Stakeholder Analysis of Wal-Mart

A long-range strategic planning is so important to an organization because if you fail to plan, change in your business can be tough to handle and ultimately you are planning to fail. Strategic planning is one of the only ways a top management team can plan for economic, demographic, competitive, technological, and regulatory changes that affect the way your organization operates.

The firm must engage in strategic planning that clearly defines objectives and assesses both the internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments as necessary to stay on track.

TASK 1.A: IDENTIFY AN ORGANIZATION OF YOUR CHOICE WHICH YOU WILL DISCUSS AS AN EXAMPLE IN THIS ASSIGNMENT AND GIVE YOUR REASONS FOR CHOOSING THIS ORGANIZATION.

Wal-Mart will be taken as the organization of my choice to discuss through the various aspects of this assignment.

Wal-Mart is the leader in retailing industry with fiscal revenue of $244.52 billion in 2003 making it the world’s largest corporation. Mike reports that Wal-Mart as of 2002 had 1,283,000 employees growing at 11.2%. The above data explains that strategy of Wal-Mart is extraordinary which manages and operates over 4150 retail facilities globally. The key components of Wal-Mart (The Value Chain), which offers cheap prices than its competitors includes firm infrastructure like frugal culture, no regional offices and pleasant environment to work. Managements take lots of visits and it is learnt there are no rehearsals before any meeting which is usually scheduled on every Saturday. In any organization, human resource is the key to development and Wal-Mart efficiently manages its sources. Wal-Mart terms its employees as associates. Manager compensation is linked to the profit of store operated by him, within promotions, compensation offered to associates depending on company’s profits and also offered some incentives on their performances. The workforce at Wal-Mart is not unionized as the company takes all the measures of their benefits and provides them training on related issues. Technology plays a vital role in development of the organization and Wal-Mart is well equipped with technological innovations like POS, store performance tracking, real time market research, satellite system and UPC. Wal-Mart procurement measures like hard-nosed negotiations, partnerships with some vendors, centralized buying, planning packets, etc. helps at large the cause of providing the goods and services on cheap prices. The other factors that increase the margin of profit for Wal-Mart are inbound logistics with frequent replenishment, automated DCs cross docking, pick to flight, EDI, hub and spoke system. Wal-Mart strategy of operation is innovative with big stores in small towns with monopoly in the market at low rental costs, local prices, concentric expansion, merchandising in brand name, private labels, little space for inventory, store within store, etc. In relation to marketing and sales, merchandising is tailored from locals, spent less on advertising and the prices are fixed low and it depends on the store manager to fix the latitude of pricing. All the above factors combined together form the key components of Wal-Mart which not only increase the margin of profits through bulk sales but also boost the confidence of the customers with services like point of sale information system and everyday low prices.

TASK 1.B: WHO ARE THE MAJOR STAKEHOLDERS OF YOUR ORGANIZATION AND WHAT CONSIDERATIONS SHOULD BE MADE TO ENSURE THEIR (STAKEHOLDER) PARTICIPATION IN DEVELOPING MANAGEMENT STRATEGY

Stakeholder Analysis of Wal-Mart

In determining the public affairs strategy of Wal-Mart, there are many groups and individuals who have a stake in what Wal-Mart does. These stakeholders can be divided into two groups: the market and non-market stakeholders. The market stakeholders are those groups and individuals who have an economic stake in what the company does. The non-market stakeholders are those groups and individuals who have a non-economic stake or political stake in what course the company takes.

Market Stakeholders

1. The Stockholders

The first group that has an economic stake in what Wal-Mart does is its shareholders. These are the people who actually own shares of Wal-Mart and therefore are interesting in seeing a return on their investment. They hope the value of their stock will rise and they will see dividends. According to the 2001 Annual Report, last year, Wal-Mart paid out $.24 per share in dividends (Annual Report 2001, 45).

2. The Wal-Mart Executives

The top executives of Wal-Mart also have an economic stake in the company just as the regular stockholders do. Many of the top executives received stock options are part of their salary. Obviously, they want their stock value to rise because a large part of their compensation comes from how well the Wal-Mart stock is doing.

