CASE ASSIGNMENT

CEO Lee Scott and Chairman Rob Walton have scheduled a strategic planning session to
prepare for the 2007 Wal-Mart Annual Shareholders Meeting. You have been invited to
join the discussion of key strategic issues and to present a suggested course of action for
Wal-Mart's leadership to take during the upcoming fiscal year.
To have a full understanding of the issues facing the company, everyone participating in
the meeting has received the planning department's current Situation Analysis. New to
the group, you decide to follow the strategic management process model to prepare for
the meeting.
1. Based on the company's external and internal environmental analyses, outline the
primary factors impacting Wal-Mart's strategy. Organize these factors by
Stakeholder Group to prioritize expectations and identify conflicting pressures on the
organization.
2. Review Wal-Mart's business-level and international strategies and evaluate their
potential for success, given the strategic inputs outlined above. Determine their
strategic fit with the environment.
3. Based on your complete assessment, present your recommendations for an integrated
and coordinated set of commitments and actions which will exploit the company's
core competencies, stimulate and sustain growth, strengthen competitive advantage,
establish direction for the company, and maximize the value of the firm.
The meeting agenda is outlined below. To be fully prepared for the discussion, be sure
that your proposal provides a solution and supports your position for each of these items.
How can Wal-Mart Stores and Sams Club increase same-store sales?
How should the company capture share of middle- and upper-income wallets?
Should Wal-Mart Stores fully retreat from fashion-forward merchandising and
marketing? Will its neighborhood-store-localization strategy increase sales
enough to offset the associated costs? What should it do to make its new three-
types-of-customers segmentation strategy work?
Should the company spin off Sams Club? If not, what should it do to compete
more effectively against Costco?
Is Wal-Mart expanding the right kind of new stores at the right pace and in the
right places? How and where should the company continue to grow
internationally? Should Asda buy J. Sainsbury?
What will it take to restore the companys reputation in the United States?
Should Lee Scott change Wal-Marts course? If so, how?
Should Rob Walton replace Lee Scott? If so, when and with whom?



STRATEGIC MANAGEMENT INPUTS


1. Based on the company's external and internal environmental analyses, outline
the primary factors impacting Wal-Mart's strategy. Organize these factors by
Stakeholder Group to prioritize expectations and identify conflicting pressures
on the organization.


Product Market Stakeholders
Strengths Weaknesses Opportunities Threats
Largest American
corporation - size
and scale - most
stores, revenues,
and net income
Same-store sales
growth is weak and
expansion growth
has slowed, U.S.
and abroad
Internet sales and use
of growing electronic
commerce to spur
online sales, even
with low-income
consumers
Industry-wide trend
of low same-store
sales growth
International
revenue - a constant
source of sales and
income growth
(17.8%) - especially
from Asda (in the
U.K.)
International stores
under-perform
domestic stores in
revenues per store*
International sales
growth - trade
barriers continue to
lower and technology
enables greater access
to new markets
Largest percent of
sales (65.6%) in
slowest growing
segment (discount
stores growing at
only 8.7% past
three years)
Supercenters -
competitive strength
in non-membership
discount format
Club store sales
growth and
membership
renewals - customer
loyalty is low
Improve club store
performance
Success of Costco
Market leadership -
number one retailer
in 77 of 100 largest
general merchandise
markets
Apparel segment -
even with 12% of
the market (and
10% of Wal-Mart
sales) - attempts to
do better with
fashion have failed
Casual fashion
retailing - good
quality at low price
point
Target's
competitive
performance
Dominant retailer in
the South and in
mid-sized and small
communities
Public image U.S. population is
aging and becoming
more diverse, income
inequities are
increasing
Public image and
lost market appeal
*International stores represent 40.6% of Wal-Mart's total number of stores, yet the segment's revenues
are only 22.4% of Wal-Mart's total revenues. 59.3% of total stores are Wal-Mart discount stores, and
they generate 65.6% of total sales. Even the Sam's Club segment has 8.5% of stores and 12.1% of
sales.



