Monday, October 22, 2012

Wallmart : Strategic Management Analysis

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Strategic Management

December 00

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Before analyzing the key success factors of Wal-Mart, I am going to present this company in few words. Wal-Mart is a discount retailor created in 16 by Sam Walton. The first store opened July nd of this year in Rogers, Arkansas, USA.

During the 10 first years Wal-Mart opened stores and during the following 10 years, it opened 44 new selling points while the United States knew the two petroleum crisis.

As show the following graphics, its sales increased 67.000 times between 16 and 14 and its profits 0.000 times.

As we can see better with these graphics, how incredible is the increase of the Wal-Mart’s profits, a real American success story... This one is now the case of many business schools to understand the key success factors which had led this company to be the world’s largest discount retailor. This is the purpose of this paper.

Founder Sam Walton’s inspiracional leadership

Like every entreprise, somebody is at the origin and usually this person, its personality, its character, is the main factor of success or failure. As Wal-Mart were growing, Sam Walton porved an effective and visionnary leadership which are the two main qualities to guarantee the success of a new company. Thus, Sam Walton has known how to combine these two qualities to put in place in its strategy values and beleifs as innovation, social responsability, employees’ participation, costs cut, technology awarness which led its company to a rapid expansion.

An associate-focused organisational structure

Sam Walton understood from the begining that without a strong participation of its employees, Wal-Mart would meet difficulties in its expansion. Thus, he considered them as the first partners of the company so that they would strive to excel and then participate in the rewards. This increases more the standing of Sam Wlaton when we know that culturaly, the United States is a very individualist society where entrepreneurs are usually looking for profits before its employees well being.

A strong customer service orientation

As we can read in this case, Wal-Mart has a strong approach oriented to customers’ satisfaction. From the welcoming of the customers to the arrangements in the stores everything is done to make their visit pleasant. A precise point attracted my attention is that one of the five themes stressed in training store personel is Sell the customer what they want to buy. This is very symptomatic of the approach has Sam Walton for business, long-term benefits. In this example the satisfaction of the ckient will make him comeback in the store.

A low-cost strategy

The low-cost strategy is one of the main factors of Wal-Mart’s success. It permits to make benefit to the customers to the lowest prices of the market which is in this sector a real competitive advantage. This strategy is feasable thanks to another key factor of success of wal-Mart, a very efficient logitics system where the search of economy is the present in each step of the distribution chanels.

A strong capacity for innovation

This an essential factor of success and demonstrates well the visionnaire’s quality of Sam Walton who was laways aware of the technologies evolution. As an example we could mention that in 174, Wal-Mart begun tu use computers to control its inventories. We can also see in the case that Sam walton was a pionneer in the telecommunication sector buying the largest private satellite telecommunication network. In this example technology is used in a very effeciency way because it was used to reinforce the internal communication which is also a factor of the success of the company. Indeed, in a company composed by more than 000 stores, internal communication is key point in its success.

An innovative merchandising

The goal of the company concerning its merchandising strategy is to maximize inventory turnover. To reach this objective, Wal-Mart was veru active experimenting, testing new merchandising techniques which led the company to the excellence in this sector and was one the main factor of the unbeleivable increase of the sales.


The success of Wal-Mart is not the result of luck or because it was a pionneer in a sector, it is the combinaison of these key factors. The competitive advantage of the company was obviously its founder’s capacity to innovate, to manage all the aspects of the business. He maximized both human and financial resources to make porfits. What is for me essential in its strategy is that he makes participate all the people who work with him in the results of its company taking into account the human dimension of the business. I think this is not an obsolete way of thinking the business at all considering that first, it is the people who guarantee the success of a business.

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