3. The Employees

While some of the employees may have stock in the company, many of them have an economic stake in the company just because their job is their primary source of income. They want Wal-Mart to do well because then they will keep their job and their source of income. Their financial compensation from Wal-Mart sustains them. Wal-Mart employs more than 885,000 people nationwide (Reid, 1)

4. The Communities where Wal-Mart is located

Each of the communities that have a Wal-Mart located in it has a stake in how well the company is doing. Many of these communities rely on Wal-Mart not only for jobs but also for a place to purchase many of their day to day necessities are a low price. Without Wal-Mart in these communities, there would be people without jobs and families paying higher prices for the goods that they need.

5. Consumers

Consumers have a stake in how well Wal-Mart is doing. According to the 2001 Annual Report, Wal-Mart is the country’s largest grocery retailer (Annual Report 2001, 7) and therefore many people rely on Wal-Mart for their groceries.

6. Non-profit Organizations

Many non-profit organizations have an economic or market stake in how well Wal-Mart is doing. The Wal-Mart foundation provides many non-profit organizations with funding and if the company is not doing well, the Foundation is not going to do as well either. According the Wal-Mart Good Works Foundation, 97 percent of their funding goes to non-profit organizations in the communities where their stores are located. The Wal-Mart Good Works Foundation provides funding to programs that deal with community, education, environment and children. Therefore, if a Wal-Mart is located in a certain community, the non-profit organizations can look to the Wal-Mart foundation as a possible source of funding. (www.walmartfoundation.org)

7. Other Retailers

Other retailers have a stake in how well Wal-Mart is doing and how much they are expanding. If a Wal-Mart moves into a community, changes are the other retailers in that community, especially if they are privately owned are going to lose money and may even be forced to close down. Because Wal-Mart is the largest retailer in the United States and number 1 on the Fortune 500 list, they have the ability to lower their prices and therefore can force other retailers out of business because they cannot match Wal-Mart’s low prices.

8. Online Retailers

Like other retailers in communities where there is a Wal-Mart, online retailers also have a stake in how well Wal-Mart is doing. Wal-Mart totally revamped their website in 2000 in order to make it a more profitable part of their retail empire. Wal-Mart, unlike many other e-tailers closed down their website in September 2000 in order to revamp their site. While Wal-Mart’s online sales only represent a small portion of their overall sales, the website is a low cost way for Wal-Mart to deliver goods to consumer who lives in communities without Wal-Mart stores. (Business Week 11/6/00,2).

9. Gasoline Retailers

In 1996, Wal-Mart made its first partnership with the gasoline industry. Today, Wal-Mart has contracts with companies such as Murphy Oil USA, Sunoco, and Tesoro Petroleum. Wal-Mart contracts with these companies and leases real estate on their lots in order for the company to offer gasoline at Wal-Mart stores. Both the oil companies who have contracts with Wal-Mart and local gas stations have a stake in this. The local gas stations often cannot compete with Wal-Mart in either price or convenience. Over the next year, the oil companies that contract with Wal-Mart plan to expand to offer cheap gasoline at more Wal-Mart locations. For example, Murphy plans to expand to 600 Wal-Mart sites by 2003 and the other gas retailers have similar plans. (Reid, 5)

Non-Market Stakeholders

1. Labor Unions

Labor unions have a political stake in Wal-Mart has a strict policy about not having their workers unionized. Wal-Mart takes the position that they are better able to take care of their employees and provide them with the best benefits and compensation plans. Wal-Mart does not want interference from unions. Recently, Wal-Mart was charged by the National Labor Relations Board with violating federal law by keeping employees from holding elections and joining the United Food and Commercial Workers International Union. (NY Times, C2)

2. International Retail Stores

One of Wal-Mart’s key policy issues has been to move into the international retail market and open stores in other countries. Last year, Wal-Mart’s International Division’s sales increased by 41 percent (Troy, 47). Currently, Wal-Mart has stores in Chine, Korea, the United Kingdom, Brazil, Argentina, Germany, Canada and Mexico (Thau, 9). Wal-Mart must work closely with Public Relations firms in those countries in order to make sure there is no backlash against them moving into other countries. They must also be careful to follow the laws of each of those countries when they open new stores. Wal-Mart has been careful in moving into the international markets. They have acquired companies already well established in those countries and have made sure that 90 percent of their international products are locally sourced (Thau, 9).

