Walmart Company Goals
Walmart remains the biggest supply chain store founded in 1962 by Sam Walton. It is one of the largest American multinational companies running a chain of warehouse and departmental stores. The goal of the company is to transform the lives of its customers through saving money on shopping (Massengill 12). Walmart was listed in the New York bourse shortly after incorporation in 1969. By late 1970’s, it had expanded to two hundred and seventy-six stores in eleven states. In the early 1980’s, the first Sam’s Club targeting individuals and small businesses were opened. The company’s ability to provide a seamless shopping experience to the customers enabled it to increase the market share twice fold (Loveless, Ron and Anna 36). Moreover, Walmart implemented some environmental initiatives with the aim of increasing energy efficiency. The Fortune Global listed Walmart as the world’s second-largest publicly trading company. Over the next two years, the management of Walmart plans to spend $2.7 billion in increasing wages, offering education, and training for employees.
A Summary of Walmart’s Competitive Environment
The retail industry involves the selling of merchandize and products from a static point like a store, online or through email. As the retail industry leader, Walmart’s products are differentiated in many ways (Massengill 25). Currently, Walmart faces fierce competition from all corners, internally and externally. The key competitors include Amazon that focuses on online retail business, Sears whose main focus is furniture, Best-Buy that concentrates on the sale of furniture, and other general retailers such as Kmart, Targets, and Costco. Target is Walmart’s direct competitor as it is slightly lower than Walmart regarding share market. Target’s strategy has been the delivery of quality, but discounted products to the customers. Its strategy attracts the rich, and as a result, Target generates a relatively higher sales revenue. Target customers also have a relatively higher average yearly income compared to Walmart customers. Target is not the only retailer slowly taking away Walmart’s customer base. Costco has in the recent past outperformed Sam’s Club stores in many ways. Between 2011 and 2014, Costco grew by 25%, more than twice the growth rate reported on Sam’s Club stores (Massengill 28). In 1998 and 2006, Walmart withdrew in South Korean and German markets by selling off tits store. In South Korea, it sold to Shinsegae outlets while in Germany, its stores were acquired by Metro Company.
Information Management at Walmart
Walmart has a centralized information system with approximately 3000 societies working in its Technology Center situated in Bentonville. The information system department is hierarchical involving business analysts, general managers, and level managers. Moreover, the department is formal and structured with the ability to track the amount of time spent on various projects (Loveless, Ron and Anna 41). The information systems department enables the company to remain within its productivity metrics and budgets. The data center has a huge capacity of 460 terabytes which is a big boost to the company growth secret. The data center has been considered a mysterious icon for Walmart helping it remain the business leader in the retail industry. The bar code technology has allowed Walmart to generate all the necessary information about the thousands of its products. Since inception, Walmart has continued investing more resources in information technology to boost production and sales in its thousands of stores spread throughout the world. Today, Walmart’s suppliers must provide microchips for servicing RFID. This requirement is a great enhancement to the barcode technology as it allows the company to know instantly the fast-moving and the slow-moving products. Moreover, this knowledge helps the company to decide which products to buy in large volumes and those to buy in small quantities.
The Major Transition or Strategic Decisions Made by Walmart
Walmart has made plenty of operations management decisions revolving around supply chain, sales and marketing, and inventory management. One of the strategic decision involves the design of its products and services. Walmart has a set of its brands including Sam’s Choice and Great Value brand that allows it to maximize efficiency. By producing its brands, Walmart minimizes the production costs and maximizes profit. Quality management is another major strategic decision made at Walmart. Currently, Walmart has three tiers of quality check including the lower, middle, and the upper tier. While the lower tier focuses on specifying the minimum quality expectations, the middle tier deals with the average market quality for the low-cost products (Loveless, Ron and Anna 47). The upper tier deals with quality levels above the market averages. The behavioral analysis is conducted on its employees and the customers, and it serves as the basis for capacity and process design.
Forecasting allows the company to evolve and to grow by changing the aspects that need change. The continuous monitoring allows the management to keep in touch with the current affairs of the company so as to address the various concerns raised by customers and the employees. Location strategy is another major strategic decision implemented by Walmart before setting up stores. Before setting up stores, Walmart takes into consideration the efficiency of movement of merchandize, business information, and human capital. The majority of Walmart’s stores are located in major urban cities to maximize the target market reach. The optimal scheduling allows the company to minimize losses associated with excess capacities. Moreover, the management occasionally changes the personnel and store schedule to deal with any anticipated changes in demand.
The Financial and Management Status of the Company
Walmart’s operations are divided into three major segments. In 2016 financial year, the Walmart US segment contributed 59% of the total sales made while the International segment contributed only 29% of the gross sales. The Sam’s Club segment includes the operations of membership clubs in America and the transactions made through the samaclub.com website (Massengill 33). This segment contributed only 12% of the gross sales. The sales revenue from 2012 through 2016 were $446,950, $469,162, $476,294, $485,651, and $482,130 billion. The sales revenue is expected to grow at between 3% and 4% over the next two years which translates to $45 to $60 billion increase over the period. Investments in digital programs and e-commerce are expected to be approximate $1.2 billion in 2017 financial year.
Moreover, the capital investments are expected to rise in 2017 to the tune of eleven billion dollars, and then remain the same for the next two years up to 2018. This rate is below the 2016 financial year estimates of $12.5 billion, and this is primarily because of the change in physical expansion of the stores. Walmart also announced at the release of 2016 financial statement that the board of directors authorized a new share repurchase program to the tune of $20 billion. These initiatives demonstrated the management commitment to increased value for shareholders (Massengill 39). It indicated the management’s effort to maintain a strong financial position that allows the company to focus on growth.
Projections for the Future
Walmart’s opportunities in the coming years revolve around expansion and improvement of its business practices. It can expand to the emerging markets, improve the quality of its product portfolio, and upscale its human resource practices. The expansion to developing countries is based on its economic condition and high growth metrics. The opportunities on human resource practices are related to the criticism that the company faces on its employment policy (Massengill 52). The majority of Walmart’s risks revolve around its global presence. Walmart needs to enforce different workplace standards in its various International locations.
Walmart pleaded guilty in Missouri and California in 2013 over improper disposal of hazardous wastes. In California, Walmart was fined for breaking the Clean Water Act while in Missouri, it was fined for breaking the federal law concerning the disposal of pesticide. As a result, Walmart paid fines amounting to $82 million. Although the lawsuit did not have a significant impact on the retailer’s financial position, it was prompted to revamp its wastes disposal practices (Clarkson et al. 63). Moreover, Walmart began training its employees on proper waste disposal procedures in all stores as well as setting up a compliance department. Investigations into the California case began in 2003 when Walmart employees tossed products such as fertilizer and bleach into local sewer systems instead of treating them as hazardous wastes. The judge held that retailers such as Walmart that deal with hazardous wastes owe the public the duty of safely and legally disposing of the wastes. Dumping the wastes down into the sewer was neither safe nor legal (Clarkson et al. 71). In Missouri the ruling Judge held that regulated pesticides were sold to customers without proper ingredients, information and the necessary registration.
Clarkson, Kenneth W, Roger L. R. Miller, Frank B. Cross and Kenneth W. Clarkson. Business Law: Text and Cases: Legal, Ethical, Global, and Corporate Environment. Mason, OH: South-Western Cengage Learning, 2012. Print.
Loveless, Ron, and Anna Morter. Walmart Inside Out: From Stockboy to Stockholder. Las Vegas, NV: Stephens Press LLC, 2011. Print.
Massengill, Rebekah P. Walmart Wars: Moral Populism in the Twenty-First Century. New York: New York University Press, 2013. Print.