Student assignment: Walmart’s Successful Sustainability

By | May 1, 2014

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Walmart’s Successful Sustainability

1. Introduction

For long Wal-Markt has been considered as the industrial leader in the global retail business sector not only because it provides the “daily low price” to its various customer all over the world, its mass retailing strategy that contributes to value creation for all stakeholders is strongly supported by its three major business functions: marketing, human resource management and operation management. In this study, we try to answer the question that how the company manages these three fields and achieve the desirable long term competitiveness and business sustainability.

2. Analysis

2.1 Marketing

Figure 1 The flower of service model
Source: Lovelock, Wirtz & Chatterjee 2003

Lovelock, Wirtz and Chatterjee (2003) developed the flower of service model as shown in the figure above, the model suggests that core service or product is surrounded by a cluster of facilitating and support services. And the four of them are facilitating supplementary services while the other four services are value strengthening services. And in the following we will talk about the performance of Walmart in some of these service categories with reference to its business practices and relevant strategies.
Facilitating services Enhancing services
Information Consultation
Order-taking Hospitality
Invoicing Safekeeping
Payment Exceptions
Table 1 Facilitating services & Enhancing services

2.1.1 The service petal of Payment

Wal-Mark as the one of the major play in the global retail industry, its various payment methods provide sufficient options for its different customers. For example, in its shopping center provide the following methods of payment for orders in the US Wal-Mark outlets: credit card, ATM / Debit / Check Cards, Walmart Gift Cards and eGift Cards, Cash, Bill Me Later and PayPal (walmart.com 2012). And also the company also issues its own credit card used in all the group’s outlets (Walmart, Walmart.com and Sam’s Club) with some special offers given to the dedicated credit card users. And obviously, the provision of the various payment methods has offered the customers from all over the world to shop in the sale outlets, and they can choose the payment methods which are comfortable to them and also they could store up points in the gift cards through making payments which finally could be converted into real money.

2.1.2 The service petal of Information

The service petal of information is one of the four facilitating services and provide extra conveniences to customers to save the time for the customers or help them to obtain the needed information as soon as possible. According to M. C. Cant, J. W. Strydom and C. J. Jooste (2006, p. 295), in the customer decision making, information gathering is very critical. Aspects such as service hours, service level agreement details, value propositions, prices/fees, and guarantees/warranties are needed. It is said that this service petal to some extent educate the customers gradually by telling them the necessary and usual information about the company and about their shopping conditions. For example, in Malaysia, when we enter any outlets under Wal-Mart, there are two major methods that we, as customers, could obtain the information that we need. First of all, we would probably receive a paper introducing most recent promotions activities regarding what products are under discount; on the other hand, we could also ask the service/information counter which provides enquiry or after sale assistance in a fixed place that we can always refer to.

2.1.3 The service petal of Consultation

The service petal of consultation usually involves a dialogue or talking between the customers and some professionals who can provide professional consulting services and knowledge to help the customers to better understand their own situations and conditions better and help customers to make up their mind regarding what they need and what they could do (Rao 2011, p. 226). In case of Wal-Mart, inside the supermarkets, we could usually find knowledgeable staffs to give us advices to allocate the products that we could buy based on our demand. The provision of the consultation service is important because customers usually would not have the professional knowledge or be willing to read the long instructions in the various products, therefore the consultation services by those who have already had the profound knowledge could save the customers a lot of time of searching the right products and as a result the chance of buying the wrong products would be significantly reduced. And obvious buying the wrong products or goods would result in customer dissatisfaction to the customers.

2.1.4 The service petal of Hospitality

Since customers in a supermarket usually spend a length of time in doing their regular buying, it is important that they receive hospitality during whole buying process in particular when they encounter some issues such as queuing and happening of some mistakes. And to a large extent the degree of hospitality contribute significantly to the total service quality level perceived by the customers. For example, the whole shopping process could be well designed and of very good quality in term of various customer oriented services such as the provision of professional consulting services, but the cashier’s unfriendly words could ruin all these efforts and result in a complaint case. As in the case of Wal-Mark, the company hiring more than 2.1 million people (businessinsider.com 2010), it would usually be difficult for a company hiring so many people to keep each employee in a high hospitability level with various interactions with customers on each day. But the company managed to ensuring the high level of service quality and hospitality by adopting a simple belief: we (the company) take good care of the employees and the employees would take care of our customers.

2.2 Operations

2.2.1 Rule based operation management

In the design of the organizational structure, Wal-Mart adopts rule based management style. Though its massive employees decides that the company has a large company structure influencing a large number of staffs, it manages to achieve a balance to ensures that rules are well followed and necessary authorization is given. For example, while managers have strong power within a single store’s management hierarchy and operations, they would be relatively powerless to affect the operation and management systems set in place by the global company to supervise the massive operations throughout the world. Such rule based operation management has two major advantages: first of all, by adopting rule based management it ensures that all the stores dispersed in different countries would share the same management system and thus provide consistent service to the employes.