3. Politicians

Politicians have a non-market stake in Wal-Mart for several reasons. First of all, politicians may or may not want Wal-Mart opening in their district. On one hand, it may be good for the community. However, if it is a district with a large union presence, the politician may not want Wal-Mart is that area. Also, politicians may rely on Wal-Mart for campaign funding. Last cycle, Wal-Mart’s political action committee, Wal-Mart Stores Inc PAC for Responsible Government contributed $752,500 to various committees and candidates during the 2001 cycle.

TASK 1.C: WHAT ARE THE KEY CRITERIA THAT SHOULD BE CONSIDERED WHEN REVIEWING MANAGEMENT STRATEGY OPTIONS?

Key Points to make Planning Effective

1. The Success of planning depends upon the effectiveness with which the forecast has been made. If the forecast is accurate, there is every possibility that the plan will be success.

2. Flexibility must be introduced in the plan whenever necessary so that the employees can work with sustained interest and effort. The management shall not use pressure tactics and force employees to work for the sake of attaining the daily or weekly targets.

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3. All the members concerned with the organization must be involved in the task of preparing the plan. The viewpoints of the employees, who are actually going to perform the tasks, must be secured and their ideas may be incorporated in the plans, if found suitable.

4. The plan should not be prepared to focus on the financial goals of the business alone. It must have something for the employees. There must be some provision in the plan to reward efficient workers. Some inducement is necessary in the plan to motivate the employees to work harder.

5. The plan must be realistic. It should take into account the capabilities of both the managers and the employees. Both shall not be required to work beyond their capacity. In other words, the plan must not expect too much out of every person.

6. The plan must be communicated effectively to all the subordinate staff. Their consent may also be obtained. The successful implementation of the plan depends on the extent to which subordinates participate willingly in the performance of the tasks.

7. A co-ordinated effort on the effort on the part of every department is required for the success of the plan. To achieve this, the departments concerned shall work with proper understanding.

Additional steps that can be followed to avoid obstacles in planning.

(There should be no ambiguity in the objectives that are laid out. They must be clear and achievable.

• Use of information should be put in place. Management Information System can be used.
• Managers should sport a dynamic outlook and they should have that mindset of moving towards achieving the objectives
• All plans designed can have some amount of flexibility built into it.
• All resourcing required for the plan should be done upfront leaving on surprises at the end.
• The importance of having a Cost-Benefit analysis cannot be ruled out. This must be done.

TASK 1.D: DESCRIBE A SITUATION WITH YOUR CHOSEN ORGANIZATION WHERE A POTENTIAL STRATEGY MIGHT BE DEVELOPED TO RESOLVE AN ISSUE. PRODUCE AN APPROPRIATE STRATEGY AND INDICATE ITS RESOURCE REQUIREMENTS.

A strategic goal of Wal-Mart is to expand. It has done so successfully. Looking at the facts and figures clearly shows the corporations dominance and power. Currently the corporation employs over 1.3 million employees, one million in the US alone. The company owns over 4000 stores worldwide. Over 1,200 units (stores) are in operation internationally. Domestically, Wal-Mart is the largest US retailer, employing around 1 million people. It has over 3,000 stores and outlets, and 77 distribution centers. The company serves more than 100 million customers weekly in all 50 states, Puerto Rico, and several nations around the world. (www.walmart.com, Fact Sheet – Wal-Mart at a Glance, 2002).

Internationally, the retailer operates in Mexico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom. Its expansion strategy internationally has been aggressive and powerful. The latest expansion strategy is for the company to gain entry into a nation by corporate takeover of a national retailer. Once the company is bought, Wal-Mart converts the stores into Wal-Mart stores. Three countries, all with no previous Wal-Mart stores, became part of the corporation’s international presence when domestic retail chains were overtaken. In 1994, Wal-Mart bought 122 Woolco stores in Canada; today there are 196 units in Canada. In 1998 Wal-Mart bought the Wertkauf store with 21 units, now there are 94 Wal-Mart’s in Germany. In 1999, Wal-Mart acquired the ASDA chain with 229 units in the UK. Today, the UK has 252 Wal-Mart stores. (www.walmart.com, Fact Sheet on International Operations, 2002) This particular strategy, of corporate takeover, puts the company at an advantage when it enters into a new market. In one stroke, a large competitor is eliminated, and at once, Wal-Mart has real estate and employees, and a massive presence in its targeted location. This is an effective use of the company’s size and wealth, as few if any competitors are able to do this effectively. The company builds up brand familiarity, while retaining the old familiar outlets. Gradually, as the local Wal-Mart stores begin to make money, and local management assess their competition environment, the company begins to redesign the acquired stores to look like “Wal-Mart’s, it then begins to build new and larger stores in that new market. Wal-Mart is now the largest retailer in Canada and the UK.

