Wal-Mart - Business Practice and Structure of a Retail Giant

Topics: Wal-Mart, Supply chain management, Trade union Pages: 11 (4213 words) Published: December 3, 2013
2.A Short History of Wal-Mart2
3.The Company Culture of Wal-Mart – Pillars to Success4
3.1.Supply Chain Control and Clever Marketing4
3.2.Labour Policy5
3.3.Controlling the Suppliers6
4.Wal-Mart in China7
5.Wal-Mart in Germany8
6.Success Always at Low Prices?9

Being the biggest company in the world in terms of sales volume, directly and indirectly employed personnel Wal-Mart is one of the most controversially seen companies on the planet. Providing 15 countries with “Every Day Low Prices”, driving off labour unions, pressurizing suppliers and being responsible for massive outsourcing in the U.S. the media coverage on this company is enormous. With this essay it is intended to give an overview over the business practices of the global-player Wal-Mart. First it will be shown through an historical overview and how the company placed itself over the years in such a powerful, influential, money-generating and controversial position in the global economy. With a special focus on the supply chain management practices and the company culture of Wal-Mart it will be analysed if the famous business slogan “Always at Low Prices” just stands for the actual prices of the products in the shelves, or if the whole society can profit from this apparent advantage. 2.A Short History of Wal-Mart

In 1962 the first Wal-Mart Store opened its doors in Rogers, Arkansas founded by American entrepreneur Sam Walton. With his passion for direct customer contact he made a crucial difference in this era, which was by stores in which the customer had to ask for each item in order to see it. The new and simple paradigm of Walton was the establishment of auto service in his stores which made it much easier and faster for customers to buy goods and also made it possible to run bigger stores with less employees which was the base Walton’s second crucial strategy: Selling products at very low prices and make high profits with large quantities rather than with high profit margins on each product. Thus, the first store already had a high variety of low-priced products leading to fast success and expansion. In 1966 Sam Walton already owned around 20 stores and despite his big success made steps towards raising the efficiency in the supply chain process. The key step in reaching this objective was the closure of a contract with IBM which helped technologizing the supply-chain management. As a result he opened his first distribution center and the main office of Wal-Mart in Bentonville, Arkansas. The goal was to store the whole inventory of the Wal-Mart chain in one place and to supply the single stores with goods through the company owned truck-fleet. Walton knew that it was crucial, in order to maintain prices low, to have rigid control over the inventory. Low quantity of products in the inventory often means high losses of sales for a company, whereas, too high quantity means excessive costs and financial inflexibility. The control of the inventory requires control of information. Thus, Wal-Mart converted itself to an icon in inventory control at that time, establishing sophisticated logistics and high efficiency supply management. The company was one of the first ones to use the barcode system in such a way that each barcode that was registered by a cash register was sent directly to the central computer in Bentonville. The new computerized headquarter made it possible to observe and make detailed forecasts about customer behaviour. This in turn helped to rationalize the supply chain, find equilibrium prices easily and utilize precision merchandising (Garcia, 2006). These steps made it possible that the Wal-Mart Company in 1979 had 270 shops in the United States, increasing the total revenue in 1970 from 44 million dollars to 1,248 million dollars in 1979. For the first time Wal-Mart was also mentioned in Forbes Magazine. Extending the amount of...

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