Product Market Stakeholders (cont.)
Strengths Weaknesses Opportunities Threats
Large control of
specific product
segments - dry
grocery, non-food
grocery, health and
beauty aids, general
merchandise, and
toys
Successful segment
categories are
consumable
products that need
to be replaced
regularly -
promotions for
routine and repeat
buyer programs to
lock buyers into
Wal-Mart
Strong competitor
performance -
urgency to protect
market share - Target,
Kroger, and Family
Dollar are growing
revenue faster than
Wal-Mart and
threatening its
dominance
Procurement
systems -
Leverage against
suppliers, dictate
terms and prices
Centralized
merchandising
decision making -
customer contact
not factored into
decisions
Front-line,
customer-driven
merchandising
Ability to compete
for prime retail
locations - some
resistance to Wal-
Mart's local presence
Technology-driven
cost position and
supply chain
management
Single focus on cost
reduction has
negatively impacted
store image -
cleanliness,
crowding, associate
satisfaction, and
service levels
RFID developments
to drive costs down
further
Pressures for social
responsibility,
compliance with legal
requirements, and
government authority
can drive up costs
and drain
management
resources
Serving low-income
shoppers
Attract middle-
income shoppers to
improve sales
growth

Convenience, price,
merchandise
diversity, and
proliferation of
stores - a difficult
combination to
duplicate





Organizational Stakeholders
Strengths Weaknesses Opportunities Threats
Associate
satisfaction levels
are low - Union
attempts to organize
Ability to attract
and retain quality
employees
Capital Market Stakeholders
Strengths Weaknesses Opportunities Threats
Strong returns on
equity and assets -
EPS and dividends
have more than
doubled since 2000
Profit as percent of
revenue and return
to investors are
below par (some
improvement over
last 3 years, but still
weak)
Emphasize results
achieved.
Profit margins held
down by grocery
business, especially
in Neighborhood
stores
Strong, active Board
of Directors -
Ownership
concentration to
monitor managers
and coordinate their
actions
Stock price is
stagnant - Not
meeting
performance
expectations
Tap into the
experience and
background of board
members - vast
knowledge resource
for leading the
organization to
achieve goals
Shareholder power
to shake things up


The parties that are affected by the outcomes of Wal-Mart's performance are outlined
below, along with their expectations and the measures of success that influence
stakeholder satisfaction.
Product Market Stakeholders. Satisfying the needs of customers, suppliers, host
communities, and unions in the product market should receive the company's full
attention to define their expectations and meet their measures of success. The summary
above establishes that Wal-Mart's product market stakeholders have the greatest stake in
the firm's strategies and success.
Customers, as stakeholders, generally demand reliable products at the lowest possible
prices. Wal-Mart's customers will ultimately determine if the company succeeds based
on satisfaction measures such as product quality, product features, and level of service
(including timeliness, courtesy, consistency, convenience, completeness, and accuracy).
With its discount general store concept, and a focus on wide assortment, good quality
merchandise, lowest possible prices, guaranteed satisfaction, friendly and knowledgeable
service, convenient hours, free parking, and pleasant shopping experience, Wal-Mart is
poised to satisfy its customers. The company needs to be sure to measure each of these
factors and react to areas that are slipping. In particular, it needs to immediately take
steps to improve store image and customer interactions (input and feedback systems) and
to reward employees for anticipating and responding to customer needs and expectations.


