September 29, 2008
Case Study 1 – Wal-Mart Stores
TABLE OF CONTENTS
Table of Contents pg. 1
Executive Summary pg. 2
Ch. 1 pg. 3
1.1 Mission pg. 3
1.2 History pg. 3
1.3 Background pg. 4
Ch. 2 pg. 4
2.1 Internal VRIO Analysis pg. 4
VRIO Table pg. 10
2.2 External Five Forces Analysis pg. 10
2.3 Problem Statement pg. 15
Positioning Grid pg. 16
Ch. 3 pg. 16
3.1 Option 1 pg. 16
3.2 Option 2 Pg. 16
Ch. 4 Strategic Option Evaluation Pg. 16
4.1 Strategic Evaluation of Unionizing Pg. 16
4.2 Strategic Evaluation For Reorganization Pg. 18
4.3 Recommendation and Plan of Action Pg. 19
4.4 Competitive Advantage Pg 19
4.5 Implications Pg. 20
Endnotes Pg. 21
Historically the discount shopping experience began in the mid 20th century, and in 1962 Wal-Mart helped pave the way along with other competitors such as Target and K Mart. Since then Wal-Mart has grown into one of the top retailers in the United States, and are currently in the process of trying to establish themselves into international markets. A key to Wal-Mart’s success is their competitive advantage of low prices – lower than any of their competitors in the discount retail industry.
Being a top business does not exempt one from problems. Over the years Wal-Mart has been one of the most scrutinized businesses in America. Wal-Mart has had to deal with employee disputes over health benefits, wages, hours, and labor. They have faced opposition from the communities, banks, elected leaders, and unions in many of the small towns they have expanded to. Many argue that Wal-Mart stores can have a negative effect on the community, because Wal-Mart has driven out other local competition by driving the prices down.
Another issue with Wal-Mart Stores is the perceived quality of their products which is considered marginal. In recent news there are several accounts of product recalls, and there are numerous consumer reviews of poor products purchased at Wal-Mart Stores. Wal-Mart’s goal is to treat their customers like family while providing them with quality goods at lower prices, and, the issue of quality being sub-par is a major issue. This quality problem, coupled with being closely scrutinized by all of America, has lead to the deflating of Wal-Mart’s image. The challenge facing Wal-Mart, especially in this trying time of economic hardship, is to boost its perceived value to the customer by improving the quality of their goods while keeping themselves differentiated from their competitors. Keeping costs of running their business low will in turn allow them to continue to offer low prices to their customers.
There are several options that a major company is faced with that will take their company in different directions. There are two drastically different options to follow that Wal-Mart should analyze and take action with. One option is more organization with the individual stores while the other has to do with completely changing the structure of the company. In becoming and also staying a major coming in an industry money and time must be spent to stay at the top. By unionizing a company such as Wal-Mart, the costs would be very great in initial start up while they may knock down future legal costs. By reorganizing the stores and creating a new atmosphere, there is less start up costs but there is no room for structure change. There are tradeoffs that all companies are faced with and any option that is analyzed is important to the life of the company. Ch. 1 Introduction
Wal-Mart’s mission statement is simple, “Saving people money so they can...