Unit 7 Business Stratey-hnd 1459p

Business Strategy

STUDENT NAME

:

JUBAIR KABIR

MODULE NAME

:

Business Strategy

UNIT

:

7

DATE OF SUBMISSON :

27.02.14

Business Strategy

Individual assignment

Contents Figures

2

Task 01 .................................................................................................................................................... 3 1.1 Introduction .................................................................................................................................. 3 2.0 Task 1 ................................................................................................................................................ 4 2.1Wal-Mart Corporation ................................................................................................................... 4 2.2 The Vision and Mission ................................................................................................................. 4 2.2.1 Mission ................................................................................................................................... 4 2.2.2 Vision...................................................................................................................................... 5 2.2.3 Objectives............................................................................................................................... 5 2.2.4 Goals....................................................................................................................................... 5 2.2.5 Core competencies of the business ....................................................................................... 6 2.3 Planning strategic directions for Wal-Mart................................................................................... 7 Current competitive strategic conditions of Wal-Mart .................................................................. 7 2.4 Limitations in planning strategic directions for Wal-Mart ............................................................ 7 2.5 SWOT Analysis............................................................................................................................... 8 2.6 PEST Analysis ................................................................................................................................. 8 2.7 Significance of the stakeholders ................................................................................................... 9 2.7.1 Internal Stakeholders ........................................................................................................... 10 2.7.2 External Stakeholders .......................................................................................................... 10 3.0 Task 2 .............................................................................................................................................. 11 3.1Strategic Plan ............................................................................................................................... 11 3.1.1 Strategies of Wal-Mart......................................................................................................... 11 3.2 Appropriate future strategy ........................................................................................................ 12 3.3

Roles and Responsibilities ..................................................................................................... 14

3.4 Resource requirement evaluation .............................................................................................. 15 3.4.1 Cost Evaluation .................................................................................................................... 15 3.4.2 Value Chain .......................................................................................................................... 16 3.5 Targets of the strategy ................................................................................................................ 18 3.6 Timescales of the strategy .......................................................................................................... 18 4.0 Conclusion ....................................................................................................................................... 19 5.0 Reference ........................................................................................................................................ 20

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Figures Figure 1 - Core competencies ................................................................................................................. 6 Figure 2- supply chain ............................................................................................................................. 8 Figure 3 - value chain ............................................................................................................................ 17 Figure 4 - walmart value chain .............................................................................................................. 17 Figure 5 - value creating activities ........................................................................................................ 18

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Task 01 1.1 Introduction

Walmart serves and customers more than 200 million times per week. They serve the customers in a way that they want to be served – in retail outlets, online and on mobile devices. Walmart operates under 69 different banners in 27 countries. With fiscal year 2012 sales of approximately $444 billion, Walmart employs 2.2 million associates worldwide. Strategic management looks in to the decisions made by the hierarchy on behalf of the shareholders optimizing the use of resources and enhancing performance within the external environment. At Wal-Mart satisfying customer is the key. Wal-Mart provides it all, low prices, broad assorted, quality goods and services, customer delight, staff are curtious and knowledgeable, convenience, long hours and a pleasant shopping experience

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2.0 Task 1

2.1Wal-Mart Corporation Wal-Mart was founded by Sam Walton in 1960.The first discount store in Rogers Ark dwest 1945 – 1961. There after a chain of Ben Franklin franchised. Approximately 15 stores across rural Arkansas 1960. Sam Walton opened his first discount store in 1962,the first Wal-Mart in 1970, and the first distribution center in 1980. There are over 330 Wal-Mart stores in USA alone. Although Wal-Marts main target was rural markets (45% stores), due to severe competition it moved in urban areas such as Kmart, T.J Maxx, Wholefoods. Over the years Wal- Mart has faced many competitors. In 2008 Wal-Mart has 4,227 total units in the US Wal-Mart discount stores (914) Supercenters (2,576) Sam & apos’s Clubs (594) Neighborhood Markets (143) 3,210 total units in international market Argentina (24) Brazil (320) Canada (309) China (Wal-Mart 108 ; Trust-Mart 100) Costa Rica (156) Guatemala (149) Honduras (48) Japan (392) Mexico (1,081) Nicaragua (47) Puerto Rico (55) El Salvador (74) United Kingdom (347). Today Wal-Mart earns annual revenue of over $100billion and has more than 75,000employees worldwide.