Suppliers typically seek loyal customers who are willing to pay the highest sustainable
prices for their goods. Driven by the opportunity to move large volumes of product
through the distribution chain, suppliers have accepted Wal-Mart's rigid terms and
continuous pressure to reduce costs to support its low price strategy. However, supplier
reaction to Wal-Mart's "strong-arming" should be monitored, and Wal-Mart needs to
understand the types of actions required by suppliers to meet its demands. Moving
production to countries with unsavory employment practices (such as child labor) and
conditions, negatively impacting the environment through unsafe waste disposal, or
reducing product quality are some of the undesirable outcomes from pushing suppliers
beyond their ability to viably produce items. Wal-Mart needs to measure successful
relationships with suppliers not by cost alone and minimize the unintended consequences
of its relentless quest for lower prices. By partnering more closely with suppliers, Wal-
Mart can help them achieve mutually-beneficial goals without the abuse of resources or
damage to the environment.
The public and host communities associate the social issues mentioned above with Wal-
Mart and view the company's actions as ruthless corporate behavior. Many activists even
contend that Wal-Mart is breaking antitrust laws by using its power to micromanage the
market through carefully coordinated maneuvering of thousands of firms from a position
above the market. As a result, anti-Wal-Mart press has risen. The company is charged
with destroying America. Communities and national interest groups have even begun
rejecting the expansion of Wal-Mart stores. Although consumers like low prices, they
also want corporate neighbors who respect the local community, are willing to be long-
term employers and providers of tax revenue without placing excessive demands on
public support services. Wal-Mart's image has suffered dramatically as the public
becomes aware of the high cost of low prices. The company is perceived as a greedy
corporation, rather than as a champion of the consumer. The company cannot move
quickly enough to reverse the damage to its reputation.
Government stakeholders are concerned with political issues related to trade, healthcare,
the environment, discrimination, worker pay, and general anticorporate sentiment. Wal-
Marts handling of hazardous waste has prompted local, state, and federal officials to
initiate formal action against the company. Legal issues it faces include environmental
violations, child labor law violations, use of illegal immigrants by subcontractors, and
class-action employee lawsuits. The political ramifications for activist and government
attention also influence the company's success.
Ongoing damage to its reputation has an increased financial cost to Wal-Mart. Some
guess that these issues have cost the company $16 billion in market capitalization and an
unknown amount of lost business in each store category or business segment.
Additionally, union groups who are interested in securing jobs and desirable working
conditions for employees are at odds with Wal-Mart. Their concerns are aligned with
employee considerations, which are discussed in the Organizational Stakeholders section
below.
Organizational Stakeholders. Employees expect firms to provide dynamic, stimulating,
and rewarding work environments. They are usually satisfied working for a company
that is growing and actively developing skills. Workers who learn how to use new
knowledge productively are critical to any organization's success. Collectively, the
education and skills of the workforce is a competitive weapon that influences the success


of strategy implementation. Strategic leaders are charged with fully utilizing human
potential and creating organizations where people can grow and learn, while still
achieving a common objective and nurturing the human spirit.
Human resource policies that dictate wages, health care, fair employment practices,
working conditions, staffing levels, and morale directly address the expectations of this
stakeholder group.
Again, in its quest for low prices at all costs (productivity, productivity, productivity),
Wal-Mart's human resources have been compromised. Associate dissatisfaction not only
attracts costly union attention, but ultimately impacts the customer market through low
service levels and poor shopping conditions. Associates are the "face" of the company,
and interactions with customers are the experiences that define Wal-Mart's image.
Wal-Mart's human resource policies need to continuously address employee issues. Input
from experienced associates can provide valuable feedback on their needs. Most
importantly, empowered management practices and strategic reward systems that are
matched to the goals of the organization will maximize associate effectiveness and
achieve the superior retail experience the company is seeking. Again, employee attitudes
are passed along to customers and will ultimately determine the company's success at the
local level.
Capital Market Stakeholders. Shareholders and lenders expect financial returns that
exceed industry performance and the potential returns from alternative investment
opportunities. A look at Wal-Mart's financial performance helps to identify
measurements that determine the success of Wal-Mart's strategy for capital markets:
Stock price - stable, but not increasing in value
Earnings per share - up 117% since 2000
Dividends - up 235% since 2000
Current ratios - less than 1.0 (quick ratio is .25, strongly suggesting the inability
to pay current debt without liquidating inventory)
Debt to equity ratios - also high, suggesting leverage beyond equity value to fund
expansion
Sales growth - still growing, but growth rate has slowed in past three years -
revenue and income growth are particularly strong internationally
Profitability - operating profit margins trending upward, but slowly and net profit
margins increased very slightly since 1997, but dipped by 8.3% in 2007
Despite good returns, key strategic challenges facing Wal-Mart are slowing growth rates,
tentative margin improvement, and potentially serious leverage issues. The company's
capital market is dissatisfied with stock performance, even though their earnings are
strong. In addition, it is worth noting that 42% of outstanding shares are held by insiders
(41% are held by the Walton holding company and institutional and mutual funds hold
37%.) Inside stockholders are less likely to demand dramatic changes in strategy,
whereas institutional stockholders are more attentive to short-term performance measures
and push for visible action that will maximize shareholder wealth.

