Wal-Mart: The Challenges of Dominance
There are few companies that have become household names all across the Americas and many parts of the globe. One such company is Wal-Mart. Since its’ birth in 1962, there have been over 4,700 company locations opened, employing over 1.4 million people in the continental United States alone. (WALMART STORES.COM 2011) Wal-Mart was founded by Sam and Bud Walton as a department-sized store targeting small rural towns throughout the Midwest. It has immersed itself in a rapid amount of growth and success over the first few years by offering among the best levels of customer service, as well as “Every Day Low Prices.” After several decades of extreme growth, Wal-Mart began to finally shift its focus from targeting rural areas to that of urban areas all across the United States with its adaptation of the larger supersized centers that could offer a wide array of products and services. A great example to show its rapid movement would be to compare its growth to that of several of its’ competitors. It was founded the same year as corporate moguls Target and Kmart, and in 2011 it grossed revenues of more than four times that of both of these companies combined. (WALMART 2011) Retailing is the second largest industry in the U.S. and one of the most sizable in the world, and Wal-Mart is larger than the next four global giants combined.
Wal-Mart’s capabilities in the Retail link-system, as well as its innovations in developing the hub and spoke distribution system, have enabled it to maintain itself as one of the most efficient and productive companies in the world. They were able to accomplish this feat by utilizing every square foot of effective space for a maximum output. With several decades of success in the domestic realm, by 1992, the time for Wal-Mart to concentrate on global expansion was inevitable in spite of Sam Walton’s opposition to global visibility and exposure. By focusing on an essential formula of creating value with customers and composing employee relations that would build an impenetrable bond of loyalty, Wal-Mart has assembled a limitless atmosphere for upward growth. As company leaders constantly suggest: “Wal-Mart has been recognized as a leader in sustainability, philanthropy and employment opportunity.” (WALMART STORES.COM 2012) The company has established itself as a leader in customer service as well as providing benefits and opportunities for its employees, but like any company that reaches high levels of success, it does not come without certain conflicts and opposition. After experiencing several stretches of annual profit growth, Wal-Mart would begin to see a period of sluggish growth. Wal-Mart experienced a decline in the discount store chain segment in 1996, which signaled the beginning of a shift toward the Super Center Chain, mimicking the hypermarket concept that was so successful overseas, from that point on. This certainly boosted its efforts in greatly expanding the company even further. The Corporation would face a wide array of difficulties during the conversion process including instances such as the corporate name being assaulted by news companies for its use of underage labor overseas in providing several product lines, and it received backlash from over 100,000 independent vendors citing their inability to compete with Wal-Mart’s economies of scale. Many of the company’s desires to expand globally can be drawn from these instances. Wal-Mart’s main drawback toward achieving this goal was its’ unfamiliarity in many regions where it expressed an interest for development. This would cause further predicaments in the near future. While Wal-Mart would experience success in international markets such as Canada, Mexico, and the United Kingdom, It would have many troubles penetrating the markets in China, Germany, and much of Eastern Europe. Wal-Mart’s main obstacle was misjudging the consumer interests and business culture in each...
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