2.2 The Vision and Mission 2.2.1 Mission

WalMart's mission statement and its ad slogan are nearly identical. The mission statement is “To provide a greater customer service and at the lowest possible price...always” Or as the ad slogan goes, "Save money. Live better."

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2.2.2 Vision

‘The secret is in delighting the customer’. As a customer one is deemed to look for:  A wide range of quality good and service at the lowest possible price  Staff that are friendly, knowledgeable and provide a good service  Convenience of long hours, free parking.

2.2.3 Objectives

Wal-Mart has lots of objectives.  To increase sales.  To satisfy customer at low prices.  To advance in data management.  To motivate employees to grow.

2.2.4 Goals  Grow overseas.  Develop online sales rapidly.  Expand market shares.  Built loyal consumer base.  Leverage all the benefits of discounted cash flow.  Help the FMCG in brand building.  To organize the best supply chain management.  Get maximum supply credit and discount from FMCG  Branching out in to new sections as pharmacies, automotive repair and grocery sales.

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2.2.5 Core competencies of the business

Wal-Mart has developed their core competencies, enhancing their scope into new territories while keeping the traditional method of low prices backed by excellent customer service, while pursuing their vision (Ireland, Hoskisson, Hitt, 2008) Core competency creates competitive advantages. Wal-Mart has created five distinct competitive advantages. They are listed below. Under fit and scope, researcher enlists the basic strategy followed by Wal-Mart mainly low cost, high volume, and customer satisfaction. At Wal-Mart competitive advantages fits and also s the strategy.A volume base strategy matches the economies of scale.Wal-Mart relies heavily on partnerships. It maintain low inventory.

IT Based Management

Customer oriented Culture

Efficient in store operations

Core competencies

Low economies of scale

Self owned Distribution

Figure 1 - Core competencies

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2.3 Planning strategic directions for Wal-Mart Current competitive strategic conditions of Wal-Mart The current strategy used by Wal-Mart is unique. There are three main areas looked at: Internationalization through creation of partnerships,reaching to areas where retail marketing is not wide spread, and expanding the product range to offering a comprehensive package of goods and services, looking deeper into areas of travel, insurance and banking services. Internationalization is essential for Wal-Mart’s traditional marketing to capture market share different countries. This is why Wal-Mart has been pursuing this area of marketing aggressively. Depending on the country and place of choice, partnerships are developed in order understand the marketing strategies used in that specific area, the product mix, design brand, customer service and even pre and after sales service. This adaptation has enabled product design adaptation which enhances product quality and service creating a positive correlation with firm performance. Business performance is tied up with performance. In order to enhance market share the firm must strive at corporate excellence. This way it can achieve greater improvement in operations. For managers of the firm to be sensitive to achieving excellence it is curial for a firm to be IT based and continuously improving and training staff accordingly, innovate and inspired to reach further in to new markets. (H. Lee Scott, 2002, www.walmart.com) As a step forward Wal-Mart focused on improving marketing strategy and marketing mix, moving away from the traditional low cost/ high volume strategy. The strategies that are currently used will be developed further through excellent customer service enhancing customer satisfaction, motivating staff and using advanced data management system for data mining and monitoring profitability. 2.4 Limitations in planning strategic directions for Wal-Mart 

Continuous training need.

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Differentmarketing strategy and marketing mix for different retailers in different countries to be used. This will require comprehensive market research.

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Adaption of Cooperate Cultures in line with the culture of the country.

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To established Wal-Mart services and value additions in the county or place of establishment.

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2.5 SWOT Analysis

•Strong market position in United States and other countries •Benefits for full time employees •Customer oriented culture •IT based data mining system •Tight partnerships •Good reputation •Customer loyalty •Strong marketing capabilities •Balanced brand mix •Ability to span large net work and large customer base

•Strong competition •Cheaper logistics •Political influence •Effects of the subprime crisis •Current economy and taxes

strengths

Weakness

Threats

Oppotunities

• Legal issues • Recession • Reduced flexibility • The company is global, but has a less presence in Worldwide • Product recall • Exit from certain markets • Advertising expenses are lower given the EDLP strategy • Inbound logistics • IT cost is high

•Increasing online sales and network stores •Greater demand for low cost goods and services •Improved customer perception •Promote green world, air trade and human labor laws •Expand to far fetched areas •Developing economy

Figure 2- supply chain

2.6 PEST Analysis Page 8

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Political       

Large retails encouraged for they create a job market Provide goods and services for a discount rate especially during recession Leading retailing industry with a revenue of $244.52 billion To curtail price wars leading to inflation Curtail encumbrances due quick exit and entrance of retails Large capital requirement as the FSA Largest law suite