TASK 2: DEVELOP VISION, MISSION, OBJECTIVES AND MEASURES

TASK 2.A: FOR YOUR CHOSEN ORGANIZATION, LIST THE DOWN IT’S ETHICAL, CULTURAL, ENVIRONMENTAL, SOCIAL AND BUSINESS OBJECTIVES. HOW ARE THESE INFLUENCED BY THE CURRENT BUSINESS AND ECONOMIC CLIMATE

Visioning

Creating shared understanding of future possibilities

A strategic vision is usually thought to be solely future oriented.

• A vision provides an organization a forward looking, idealized image of itself.
• Moves outside the usual assumptions.
• Concentrates on the end goal, not the means to reach the goal.
• Followers gain ownership by developing the means (action plan).

An alternate view from the field of organizational learning expands this to shared vision, which also includes a present component.

• Vision is not a destination, but an intangible structure that surrounds us and guides our daily activities. From this perspective, a shared vision is a form of self-identity.

This definition of vision is a collective belief in what the organization can become. In this way it is similar to a truly desired wish for the future. The difference, however, is in how we mold ourselves to adapt to the environment without expecting to be able to change the environment itself. Yes, there is an implicit assumption about the future. However, if the vision is sufficiently broad it will suffice for providing a framework for current decisions. Granted, all decisions are made in the present. Yet, to work toward something grander than the present employs some probability of future outcomes upon which to make decisions, all other things being equal.

Regarding feedback loops for control, such feedback can be employed for both corrective action and vision revision (interesting combination of words). If the feedback indicates a problem in the implementation and nothing amiss in the expected vision then the strategy and/or tactics can be altered to get back on track toward the vision. And if there is an indication that the vision is no longer realistic there is no problem with a shift in vision to a more workable vision. Normal planning cycles allow for such a step on an annual basis, which is probably too long for planning within a dynamic environment. But this gets back to the dynamics of the planning process itself. This approach to using feedback is similar to the use of a tracking ratio to serve as a warning system for a forecast that is no longer adequate to the current reality.

Implications

• What is unique about the organization’s self-concept of itself? Something that would be missed if the organization were not to fulfill this vision.
• What issues might arise among different stakeholders as this vision is realized?
• Are organizational practices aligned with the vision? Are desired actions reinforced by performance metrics?

Putting an organization mission & vision in place requires working at all levels of the organization. Oftentimes, the effort is only made at the top of the organization with the expectation that employee commitment will follow. Instead, limited compliance is accomplished, at best. It is recommended that a specific change program be put in place to develop a shared vision and common understanding of the group’s mission.

Mission

The mission is the ultimate purpose for why the organization exists. Essential components of a good mission statement include:

• Brief and easily understood by everyone.
• What – goods and services (beyond the basics)
• For Whom – market segmentation (geographic, sociological, financial, ethnically)
• How – market strategy, distribution strategy.
• Present and future possibilities.
• Why – basic reason the organization exists.
• Distinctive competency.
• Driving Forces.

Driving Forces

• Products and/or services offered
• Market served
• Technology
• Low-cost capability
• Operations capability
• Method of distribution & sale
• Use of resources
• Profit (return on resources)

•

TASK 2.B: DESCRIBE THE ROLES OF VISION AND MISSION STATEMENT OF YOUR CHOSEN ORGANIZATION

The corporate mission can be stated as follows:

As Wal-Mart continues to grow into new areas and new mediums, our success will always be attributed to our culture. Whether you walk into a Wal-Mart store in your hometown or one across the country while you’re on vacation, you can always be assured you’re getting low prices and that genuine customer service you’ve come to expect from us. You’ll feel at home in any department of any store…that’s our culture.

