Wal-Mart is one of the leading supermarket chain stores in the North-American region. The company is the market leader in the industry and is known for applying strategic management in dealing with the issue of competition. Currently, the firm is ahead of others in terms of profits because it applies the latest technology in marketing and selling of its products. In this article, the mission statements, objectives, and values of the supermarket store are analysed. The paper further looks at the financial position of the company with the aim of suggesting some of the best strategic management practices.
Vision and Mission Objectives and Values
|Vision: what the company wants to be||To be the best retailer in the world in the hearts and minds of consumers and employees: This means the company has the interests of customers and its employees at heart, as it is focused on giving them the best. For instance, it ensures only highly qualified, and talented workers are recruited since they have the capacity to offer the best services to clients.|
|Mission: why the business exists||Saving people money so they can live better: The company is concerned with improving the living standards of its customers by offering high-quality products at reduced prices.|
|Objectives and strategies: profitability of the firm||Wal-Mart is one of the multinational companies committed to making profits with the aim of satisfying the stakeholders. In this regard, the management has put in place several objectives and strategies to facilitate profitability. Based on the 2011 annual report, the following objectives and strategies outline the commitment of the company: |
The company further realises that meeting the above strategies is not an easy task and has put in place tactics to facilitate goal realization. For instance, it has established a department that engages in customer research to establish their wishes, expectations and desires using new formats in introducing products in new markets, especially in rural areas. It also ensures transactions are completed in time to avoid inconveniencing clients.
|Values: what drives the company efforts||The company has three key values that guide it as it continues to offer top service to clients. They include: |
Wal-Mart Stores Inc., Consolidated Income Statement
USD $ in millions
|12 months ended||Jan 31, 2014||Jan 31, 2013||Jan 31, 2012||Jan 31, 2011||Jan 31, 2010||Jan 31, 2009|
|Cost of sales||(358,069)||(352,488)||(335,127)||(315,287)||(304,657)||(306,158)|
|Membership and other income||3,218||3,048||3,096||2,897||3,168||4,363|
|Operating, selling, general and administrative expenses||(91,353)||(88,873)||(85,265)||(81,020)||(79,607)||(76,651)|
|Interest expense, debt and capital leases||(2,335)||(2,251)||(2,322)||(2,205)||(2,065)||(2,184)|
|Income from continuing operations before income taxes||24,656||25,737||24,398||23,538||22,066||20,898|
|Provision for income taxes||(8,105)||(7,981)||(7,944)||(7,579)||(7,139)||(7,145)|
|Income from continuing operations||16,551||17,756||16,454||15,959||14,927||13,753|
|net income attributable to Wal-Mart||16,022||16,999||15,699||16,389||14,335||13|
Wal-Mart Stores Inc., short-term (operating) activity ratios
|Jan 31, 2014||Jan 31, 2013||Jan 31, 2012||Jan 31, 2011||Jan 31, 2010||Jan 31, 2009|
|Working capital turnover||–||–||–||–||–||–|
|Average No. of Days|
|Average inventory processing period||46||45||44||42||40||41|
|Add: Average receivable collection period||5||5||5||4||4||4|
|Less: Average payables payment period||38||39||40||39||36||34|
|Cash conversion cycle||13||11||9||7||8|
An evaluation of the company income statement shows that it has always generated profits, which is attributed to various factors, one of them being undertaking the best strategy in marketing and sales. Most of the revenues are generated through the sale of products, the offering of services, issuance of insurance premiums, as well as other activities. The net sales of the company went up from the year 2012 to 2013, as well as from the year 2013 to 2014.
