Walmart: A Case Study in Strategy
Management 5650 Management and Strategy 2014
Professor Mike Gibbs
September 20, 2014
As I sat down several weeks ago to begin writing this case study, I struggled with how I wanted to lay the paper out, however, when I opened Lee Scott’s 21st century leadership speech that was part of the required reading, the following quote struck me as the essence of the whole case study, so I would like to share it with you. You know, we are in uncharted territory as a business. You won’t find any case studies at the Harvard Business School highlighting answers for companies of our size and scope. If we were a country, we would be the 20th largest in the world. If Walmart were a city, we would be the fifth largest in America. People expect a lot of us, and they have a right to. (Scott, 2005) Walmart: A Case Study in Strategy
From their website, Walmart helps people around the world save money and live better -- anytime and anywhere -- in retail stores, online and through their mobile devices. Each week, more than 245 million customers and members visit our nearly 11,000 stores under 71 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2014 sales of approximately $473 billion, Walmart employs 2.2 million associates worldwide. (Walmart, 2014) Opened in 1962 in Rogers, AR, Walmart has grown from a local company to a global company with international reach. Walmart has opened thousands of stores in the U.S. and expanded internationally. Walmart operates over 11,000 retail units under 71 banners in 27 countries and e-commerce websites in 10 countries. (Walmart, 2014) Through innovation, they are attempting to create a seamless experience to let customers shop anytime and anywhere online, through mobile devices and in stores. Walmart is completely committed to saving people money so they can live better according to their website and that is the message they have propagated for years. In my humble opinion they are very good at staying on message and selling their company which has helped make them a global powerhouse. With all that being said, no company grows to the size and scope of Walmart without challenges and changes in strategy and, goals and priorities which, we will discuss throughout this case study.
Threats and Challenges
One of the more recent threats to Walmart has been the cost cutting measures that they have taken since the recession. The following passage from a story in Bloomberg Businessweek sums up what I would consider the most recent threat facing Walmart in the last 5 years. Margaret Hancock long considered her local Walmart superstore her one-stop shopping destination. But during recent visits, the retired accountant from Newark, Del., says she failed to find more than a dozen items, including certain types of face cream, cold medicine, mouthwash, bandages, and hangers. Walmart’s loss was a gain for Kohl’s, Safeway, Target, and Walgreens, the chains Hancock visited for the unavailable items. “If it’s not on the shelf, I can’t buy it,” she explains. “You hate to see a company self-destruct, but there are other places to go.” (Dudley, 2013) Walmart has been cutting staff since the recession, and pallets of merchandise are piling up in its stockrooms as shelves go unfilled. In the past five years the world’s largest retailer added 455 U.S. Walmart stores, a 13 percent increase, according to company filings in late January. In the same period its total U.S. workforce, which includes employees at its Sam’s Club warehouse stores, dropped by about 20,000, or 1.4 percent. (Dudley, 2013) A thinly spread workforce has other consequences: longer checkout lines, less help throughout the store, and disorganization. Last month, Walmart placed last among department and discount stores in the American Customer Satisfaction Index, the sixth year in a row the company has either tied or taken the last spot. (Dudley,...
References: Bonini, S. M., Mendoca, L. T., & Oppenheim, J. M. (2006). When Social Issues become strategic. McKinsey Quarterly, 20-32.
Dudley, R. (2013, March 28). businessweek.com-articles. Retrieved from businessweek.com: http://www.businessweek.com/articles/2013-03-28/walmart-faces-the-cost-of-cost-cutting-empty-shelves
Head, S. (2004, December 16). Inside the Leviathan. The New York Review of Books, pp. 1-9.
McMillon, D. (2014, January 28). Disruptive Innovation Ahead. (S. Ruhle, Interviewer)
Pelletier, J. (2013, November 27). fool.com/investing general. Retrieved from www.fool.com: http://www.fool.com/investing/general/2013/11/27/3-challenges-new-wal-mart-ceo-doug-mcmillion.aspx
Walmart. (2014, September 20). Our Story. Retrieved from Walmart.com: http://corporate.walmart.com/our-story/?povid=P1171-C1093.2766-L6
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