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The organisation chosen is the hugely successful Wal-Mart before looking at the strategy employed by the company a little bit of background is needed. Wal-Mart is one of the largest retailers in the world at the present time, serving more than two hundred million customers a week. Originally started in 1962 by Sam Walton (Annual Report, 2009) to offer the cheapest products to customers, it soon grew in size, moving from one store to twenty-four within five years (http://www.pbs.org), becoming incorporated in 1969 and was then listed on the New York stock exchange in 1972 (http://walmartstores.com). The Wal-Mart brand has also become diversified by varying the type of store they have giving the company a wider variety, these include the Wal-Mart Super-centres, Wal-Mart discount stores, Neighbourhood Market stores and Sam's Club warehouses, the total number of Wal-Mart related stores has now soared to over seven thousand eight hundred. What began as a United States based store is now a global power with just under half of all Wal-Mart branded stores being internationally based, ranked as the largest publicly traded corporation, by revenue, in 2008 (Fortune Global 500, 2007), selling under fifty-five different names (e.g. ASDA) in fifteen countries (e.g. China). Not only are Wal-Mart considered the largest corporation in the world, they are considered to be the largest private employer in the USA, employing over a million in the USA and a further half a million worldwide (http://www.ufcw.org), and they are also the largest grocery retailer in the USA, selling $401.2bn worth of products in 2009 (Annual Report, 2009).
Despite this obviously successful strategy there have been some very big problems, in 2000 Wal-Mart was sued four thousand eight hundred and fifty one times (once every two hours, every day of a year) (http://www.usatoday.com). The number of alleged crimes committed by Wal-Mart range from predatory pricing and price-fixing (Arkansas Supreme Court, 1995) to low wage issues and gender discrimination (http://wakeupwalmart.com/facts). These cases would be very harmful to any business but as Wal-Mart is such a more widely know brand and store the impact that negative publicity can have may be slightly dampened, although a rethink in strategy could cut these out. Another area that Wal-Mart have been struggling in is breaking into the European markets, especially Germany, and South Korea, both of which Wal-Mart has had to pull out of due to decreasingly low sales and protests having tried to win over the populous for more than eight years, which according to "walmartwatch" cost the company in excess of one billion US dollars. [Finish off]
Assessing the current strategy of Wal-Mart
To begin to critically analyse the strategy of Wal-Mart we must break it down into component factors. In order for this to be done the market Wal-Mart operate in must be defined, in this case it is most prominent in the consumer supermarket and retailer area. The first component to look at is the trend analysis.
Trend Analysis (Van der Meer, 2005)
Trend analysis is the process by which a company's external context can be broken down and processed, in essence the trend analysis looks at any external factor that could affect the company's strategy. It is also known as a PEST analysis as it looks at the political, economical, social and technological aspects that affect the company's strategy.
First is political trend analysis which looks at how the strategy is affected by political shifts and government policy. Wal-Mart operate in many different countries with a wide variation in government policy, for the most part Wal-Mart operate efficiently in these areas. Within the USA Wal-Mart wields a huge amount of political power, their strategy seems to be using this power in order to get what they want. A few examples include using tax-payers money to further their means to do business, Wal-Mart is said to have received over one billion US dollars from two hundred and fifty public funds, for example infrastructure assistance and property tax breaks among other things, known as subsidy shopping (Mattera & Purinton, 2004). Using their power in order to receive millions of dollars to widen the main road to their headquarters, a federal highway bill signed by G.W.Bush himself (Associated Press, 25/03/05; Arkansas Democrat-Gazette, 11/08/05; Benton Daily Record, 21/08/05). This all shows that political variations in the USA have very little affect on the strategy that Wal-Mart employ, they just need to maintain the power they hold there will always be a need for money in political campaigns, therefore with the Waltons backing several different parties they will always have an ear in government and more influence than any other retailer. In international situations Wal-Mart has not had the same influence it maintains in the USA, for example in the UK ASDA (along with five other firms) has just be ordered to pay in excess of one hundred and fifty million pounds (three hundred and forty four million US dollars) for price fixing of cigarettes (Bloomberg News, 11/07/08). This shows that the international strategy when it comes to political power is lacking in comparison to the USA political power. Anti-Wal-Mart groups have been trying in vain to point out this huge amount of power that the Waltons and Wal-Mart hold (http://walmartwatch.com).
The next thing to look at is the economic trends that can affect the company. Economic trends can be anything that affects the economy, such as globalisation and the propensity of consumers. In the present economic climate where people are looking to tighten their belts and spend less Wal-Mart's slogan of "Save Money. Live Better. Now more than ever" has a greater impact and appeals more to people. Wal-Mart psychologically price their merchandise, so it appears that they are selling at the lowest price and people therefore buy in Wal-Mart's due to the perceived lower price than their competitors. This change in the international economy has meant that people are willing to spend less and therefore Wal-Mart has benefited from this decrease in disposable income. Wal-Mart has also become a very large global entity this means that they are moving into other economic areas, with the USA becoming vastly saturated with Wal-Marts they have moved into China and the UK, among others, where they hope to try and become a dominate force. Therefore the change of economic conditions means they will have to adapt to the economies they are operating, which they failed to do in South Korea and Germany.
Thirdly is looking at social factors that could affect the company. Social trend analysis looks at how people view what is important to them at the present time. So in the current economic climate people are unwilling to spend money on what they perceive as unnecessary purchases, or luxury items. Therefore Wal-Mart's products, again being perceived as a lower price than the competition, will be more likely to be purchased as they will not be seen as unnecessary or luxury. Social factors such as how the company itself is perceived is very important. Wal-Mart has a huge amount of controversy surrounding it (price fixing, gender discrimination etcetera) along with these there is a growing concern about the environmental impact that Wal-Mart has, these include water violations and the buying up of prime farmland. Environmental issues are very much in the news at the moment so Wal-Mart's continuous disregard for following environmental rules to help maintain the environment could lead to a very negative social perception of damning proportions, which would be bad for the company itself. Having said this recently Wal-Mart has put into place several environmental measures to help improve their image, they have become the biggest seller of organic milk and cotton (Gunther, 2006) along with building several environmentally friendly stores which combine wind turbines, water cooled fridges among other environmentally friendly ideas to make them more green (Berner, 2005) - thus raising their public image.
Fourthly is the technological trends which the company can take advantage of or already have which gives them an advantage over the competition. Wal-Mart has become a technologically advanced giant and has taken advantage of every new invention that has been produced. For example they were the first company to introduce radio frequency identification technology which means that they can keep a much better track of stock and reduce the number of out of stock items. They also pushed through a new universal bar code which forced the manufacturer's to adopt common labelling, which meant that they cut out some of the lee-way in the supply chain thus making them more efficient and therefore more profitable. Overall any technological changes are more than likely to come from or be pioneered by Wal-Mart.
It would now be important when looking at trend analysis to look into demographic trends but since Wal-Mart function in so many different population areas and so many different countries it would be a bit pointless. Although having said this there is a change in one very universal demographic, Wal-Mart is trying to move from rural areas into major urban populated areas which is proving a bit of a problem but with more and more people living within urban populations they must learn to adapt (http://www.FT.com).
The next component to look at is how the competitors compare to Wal-Mart, how powerful they are and how well they operate in the market.
Competitor Analysis (Van der Meer, 2005)
The first thing to consider is the competition level. All firms participate on four different levels