Implementing Strategies : Policies

Wal-Mart Stores Inc. became the largest company in the world this year, surpassing Exxon Mobil
Corp. to become #1 on Fortune Magazines annual "Fortune 500" list. Wal-Mart took in $220
Billion in revenue last year, and has firmly grasped the spot that it has long aspired to hold:
that of the #1 retailer in the world. However, Wal-Mart does not plan to sit on its laurels.
There are still several policy issues that they face. These include:

1. Wal-Mart's expansion into the foreign market

Wal-Mart has moved in the past year to further expand into the world marketplace. The retailer
already has close to 400 European stores, mostly in the UK and Germany (dir.yahoo.com).
Wal-Mart is also looking towards greater expansion in Europe and South America (Wal-Mart
Annual Report, 2001). They will continue to pursue partnerships with retailers in those
markets to gain easy access to consumers, and continue their dominance.

2. To expand beyond just retail and move into other sectors

Wal-Mart has shown a definite desire to move just beyond retail shopping. Of the nearly 3000
stores in the US, 475 are Sam's Club warehouses, specializing in bulk sales from food to
electronic items (ElBoghdady, Dina, "Washington Post").
3. Dominance in Labor Relations
Wal-Mart has long tried to hold the upper hand over its work force. They have consistently
fought attempts by several segments of their work force to unionize. A recent example is
Wal-Mart's battle against the United Food and Commercial Workers (UFCW) (Bernstein,
Aaron, www.businessweek.com).
 Matching Stage :
SWOT Matrix Technique
Strengths
Cost advantages over rivals. Costeffective supply chain
management practices.
Distinctive competence in distribution systems;
automated and efficient distributionof goods into its
stores, from manufacturers to its fleet of delivery
trucks that made daily deliveries to surrounding stores.
Companys strong We Sell for Less brand image and
reputation that generates loyal consumers.
Economies of scale advantages in distribution,
advertising, and procurement.
 Weaknesses
A strategy that does not have proprietary
protection and therefore can be copied by
competing retailers who wal-martificates
their supply chain. (Lack of sustainable
competitive advantage).
Weak presence in major metropolitan areas.
Plagued with annual turnover rates of 45%.
 Opportunities
Expansion into new geographic areas; saturating the
U.S. market with
Supercenters and globalizing Wal-Mart operations.
Acquisition of smaller retail chains to (1) increase
market share; (2) take advantage of economies of
scale; (3) reduce number of competitors.
Entering into alliances or joint ventures that can
expand the firms market coverage and boost its
competitive capabilities. Integrating backwards to
further control cost in merchandise production.
 Threats
Increasing intensity of competition that may squeeze
profit margins.
Federal lawsuit claiming discrimination against women
in pay, promotions, training and job assignments.
Fierce local resistance to Wal-Mart entry into the
community.
Combative labor unions pressuring Wal-Mart to raise
its wages and benefits.
Bad publicity.
 Human Resource Management
Wal-Mart hiring more than 1 million ees over next five
years
o Advancement Opportunities
65% of store managers began in hourly j reobs
o College Recruiting
Diversity recruting
Intenrship in pharmacy and merchandising
o Management trainee program, for college students
o Networking
Students in Free Enterprise
 Strategy - Evaluation
Since Wal-Mart has been successful in executing its low-cost strategy,
careful guarding must be implemented as other retailers attempt to
imitate Wal-Marts supply chain streamlining. In conjunction with this,
Wal-Marts first mover technology advantages should be applied in other
areas of its value chain. One avenue is using technology in the continuous
training, performance evaluation, and tying rewards and incentives to
above average performance of associates. Doing so would make this
Herculean task more doable as information systems can be automated
and are more objective in labor monitoring.

Wal-Mart should project a more community friendly, environmentally

concerned, and outstanding employer image. A portion of profits should
be returned to the community by sponsoring charity events, scholarships,
community clean-up, and the like to remedy the fierce resistance of local
residents and replace it with a welcoming attitude. This should allow Wal-
Mart to gain easy entry in other smaller towns and even in major
metropolitan areas.