STRATEGIC ACTIONS: STRATEGY FORMULATION




2. Review Wal-Mart's business-level and international strategies and evaluate their
potential for success, given the strategic inputs outlined above. Determine their
strategic fit with the environment.

Wal-Mart's worldwide mission is to "save people money so that they can live better."
The company strives to provide savings on life's essential items and wants its customers
to know that Wal-Mart is the low price leader on everyday items, as well as those
products that enhance their lives.
Wal-Mart's relentless core generic strategy of cost leadership yields an everyday low
price position that is the foundation of its business. The cost leadership strategy is an
integrated set of actions taken to provide goods and services with features that are
acceptable to customers at the lowest cost, relative to that of competitors. Firms using
the cost leadership strategy commonly sell standardized goods or services (but with
competitive levels of quality) to the industrys most typical customers. Cost leaders
goods and services must have competitive levels of quality (and often differentiation in
terms of features) that create value for customers.
Similar to most cost leaders, Wal-Mart concentrates on finding ways to lower its costs
and "unlock value" relative to its competitors by constantly rethinking how to complete
its primary and support activities. The company creates value for customers with a
highly efficient and innovative supply-chain management operation. This operation
combines tough, low-cost procurement tactics, leading-edge information systems and
rocket-science logistics. In fact, it has been successful at creating a competitive
advantage in terms of logistics, which creates more value when using a cost leadership
strategy than when using a differentiation strategy (which is something to keep in mind if
the company would ever choose to change its business strategy).
At the extreme, concentrating only on reducing costs can result in unforeseen and
harmful consequences. As the environmental analysis above reveals, an overemphasis on
cost has had a negative impact on Wal-Mart's product market and organizational
stakeholders. This becomes evident when the inroads that competitors have been making
in the marketplace are considered. A more balanced measurement of strategic and
financial goals is needed to correct this condition (a balanced scorecard).
Future growth in the discount market is uncertain, and competitors are gaining increased
shares of the market. Wal-Mart has identified that being the low cost leader in the
industry can no longer guarantee sustained competitiveness and performance in the
current competitive environment. Confronting a period of rapid and profound change,
the company is committed to staying Out in Front of the changes around it. Leadership
wants to proactively set its sights ahead of changes in the markets it serves to ensure
future success. Wal-Mart's efforts to be "out in front" will validate its role as first mover
and industry leader. In the process, it is important to address stakeholder interests and to
broaden the company's appeal to consumers.
The company operates under three business segments, and each requires specific
strategies for moving forward. Each strives to focus on the right challenges for its short-
and long-term success in the marketplace and to ensure that the company is applying its
greatest resources against its greatest strategic challenges across the enterprise.


Wal-Mart Stores Segment. This segment's current plans target improved ROI, people
development, and customer relevancy, with a primary focus on the customer since
January 2007.
Customer segmentation and merchandising strategies have been in flux over the past few
years, with three different strategies in play to move Wal-Mart Stores toward a more
customer-focused position. The value of this strategy trial period is that Wal-Mart now
knows what will or will not work for it.
Mimicking Targets upscale, fashion-forward apparel and over-customizing in local
neighborhoods are strategies that do not fit with Wal-Mart's competencies and its aim for
lowest cost and broad appeal. Although the company has the capabilities to become a
"Store of the Community" that reflects the individual needs of each neighborhood served
(particularly through its technology and logistical strengths), an over-focus on
customizing stores will ultimately drive up costs and increase the management
complexity of its retail operations.
The third customer-focused strategy most recently implemented by Wal-Mart has
successfully segmented the company's customer base. Three fundamental types of
current low-price-seeking customers have been identified and now guide merchandising
and marketing decisions.
Brand Aspirationals
Price-sensitive Affluents
Value-price Shoppers
For these customer types, Wal-Mart is concentrating on developing unique, innovative
products and providing distinguished brands to better appeal to its core customers as the
low-price leader on well-known brands. This strategy aligns with the company's basic
brand proposition and basic consumer, rather than trying to attract a new consumer by
adding high-end fashion and complicated assortments. For the same reason, it aligns
better with Wal-Marts supply chain strength. It is more manageable to roll out a national
brand in stores nation-wide than it is to ship different assortments to different stores
within a region without disrupting the cost efficient supply chain that is Wal-Marts core
competitive advantage. This strategy is both sustainable and executable for Wal-Mart.
Sams Club Segment. This segment is focused on three areas: reinvigorating the brand
by broadening products and services; improving inventory management and other
performance measures; and optimizing the in-club experience. Management layers
have been restructured to give stores additional flexibility and to boost service. Sams
Club members count on savings being passed along to them, whether for their small
business or for their personal needs. These customers and members count on the offering
of great values. These goals are appropriately aligned with current environmental
conditions. Provided that this segment begins to see some performance improvements
(and progress should be closely monitored), the idea of spinning off the segment to set its
own direction in attracting and retaining members and associates is not a desirable move.
These goals can be sought while under Wal-Mart ownership. The related diversification
of Wal-Mart's three business segments provides an attractive, synergistic set of corporate
assets.
Wal-Mart International Segment. This segments strategy is to prioritize investments
where the greatest growth and return potential exist, what the segment calls majoring in