Economical     

Lack of money circulating thus inability for consumers to by luxury goods. Large economic benefits to staff. Welfare systems funded by Wal-Mart supercentres. Cost reduction in distribution Managing a large work force is expensive

Socio-cultural  

Look for low income customers. Establishing centres in small towns

Technological  

Establishment of private satellite network. Managing own logistic through a central hub and spoke centre of warehouse

2.7 Significance of the stakeholders There are two types  Internal stakeholders  External stakeholders

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2.7.1 Internal Stakeholders

Employees – Employees are considered as internal customers, they are key to any firm. The success of the business and the intended consequence of the business lie in the hands of the employees. Employees expect the firm to open, fair and provide them with job security. They will also require financial compensation to retain them. Shareholders – Understanding the need of the consumer is central for a firm to flourish. Only if there is a continuous stream of purchases will there be increased sales which will push market shares high. This will encourage shareholders to invest more. The Wal-Mart investors ensure that the firm expends business and grows in size and to continue the operations. The shareholders expect a higher rate of return and a large portion of dividend to be paid.

2.7.2 External Stakeholders

Government – The government is the most influential and largest non- funding stake holder. The government has the sole authority to allow operation or even instruct a close down of the retail malls. The rules and regulations of Central Government in regards to Shop and Office have to be adhered. The norms and standards have to be satisfied as per requirements of the government.Also, politicians expect Wal-Mart to fund their campaigns. Wal-Mart's political action committee has contributed over $752,500 towards this end, last year.

Pressure groups –They ensure that the firm is engaged in ethicaloperations in line with environmental protection and low pollution levels.

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3.0 Task 2 3.1Strategic Plan Wal- Mart is beginning to feel the shakes of the recession, thus a new strategic plan needs to be reverberated island wide in order for the firm to move forwards in its endeavours. This will enable new methods of marketing and merchandising tying up with new brands and new partners. This strategy will create an economically diverse customer base.

It will also enable

investments to grow with sales still sticking to the traditional high volume low cost approach. 3.1.1 Strategies of Wal-Mart

The strategies adapted are 1. Develop a strong, global, customer oriented culture through advance data management. 2. Keeping to the low prices, also look to add value. 3. Keep emphasis on customer. 4. Look at dealing with suppliers of the firm in a different light. 5. Strengthen partnerships. 6. Focus on fast, clean friendly.

Project Impact is bringing a new look to Wal-Mart Supercenters, including the addition of new logos and signs designed to aid navigation and simplify the shopping experience.

As part of Project Impact, Wal-Mart has begun highlighting local products in its stores. This may help the retailer gain a better reputation for food, but brings added complexity, sources said.

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3.2 Appropriate future strategy As the Strategic Consultant planning, implementing and follow up is entirely up to me. This five year strategic plan is carried out in stages complementing the six strategies namely developing a strong, global, customer oriented culture through advance data management, keeping to the low prices, also look to add value, keeping emphasis on customer, look at dealing with suppliers of the firm in a different light, strengthen partnerships, and focusing on fast, clean friendly. In order to reap the full results of such an Endeavour the resources will have to be enhanced. The number of staff will have to be increased. They will have to be given a comprehensive training in the areas of customer service and IT based data management. In order to achieve these end results steps that need to be carried out are indicated below:-

First step -In order to go global Wal-Mart is planning on aggressively moving into urban markets, even if the space is small. Wal-Mart has been looking for small locations. These are typical drug store sizes. Each will be manned with approximately 5 staff spanning from clerical to supervisory. The second step looks at improving the market strategy and mix, deg a methodology to attract new customers. These shrinking super markets will carry an assortment of goods and services. The modified stores will focus on fast, clean and friendly. They will solidify the customer loyalty by giving the customer a good service. This will create an increase the frequency of purchase but also help market the low price more value concept instead of stressing on the low cost high volume approach. The high unemployment and low income will keep squeezing to purchase lesser and lesser. This will be used to the advantage of Wal-Mart. The third step delivery system by suppliers has to be looked at in a different light. The customers must be ensured that the supplies that they purchase are safe for consumption. It is only then that the customers will trust the service at Wal-Mart. It is important that Wal-Mart build confidence within the customer ensuring a repurchase.

