Joel Clark Paragas

Emg216/COM
Case Analysis #8 Wal-Mart Stores, Inc. in 2008: Managements Initiatives to Transform the
Company and Curtail Wal-Mart Bashing
Overview
Before year 2008, Wal-Mart has undergone a lot of pressure against their rivals,
economically, socially and politically. Wal-Marts Strategy is categorized under Best-Cost
Provider, which in turn made them successful during the past 25 years. This success keyed in
from the companys culture, and good leadership. However, the way of governance Wal-Mart
has been following has maturity and needs to cope up with the present situation.
This case analysis will let us see what actions Wal-Mart should consider in order to stay
ahead in the market and maintain their competitive advantage.
In June 2008, Wal-Marts CEO Lee Scott along with the top executives presented a
transformation strategy for Wal-Marts business model. Due to the Top executives
transformation strategy for Wal-Mart, the following initiatives were formed:

Change the companys mission to Saving People Money So They Can Live Better

Revise Wal-Marts logo to better mirror the companys shift in emphasis away from
always low prices and we sell for less to the broader mission Saving Peoples
Money So They Can Live Better

Make a special effort to convince Wal-Marts 2.1 million associates why the companys
new mission was more than a hollow statement

Broaden Wal-Marts appeal to existing customers and attract new customers to shop at
Wal-Mart

Initiate a flat price of $4 for the generic versions of some 200 common prescription
drugs

Increase green merchandise offerings and promote their use to customers

Launch a multifaceted Zero Waste campaign

Institute ways to make Wal-Mart stores both more energy efficient and supplied by 100
percent renewable energy

Make Wal-Mart an even better place to work

Drive Growth in the companys international operations via both acquisitions of foreign
retailers

Make a positive contribution to the quality of life in every community in which the
company conducted business

The above table summarizes the transformation initiatives to three categories (environment,
Customers, Employees)

Company Mission
Wal-Mart Stores, Inc. mission was change from always selling less to Saving Peoples
Money So They Can Live Better.

Internal / External Analysis

Financial Ratios (2000-2008)

Current Ratio

Return on Assets

Return on Shareholder's equity

1
0.9

0.9

0.9

0.9
0.8

24.50%
10.10%

2000

20.70%
9%

2002

22.40%

22.90%

22.00%

21.10%

9.70%

9.30%

8.80%

8.40%

2004

2006

2007

2008

The above financial ratio of Wal-Mart tells us that their growth from year 2000-2008 is
not healthy. All the presented ratios are on a downside trend which shows that the company
should do revisions either on policies, procedures, processes and so on whichever is necessary.

SWOT Analysis

Strenghts
best cost provider
technological
developments
supply chain
range/ collection
brand name
Strong
management
commitment on
company cultures
Management are
flexible on
deciding strategy
for the company's
improvement

Weaknesses
wages, social
benefits
Declining Image
no trainings for
associates
focus of cost
savings

Opportunities
choice of location
demand for
discounters
Regain and
improve WalMart's good
reputation
Diversify
Improvement on
products sold
Company culture
improvement

Threats
competitors
(Target, Kmart)
relations to
suppliers
public critics
impact of lobbying
labor unions

The SWOT analysis shows that there are lots of opportunities for improvements on WalMarts part. Having a management team that is flexible on developments and strong
commitment on management cultures, Wal-Mart should employ people involvement not just
on top executives but also on their stakeholders. This is vital since Wal-Mart executives are
initiating a good platform for improvements.

Source: Zenith Management Consulting (2005)

The Graph above shows how Wal-Mart and their competitors are meeting their core
competence. Wal-Mart should improve on their service, quality and scope of products. They
may have the best-cost advantage but they are not making much effort for the important
aspects which consumers today are also considering (Value for Products).

Strategic Implications
After analyzing Wal-Mart Stores Inc.s from the previous analyses, it is important that
the chosen strategies take into consideration:

Continuously improve and lead as best-cost provider while attempting to implement

new structures for the company

Enforce relationship on stakeholders through better supply chain, employee and

customer involvement to outwit powerful competitor

Portray a sincere change through Top Management guidance on new missions of the
company

Find more supplier that fits quality requirements with lower cost or diversify/acquire
other suppliers for the companys advantage

Improve company reputation standings on the customers point of view (through

advertisement and Infrastructure)

Develop a fun-atmosphere workplace where employees will enjoy working

Formulate a better reward system on employees

Recommendations
Lee Scotts platform on June 2008 meeting from the companys stakeholders will lead to
a better Wal-Mart. I recommend that Lee Scott should get the Stakeholders buy-in on his
platform and continue to keep an eye on economic and social trending. Be flexible on WalMarts environmental changes but maintain the best-cost leadership amongst its competitors.
Also Wal-Marts top management needs to focus on their core competencies and their
companys culture.

References
Thompson, A.A., Jr., Strickland III, A.J. & Gamble, J.E. (2009). Crafting and Executing
Strategy (17th Edition). New York: McGraw-Hill/Irwin.