the majors. Both a focused portfolio execution and global leverage (to take full
advantage of worldwide assets - formats, information systems, purchasing organizations,
category expertise, and shared best practices) are important considerations in the current
environment. As was noted in during the environmental analysis above, the company
should also give serious attention to increasing revenues per store to impact the
corporation's performance measures.
Wal-Marts international stores are varied in their mix of products and services, but they
stick to the motto of offering working families the things they need at the prices they can
afford. The segment uses a multidomestic strategy, making decentralized strategic and
operating decisions in each country to allow each business unit to tailor products to its
local market. This strategy provides different country operations the autonomy to
customize products as needed to meet specific needs and preferences of local customers.
Of course, the challenge is to select successful product offerings for each location.
[Wal-Mart's mode of entry into foreign markets is varied, depending on the
conditions of each market. It has employed joint ventures and majority-owned
subsidiaries. It has even divested some of its holdings based on business
environments that were unable to produce adequate scale and market position.]
Customer Relationships. Wal-Mart, through its market segmentation, has a full
understanding of the customers it serves. Its emphasis on "Customer Relevancy" should
be executed in a manner that establishes which customer needs it can and should satisfy
(which, according to the three key consumer groups, are brand, price, and value).
Customers shop at Wal-Mart most often because of the values they find in its stores.
Close and frequent interactions with current and potential customers will help the
company more specifically define customers current and future needs.
From a strategic perspective, the most basic need of customers is to buy products that
create value for them. To maximize the effect of Wal-Mart's strategy, it must learn how
to anticipate changes in customer needs. The failure to understand future needs will
result in the loss of customers to competitors who are offering greater value in terms of
product features and functionalities.
Knowing customers throughout the world adds complexity to the task. It will benefit
Wal-Mart to design customer systems in a way that they can be applied globally to
reduce this complexity.
Once needs are defined and anticipated, Wal-Mart must look to its core competencies (or
resources and capabilities that serve as a source of competitive advantage over its rivals)
to implement value-creating strategies and satisfy those needs. Only organizations with
the capacity to continuously improve, innovate, and upgrade their competencies can
expect to meet and hopefully exceed customers expectations across time.
In addition, Wal-Mart should carefully identify clues from customers regarding the
quality of its service (through feedback systems) and continually assess customer
satisfaction.
Strategic competitiveness results only when the firm is able to satisfy a group of
customers by using its competitive advantages as the basis for competing in individual
product markets.


For sustained success, Wal-Mart must continually find new ways to satisfy current
customers and/or to meet the needs of new customers. This quest must be at least as
important to Wal-Mart as its drive to lower costs.
External and Image Challenges.
Wal-Mart has heard the criticisms against the company and has initiated efforts to
address environmental and community-impact issues. Sustainability efforts and localized
charitable giving are being used to help portray it as a responsible corporate citizen and a
good neighbor.
Actions toward several sustainability goals are positive, as they align the company with
characteristics of a good corporate citizen. Wal-Mart's attempt to get ahead of the
criticism curve will help, but it must follow through and stay a step ahead of problems by
anticipating the needs of the communities which it serves.
Although Wal-Mart is the largest corporate cash contributor in the U.S., the company
does not seem to benefit from its charitable giving. In other words, its image does not
improve when it increases donations. Perhaps its actions are viewed as an attempt to
"buy" acceptance. Ongoing contributions should stay focused at the local level, involve
associate input, and strive to maximize the impact on the communities it serves. Even
though Wal-Mart creates many jobs in communities of need, they put a lot of local,
family retailers out of business in the process. The company must begin looking at how
it can contribute to local economies in ways that make it a beloved member of the
community. The goal should be for communities to approach Wal-Mart to move into the
neighborhood, rather than reject its presence.



