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18th April 2011…………………………..Senior LecturerDepartment Of ………………………University
Subject: Submission of Term Paper
Dear Sir,With the due respect it is our pleasure to present the term paper entitled Case Study on “Wal-Mart in America and Around the Globe”. While preparing the report we have tried our level best to focus closely on the topic and try to collect most complete and updated information available. We believe that it will provide a clear idea about Case Study on Wal-Mart.
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Table of Content
TITLE Page No.Company Background 6Case background 8Relevant Theories 10
Controlling 10The basic control process 10Control as a feedback system 10Real-time-information and control 10Feedforward or preventive control 11Control of overall performance 11Requirements for effective controls 11Executive Summary 12Introduction 14With a saturation of stores in the rural areas in America, can Wal-Mart employ the same strategies for setting up stores in the cities? Why or why not? What difficulties may the company encounter?
15
Can the organization culture, which was so effective in the United States, be transferred to other countries? What changes, if any would you suggest?
20
Could competitors copy the inventory system of Wal-Mart? 22Would you like to be a manager at Wal-Mart? Why or why not? 24What should Wal-Mart do to be successful in other countries? 26How can Wal-Mart control the global enterprise? 30Conclusion 33References/Bibliography 35
Company BackgroundSam Walton, a businessman from Arkansas, began his retail career when he started work on June 3, 1940, at a J. C. Penney store in Des Moines, Iowa where he remained for 18 months. In 1945, he met Butler Brothers, a regional retailer that owned a chain of variety stores called Ben Franklin and that offered him one in Newport, Arkansas.Walton was extremely successful in running the store in Newport, far exceeding expectations. However, when the lease came up for renewal, Walton could neither come to agreement on the existing store's lease renewal nor find a new location in Newport. Instead, he opened a new Ben Franklin franchise in Bentonville, Arkansas, but called it "Walton's Five and Dime." There, he achieved higher sales volume by marking up slightly less than most competitors.
Fig: Walton’s Five and dime store Bentonville, Arkansas
On July 2, 1962, Walton opened the first Wal-Mart Discount City store located at 719 Walnut Ave. in Rogers, Arkansas when he noted the need for serving customer in small towns. The building is now occupied by a hardware store and an antique mall. Within five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales. In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma. Retailers such as Kmart and Sears focused on big towns. This created an opportunity for Wal-Mart to fill people’s needs in rural areas. This small-town orientation is reflected in the company’s values, which emphasize maintaining good relationships with staff as well as suppliers. The focus on cost savings enables the company to offer “everyday low prices”, which has become the familiar company slogan. The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million. It began trading stock as a publicly held company on October 1, 1970, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a market price of $47. By this time, Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974. As it moved into Texas in 1975, there were 125 stores with 7,500 employees and total sales of $340.3 million Wal-Mart opened its first Texas store in Mount Pleasant on November 11, 1975.
Case backgroundWal-Mart is not just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric. The scale can be hard to absorb. Wal-Mart sold $244.5 billion worth of goods last year. To get a sense of just how big Wal-Mart is today, consider these facts:
Wal-Mart employs 1.6 million people. To give us an idea of just how many people that is, Idaho, the 39th most populous state, is home to 1.4 million people.
Wal-Mart had sales of $312.43 billion in its most recent fiscal year, which ended January 31, 2006. By comparison, the second-largest retailer in the country, Home Depot, posted sales of $81.5 billion.
Wal-Mart has 6,200 retail outlets. In contrast, Home Depot has 2,040.Wal-Mart Stores Inc. branded as Wal-Mart since 2008 and Wal-Mart before then, is an American public Multinational Corporation that runs chains of large discount department stores and warehouse stores. The company was the world's largest public corporation in 2010 by revenue.
The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer. Wal-Mart is also the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sam's Club retail warehouses in North America.
Wal-Mart is reportedly the wealthiest company in the world, with approximately $288 billion dollars in annual sales. In 2004, Wal-Mart opened 242 new Supercenters around the country, and they plan to open over 1,000 Supercenters over the next 5 years—exploring the possibility of expanding their market into urban centers such as New York and Chicago.According to Wal-Mart’s investor web site, As of September 30, 2005, the Company had 1,253 Wal-Mart stores, 1,876 Supercenters, 555 Sam’s Clubs and 95 Neighborhood Markets in the United States. Internationally, the Company operated units in Argentina (11), Brazil (151), Canada (261), China (49), Germany (88), South Korea (16), Mexico (730), Puerto Rico (54) and the United Kingdom (295).
