stock, process consumer orders and keep all their stores stocked with products for consumers. Each distribution centre can support up to 100 stores within a 200 mile radius so each distribution centre is ran on a 24 hour basis.
Because there logistics is so vast that when a particular order, product or trend is selling well but running low on stock in a store there logistics system can step in and overnight and have those stores restocked again. This kind of logistics management helps Wal-Mart to stay on top when it comes to local or international competition.
Wal-Mart’s performance in the fields of environmental protection and C.S.R.as the largest retailer in the world.
When it comes to environmental protection Wal-Mart has 3 main goals that they have put in place to achieve.
•That the energy they use is 100% renewable. •To have zero waste. •Sustainable products for people and the environment.
Wal-Mart has been recognized as been very environmentally minded due to the fact that some store but not all as of yet are either solar powered fully or partially and some are turbine/wind powered. In 2012 Wal-Mart was recognized as having the largest green power generator in the U.S. with over 200 solar projects across the U.S. alone. When it comes to suppliers Wal-Mart has steps/procedures in place to make sure that there suppliers are environmentally minded also or else Wal-Mart will not maintain business with them.
There are 6 main places were Wal-Mart displays there C.S.R . • Renewable energy now provides 21% of Wal-Mart’s electricity globally, and they became the largest onsite green power generator in the United States; • Wal-Mart and the Wal-Mart Foundation are increasing training, market access, and career opportunities for nearly 1 million women worldwide; • Wal-Mart and the Wal-Mart Foundation gave more than $1 billion to support organizations that impact local communities around the world;
• The Wal-Mart Foundation became the first partner of Feeding America to donate 1 billion meals (since 2005); • They saved their customers $2.3 billion on fresh fruits and vegetables since 2011; and • Wal-Mart committed to hire any honourably discharged U.S. veteran in his or her first year off active duty.
References: 1 http://strategy-marketing.blogspot.ie/2012/04/wal-mart-secret-of-success.html