2.2.2 Advanced technology in the stock management and distribution management

An important reason behind Wal-Mart’s amazing business growth and long term sustainability is its well management of the inventory and distribution. The company has a MIS (management information system) which employs six satellite channels, from this system, the company internally receives 8.4 million updates each minute regarding what items customer buy and what is the relationship among the goods sold to each person (Kimmel, Weygandt & Kieso 2010, p. 227). There are a number of benefits by adopting these high technologies and monitoring closely about the consumer consumption behaviors: first of all, the research of the customer behaviors in term of what precuts they buy in certain time could assist the company to manage the shelves management more effectively. There are rules that are hidden and hard to be found by purely working and management experiences. The finding of the relationship between the sale of diapers and beers is a typical example suggesting that human imagination is limited and data sometimes are more reliable; secondly, the adoption of the technologies could help the managers to better understand the stock situations and distribution, and avoid the overstock or out of stock situations.

2.3 Human resource

Beside the operational management with the assistance from well designed process and operational arrangements, as mentioned, the company globally hires more than 2 million people, and we can imagine how difficult it could be to manage all these people heading in the same direction and create value not only for the company alone but also to the company to ensure the long term profitability through sustainable business.

2.3.1 Lean staffing level

Though in Wal-Mart, there are more than 2 millions staffs, it teams are highly productive but yet at the same time the staffing levels are lean. To ensure that a lean hierarchical structure could still be functioning effectively, the human resource department of the company work hard to design the job description and duties to make sure that each employees are held responsible for the job assigned to them, and there are no excuses for any faults though the company promotes teamwork.

2.3.2 Motivate employees through company culture building

It is believed that all organizations have some sort of culture and in general a successful company with long term sustainability tend to have strong company culture. While there are various definitions about the term of culture, according to O. C. Ferrell and John Fraedrich (2011, p. 183), there are three basic elements among the majority of these definitions: (a) culture is shared through individuals belonging to a group; (b) culture is formed over a long period of time and (c) culture is relatively stable. In the case of Wal-Mart, the company adopts a customer oriented culture or customer caring business culture from its establishment in 1962 by its founder, Sam Walton. Among the earlier traditions, today the company still adhere many of these long term values. For example, there is a 10 foot rule which requires employees to promise that “whenever I come within 10 feet of a customer, I will look him in the eye, greet him, and ask if I can help him” (walmartstores.com 2010). This again will assist the employees to maintain a high level of hospitality to the customers. On the other hand, the company also promotes high degree of teamwork and there are two major effects or advantages to promote teamwork in a large business like Wal-Mart has: first of all, teamwork contributes to a higher level of sense of belonging and only when employees feel that the company is their second home they could word hard for it; secondly, teamwork encourages knowledge transfer among the team members which is helpful to ensure the service quality consistency among the large number of staffs.

3. Conclusion

Through the analysis above, we can safely concluded that customer oriented service marketing, high technology equipped operation management as well as excellent human resource management in term of teamwork based and employee caring company culture have all contributed to the long term business success of Wal-Mart and the achievements that it manages to make today. Therefore, we can see that business success does not happen in a sudden, it has closed relationship with the daily management as well as strategic direction setting, this is more obvious in those large companies with a long history.  
Reference

Businessinsider.com 2010. Walmart Employs 1% Of America. Should It Be Forced To Pay Its Employees More? Accessed on 20 Jul 2012 [online] http://articles.businessinsider.com/2010-09-20/news/30081785_1_minimum-wage-real-wages-employees?1342733066

Cant, M. C., Strydom, J. W. & Jooste, C. J. 2006, Marketing Management. Cape Town: Juta and Company Ltd. p. 295

Ferrell, O. C. & Fraedrich, J. 2011, Business Ethics: Ethical Decision Making & Cases. Mason: South-Western, Cengage Learning. p. 183

Kimmel, P. D., Weygandt, J. J. & Kieso, D. E. 2010, Financial Accounting: Tools for Business Decision Making. New Jersey: John Wiley & Sons. p. 227

Lovelock, C., Wirtz, J. & Chatterjee, J. 2003. Service Marketing. New Delhi: Pearson Education.

Rao, K. R. M. 2011, Service Marketing. New Delhi: Dorling Kindersley (India) Pvt. Ltd. p. 226

walmart.com 2012. Accepted Payment Methods. Accessed on 20 Jul 2012 [online] http://www.walmart.com/cp/Payment-Options/542185

walmartstores.com 2010. Learn about our culture. Accessed on 20 Jul 2012 [online] http://www.walmartstores.com/AboutUs/295.aspx?1342736704