Use of Business Information Systems at Wal-Mart Stores

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Introduction

This paper discusses the implementation of business information system at Wal-Mart. Hill and Gareth (3) indicate that Wal-Mart set a record performance against her main competitors from 1994 and maintained the lead up to 2008. The company attained and maintained a competitive edge over its competitors this long because of unique strategies in its business operations. The company managers together with its founder Sam Walton, pursued strategies aimed at lowering costs and increasing the market share.

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About Wal-Mart

Wal-Mart was founded in 1962 by Sam Walton, running as retail and merchandising store. Through his vision and leadership skills, he was able to grow the business to become a leader in discount retailing. The founders’ goals and philosophies are still relied upon in the running of the business. Core among them is keeping ahead of technology as a strategy to be a head of the competition. The company adopted the internet or online sales system making it able to attract more buyers from far. Many other technology applications have been adopted, automating virtually all business processes at Wal-Mart stores.

Wal-Mart has over 7000 stores spread in various countries; the company makes well over 800 million transactions everyday (Reynolds, Reynolds and Stairs 181). This is a lot of data that requires a proper way of storage and maintenance. The daily data recorded is important for purposes of developing proper business strategies that can drive the company to success. The large volume of data received in the course of business operations must be manipulated and converted into useful information using business intelligent tools. Business managers use such information in making important and accurate decisions about the company.

Use of Internet in Business Information Management System

The internet comprises of a huge network of computers that are interconnected and can swap information freely (Hill and Gareth 12). The internet plays a very vital role in the modern business management systems. The internet serves as a source of information that is important for the performance of business enterprises. Entrepreneurs have to keep searching and analyzing information related to their area of business in order to make appropriate business decisions that lower costs and maximize profits.

The internet can be used to store and transmit business information from one company to another or to consumers. The cost of storing and transmitting information on the internet is comparatively low. Lowering costs in business operations results in an increase in the profit margins for the company. Business managers strive to develop strategies that can reduce the cost of business operations in order to increase the profit. Internet communication services such as e-mail, fax on order, telephony and video conferencing are relatively cheap and reliable (Hill and Gareth 23).

Electronic data interchange devices (EDI) enables companies to share vital information on business trends via the internet. This is important in the supply chain so that companies involved can be able to react in real time to the real need of the customers. Without such information, suppliers can make losses either by delivering what the customers do not require, being late or falling short of the customers demand. The customer relations manager (CRM) is another vital application supported by the internet. This application assists the company to analyze the buying trends of customers and provide them vital information how to manage the customers.

Use of Business Information Management Systems

Wal-Mart headquarter is located in Arkansas America, everyday, its affiliate stores located in different parts of the world send their business reports to the headquarter in data form. The information is send and stored in an information warehouse capable of receiving data from several source. The company relies on a technological set up by HP-Neoview data warehouse to manage its data (Reynolds, Reynolds and Stairs 181). Neoview data warehouse comprises of the hardware, software and the services that can manage large volumes of data with ease. Neoview technology has an inbuilt technology that transmits important information mined database straight to the system where it cab be accessed by managers or employees.

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Neoview is reliable and useful for companies that generate large amount of information. The company managers keep secret sensitive information which is termed the company’s weapon against competitors. Leaking sensitive business strategies is equivalent to exposing your own business to stiff competition that could easily lock you out of business. It’s therefore not possible to find out clear information on how Wal-Mart uses specific business intelligence tools. However, general information that the managers are willing to give out to the public has been documented and analyzed by business experts for use by other aspiring entrepreneurs.

A data warehouse is a source of useful information for planning and predicting both the present and future market scenarios. Wal-Mart uses her business intelligence tools convert data in the databases and data warehouses to useful information that is then send out to its top level management in a form that is easy to read and understand. The useful information is usually in form of charts, graphs and reports which reflects the business status or performance level at any time (Reynolds, Reynolds and Stairs 183). The business status gives workers the picture of their effort level in the business and helps the managers make valid decisions in the business.

Knowledge Management Strategy

Wal-Mart operates on the principle of cost reduction, managers’ aim at reducing the costs of labour and capital so as to increase profits. Well about 30 % of its employees work on part time basis. This is a strategy to reduce the cost labour on the company, the company also safes revenue on advertising, the number of advertising circulars are averagely 12 per year compared to its competitors who invest in up to 100 circulars a year (Paradice, Haynes, and Courtney 76).

Wal-Mart uses an input system referred to as Kantian system (Paradice, Haynes, and Courtney 76). The system combines both a closed and open system, where open system draws information from the outside environment comprising of customers in competitors. The closed system on the other hand draws information from the inside environment comprising of affiliates and managers of the local stores. This approach enables the company to analyze its existing information and develop new skills and strategies for running the business at a profit.

The Kantian system is self-examining, when it receives an input, it puts it in its right context and allows numerous interpretation of the input. The numerous interpretations enable the system to detect points of causality in time. The company was ranked the first in installing and using scanners linked to the inventory system, together with a satellite communication application (Reynolds, Reynolds and Stairs 146). Adopting modern communication technology in a firm can make it to develop and grow faster than its competitors.

The Kantian system also develops useful business models derived from the models. The model that Wal-Mart has used over time is based on low price leadership policy. It is able to control and maintain its operations costs despite selling at relatively lower prices than its competitors. Its adverts are always linked to the image that the company has created, which emphasizes low cost products. The Kantian system is capable of moving through a series of models before picking out the best that will work best for the company. When producing an ad for example, the system selects the best ad based on the theme of the company and discards the rest.