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The fourth step is aimed at strengthening partnership. This is a manner in which the functional capabilities, resources and expertise can be explored. This strategy helps to widen the scope of the Wal-Mart stores, worldwide. Increased sales will increase profitability. The hunger to grow has caused Wal-Mart even to expand to areas of Europe. Briskly they are moving to China and other Asian countries as well.The SWOT analysis of Wal-Mart gives an overview of the reputation, range of brands, value, and commitment.The global industry leaders need to be aware of the vulnerabilities socioeconomic and political problems it may have to face in the expansion. The main steps adopted are to cut price and increase volumes, minimize competitors, to attract new customers by building their confidence ensuring a repurchase and also motivating new and the regular customers to come through the doors of Wal-Mart stores. Through the Porters five force model it is clear that the attention has been given to strategic planning, implementation, removal of barrier entry and competitors and reducing diversity among pricing norms. At Wal-Mart goods are sold under legal brand making a phenomenon change in the retail industry. Wal-Mart profits from the low mark up on profit, with this strategy Wal-Mart has acquired and partnered many other retail firms and hopes to keep expanding. The extra revenue earned has been distributed among the sales force in the form of bonus and incentive pay. This will not only motivate the staff to keep performing and giving a good service but also go out of their way to market Wal-Mart stores. It is not only the customer but suppliers of the supply chain will also benefit. Enabling a better customer service, the staff will endure a thorough training in the areas of customer service. They will be thought the best practices of the industry. High performers will be recognized and rewarded. In this manner Wal-Mart and they will be able to reach their aim successfully and easily.

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3.3 Roles and Responsibilities The corporate leadership should be provided by Director Board and consultants such as me. It is the responsibility of the above said to articulate the transcending goals by providing a vision.

They have to portrait the firm as it is to become. In the process good publicity must

be given to future plans. A advertising campaign may have to be launched.

High

performance standards for each of the functional divisions namely operational, financial, human and marketing should be laid down. The Director Board must have faith in their subordinates that the staff will, carry Wal-Mart forward. They middle management must help the subordinates build confidence by providing them with goals though long term planning, coaching and mentoring them.

They have to set

examples and must communicate and give on performance. The staff will market

.

and promote as instructed The sole discretion to change discount prices is vested with the top management. But where the foreign retails offer discount the decision on how much it will be is decided by the store head. For the purpose of calculating such a discount a technical knowledge is provided to staff. All other rules, regulations, and policies have to be adhered in line with Wal-Mart, USA. THE MASTER STRATEGIST 

CEO personally shapes the plan

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Depends on skills and vision of one person DELEGATE IT TO OTHERS

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Uses a planning staff or task forces

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Lack of top-down direction and leadership COLLABORATIVE APPROACH

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Involve key people --- seek group consensus

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Can political games and compromises be avoided? THE CHAMPION APPROACH

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Encourage subordinate managers to develop their own strategies

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Will a coherent, unified strategy emerge? Page 14

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3.4 Resource requirement evaluation This looks into the resources required to implement the new strategy namely cost analysis. 3.4.1 Cost Evaluation This is a tool used to choose a range of alternatives using financial resources. It assesses the gains and losses of carting out the relevant activities. It gives an overview on how to get the maximum from limited, budgeted resources. These resources are budgeted for the next five years. Given below are an estimate of the funding requirements and the estimates per unit.

There are three broad cost groups · the direct costs of service provision · the costs to the individuals or their families · the costs (or averted costs) falling on other agencies as the result of the ‘treatment’ episode

The direct costs of services can be further broken down into: · capital costs - building, equipment furniture and fittings · building related expenditure - heating, lighting, property taxes, maintenance· staff costs · other service related expenditure - stationary, telephone, travel costs, etc. · overhead costs - management and istrative expenses often shared across interventions or services

Cost evaluation with in the unit 

Outline of the purpose of the study

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describe the service organisation and the interventions under review

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Identify the resources needed to deliver the interventions

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collate the existing data sources

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develop an analysis plan

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conduct new data collection

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conduct full analysis

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Business Strategy                       

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Capital costs in USD · building (building value/60 years — then divided by 4 because prevention programme occupies only 25% of building) 15,000 · equipment (equipment value/10 years) 5,000 · furniture (furniture value/10 years) 2,000 · vehicles (vehicle value/10 years) 1,000 Building related expenditure · heating 500 · lighting 200 · property taxes 1,000 · maintenance 300 Staff costs · total prevention staff salaries plus benefits 120,000 Other service related expenditure · stationary 400 · telephone 1,200 · vehicle operating costs 670 · travel costs 2,000 Overhead costs · management and istrative expenses 80,000 Total 1996 costs 229,270

3.4.2 Value Chain

A value chain is also known as supply chain. It gives the sequence of activities involving the production and delivery of the product and service. This is depicted in a sequence of tasks. Each area creates value. The value chain of Wal-Mart is shown below. There are two parts to it, the primary and the secondary. Both areas are required for the organization to effectively run its business. The primary activities the main process of the organization whereas the secondary s the ive activities of the primary activities in the value chain. Value chain enables grater agility, productivity, more profit, shorter lead time, loyal customer base and limited inventories.