The company has three “Basic Beliefs” or core philosophies Sam Walton built the company on. Those beliefs are: (1) Respect for the Individual, (2) Service to Our Customers, and (3) to Strive for Excellence. Respecting the individual is a call for treating their employees well and pushing them to excel in what they do. The commitment to their customers is a goal whereby the stores respect a pricing philosophy to always sell items as low as they can while providing excellent customer service. The third belief is to strive for excellence, that is to expand the store, innovate, “reach further” in to new markets and to grow. (H. Lee Scott, 2002, www.walmart.com)

Other beliefs include, exceeding customer expectations with “aggressive hospitality” such as using door greeters. The store also features patriotic display and themes in its US stores. Another goal for the company is to support efforts in the local community via charitable contributions. Wal-Mart identifies several affiliations with charities such as the United Way and the Children’s Miracle Network (www.walmartfoundation.org).

The “Sundown Rule” is a corporate directive whereby all Wal-Mart employees, be they store “associates,” management, or corporate staff, must reasonably answer a customers or supplier request or question within 24 hours. The “Ten Foot Rule” states that store employees must greet, smile, and attend to a customer in a store when within 10 feet of them. It’s a type of aggressive hospitality policy. Wal-Mart also compels its staff to engage in morning “cheers” where they recite company sayings.

A final, yet important rule, which is a strong part of the corporate culture is Sam Waltons’ “Pricing Philosophy” which underlines the company strategy of selling items for less then their competitors, “always.” (www.wal-mart.com, corporate culture).

TASK 2.C: INDICATE HOW IT IS POSSIBLE FOR AN ORGANIZATION TO EVALUATE THE ACHIEVEMENT OF ITS OBJECTIVES

Implementing: Every company will have its own strategy but it is the operation which puts in to practice. You cannot, after all, touch a strategy; you cannot even see it ; all you can see is how the operation behaves in practice. The implication of this role for the operations function is very significant.

Support: It must develop its resources to provide the capabilities which are needed to allow the organization to achieve its goals. Example: If a manufacturer of personal computers has decided to compete by being the first in the market with every available new product innovation, then its operations function needs to be capable of copying with the changes which constant innovation will bring. It must develop or purchase processes which are flexible, enough to manufacture novel parts and products.

Driving: The third role of the operations part of the business is to drive strategy by giving it a long-term competitive edge. The both short term and long term success can come directly from the operations functions. An operations function which is providing both long and short term advantage is ‘driving ‘ business strategy by being the ultimate custodian of competiveness.

Effective operations management: Operation plays these roles within the organization can be judged by considering the organizational aims or aspirations function. The model traces the progression of the operations function from which it is largely negative role of stage 1 operations to it becoming the central element of competitive strategy in excellent stage 4 operations.

Stage 1: internal neutrality: This is the poorest level of contribution by the operations function. The other functions regard it as holding them back from competing effectively. Even good organizations can be let down by their operations function and the resulting publicity can be damaging.

Stage 2: External neutrality: The first of breaking out of stage 1 is for the operations function to begin comparing itself with similar companies or organizations in the outside market. By taking the best ideas and norms of performance from the rest of its industry, it is trying to be ‘externally neutral’.

Stage 3: Inernally supportive: These operations have probably reached the ‘first division’ in their market. They may not be better than their competitors on every aspect of operations performance but they are broadly up with the best.

Stage 4:externally supportive: The third stage is taken to be as the limit of the operations functions contribution.

TASK 3: PLAN FOR IMPLEMENTATION OF THE STRATEGY

TASK 3.A: DISCUSS HOW A TIMETABLE FOR STRATEGY IMPLEMENTATION CAN BE DETERMINED. INCLUDE A SAMPLE TIMETABLE, TO INCLUDE KEY MILESTONES AND THEIR TIMINGS

As an example, let us take the strategic planning and implementation of a university learning programs.

Following is a sample table that gives detailed timeline in achieving a specific strategic goal that have been set.