Relevant Theories
Controlling: The managerial function of controlling is the measurement and correction of performance in order to ensure that enterprise objectives and the plans devised to attain them are being accomplished. It is a function of every manager, from president to supervisor.
The basic control process: Control techniques and system are basically the same regardless of what is being controlled. Wherever it is found and whatever is being controlled, the basic control process involves three steps: [1] establishing standards, [2] measuring performance against these standards, and [3] correcting variations from standards and plans. There are different kinds of standards, and all should point out deviations at critical points. Performance can be measured against best industry practices, an approach known as benchmarking.
Control as a feedback system: Managerial control is usually perceived as a simple feedback system similar to the common household thermostat. This system places control in a more complex and realistic light than if it is regarded merely as a matter of establishing standards, measuring performance, and correcting for deviations. Managers do measure actual performance, compare this measurement against standards, and identify and analyze deviations.
Real-time-information and control: Real-time information is information about what is happing while it is happening. It is technically possible through various means to obtain real-time data on many operations.
Feed forward or preventive control: No matter how quickly information is available on what is occurring, there are unavoidable delays in analyzing deviations, developing plans for taking corrective action, and implementing these programs. In order to overcome these time lags in control, it is suggested that managers utilize a feedforward control approach and not rely on simple feedback alone. Feedforward control requires designing a model of a process or system and monitoring inputs with a view to detecting future deviations of results from standards and plans, thereby giving managers time to take corrective action before problems occur.
Control of overall performance: Many overall control are financial, one of which is profit and loss control. Another is the exercise of control through calculating and comparing return on investment. This approach is based on the idea
that profit should be considered not as an absolute measure but as a return on the capital employed in a business or a segment of it. The management audit has also been used as a control device. Bureaucratic control is based on rules, regulations, policies, procedures, and formal authority. On the other hand, clan control is influenced by norms, shared values, and expected behavior.
Requirements for effective controls: If controls are to work, they must be specially tailored to plans and positions, to individual managers, and to the needs for efficiency and effectiveness. To be effective, controls also should be designed to point up exceptions at critical points, to be objective, to be flexible, to fit the organization culture, to be economical, and to lead to corrective action.
Executive SummaryWal-Mart has grown into one of the largest discount retail stores in the world and has proven that the type of operation that they have is successful and effective. Although they are the industry leader, in the recent years their sales growth rate has not experienced such of an increase. The decrease of the slowing growth rate from their previous double-digit growth has begun to develop problems and serious concern for the company. They are now faced with the attempt to understand the symptoms and causes of the problem and how to regain their growth strength.
Internally analyzing with the VRIO system, Wal-Mart tends to still prove their strength. One of their largest strengths is the distribution system that they use. This decreases their cost and delivery time by remarkable numbers. Their use of the EDLP (Every Day Low Prices) executes the most success in being the lowest prices compared to their competitors. New systems have also now been implemented to decrease the cost of loss of inventory, shoplifting, or simply not having an item in stock. Although the company is so large they are able to stay well organized, one way in which they do so is by keeping all of the vice presidents of the stores in the headquarters to maintain use of internal strategies.
The analysis showed the Wal-Mart faces almost no threat of entry with because Wal-Mart’s economy of scale eliminates the immediate threat of new entrants into the market. With the products that Wal-Mart offers, there is a large chance for substitutes, but since the range is too large for smaller stores the only other substitutes are other large discount retailers. Threat of substitutes is not very
apparent due to the fact that the number and size of Wal-Mart is much greater than any other supplier. Since it is difficult to measure name brand, the threat of buyers is apparent, although the biggest strength that Wal-Mart has is that the average consumer is price sensitive therefore they will continue to search for the low prices. These low prices are the main focus of the threat of rivalry. Wal-Mart still continues to remain very strong due to their wide variety and low prices.
Recently Wal-Mart approaches the maturing market leaving them in need of new market opportunities to retain or increase their sales and maintain competitive against their industry. Initially using the analysis conducted internally and externally once option would be to expand in select international markets. One struggle has been that some global markets are not becoming a strong profitable investment therefore if they would withdraw from these markets that are weaker and focus on the stronger global markets.
IntroductionWal-Mart is the world's largest retailer. Wal-Mart sold $244.5 billion worth of goods last year. Wal-Mart employs 1.6 million people. To give us an idea of just how many people that is, Idaho, the 39th most populous state, is home to 1.4 million people. Wal-Mart has 6,200 retail outlets. In contrast, Home Depot has 2,040. Wal-Mart Stores Inc. branded as Wal-Mart since 2008 and Wal-Mart before then, is an American public Multinational Corporation that runs chains of large discount department stores and warehouse stores. The company was the world's largest public corporation in 2010 by revenue.