Opportunities and threats
|Many people appreciate and embrace online shopping, something that is likely to boost the performance of the company. Goods and services advertised through social media are most likely bought online. The management has been quick to set up an online payment method that allows clients to obtain products without necessarily visiting the shop.||Even though the company is doing well in online marketing and selling, it faces stiff competition from brick and mortar sellers since a number of individuals are reluctant to appreciate online buying.|
|Customers in the North American region, especially the United States, are concerned with the foods they consume. A number of them are embracing healthy eating tips, which is boosting the company in the sense that it promotes healthy living by offering low cholesterol products in the market (Harrison, 2005).||Many local communities are resistant to change whereby they protest the idea of bringing experts to work in their localities. They often claim that they must benefit from the company as far as job opportunities are concerned, yet they lack sufficient skills to propel the firm to the greater heights.|
|Customers visiting the company’s shops are interested in the products with the supermarket’s label meaning it is likely to dispose of more products as compared to the competitors.||The company faces a challenge of sustaining prices because of the global financial crisis. The cost of fuel is ever-increasing, which affects the prices of many local products. In many cases, the management is forced to increase prices of basic products without informing customers.|
|Finally, the current trend shows an increase in the sales of the company products in the new markets, particularly in the US, which is an opportunity for the company to excel.|
Strengths and weaknesses
|Wal-Mart is one of the largest retailers in the world, meaning it enjoys the scale of economies. The company has over ten thousand stores globally, with over $400 billion in revenues. This makes it the market leader given the fact no company can offer substantive competition to it.||Unfortunately, labour-related legal suits are one of the weaknesses of Wal-Mart. The company is accused of mistreating its employees, leading to losses owing to court fines. For instance, several employees accuse the company of failing to provide better working conditions. Again, the only company offers low wages with no overtime compensation. In one of the cases, the company was accused of discriminating employees based on their gender and race.|
|The company is a well-structured information system that is competent, which allows it to save on the costs. Orders from customers are easily traced, inventory levels are well managed, and sales are managed easily through the systems.||Due to the continuous legal tussles, the company is suffering from high rates of employee turnover, which has increased the costs of operations significantly.|
|In terms of offering products, no competitor can challenge Wal-Mart because customers are given an option of buying grocery, entertainment equipment, health products, and other home-related goods. This helps it in attracting customers (Hill, & Jones, 2012).||Unlike its competitors, Wal-Mart does not employ differentiation strategy as far as prices are concerned.|
|Wal-Mart is the only supermarket chain store that applies cost leadership strategy making it a low-cost market leader in the industry.||The company is losing public trust because of the poor management of human resources.|
The company’s mission and objectives should not be altered because they are some of the best, but the corporate and business strategies must be improved to ensure the desired goals and aims are realised.
|Corporate strategies||Business Strategies|
|Assessment or review of the current strategies whereby the management must consider the turnover or growth of the firm, product differentiation, human resources, capital resources, and the nature of the market, especially competition (David, 2009).||Generic strategies focus on growth, whereby the company is encouraged to acquire or develop new products. Again, the business unit can go global by opening new branches in other countries to boost the customer base. Under the general strategy, the organization could embark on a retrenchment exercise to prevent wastages of resources.|
|Planning or revision of the current strategies: In this case, the company has established whether the physical appearance of the supermarkets is appropriate, sizes of the shops, the location of the premises, existing methods of distribution, and the staff.||Competitive advantage strategy, including selling products at a fair price and product differentiation is an additional strategy.|
|Action or refining of the strategies whereby change programs have to be introduced to improve the image or publicity of the firm.|
Implementation of strategies
|Marketing||Intensify online marketing through Facebook and Twitter||Capture the youths|
|Human resources||Design the best reward system||Retaining the most qualified and talented workers|
|Finance||Improved financial reporting||Attract investors|
|Operations||Go global||Outsmart competitors|
|Information systems||Employ current technologies||Reduce the costs of operations|
|Marketing||Attract customers in new areas||Focus on online, as well as conventional advertising tactics|
|Human resources||Retain the best workers||Change the existing policy|
|Finance||Strengthen the financial position||Adopt better practices in financial reporting|
|Operations||To be a global company||Focus on overseas markets|
|Information systems||To be the best online company as far as sales and marketing is concerned||Develop an ICT department|
The performance of the company would be improved through the application of various long-term and short-term strategies. For instance, the projected pro forma statements for the next five years would resemble the following.
Pro Forma Income Statements – Years 1 through 5
|Cost of Goods Sold||15,250||15,000||20,000||25,000||25,000|
Strategy Review and Evaluation
|Consistency||This means the strategy has to be in line with the major goals, as well as the policies of the company.|
|Consonance||The management must revaluate various trends in the market, including the behaviour of individuals.|
|Feasibility||The company should never engage in overtaxing of resources or create problems that cannot be resolved|
|Advantage||The firm has to ensure the competitive advantage is maintained|
David, F. R. (2009). Strategic management: Concepts and cases (12th ed.). Upper Saddle River, NJ: Prentice Hall.
Harrison, J. S. (2005). Foundations of strategic management (3rd ed.). Mason, OH: Thomson/South-Western.
Hill, C. W. L., & Jones, G. R. (2012). Strategic Management. New York: Cengage Learning.
Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2005). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases (14th ed.). Boston, MA: McGraw-Hill.