Sample Essay on Strategic Management at Wal-Mart Stores, Inc

Strategic Management at Wal-Mart Stores, Inc


With the dynamism and difficult economic traits experienced in the business world today, strategic management is crucial to any business. This is because a business needs to confront changing scenarios, disappearing state-bounder economic relations and the competitive advantages of a firm increasingly becoming difficult to attain and maintain. This calls for a framework that examines and strategizes on the future expectation and deduces the anticipated direction in terms of the theoretical framework and methodologies to be used. This should be done with a close eye on the evolving strategic management. This paper demonstrates an understanding and analysis of the theories on strategic management as well as evaluating their practicality in real life situations in the workplace; a case study of Wal-Mart Stores, Inc.

Strategic management

Wal-Mart Stores, Inc is a family run firm that offers large discount departmental stores as well as warehouses. Strategic planning is an inherent aspect in this organization. This is because strategic planning comprises of environmental scanning, strategic formulation, implementation, evaluation and controlling of the organization’s activities and how these factors can be mingled for the success of the firm.

Strategic management is the process through which an organization plans the activities that will be useful to the company. To be able to maximally benefit from their world spread stores; the Wal-marts have to ensure that clear operation plans have been laid down and commuted to the various stores. In addition, the firm has to take advantage of strategic management is cruciality in laying goals and objectives to be pursed by the company’s mission. A balance has to be struck between the managing options to help in maintain efficiency and effectiveness in achieving the firm’s success. This is vital as it leads to reduction of the resources used while maximizing the firm’s returns. Strategic management is therefore a key aspect when making decisions.

Effectiveness in an organization helps in the achievement of the firms. This is because effectiveness takes into consideration a varied range of factors at all levels of the firm. Strategic management is important in organizations as managers are able to learn vital skills like leadership, adaptability and value creation. This enables the firm to learn and acclimatize to circumstantial changes (Hill and Jones, 2012). Further, they will be able to apply sound logic and reasoning even when faced by new and unfamiliar situations.

Strategic management process framework

Strategic management progression structure promotes a systematic approach top strategy formulation that is founded on the mission, purpose of the organization and tests the implementation of the choices and actions of the firm against its mission. This is because the mission is the direct basis for the specific target the firm aims at achieving. It also gives the nature, form and the extent of evaluation of the organization as well as its environment. This incorporates issues like the nature of the corporate and decision made at the business level. The management framework is crucial in defining the conditions that the organization will use to determine the milestone the firm anticipates and the success achieved.

Theories in strategic management

Knowledge- Based theory

Knowledge is a very crucial resource for every firm as it helps in generating market value and economic rent. The knowledge of any firm is heterogeneous and complex when it comes to imitation and understanding. A firm well characterized by knowledge bears a very great basis for competitive advantage. To maximize on this theory, the management in Wal-mart should identify necessary and sufficient conditions for a corporate coherence. The firm should be able to offer an explanation as well as give a prediction of the future operations of the firm. This should be done in a manner that gives an evolutionary and revolutionary prediction of the changes that need to be done to the running of the firm’s activities. The levels of changes that need to be done should be coherent to the value created by the firm.

Wal-mart Inc management is well informed and thus is too able to revisit the market and the hierarchies of mechanisms crucial for intensification of the market share an economy strategizing. The mechanisms for coordination lead to trust among the parties involved. When this trust is new, values of proficiency and integrity are established. This gives better results than the previous traditional loyalty existing between the parties.

Organizational knowledge can be vital for the creation and use of acquaintance as a collective outcome. This is because knowledge has a way of diffusing and articulating within a set system, which boosts the performance of the organization. Since the production of products requires typically different sources of knowledge, allowing the difference stakeholders to bring aboard their different knowledge is vital as it leads to high production and quality goods. The firm has the capability to mingle new and the existing knowledge to maximize on its functioning. For example, the Wal-mart Inc has a collective firm can give an activity description of what it does and does not do. This could have been founded on an improvement of the previous activities by the firm. The Wal-mart stores announced a plan to improve its pile up brands’ dietary value. This was to be done by reducing the levels of sugar and salt in it foods.

Connectivity is a crucial concept of the knowledge based theory. Wal-mart has to ensure that the stores it owns in different regions are well connected to achieve the best of outcome. According to Choo and Bontis (2002), connectivity is an expression of the foundation and the user of knowledge in the knowledge –creation process. Choo and Bontis further argue that weak connectivity implies that limited physical contact between the source and the user of the knowledge. The experiences existing in the workforce may be regular but may remain to the particular individuals. On the other hand, a strong connectivity shows some lack of identifiable continuum between the source of knowledge and the user of knowledge. There exists a very close tie between knowledge, capabilities and the products in that they all co-evolve. This leads to strategic opportunities for the firm, which corresponds to the changing company’s portfolios.

Agency theory

The agency theory is about a firm’s objective compatibility of the principles existing in the management and the employee. In this case, the firm is perceived in terms of contracts’ nexus. The supposition here is that some relationship exists between the principal and the agents in the business. The theory majors on solving problems that may arise from the operations of the agencies. The parties involved in the contract operate with their own prioritized interests and astuteness. To create efficiency and effectivity in their operations, a balance should be struck. This is done by efficiently sharing the firms’ risks and information, which leads to the parties getting to a position where they appreciate the variability of the party’s goals. To ensure this is achieved, a board of directors is selected who mandate is to monitor the operation of shareholders and those of the executives.

