International Business Strategy
Members of the group:
Consultant Group F
10, Champs Elysees
Rennes, 15th March 2006
Board of Directors of Wal-Mart
As a consultant group hired to analyse the current situation in your company, we have prepared a report on the problems it is facing, different viable alternatives and the description of the strategy that, we think, is going to help to overcome the difficulties.
Wal-Mart Stores Inc, has already been the miracle of the retailing markets. It is now the world largest discount retailer, with 5,000 stores and wholesale clubs in 10 countries. In 2003, your company ranked first in the top 500 enterprises. However, it is well-known that the competition is becoming more aggressive nowadays.
In order to give the most suitable recommendations, we have first analysed the current situation of the company and found some challenges to take up for the future. Then we have defined the main problem and set up an alternative to solve it. Finally, we have worked on the implementation of the strategy.
We enclose the mentioned report and look forward to pleasing your expectations.
Consultant Group F
TABLE OF CONTENTS
TABLE OF CONTENTS
I) WAL-MART'S CURRENT SITUATION
VII) CONTINGENCY PLAN:
Wal-Mart is the largest retailer and one of the largest companies in the world based on revenue. In 2005 it reported net income of more than USD 11 billion and sales revenues around of USD 310 billion so its financial power is huge. It is also the largest private employer in the United States, Mexico and Canada, and has almost 1.4 million employees all over the world. It is already implemented in 15 countries. Wal-Mart has great brand awareness; customers see it as the real low prices specialist.
A few years ago it started experiencing many problems. First of all, many lawsuits have been suited against the company claiming that there is a gap between men and women's wages. Secondly, Unions have requested higher salaries for the workers inside Wal-Mart, and have explained that it was impossible to compete if they paid such low wages. As if this was not enough, people in small towns have claimed that the company destroyed all the local businesses. Finally, competition has been getting more aggressive in overseas markets.
After detailed analysis it was clear that the main and most urgent problem was the weak Human Resources Management that the company has. Indeed it ruins the public image and could seriously damage the long-term strategy.
To cope with this situation different alternatives have been found. The best one is implementing an important Human Resources Plan in the next 2 years. This plan consists in increasing 10% the minimum wages, giving health care protection to every worker in the company, eliminating any possible gap between men and women's wages, and train women in the company to occupy management positions.
The cost of the strategy is going to be around USD 1 billion. The company will get it after negotiating lower prices from suppliers, cutting slightly the expected profits figures and from savings because of the efficiency gained with the strategy.
I) Wal-Mart's Current Situation
1) SWOT Analysis
Low-price specialist. Before any other store, Wal-Mart has understood the customer desire to pay less. As it has built an efficient business strategy and succeeded in cutting its prices at each step of the business process, Wal-Mart has a huge advantage compared to its competitors. This is efficient since customers recognize that they find the lowest prices at Wal-Mart stores, and no other company has managed to copy it.
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