Walmart Inc.’s New Advancements in Business

Summary

The evaluation of any company’s corporate strategic activities may be regarded as a highly essential process that helps define its expediency and impact on subsequent growth and development in the competitive environment. As one of the largest and most profitable retailers in the US, Walmart Inc. relies on evaluating its strategic activities to stay productive, increase profitability, meet customers’ expectations, and identify mistakes to minimize and avoid them in the future. Thus, this research aims to critically evaluate the company’s activities and their impact on sales during the period 2010 through the secondary data review.

Title Research

A Critical Evaluation of Walmart’s Inc. (US) Corporate Strategic Activities and Their Effect on Sales During the Period 2010-2020

Background Research

Walmart is a retail company that has been in the market for more than half of a century. Its history began in 1950 when businessman Sam Walton purchased a store from Luther E Harrison in Bentonville. However, the Walmart chain was founded later in 1962 with a single store opened in Rogers, Arkansas, and then it expanded into Wal-Mart Stores, Inc. opening outlets in every state of the US. (History, no date). In the present day, the company is regarded as one of the most profitable retailers in the country, and its corporate strategies determine Walmart’s effectiveness based on the perspectives for long-term success. Evaluating the experience and performance of companies that are equally competitive with it, Walmart defines its own competitive behaviors, actions and market cycles for stable growth and development.

The main corporate strategy of Walmart is determined by the company’s philosophy of “everyday low prices” reflected in its logo. In other words, it pursues the business strategy of cost leadership enabled by the economy of scale that is derived by Walmart to a considerable extent. The basis of the company’s business strategy is provided by the constant improvements of accessibility, assortment, and prices (Lutz, 2015). In simple terms, it aims to offer a wide choice of products for the most affordable price, along with providing customers an opportunity to choose the most convenient channels in order to facilitate purchasing. Walmart combines traditional and online sales channels contributing to the retail operation’s cost-efficiency level.

In 2010, the company’s CEO Mike Duke identified four key strategies of its development in the future. They included the following goals:

• Become a global company;
• Understand the upcoming business challenges in the retail industry and solve them;
• Play a substantial leadership role in relation to social issues important for customers;
• Strengthening the company’s culture everywhere (Walmart CEO Mike Duke outlines strategies for building the “Next Generation Walmart,” 2010).

To enter the international market and strengthen its positions there, Walmart was planning to leverage its global supply chain and identify the best talents recruiting people for 500,000 jobs created all over the world (Walmart CEO Mike Duke outlines strategies for building the “Next Generation Walmart,” 2010). In relation to the US, its strategy presupposed the focus on remodeling and accelerating growth through new and more efficient supercenters in 2010 projects – approximately 70 percent were expected to be completed by 2012. In addition, Walmart retained its commitment to the policy of low prices addressing the global challenge of price transparency predicted for the next 20 years along with the growing influence of technologies on customer behavior. At the same time, Walmart is aware of a considerable influence of the brand’s reputation on consumers’ loyalty – thus, it aimed to address social issues that matter for people to attract them as a responsible and sincere company with a credible experience. Finally, Walmart identified its culture based on diversity and ethics as one of its major competitive advantages that should be spread in society.

In addition, Walmart’s corporate strategy was designed to diversify its operations into several product markets or businesses. This would specify the approach the company would need to implement to gain competitive advantage by means of the selection and management of competition in different markets. This diversification aimed to decrease variability in Walmart’s profitability. Since 2010, its strategic decisions on the basis of the SWOT analysis and through a combination of approaches that emphasized the supply chain and inventory management and sales and marketing have strengthened the business against competitors (Smithson, 2020). In general, Walmart’s strategic decision areas related to operations management include the design of services and goods, capacity and process design, quality management, layout design, location strategy, supply chain management, human resources, inventory management, maintenance, and scheduling (Smithson, 2020). On the basis of continuous monitoring, forecasting, and customer behavioral analysis, the company follows its main course of optimizing operational processes and reflecting public expectations to stay competitive.

Walmart’s corporate strategies were renewed and updated by Doug McMillion after his appointment as the company’s CEO in 2014. He introduced several considerable changes in the company’s strategy in the following directions for its subsequent development:

• Focus on the improvement of customer services through investments to provide more training, higher wages and increased opportunities for career growth (Opportunity, no date)
• Improving groceries. Due to the demand and popularity of organic food in supermarkets, Walmart has increased the number of organic foods available in its stores. Being the largest grocery retailer, it raised concerns resulting in attempts to push lower prices for inexpensive organic food.
• Integration of multiple sales channels for the enhancement of flexibility. In order to improve the shopping experience, Walmart aimed to develop both physical and online stores and offer several purchasing and delivery options for clients.