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Figure 3 - value chain

Figure 4 - walmart value chain

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Figure 5 - value creating activities

3.5 Targets of the strategy The strategy has been looked from a global perspective. The targets are individually broken down to different functional groups. Their low price more value concept will set ablaze the marketing of Wal-Mart. The word of mouth is one of the most powerful marketing tools that can be used to market any retail store. This will draw more customers towards Wal-Mart. The strategy is drawn out over a period of 5 years. Each stage will be evaluated. If the target has not been reached then the process will be revaluated and errors rectified, amendments made before moving to the next phase.

3.6 Timescales of the strategy The original target is cascaded to functional units and from there on to departments. The time line should be broken down into 6 month processes and evaluated at the end of every six months. In this manner the, with close supervision the targets can be met.

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4.0 Conclusion The Wal-Mart focuses on neighborhood marketing with a variety of good and service. Goods sell at a low price at high volumes with value additions. The main aim and purpose of this assignment was to derive new strategies of Wal-Mart. It is justified by giving Porters five forces, the external and internal analysis, SWOT and PEST analysis. This five year strategic plan is carried out in stages complementing the six strategies namely developing a strong, global, customer oriented culture through advance data management, keeping to the low prices, also look to add value, keeping emphasis on customer, look at dealing with suppliers of the firm in a different light, strengthen partnerships, and focusing on fast, clean friendly. This is done in order attract customers to the low prices offered. It has strived to modify the existing strategy which works well for Wal-Mart. This will enable the capture of foreign markets more effectively. It is important that Wal-Mart holds on to its market share as it climbs the ladder of profitability. The publicity and promotions must be well planned out. And from the moment of strategic planning and implementation the hierarchy must the staff and middle management to achieve what is required of them. The strategic positioning and the end results must always be evaluated. must be shared with higher management. In this manner the strategy can be adapted in the said span.

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5.0 Reference 

Broughton,R,quality assurance solutions,http://www.quality-assurancesolutions.com/swot-analysis-of-wal-mart.html (last accessed – Jan 05 2013)

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McIntyre,D,(2010),Wal-Mart’s big goals are a huge challengehttp://www.dailyfinance.com/2010/06/05/wal-mart-big-goals-hugechallenge/[06/05/2010](last accessed – Jan 05 2013)

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Walton, S,(1918-1992), An introduction to walmart.com http://www.walmart.com//An-Introduction-to-Walmart.com/542413 (last accessed – Jan 06 2013)

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Bernstein, Aaron "Labor Finally Puts A Target on Wal-Mart" Business Week, Dec. 6, 2000.

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Canadian Business and Current Affairs "A giant, yes. Gentle, no: Wal-Mart stumbles into a cultural chasm" January, 1996 V.69: 23,24.

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El Boghdady, Dina. "The High Price of Cheap Gas." The Washington Post. Feb. 1, 2002: E01.

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Finney, Daniel P. "May The Force Be With You, Star Wars Fans", Omaha WorldHerald, April 24, 2002.

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Gimein, Mark " Sam Walton Made us a Promise" Fortune Magazine,Monday, March 18, 2002.

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Hoffman, Hank "Wal-Mart Blues" www.metroactive.com/papers/

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Quinn, Bill How Wal-Mart is Destroying America and the World, Berkeley CA: Ten Speed Press, 2000.

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Reid, Keith. "The Wal-Mart Approach" National Petroleum News. May 2001: 20.

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"Rejected by the Unites States Senate: Wal-Mart tried a ploy to stop unions from informing its workers." www.unionnetwork.org November 4, 2001. Reuters, “Seiyu Shares Surge on Wal-Mart Alliance.” March 14, 2002.

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Thau, Barbara. "Wal-Mart Takes on the World." HFN, September 3, 2001: 8.

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Troy, Mike. "The World's Largest Retailer." Chain Store Age Executive, June 2001: 47.

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