What used to be Wal-Mart before 2008 has reformed and been rebranded to suit the changing markets of the world and generally embrace the financial potentials provided by the global market. It was re-branded Walmart in 2008 which saw the American public corporation rise to become the world's largest public corporation by revenue in 2010. Walmart was founded by Sam Walton in 1972, who was a business man from Arkansas. Walton emerged from a humble beginning as an employee of J. C. Penney in Iowa to starting his first store, Walton's Five and Dime, in Arkansas which gave birth to multibillion dollar chain shops of Walmart.
Walmart is basically the largest grocery retailer in USA as well as the largest seller providing several goods and services. It has grown considerably over the years, operating in USA as well as North America. Its global business chain stretches all over the world through South America Europe and Asia. This comprises of wholly owned corporations in Brazil, Argentina, Canada, Puerto Rico, UK, Japan, Mexico etc. This is strategically achieved through the localization of its global stores operating as Walmex in Mexico, ASDA in UK and Seiyu in Japan.
Walmart's ascent has not however been a bed of roses as it has seen its ventures succeed and fail in equal measure. It reminds a very strong corporations with one of the greatest brands which ha successfully reaped the benefits of the global economy. Walmart has enjoyed unparalleled success in South America, United Kingdom and China but could not duplicate this in Germany and South Korea where it had great difficulty in establishing a market. Walmart continues to scour the world market capturing emerging customer spheres all around the world.
The success of the firm can be pegged in the effective management that has been characteristic since its inception. Started by a visionary entrepreneur who sought to establish a brand that would command market positions it has grown along the shrewd lines of a talented strategic management team that is able to align the firm with the successful wave of financial and economic advancement. This case analysis seeks to establish the decision making process that has enable Walmart chain stores emerge as a leading business corporation in retailing.
Walmart a chain store in USA is a public corporation founded by Sam Walton in 1972. It has grown since into one of America's largest chain store and has invariably established its elf a recognizable niche in the global market. The public corporation is a very successful firms especially its grocery sales whose profitability was demonstrated in 2009 when it generated 51% of its US$258 billion sales in the USA only. Walmart has about 8500 stores in 55 countries which demonstrate the extent of customer base it has assimilate from the global market. It operates with 55 different names specific to the area where it is situated for example it operates as Sam's Club Retail Warehouses in North America, Walmex in Mexico, ASDA in UK, Best Price in India and Seiyu in Japan. In America it operates using its own name in almost 50 states. It has been very successful in most markets including South America, United Kingdom, South America and China while Germany and South Korea have not been very successful.
The company is very successful in terms of local and global market as it cultivates unparalleled profits. It has invested in several countries that have strategically increased both its asset and customer base. It continues to venture into new markets with a focus on Asian and Arab markets presently. Walmart however is faced with several challenges which hamper its continued growth in the global market as well as local market. Walmart was faced with allegations of sexism, extensive foreign product sourcing and low rates of insurance for its workers. It has face significant criticism from pressure groups such as community groups, Women's Rights groups, Grassroots organization and labor unions. Walmart has faced a gender discrimination lawsuit in Dukes Vs. Walmart Stores Inc. where Walmart was being challenged over its promotions and policies regarding gender sensitivity.
Walmart also underwent several setbacks as a result of failing to flourish in some markets. Owing to the fact that they had to withdraw or go through a loss of finances over failed ventures it has encountered several challenges. It has been difficult to establish itself in some markets all over the world. Walmart has a big brand image enhanced by its gigantic customer base especially in USA; it nevertheless faces a great challenge of competition from there chain store retail businesses. The company faces stiff competition in the industry from players like Target, Costco and Sears Holdings. Intense competition could adversely affect the revenues and profitability of Walmart.
Walmart has established several strategic policies to improve, it image and continue to increase its profitability in the market. In October 2005, it announced a policy designed to increase energy efficiency in an effort of implementing environmental measures. Among this was building new experimental stores in McKinney, Texas, Aurora, Colorado and Las Vegas which used wind turbines as a source of energy, photovoltaic solar panels, biofuel-capable boilers, water-cooled refrigerators, and Xeriscape gardens. This is in an effort of increasing corporate social responsibility which requires the global firms to align with global concern I order to command the support of opinion forming groups that drive the agenda of corporate social re possibility. It is apparent that the world today is moved extremely b y the mention of environment, Eric Hobsbawn (2007) and thus most corporate fir ms have focused on the agenda of driving environmental issues especially at a time when the looming energy crisis is apparently haunting all sectors of the economy.
The firm has also sought to counter the effect of rising competition by seeking to appeal to a more affluent demographic. To compete with more upscale and appealing stores like Target, Walmart in 2006 started the much hyped Supercentre concept in Plato Texas. The establishment was built to increase appeal with wooden floors, wider aisles, a sushi bar, a coffee shop with free Wi-Fi internet access and a hunter green background behind Walmart letters to make it familiar to the neighborhood. Its strategy to brand its stores specific to the demographical preferences of the countries in which it has established its global strategic chains has effectively marketed its image to the local people.
Walmart has also stepped up advertising which can attest to its increased profits in recent times. The use of the Slogan such as 'Save Money Live Better' to replace 'Always Low Prices, Always' coupled with its 2008 rebranding which saw it omit the hyphen to make Walmart has refurbished its image among the customers. This caused a revolution of its brands and a significant recognition of the fact that the logo is as bold as that of its competitors and did not deviate majorly away from the recognizable as its former 18 year old logo. Its policies to reduce profits resulted in increased savings for its customers which accumulated to about $287 billion in 2006, which equated to $957 per person or $2,500 per household. This has attracted more customers and has oriented the business to handle the indelible challenge of competition in a most effective way.
In 2009 Walmart sought to repair its labor relations and show sensitivity to the general workforce that has seen it significantly ascend the ladder of the most labor friendly organizations. Walmart announced that it is paying a combined $933.6 million in bonuses to every full and part time hourly worker of the company. An additional $788.8 million in profit sharing, (401 k) contributions, and hundreds of millions of dollars in merchandise discounts and contributions to the employees' stock purchase plan is also included in this plan. Walmart also sought to increase its product diversity and the corporate base especially by seeking to acquire new firms to boost its resource base. In 2010 it acquired a video streaming company Vudu. Inc. for an estimated 100 million. It is big global and commanding brands that recognize the strategic need or acquisition of new firms as well as mergers while recognizing the need to maintain the image that has cultivated customer loyalty.
The firm strategy is mainly selling products at a low price encouraging sales in the mantras it uses to promote their sales. Its themes like'Save Money Live Better' which replaced 'Always Low Prices, Always' shows the aim of the firm to propose its customer concern as a firm that drives sales on low prices. Walmart unlike many other retailers does not charge a slotting fee to suppliers for their products to appear in the store. In 2006, the firm announced that it would phase out its layaway program due to declining use and increased costs. Layaway ceased to be offered in 2006 and required merchandise pickup December. Wal-Mart now focuses on other payment options, such as increased use of six- and twelve-month, zero-interest financing.
Walmart is currently enjoying infinite success from its chain stores despite the declining economic situation at the global scene. For the fiscal year ending January 2009 it reported a net income of $13.6 billions on $404 billion of revenue (3.4% profit margin). For the fiscal year ending January, 2006, Wal-Mart's international operations accounted for about 20.1% of total sales. Its incredibly low prices have significantly contributed to a very large customer base. Each week, about 100 million customers, nearly one-third of the U.S. population, visit Walmart's U.S. stores.