RECOMMENDATIONS


3. Based on your complete assessment, present your recommendations for an
integrated and coordinated set of commitments and actions which will exploit
the company's core competencies, stimulate and sustain growth, strengthen
competitive advantage, establish direction for the company, and maximize the
value of the firm.

Despite the problems facing Wal-Mart, the company does a lot of things right, and its
strategy is fundamentally aligned with its current environment by directing the company's
strengths toward available opportunities and effectively serving to overcome
organizational weaknesses. Current business-segment strategies are promising attempts
to meet higher performance expectations (such as comparable-store sales and stock value
for shareholders) and to stimulate growth.
It was identified during the environmental analysis that the company's powerful and
singular focus on cost (saving people money so that they can live better) has had
unintended consequences for both suppliers and the public. While it has been a
successful mission for Wal-Mart, the company has failed to balance all of its
stakeholders' interests and to neutralize environmental threats.
For improved results, the assessment above highlights several critical strategic
suggestions for Wal-Mart leadership to consider prior to the upcoming shareholder
meeting. In addition, the following recommendations offer the company substantial ways
to boost performance.
Store Image - In order to perform at the store level, the image of the store setting
needs to be immediately improved. The shopping experience, particularly for
middle-income consumers, is holding the company back. This is going to involve
an aggressive "Clean Up" of stores, merchandise presentation, employee attitudes,
and service levels. Low-income customers are going to come in for the low
prices, but attracting middle-income buyers to increase same-store sales is going
to take an improved "in-store" experience for a broader customer base.
Customer Interactions - Delivering superior value strengthens customer
relationships. Strong interactive relationships with customers can provide the
foundation for the Wal-Marts efforts to profitably serve their unique needs.
Three dimensions work to build the quality of customer relationships:
o Reach - access and connection to customers,
o Richness - depth and detail of the two-way flow of information between
the company and its customers, and
o Affiliation - facilitating useful interactions with customers
Wal-Mart should clearly proceed with its customer segmentation strategy, with an
emphasis on the company's associates providing the final link in its value chain to
customers. Resources to better understand its consumer base, the merchandise
they desire, and the factors valued in the store (and club) experience provide
significant customer input and feedback which can be used to make strategic and


operational decisions. Better matching staffing levels with shopping patterns can
facilitate this process.
Merchandising - Innovative merchandising techniques and detailed market
research should be used to develop unique brands, new products, and tailored
merchandise assortments to deliver against customer needs and expectations. The
company can produce "Smart Merchandising" by linking customers into its
supply chain. Use of Wal-Mart's advanced technological systems and expertise to
incorporate the customer is an essential method of improving merchandising at
the local level, particularly for casual apparel. With customer-driven
merchandising, the company may find that low prices do not have to mean low
margins. Specific programs should address the following areas of concern:
o Apparel - casual fashion with quality at an affordable price point,
o Demographic Trends - particularly to serve the changing needs of an aging
and diverse population in the U.S.,
o Repeat Buying - consumable items that are replaced by customers at
regular intervals to keep them returning to the store, and
o Brands - specific products that people seek offered at an everyday low
price.
Supplier Relationships - Developing partnerships and sharing technology and
value chain tools to aid suppliers in mutually-beneficial cost saving opportunities
can create a team approach to serving the end-use customer. Rather than making
demands of suppliers and leaving them to fend for themselves, Wal-Mart needs to
become their partner at accomplishing shared goals.
Public Image - Wal-Mart believes it is doing so much for the public, yet the
expectations of communities, employees, and interest groups are not being met.
Rather than continuing to throw charitable money at the problem (an approach
that Wal-Mart gets little mileage from), the company should repeat a play from its
own playbook.
The $4 generic prescription drug program recently rolled out in all of its U.S.
pharmacies is an excellent example of one program that can have enormous
impact on the market (and even the industry). Customer and public response to
the offering was extremely positive. It provided a significant savings to a broad
market in an area that affects people the most healthcare costs.
This type of Visible Impact program alone serves to create the positive image of a
company dedicated to improving the lives of its customers. It is a sincere effort
(in stark contrast to the appearance of ruthless, corporate acts) at the core of Wal-
Mart's mission that has a substantial financial and health-related impact on
consumers.
By replicating this type of program every year or two, along with its grass root
sustainability and community-improvement goals, Wal-Mart can establish a
"clean" public image. Additional high-impact products and services to consider
should be important items that people find difficult to afford, whether it is in
vision, organic foodstuff, or exercise facilities. Most importantly, it is unlikely
that any of its major competitors can duplicate such dramatic competitive moves.