In assessing the value created by the Wal-mart, the firm needs to consider the explicit and the implicit contracts. This will lead to realizing the economic surplus that has been captured by all stakeholders. However, it is worth noting that moving from assessing of each stakeholder’s valuation, the economic value should be distributed and the surplus distributed among the different stakeholders be done by the claim-holders. The claim-holders include holders of equity or debt options issued by the firm. For example, if Wal-mart firm holds the implicit contract that does not impound the quasi-rents generated by the employees investing in particular human assets. In such a case, the staff may willingly choose to venture in investments that are higher in a marketplace where explicit contracting is feasible.

The challenge of the agency theory in the Wal-mart case is that the administration or the board of directors is always under scrutiny. The shareholders are at an advantage of frequently voting for or against the managers. Though the stakeholder may be at an advantage in this, the managers are disadvantaged. This becomes a challenge when the incoming management does not share the outgoing management philosophy. In such a case, certain firm goals may never be achieved, which may in turn disadvantage the stakeholder. In other scenarios, agency problems may arise due to the principal’s delegation of the decision-making processes. This can be caused by inefficiencies that can arise from improper passage of information. This can highly affect the functioning of the firm, as activities may not run as stipulated.

Moreover, in a case where the firm may be facing difficulties, the manager may be forced to reconsider their approach when the firm faces some difficulties. For instance, the company may do away with some promises entrenched on preceding implicit contracts in order to be able to survive fiscal downturn. On a positive note, implicit contracting may facilitate identification of the value that has been generated by a firm. This can lead to a stronger economic market by seizing the market advantage.

Resource-based theory

Wal-mart as an organization is believed to be a package of resources along with capabilities. These are made of physical, fiscal, human as well as intangible assets (Information Resources Management Association and Khosrow-Pour, 2006). This theory proposes that the resources in affirm are not homogeneous and are not strained to mobility. Therefore, the firm should translate the resources and capabilities it has to competitive advantage. This works effectively in a situation where the resources are valuable, scarce, and inimitable, and the firm is strategically set in a way to exploit these resources. This theory has a weak point in that it has made minimum use of the property rights of the stakeholders. This leads to a situation where the property privileges resources are not secure, a situation whereby the firm easily falls out of its analytical framework.

Moreover, cases of existing feedback loopholes are witnessed. This occurs in distribution issues that impact the productive utilization of the resources that fall outside the company’s resources. Doing away with the assumption that the firm’s resources are secure leads to putting into consideration establishment of property rights for the stakeholders and thus boosting the realization of the economic value of the company. The proponents of this theory advocate for the firm’s ability to look at the competitive advantage arising from inside the firm instead of competitive environment. This leads to exploitation of external opportunities, using the existing resources in a novice way. This is in contrast to acquiring new skills for each different opportunity. This helps cut on cost while maximizing on output. According to Freeman (2010), this theory does not provide for the extent to which the firm needs resources to achieve competitive advantage. In addition, the theory does not provide an explanation of  why economic rents are to be distributed after they are created.

Resource dependence theory

These theories hold that no organization is self-sufficient but relies on resources availed in the environment to succeed. In this case, Wal-mart organization cannot secure the resources and capabilities required to survive without interaction with other firms or individuals who are beyond their boundaries. As a particular firm, Wal-mart has the mandate to actively seek to control their critical resources both internally and externally. This should be done in the best way possible within their environmental operation thus boosting their chances to survive in the market. Moreover, this theory appreciates that a firm is always engaged in a mix of cooperation and competition. Operational unity within the stores can give the firm competitive advantage over their competitors.

According to the Resource dependence theory, the magnitude to which the management relies on the employee is the inverse of the potential that the same employee has over his or her manager. This translates in higher dependence by managers on staff that have a greater employee power. In response, this triggers more managerial controls to ensure that greater results are achieved. This managerial control is triggered by the fact that ineffective control over the existing resources creates uncertainties for the firm’s operating environment.

To be able to fully win its share of the market, Wal-mart needs to maintain consistent positive relationships. These are between the management and the present resources provider as well as the industry surroundings. According to Poole and Van (2004), organizational responses to environmental pressure are meditated upon depending on organizational traits such as size. This therefore means that the bigger the size of the scale and scope, the greater the firm’s ability to actively influence its surroundings.


To be able to survive in an environment that is hyper-competitive, Wal-mart needs to embrace the expansion of their operations into urban and rural regions as well as foreign markets. This will eliminate the firm’s reputation that a bully needs to be eliminated by implementing social awareness and advancement programs.

Wal-mart should not take the evolving capabilities in pursuit of above-average returns. Instead, it should work to acquire a collection of the capabilities, which in turn lead to strategically building a sustainable competitive advantage. Attaining and sustaining of competitive advantage is a vital concept of the firm optimum operations. Moreover, the competitive advantage will enable the firm to ‘eat’ any firms that have infested its market. The firm also needs to create an environment that is a source for inertia and stable in order to impede the market forces.



Choo, C. W., & Bontis, N. (2002). The strategic management of intellectual capital and organizational knowledge. Oxford: Oxford University Press.

Freeman, R. E. (2010). Stakeholder theory. Cambridge University Press.

Hill, C. W. L., & Jones, G. R. (2012). Strategic Management. Cengage Learning.

Information Resources Management Association., & Khosrow-Pour, M. (2006). Emerging trends and challenges in information technology management. Hershey, Penn: Idea Group.

Poole, M. S., & Van, . V. A. H. (2004). Handbook of organizational change and innovation. Oxford, UK: Oxford University Press.