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Wal-Mart - Strategic Management Analysis

Sam Walton, a leader with an innovative vision, started his own company and made it into the leader in discount retailing that it is today. Today, years after his death, the company is still growing steadily. Wal-Mart executives continue to rely on many of the traditional goals and philosophies that Sams legacy left behind, while simultaneously keeping one step ahead of the ever-changing technology and methods of todays fast-paced business environment.

The organization has faced, and is still facing, a significant amount of controversy over several different issues; however, none of these have done much more than scrape the exterior of this gigantic operation. The future also looks bright for Wal-Mart, especially if it is able to strike a comfortable balance between increasing its profits and recognizing its social and ethical responsibilities.

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Walton had a reputation for caring about his customers, his employees, and the community. In order to maintain its market position in the discount retail business, Wal-Mart executives continue to adhere to the management guidelines Sam developed. He believed in three guiding principles 1. Customer value and service, . Partnership with its associates, and . Community involvement.

Implementing the strategy put together by Sam Walton emphasizes building solid working relationships with both suppliers and employees, being aware and taking notice of the most intricate details in store layouts and merchandising techniques, capitalizing on every cost saving opportunity, and creating a high performance spirit. Wal-Mart stores operate according to their Everyday Low Price philosophy.

Wal-Mart has invested heavily in its unique cross-docking inventory system. Cross docking has enabled Wal-Mart to achieve economies of scale, which reduces its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the individual managers more control at the store level.

A company owned transportation system also assists Wal-Mart in shipping goods from warehouse to store in less than 48 hours. This allows Wal-Mart to replenish the shelves four times faster than its competition.

Wal-Mart has been led from the top but run from the bottom; a strategy developed by Sam Walton and carried on by a small group of senior executives led by CEO David Glass. Although recent growth has led Wal-Mart to add more management layers, senior executives strive to maintain its unique culture.

Wal-Mart has been extremely successful in competing in the retail industry by combining service, price, and quality. However, other merchants may object to Wal-Marts entry into their community. Because of its ability to out-price smaller competitors, Wal-Marts stores threaten smaller neighborhood stores which can only survive if they offer merchandise or services unavailable anywhere else. This makes it very hard for small businesses, such as mom-and-pop enterprises, to survive. The increasing opposition indicates that the road ahead for Wal-Mart may not be as smooth as they had planned. This requires Wal-Mart to rethink its expansion strategy since it would not be profitable to operate in an unfriendly community.

The ever-changing market presents continuing challenges to retailers. Wal-Mart has expanded with its Super-centers and Sam’s Club divisions where customers are being offered a wide choice of shopping experiences, but no one operation can capture them all. Therefore, it is necessary for management to define their target market and direct their energies toward solving that specific markets problems.

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