Wal Mart Business History And Practices Essay

1350 words - 5 pages

In order to properly assess Wal-Mart's place in the global business world, it is necessary to conduct a thorough analysis of their business. Ancient Chinese military strategist Sun Zu once said "If you know neither the enemy nor yourself, you will succumb in every battle." (Gutenburg Project Translation, 2005) Although Wal-Mart's "battle" is far from life and death, Sun Zu's words have some bearing if looked at figuratively: it is extremely important to identify both internal and external factors that may influence future growth.In order to efficiently conduct the internal portion of the analysis, Michael Porter developed the Value Chain Model to identify activities that allow businesses to create value and a competitive advantage. The next exhibit shows the value chain in graphic format.The primary functions relate to the major activities of the business and the support functions are the staff roles supporting these primary activities. Of course, Wal-Mart's primary focus is on the inbound logistics of their merchandise, the strict operations to sell this merchandise, and logistics of getting it to the customer. In the past Wal-Mart concerned itself little with marketing and customer service, relying on the age old slogan 'everyday low prices." They too thought that if they provided millions of people with a job and allowed them to keep money in their wallets, they would be loved by all. Simply and definitely not true.Anyone that has done research on Wal-Mart knows their distribution system is a competitive advantage. They were one of the first businesses, and especially one of the first retailers, to use a form of just in time (JIT) supply system. Their system scans UPC codes on merchandise, and then a satellite link sends this data to warehouses, distribution centers, headquarters, and suppliers. (Lawless, 2001) This allows for almost real-time updates and distribution of supplies. Their distribution system helps not only them but also the other links in the chain. It maximizes cost savings wherever possible, cost-savings eventually passed on to consumers.Wal-Mart is stingy with every dollar they touch. A strict operational model is designed to save money every step of the way, a savings passed on to customers. Every decision they have made is to this point; however, they are learning quickly that their "no-frills" business model is not allowing for the massive growth goals they have hoped to achieve. Although sales are still brisk, income growth and share price are not so much. A business that prided itself in not needing to conduct marketing outside their catchy one liner-everyday low prices-is learning that customers want more than just low prices; customers need atmosphere. Wal-Mart has obliged by hiring a marketing department and venturing from the cheap, attempting to at least focus on aesthetics and wooing customers.Wal-Mart employees or associates restock goods versus sell them. This is an important distinction because these employees...

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