In conjunction, Wal-Mart needs to continue identifying the toughest challenges
facing the communities it serves and being involved with the solutions through its
associates who live in those communities. In all ways, the company must strive to
be a good citizen (local and worldwide), and its behavior needs to reflect the
values of the public it serves.
Human Resource Management - Wal-Mart's people strategy involves giving
associates the tools and opportunities they need to be as productive as possible,
which enables workforce productivity gains. The company needs to expand on its
policies, enhancing them with efforts to provide an environment of fulfillment as
well. Viewing employees as a resource to be maximized rather than as a cost to
be minimized will facilitate successful implementation of Wal-Mart's strategies.
Through empowerment and reward systems, associates can initiate steps to react
to customer needs and be rewarded for productivity gains that are tied to the
success of the company. As the point of contact for customers in Wal-Mart's
stores, they are essential in the formula for improving customer relevancy.
Additionally, to attract and retain quality associates requires giving them a voice.
(This is especially true for valued, long-term employees.)
Entrepreneurial opportunities can be a vital source of growth for companies like
Wal-Mart. These types of human resource policies can aid Wal-Mart's strategic
leaders in encouraging employees and supporting their efforts to uncover new
ideas by creating an internal environment of autonomy, innovativeness, risk
taking, proactiveness, and competitive aggressiveness.
Internet Sales - Developing a strong strategy and marketing plan to enhance the
company's Internet presence and transactions is an excellent example of how Wal-
Mart can benefit by being out in front. When its customers are ready to
increase their Internet shopping, Wal-Mart will be immediately positioned to
satisfy their needs. With its technology and distribution skills, this effort should
integrate well with the company's overall strategic approach.
Sam's Club - Reinvigorating this brand is essential for meeting performance
expectations. Deeper relationships with small business owners can enhance
product-offering relevance by building new product lines for specific entrepreneur
types and valuable services to help small businesses run more profitably. Broader
appeal to members is possible through improved quality, meeting unique personal
needs, and offering affordable luxury items. An improved member experience
will result from availability of the products and services being sought by members
and the delivery of a great in-club experience. Improved checkout efficiency,
prominently displayed merchandise, logo and signage design, and lighting
enhancements can all serve to refresh the Sam's Club brand and improve in-club
navigation.
Wal-Mart International - Wal-Mart's International strategy should continue to
leverage Wal-Marts global brand, while recognizing the need for local autonomy
(which is necessary with a portfolio of forty-six store banners in nine formats of
varying size in thirteen markets outside the United States). Expansion in
countries with the greatest ability to capture value and where the greatest value
creation potential resides will help the company to prioritize capital spending for


maximum return. It is also important to emphasize the growth of comparable
store sales and operating income from existing stores by paying attention to the
basics of serving customers and by holding local management accountable for
improved results.
In summary, the company's mission needs to be expanded to elevate the customer to a
level of equal importance to cost. Attracting more business at the store level means that
people have to want to visit Wal-Mart. It's simple. It's image. It's customer importance.
It's a good experience. It's the right product. And its the associates.
The ideal long-term strategic direction for Wal-Mart should have two parts: a core
ideology and an envisioned future. A core ideology motivates employees through the
companys heritage, but the envisioned future encourages employees to stretch beyond
their expectations of accomplishment and permits significant change and progress to be
realized. The envisioned future serves as a guide to strategy implementation.