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TASK 3.B: HOW MIGHT THE DISSEMINATION PROCESS BE USED TO HELP AN ORGANIZATION GAIN COMMITMENT TO ITS STRATEGY AND THE IMPLEMENTATION OF THIS

Ten Elements of an Effective Dissemination Plan

After you have developed your dissemination policy statements, you are ready to turn your attention to more specific dissemination planning. Remember that your dissemination planning should start at the beginning of your research activities, not at the end. While some details of the dissemination effort will be suggested in your original proposal and refined as you progress through your research, your dissemination plan goals and objectives should be clarified at the beginning of your research project in consultation with your NIDRR project officer. This approach will allow you to meet your dissemination challenge in a timely manner.

1. Goals: Determine and document the goals of your dissemination effort for your proposed project.

2. Objectives: Associate each goal with one or more objectives that clarifies what you are trying to accomplish through your dissemination activities.

3. Users: Describe the scope and characteristics of the “potential users” that your dissemination activities are designed to reach for each of your objectives.

4. Content: Identify, at least, the basic elements of the projected content you have to disseminate to each of the potential user groups identified.

5. Source(s): Identify the primary source or sources that each potential user group is already tied into or most respects as an information source. Consider ways to partner with these sources in your dissemination efforts.

6. Medium: Describe the medium or media through which the content of your message can best be best delivered to your potential users and describe the capabilities and resources that will be required of potential users to access the content for each medium to be used.

7. Success: Describe how you will know if your dissemination activities have been successful. If data is to be gathered, describe how, when, and who will gather it.

8. Access: Describe how you will promote access to your information and how you will archive information that may be requested at a later date. Consider that most people will use your project-related information when they perceive a need for it – not necessarily when you have completed your research project.

9. Availability: Identify strategies for promoting awareness of the availability of your research-based information and the availability of alternate available formats.

10. Barriers: Identify potential barriers that may interfere with the targeted users’ access or utilization of your information and develop actions to reduce these barriers.

The dissemination and implementation of the strategic plan is a great time to actualize organizational values and improve internal processes. Once a strategic plan is established, the organization must keep a close watch on its progress or the plan and the goals will collect dust. It is usually not enough to meet a few times a year unless there are very few goals or the goals are basically to maintain the status quo. In general, it is best that those responsible plan a regular meeting schedule in order to maintain momentum and discuss issues as they arise. The processes around monitoring the implementation of the plan, disseminating the plan, developing the Action Plan, and so forth should be designed with the organization’s values as guiding principles. If possible, they should also incorporate solutions to any other organizational culture issues that were discussed during the strategic planning process. If solutions were not generated, the implementation processes should at least be designed with these issues in mind, with the intention of finding solutions at a point in the near future.

A good strategic plan must involve an examination of your organization’s values and internal process challenges (every organization has them). Often a strategic plan will expose problems that were hidden. This is a good thing. But only if you take control of them. The Action Plan must include steps to address mismatched organizational values and culture, starting with the implementation process.

TASK 3.C: DESCRIBE THE IMPORTANCE OF MONITORING AND EVALUATION OF A NEW STRATEGY. OUTLINE HOW THIS MIGHT BE ACHIEVED

Many strategic plans end up collecting dust on a shelf. Monitoring and evaluating the planning activities and status of implementation of the plan is — for many organizations — as important as identifying strategic issues and goals. One advantage of monitoring and evaluation is to ensure that the organization is following the direction established during strategic planning phase.

Note that plans are guidelines. They aren’t rules. It’s alright to deviate from a plan. But planners should be aware of the reason for the deviations and update the plan to reflect the new direction.

Responsibilities for Monitoring and Evaluation

The strategic plan document should specify who is responsible for the overall implementation of the plan, and also who is responsible for achieving each goal and objective.

The document should also specify who is responsible to monitor the implementation of the plan and made decisions based on the results. For example, the board might expect the chief executive to regularly report to the full board about the status of implementation, including progress toward each of the overall strategic goals. In turn, the chief executive might expect regular status reports from middle managers regarding the status toward their achieving the goals and objectives assigned to them.

Key Questions While Monitoring and Evaluating Status of Implementation of the Plan

1. Are goals and objectives being achieved or not? If they are, then acknowledge, reward and communicate the progress. If not, then consider the following questions.

2. Will the goals be achieved according to the timelines specified in the plan? If not, then why?

3. Should the deadlines for completion be changed (be careful about making these changes — know why efforts are behind schedule before times are changed)?

4. Do personnel have adequate res