Crafting and Executing Strategy: Case Analysis of Wal-Mart Stores, Inc. 1.0 Source Problem
Wal-Mart Stores, Inc. faces a plethora of problems in just the past five years including a barrage of public criticisms calling for a change in the management strategies of Wal-Mart. The underlying problem or fundamental issue is the cost-based competition that Wal-Mart intensified through its obsession for cost minimization. In a way, Wal-Mart commenced and intensified price wars. Wal-Mart achieved sales less than its target so that it cut back prices during the holiday season and other occasions on various items including back to school products. By decreasing its price, Wal-Mart intended to draw more customers to make more purchases and enable the company to achieve its targeted sales (Thompson, Strickland & Gamble, 2007). The decline in sales was due to the saturation of the market as well intensifying competition resulting to demolition campaigns against Wal-Mart. 2.0 Secondary Problems
Cost-based competition finds expression in specific short-term and long-term problems that Wal-Mart experienced. This finds expression through the reputation of Wal-Mart as a corporate bully because of its aggressive strategies sourcing and marketing its retail products. 2.1 Short-Term Specific Problems
One specific short-term problem of Wal-Mart is the continuous price cuts it implements every year and even every season intended to make Wal-Mart as the retail store offering the lowest price. This was necessary for Wal-Mart to fulfill its promise of offering low prices always. As such, it needed to engage in continuous price promotions in order to achieve its promise. However, this also constituted a problem for Wal-Mart since its cost-based competitive strategy became subject to scrutiny not only by its competitors but also by employee and consumer groups (Thompson, Strickland & Gamble, 2007). This is also a dilemma since Wal-Mart cannot suddenly decrease its price because it will not be able to fulfill its marketing message to the public but it also had to exercise care in its pricing strategy. Wal-Mart develops themed justifications for decreasing its prices to sway public opinion from the criticisms towards its cost-cutting practices to the benefits that the low prices can bring to consumers that would eventually redound to the benefit of the other stakeholders. 2.2 Long-Term Specific Problems
Criticisms that created problems for Wal-Mart come from four areas with the problem developing and accumulating over the years. First problem is the claims by small businesses comprising direct competitors of Wal-Mart that its aggressive product sourcing and marketing strategies have greatly and adversely affected small businesses. This problem developed as Wal-Mart expanded its market to the rural areas resulting to the displacement of the small retail stores in many rural areas and its pricing strategy prevented the small retail firms from competing. Second problem is the claims of manufacturers that Wal-Mart engages in unfair dealings or negotiations with producers and suppliers. Rubbermaid is one well-known producer that publicly accused Wal-Mart of aggressively negotiating in order to set an unfair price for its products. This is a problem because suppliers can band together to pressure Wal-Mart to purchase products for resale at a higher price that the company is bidding for. This could hurt the cost-effectiveness strategy of Wal-Mart. Third problem is the claims of its employees of gender discrimination in its promotional practices, non-payment of benefits and overtime pay, and locking employees inside the stores. These claims adversely affect the reputation of Wal-Mart and affect the morale of its workforce. Fourth are claims of consumer groups that Wal-Mart of contributing to the degradation of the community and natural environment because of its large stores and supporting the...
Please join StudyMode to read the full document