Problem Statement and Rationale

In general, the evaluation of the company’s corporate strategic activities may be regarded as a highly significant process. It starts at the stage of goal setting to give a company direction and identify ways to measure success. In other words, when strategies are identified, related activities should be evaluated after a particular period of time to state whether they were effective and contribute to a company’s growth and development. Evaluation helps a company gain experience and learn from its mistakes in the future, improving subsequent courses of action. In addition, it allows one to identify a company’s flaws and the sources of loss that require the review and improvement of activities.

As one of the largest retailers in the US that has several serious competitors, Walmart heavily relies on the evaluation of its corporate strategic activities and their impact on its performance, competitiveness, and general success. Moreover, the company has several areas that need the assessment of actions’ effectiveness. For instance, it is facing millions of tons of solid waste per day and the inputs of the material are used as landfill or incineration yearly which causes the company a major loss in profits and also potentially valuable materials. Some of the challenges faced are from the suppliers and customers in which Walmart looks deeper into and follows. In other words, the evaluation of Walmart’s operations can lead to their changes and help in terms of recycling and instability in the commodity markets as prices can fluctuate continually and have an adverse effect.

Thus, the corporate strategies of Walmart may lead to negative consequences for the company or the stagnation of its operational processes that decrease its competitiveness. In this case, its corporate strategies implemented in the period between 2010 and 2020 and their impact on its sales should be evaluated to decide whether these activities are successful and should be realized in the future or they lead to a decrease of sales and should be renewed.

Aims of Research

The aim of this research is to critically evaluate the corporate strategic activities of Walmart, Inc. and their impact on sales during the period 2010-2020. This research will also help to identify the areas that need improvement in relation to the company’s operations and identify its use of best practices as they relate to reducing spoilage and wastage of products.

Research Objectives

The research objectives of this study are to:

1. To examine the concepts and theories of corporate strategy;
2. To identify Walmart’s corporate strategy activities and evaluate their impact on the company’s sales within an identified period of time.

Method of Analysis

Secondary data collected via the internet, the company website, various peer-reviewed journal articles and reports will be used to analyze the existing issues at Walmart. Tables and charts will be used to illustrate the findings of this research study as visual graphic displays make it easier for readers to perceive the results of the findings.

Time Scale

Secondary data will refer to Walmart’s corporate strategy activities within the period between 2010 and 2020.

Chapter Summary

Founded in the 1960s, in the present day, Walmart Inc. may be regarded as one of the most profitable and successful retail companies in the US. In order to stay competitive among other serious market players, since 2010, it has implemented the corporate strategies of price leadership, diversification, global performance, attention to social issues and consumers’ needs and demands, sustainability, and the spread of its cultural values. At the same time, it is essential to evaluate the company’s strategic activities to define their efficiency, impact on sales, and potential flaws to remain or review them in the future.

Literature Review

Methods

Sources of Search

Secondary data related to strategic management and its application in Walmart company will be collected through various databases, including Google Scholar, ResearchGate, Academia, library catalog, and common search to identify the company’s website and related official sources.

Keywords

Keywords for search included “corporate strategy, corporate management, corporate activities concepts, theories, Walmart, Walmart’s strategies, Walmart’s activities, impact of Walmart’s strategies, Walmart’s sales.”

Inclusion Criteria

• Relevance to topic. All articles should be related to strategic management, Walmart’s corporate strategic activities, and the impact of these activities on the company’s sales.
• Peer-reviewed articles and official information. Data for literature review should include peer-reviewed articles and the company’s official information published on its website.
• Age. Articles should cover the period 2010-2020.
• Study design. Both qualitative and quantitative experimental research and descriptive studies can be included.
• Geography. The criterion of geography is not exclusive as the relevance of the topic to Walmart’s activities is predominant.

Ethical Issues

The ethical aspect of the research refers to the accuracy of reported information, its lawful obtainment, and the protection of the confidentiality of the organization and associated people. The study will use information provided by the company that is publicly-accessible, and no confident information will be neither gathered nor used. The ethical issues of peer-reviewed studies will be considered as well.

Concepts and Theories of Corporate Strategy

In general, the strategy may be defined as the determination of goals and the specification of courses of action that should be taken to achieve predetermined goals. According to Omalaja and Eruola (2011, p. 59), corporate strategy is “the determination of the basic long-term goals of an enterprise and the adoption of courses of action and allocation of resources necessary to carry out the goals.” It provides a broader concept of the company’s activities and sets forth guidelines that will conduct its search and the implementation of the most appropriate and attractive opportunities (Maleka, 2014). Corporate strategy is the plan of action’s basis for the allocation of scarce resources and obtaining competitive advantage, perceiving opportunities at an acceptable level of risk (Omalaja and Eruola, 2011). All in all, it is a deliberate, systematic, and accurate approach used to describe a business’s activities that determines how a company may achieve desired goals by making strategic decisions, clarifying corporate objectives, and checking progress.