Risk management

Every business enterprise is always exposed to risks which the managers must device strategies to mitigate. Wal-Mart has an online shop walmart.com, which ranks among the top three in the world (Wailgum 52). The main challenge that the company faces in running the online shop is lack of a link in the customers’ needs and the available stock. The company targets low income population based on its pricing strategy, the target customers are not buying from the physical stores and are still not likely to buy online. In mitigation to this risk, Wal-Mart has ventured in online marketing to a new clientele probably of higher income.

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The company had encountered a negative impact in applying multi-channel marketing model. The model allows customers to do their own research on given items across different stores before settling to where they can buy. Only loyal customers can be focused to a particular store to buy products. Another challenge lies in the fact that the customer relations management system for online shops is internet based. Wal-Mart managers according Wailgum have adopted use of blogs to improve the significance of their brands (53). The blogs give the customers a chance to review and rate various products on offer. The company utilizes this information in making appropriate decisions towards customer satisfaction.

System Development

Systems development process for Wal-Mart stores is treated as a cooperate affair; affiliate and new acquisitions into the company are operated on a standard system. This is meant to ensure standardization of information flow among the company affiliates. The integration and standardization of information in a company serves to improve the accounting of finances as well as management of the inventory.

The relationship between the company and its suppliers is managed through the EDI. This application facilitates sharing information between the suppliers and the enterprise through an electronic platform. The system eliminates possible human errors as the whole process is executed electronically and accurately. Recall items which have already been stocked on the shelves can easily be traced by the system and removed. The removal of recall products from the shelf is managed in an efficient and effective manner that increases the credibility of the products to the customers.

The company has also developed an internal performance monitoring system which rewards best performers. The performance measuring metrics are independent and monitors individual workers on a routine basis (Soderquist 143). Managers receive bonuses for exceeding the targets, while the workers receive wage increase for working harder. The incentives scheme system helps the company to achieve high labour productivity and profits. The technological systems developed for Wal-Mart are focused mainly on areas where they can be able to create impact.

Main areas of focus included automation of operations in the stores. The aim of this was to improve both service to the customers and the stores. Improving customer satisfaction is important in maintaining the loyalty of the customers. As the saying goes, a satisfied customer becomes a referee of your business enterprise. He or she will spread the information to others and act as a good ambassador to the business. An unhappy customer on the other hand spreads the weak points of the business enterprise to other potential business customers.

Change Management

Change management is an important aspect to include in the business process. The modern business environment is quite dynamic and change is inevitable. The change can either be brought about by new technologies or a new strategy to beat the competition. Both the workers and management team have to be prepared for the possible changes that the business may encounter and be ready to adapt. Complacency in the dynamic business environment can only work to the disadvantage of the business enterprise.

Wal-Mart has had a number of scandals under the federal investigation, most of them a faction employees and the retailer. These scandals created a negative public image for Wal-Mart, the management lost attention from the main retail business as a result of the scandals (Soderquist 132). At this point the company’s performance went down and was ranked below its close rival the target corp. faced with this situation; the management had a challenge of developing a new strategy that would bring back the shop’s lost glory. They had a task to make Wal-Mart the best place both for the customers as well as for the workers. The management is currently working on this issue in a manner to make the company regain its supposed face to customers and workers.

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Wal-Mart’s philosophy is to keep a head of technology; technology is very dynamic as more advances are made on a daily basis. Embracing the changes means that the management and the workers have to be ready to learn and take on the new changes. It should be noted that changes in technology does not only affect the internal operations of the business but the external partners as well. External partners in this case involve the suppliers and investors. When Wal-Mart installed the RFID technology for example, it required that their suppliers also implement the same technology in the supply chain system (Wailgum 56). Small suppliers find little or no return on investment associated with the installation of this particular type of technology. Yet because they are associated with Wal-Mart which has installed it they are also required to install it so that the two systems are synchronized.

This type of change requires a strategy to convince the affected parties before installing. Return on investment of the RFID technology can only be realized on huge transactions which the small suppliers can not be able to realize. Wal-Mart managers are now basing their push for the technology on the network effect. In this approach, they argue that the value for the technology can be realized if a number of companies are all using the technology. These are sample efforts that Wal-Mart managers use to manage change at the company.

Conclusion

Information systems have a wide application in today’s business world. The main objective of installing information technology applications in a business enterprise is to have a competitive edge run and carry out transactions more accurately and efficiently. Business information systems are applied in the management of the supply chain and the various enterprise departments. Wal-Mart has been sampled as one of the biggest retail and merchandising store founded on high level technology. Embracing technology has helped it to stay a head of its competitors who have been slow in adopting technology in their business operations.

The internet today forms a core for business transactions, online transactions can be made to customers with distance not being a limitation. Customers can do their shopping and order from the comfort of their houses wherever they are. Once a customer makes his or her order and pays for it through any of the online money transfer methods, the seller organizes how the goods purchased are send to the buyer. Wal-Mart set up an online shop through its site through which its customers are able to purchase goods online.

The success of any business depends on the management and the leadership style applied in running the business. This involves how the managers manage variables such as risks, systems, change and knowledge. There is need for frequent research on various aspects of the business and proper implementation of the research findings. Research helps in establishing the exact needs of the business customers and the best ways to respond to them.

Works cited

Hill, Charles & Jones, Gareth. Strategic Management Theory: An Integrated Approach. Boston: Cengane Learning, Inc, 2009.

Paradice, Haynes, and Courtney, F., James. Inquiring organizations: moving from knowledge management to wisdom. Hershey: Idea Publishing Group Inc, 2005.

Reynolds, Reynolds, and Stairs, M. Ralph. Principles of Information Systems. Boston: Cengane Learning, Inc, 2010.

Soderquist, Don. The Wal-Mart way: the inside story of the success of the world’s largest company. Nashville, Tennessee: Thomas Nelson Inc., 2005.

Wailgum, Thomas. “It’s a Web 2.0 World.” CIO. Interactive intelligence Inc, 2007. Web.

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