Strategic Evaluation
Management
Wal-Mart's policies and practices are designed to ensure an environment that
is equitable and inclusive. To that end, Wal-Mart solicits feedback from all of
their employees, annually, regarding their opinions of their work experience
and the company's implementation of Wal-Mart's basic beliefs and values. In
addition, they provide training on working with people, leadership skills,
equal employment opportunities, diversity and harassment prevention.
Wal-Mart is committed to providing all employees state-of-the-art training
resources and
development time to help achieve career objectives. They have a number of
training tools in place that keeps then out in front of the competition,
including classroom courses, computer-based learning, distance learning,
corporate intranet sites, mentor programs, satellite broadcasts, skills
assessments, and job announcements. These tools aresuccessfully increasing
advancement opportunities for women and minorities.
Wal-Mart is committed to the customers and communities they serve. Wal-
Mart hires locally, representing the diversity and uniqueness of everyone's
hometown. As the demographics of the nation have changed, so has the
family of Wal-Mart's employees.
More than 15 percent of their employees are over the age of 55, and they
are the nation's largest employer of Hispanics and African-Americans. Wal-
Mart also uses its respectable financial position to attract and retain
employees by offering stock ownership and profit-sharing programs. These
programs are available to all full-time employees of Wal-Mart and make a
significant impact on the earnings of employees. They are allowed to
purchase shares of stock at reduced prices, which allows them an immediate
appreciation of their portfolio. With the profit-sharing program, the
employees receive bonuses at the end of the year based on the success of
the overall company.
These also provide a significant amount of compensation to their employees.
Marketing
The nature of Wal-Mart's marketing is in its Every Day Low Price (EDLP)
campaign.
This is what makes Wal-Mart successful. Sam Walton devised a system for
which price setting was to be followed. Sam wouldn't allow management to
hedge a price at all. If the list price was $1.98, but Wal-Mart had paid only 50
cents, they would mark it up 30 percent, and that's it. Sam's philosophy was
"No matter what you pay for it, if we get a great deal, pass it on to the
customer." The other major campaign Wal-Mart employs is the Rollback. This
occurs when Wal-Mart lowers the already lowered Every Day Low Prices. This
has really been a successful way for Wal-Mart to increase its patrons. When
consumers shop, they are always looking for the best deal, since Wal-Mart
already offers low prices, when they rollback prices, they are able to out-
price all of their competition. Stemming from the management's core values,
Wal-Mart has been known for their customer oriented approach. Wal-Mart
maintains one of the best satisfaction guaranteed programs, which promotes
customer goodwill. One can return virtually any product to Wal-Mart without
any problems. They simply take the product back and promptly refund the
price of the product, nearly no questions asked. They also promote goodwill
among consumers by employing a tactic, which Sam created known as the
"Ten Foot Rule." This is simply the idea that if a customer comes within ten
feet of an employee, they are required to greet them and ask if they can help
them in any way. This is also evident through employees getting to know
customers on a first name basis.
Finally, perhaps the single most important marketing aspect of Wal-Mart is
that they
create the ideal one-stop shopping experience. Wal-Mart is organized into ten
distinct
divisions. These include: Wal-Mart stores, SAM'S CLUBS, Neighborhood
Markets,
International, walmart.com, Tire & Lube Express, Wal-Mart Optical, Wal-Mart
Pharmacy, Wal-Mart Vacations, and Wal-Mart's Used Fixture Auctions.
Through these divisions, Wal-Mart offers thousands of products. The Wal-Mart
stores contain groceries, clothes, healthcare products, toys, electronics,
bedding, sports and recreation, automotive, among other items. Because of
this conglomeration of products, the typical consumer can go into any Wal-
Mart and walk out without having to stop at another store for anything that
they could need.
Finance/Accounting
Since 2000, Wal-Mart's revenue has consistently increased. In 2000, they had
revenues of $165,013 billion and in 2002 their revenue had increased 24% to
$217,799 billion. This is astronomical growth in revenues considering the
overall size and scope of Wal-Mart. To be able to consistently grow revenues
in such a large organization is simply amazing. The increase in revenues has
also been very kind to their cash flow. In 1997, Wal-Mart had a positive cash
flow of $4,044 billion and in 2002 this number had increased to a positive
$9,961 billion. This growth also had an impact on Wal-Mart's net income,
which is to say that they were able to control their expenses while continuing
to grow and expand their operations. In 1997, their net income was a not-so-
paltry $3,056 billion, and in 2002, only five years later, Wal-Mart more than
doubled their net income to $6,671 billion.
It is also shown through its ratios. Nearly all of Wal-Mart's ratios are strengths
when measured against the industry averages. Through our ratio analysis,
we have shown that Wal-Mart is the best-equipped company to succeed in
the marketplace.
Production/Operations
Wal-Mart uses a system known as cross-docking. This is simply the process of
continuously delivering goods to warehouses where they are sorted and
distributed to their stores within one day. This enables Wal-Mart to take
advantage of economies of scale with shipping trucks with full loads. This
also gives Wal-Mart the ability to increase the speed of deliveries, a faster
response to market demands, and a low inventory. This system has allowed
Wal-Mart to decrease its sales cost by 2 to 3 percent over the industry. This
savings is then priced into the products with the earlier discussed EDLP
programs. This system is maintained through the most important aspect of
Wal-Mart, its employees. With over one million employees worldwide, Wal-
Mart definitely has the manpower to move goods. This is also facilitated with
a proprietary satellite-based communication system that enables managers
and point-of-sale systems real-time information on the needs of each store.
Research and Development
Wal-Mart does not engage in any research and development. Like if Wal-Mart
is to open
a new store in a city it just goes and open store without any prior research.
Computer Information Systems
As discussed in the production/operation section, Wal-Mart uses a
sophisticated system
of satellite-based communications. They also offer a safe, secure and
complete website
where consumers can purchase all of the same products found in the store.
The website is strength because it is not only a means for purchasing
products, but is also a very thorough informational site.