Corporate strategy is strongly connected with the concept of strategic management, that may be defined as the process of specifying the objectives of an organization, developing programs, policies, plans, and paradigms in order to achieve defined objectives, and allocating resources to implement these programs, policies, plans, and paradigms. Strategic management involves corporate strategy’s exploring and management and understanding a company’s strategic position and choices for growth and development in the future. Thus, the most common theories of corporate strategic management applicable to modern organizations include the following:

• Profit‐maximizing and competition‐based theory. It is based on the principle of the maximization of long-term profit and the development of sustainable advantages to be competitive in the external market as a company’s main objective.
• Resource‐based theory. This theory does not presuppose the evaluation of the external environment’s potential threats and opportunities and emphasizes the significance of a company’s internal resources and capabilities as its main competitive advantage.
• Survival‐based theory. It refers to the concept of an organization’s continuous adaptation to the changes of the competitive environment to survive and remain successful.
• Human resource-based theory. This theory values the impact of the human element on a company’s strategy development. In addition, it refers to the ability of human resources to support corporate management (Tien, 2019).
• Agency theory. This theory emphasizes the importance of relationships between company owners (shareholders) and company managers (agents) to ensure a company’s development.
• Contingency theory. This theory may be regarded as one that unites previous theories and states that there is no single approach that will be applicable to a company’s strategic management at all stages of its operation. An organization should develop the most appropriate corporate strategies and act according to the market’s situation and conditions.

Company’s Corporate Strategies

In general, Walmart’s corporate strategic activities presuppose goals oriented on long-lasting performance and achievements. At the same time, regardless of strategies identified by the company, it constantly monitors the market’s situation in order to prepare for upcoming challenges and changes (Rice, Ostrander and Tiwari, 2016). Thus, Walmart’s strategic management may be reviewed from the position of the contingency theory that presupposes the application of several approaches for stable growth and development (Muñoz, Kenny and Stecher, 2018). Although Walmart’s objectives include the maximization of long-term profit and the development of sustainable advantages to be competitive in the external market, it also values its human resources, unique capabilities, and influence in relation to social issues as factors of successful growth and sales increase. Thus, through the period of 2010-2020, the company has implemented and been guided by the following corporate strategies:

• Cost and price leadership. Walmart’s corporate strategy that may be probably regarded as the main one is following the patterns of price and cost leadership. Offering the lowest operation cost in the industry the company offers the lowest prices to its consumers in the market, respectively (Rice, Ostrander and Tiwari, 2016). According to several studies, Walmart’s prices in the market for grocery and non-grocery items were approximately 17-40% lower in comparison with the process of competitors (Brea-Solís, Casadesus-Masanell and Grifell-Tatjé, 2014). In addition, this strategy is combined with the one-stop shopping approach and pennies strategy. This means that regardless of operating in all four quadrants and targeting all demographic groups, Walmart predominantly attracts middle-class and price-sensitive families of no less than four members. Thus, by offering even slightly lower prices, the company instigates people to buy more items at the same time and increases its sales. In addition, due to the fact that the strategy of price leadership has been followed for many years, people are sure that the prices in Walmart are most affordable. Through the economies of scope and of scale and the loyalty of a considerable number of consumers in the US, Walmart is able to dominate the market in relation to costs and prices.
• Omnichannel approach as the combination of physical and online stores to meet consumers’ demands. Walmart’s decision to implement e-commerce in the operation of its physical facilities has led to a considerable growth in sales as consumers perceived this method as convenient. In addition, people were offered grocery delivery and an opportunity to order items online and pick them in the closest store. The strategy of store remodeling and focus on digital experience implied the online sales’ share of almost 70% from the company’s total revenue (Walmart highlights progress on strategic initiatives and outlines plan to win with customers and shareholders at its meeting for the investment community, 2017).
• Global growth and domestic dominance. In the combination of price leadership, the strategy of domestic dominance that presupposes the opening of thousands of grocery locations, supercenters, and discount stores across the US has led to sales increase (Walmart strategy drives growth and sustainable returns, plans $20 billion share repurchase program over two years, 2015). In addition, the company is successfully presented in the markets of other countries, including the UK, Brazil, Mexico, China and Canada (Hunt, Watts and Bryant, 2018). Moreover, it not only implements its strategy of price leadership and the value of human resources but operates by adapting to cultural differences and people’s shopping habits (Xie and Cooke, 2018).
• Particular attention to social issues, including employment, community well-being, and sustainability. Constantly monitoring the market’s changing situation and consumers’ expectations, Walmart perceived that any company’s reputation and attention to issues that matter to society improve customer loyalty and help stay competitive. Thus, it operated aiming to provide career opportunities for millions of people in the US and all over the world (Opportunity, no date). In 2015, Walmart in association with the Walmart Foundation launched the Retail Opportunity philanthropic program and committed more than $100 million in grants “to strengthen the U.S. frontline workforce development system in retail and related sectors, with an emphasis on engaging employers and funders in innovative approaches to training and advancement” (Opportunity, no date, par. 2). The company underlined the importance of human civil rights and equal opportunities for all employees regardless of their backgrounds. Beside the improvement of the brand’s reputation, this strategy has also led to the improvement of customer service and customer loyalty, respectively, increasing the company’s profitability. In addition, the company pays particular attention to public concerns related to the environmental safety and the sustainability of its operations. Walmart is working for 15 years to reduce greenhouse gas emissions and make them zero by 2040 (Sustainability, no date). Finally, Walmart values consumers’ well-being and financial stability offering the most affordable prices and convenient service. In addition, the company supports various programs dedicated to the improvement of food safety and disaster relief and preparedness (Community, no date). Aiming to improve the quality of people’s lives across the globe, the company provides access to affordable and safe products, educates people engaging them on food safety and health nutrition, and facilitates industry innovation for the promotion of access to health food and products. Moreover, Walmart provides continuous long-term support for organizations responsible for emergency management in the case of disasters and military veterans with their families.
• Spread of the company’s cultural values. The spread of the brand’s culture may positively influence its reputation, consumer loyalty, and sales. Walmart’s cultural values traditionally include diversity, inclusion, and ethical performance. Thus, the company increased the representation of women, people of color. People with disabilities and people of all ages (Culture, diversity, equity & inclusion, no date). In relation to the principles of ethics, they are supported in the company through its inner Code of Conduct that presupposes the operation of all company’s employees and partners on the basis of respect, integrity, service, and excellence (Ethics & integrity, no date). The refusal to follow the highest standards of Walmart’s services implies the absence of further cooperation.

The combination of the company’s corporate strategic activities has led to the increase of its sales in the period 2010-2020 and it may be observed in the following graph:

From this graph, it is clear that Walmart’s strategic management caused the increase of the company’s net sales worldwide in the period 2010-2020 – while in 2010, net sales were almost $405 billion, in 2020, they amounted to more than $520 billion. It goes without saying that there were multiple factors that impacted the company’s profitability, including the rates of inflation and unemployment, global events, and the market’s situation. However, the general tendency of sales growth indicates the efficiency and expediency of the company’s corporate strategies. According to Singh et al. (2017), on the basis of the company’s sales analysis, it is essential for Walmart to keep its strategies, including the monitoring of the market’s situation and relying on an omnichannel approach, to remain competitive in the future.

Reference List

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Hunt, I., Watts, A. and Bryant, S. K. (2018) ‘Walmart’s international expansion: successes and miscalculations,’ Journal of Business Strategy, 39(2), pp. 22-29.

Lutz, A. (2015) Wal-Mart is making 3 changes so people will want to shop there. Web.

Maleka, S. (2014) ‘Strategy management and strategic planning process,’ DTPS Strategic Planning & Monitoring, 1, pp. 1-29.

Muñoz, C. B., Kenny, B. and Stecher, A. (2018) Walmart in the global South: workplace culture, labor politics, and supply chains. Texas: the University of Texas Press.

Omalaja, M. A. and Areola, O. A. (2011) Strategic management theory: concepts, analysis and critiques in relation to corporate competitive advantage from the resource‐based philosophy. Economic Analysis, 44(1-2), pp. 59-77.

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Singh, M. et al. (2017) ‘Walmart’s sales data analysis –a big data analytics perspective. In 2017 4th Asia-Pacific World Congress on Computer Science and Engineering (APWC on CSE) (pp. 114-119). IEEE.

Smithson, N. (2020) Walmart’s operations management: 10 strategic decisions & productivity. Web.

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Tien, N. H. (2019) International economics, business and management strategy. Delhi: Academic Publications.

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Xie, Y., and Cooke, F. L. (2019). Quality and cost? The evolution of Walmart’s business strategy and human resource policies and practices in China and their impact (1996–2017). Human Resource Management, 58(5), pp. 521-541.