We have done our case study on Wal-Mart, because we are eager to take the taste of the managerial activities of a world class organization like- Wal-Mart. As we are doing a core level management course and we all want to work in managerial level in our entire career, we think it is fruitful for us knowing the practical managerial working function of an organization that become successful in the world market through its effective managerial process. From this case study, we know, how an organization should make its strategy for its different market situation; what difficulties the company can face in following those strategies and its way to overcome those encounters; a companies organization culture and its inventory system; the quality of an good manager; way of controlling the global market and become successful etc.
We believe that this case study and practical knowledge will help us in our entire career to be a good and successful manager of an organization.
Q1.With a saturation of stores in the rural areas in America, can Wal-Mart employ the same strategies for setting up stores in the cities? Why or why not? What difficulties may the company encounter?
As determined by the IE Matrix, Wal-Mart fits into the category of grow and build strategies. Thus, the aforementioned strategies would fit Wal-Mart very well. All three of the strategies that we decided on are grow and build types. The three strategies that Wal-Mart would benefit most from are: market penetration, market development, and product development.
1. Market Penetration:
The market penetration strategy is when a company is seeking to increase the market share for present products or services in present markets through greater marketing efforts. This is also an appropriate strategy for Wal-Mart to implement because they can take advantage of the bankruptcy of K-Mart. Through the increase of Wal-Mart's marketing campaigns, they can attract and retain most of K-Mart's customers. Also, because K-Mart has been closing hundreds of stores, Wal-Mart has a distinct advantage of controlling markets where both Wal-Mart and K-Mart are located. Also, because of Wal-Mart's economies of scale against its rivals, they have the power to influence markets in their direction.
The company culture is also well suited for this type of strategy. The management of Wal-Mart has ingrained in the employees the core values needed to excel at increasing their market penetration. Again, their EDLP and Rollback campaigns can readily be diffused into markets where they do not have as much of a market share as they want. This will also have a positive impact on the company culture because of the increased opportunities available to current employees. As their market share increases, they would also probably begin to add to their product offerings in that
area. This will, in turn, allow employees the ability to grow with the company and be promoted into higher positions.2. Market Development:The costs involved with market penetration are not nearly as great as with market development. Wal-Mart only needs to increase its marketing campaigns in the target areas.
3. Product Development:Creation of products with new or different characteristics that offer new or additional benefits to the customer. It may involve modification of an existing product or its presentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche.
Product development is a broad field of endeavor dealing with the design, creation, and marketing of new products. Sometimes referred to as new product development (NPD), the discipline is focused on developing systematic methods for guiding all the processes involved in getting a new product to market.
There are a number of organizations dedicated to supporting product development professionals, such as the Product Development and Management Association (PDMA) and the Product Development Institute (PDI). According to the PDMA, the organization's mission is "to improve the effectiveness of people engaged in developing and managing new products - both new manufactured goods and new services. This mission includes facilitating the generation of new information, helping convert this information into knowledge which is in a usable format, and making this new knowledge broadly available to those who might benefit from it."The process of product development is-
Idea Generation. Idea Screening. Concept Development and Testing. Business Analysis. Beta Testing and Market Testing. Technical Implementation.
Commercialization (often considered post-NPD). New Product Pricing.
The slogan of Wal-Mart is “Always Low Prices. Always.” Wal-Mart’s main strategy is to focus on a specific type of customer and the needs of that customer, namely, the budget customer who doesn’t want to spend a lot for the things they buy. Hence, the middle circle is the focus of their strategy. This main focus permeates every decision they make regarding the other two circles.
“Almost anything as long as it doesn’t cost a lot.” You’ll never see expensive products in a Wal-Mart store. This is because whenever they decide to offer a new product to their customers, the main criteria it has to meet is affordability. It must focus on their main strategy of meeting the budgetary needs of their target customers.
While their Web presence is increasing, their main focus has been strategically located retail stores. You’ll probably never see a Wal-Mart store located in an expensive neighborhood. That’s simply not their target customer and they know it. Literally every decision they make about accessing their customers is based on the main focus of targeting the budget customer. I know this in part because I live in Utah. Utah residents are well known for their conservative spending habits. From my home I can drive to four different Wal-Mart stores within 30 minutes. I’m told that these four stores are among the highest revenue-generating Wal-Mart stores in the world.
So, Wal-Mart’s circles of business strategy look like this:
Wal-Mart knows that by choosing this strategy there will be tradeoffs involved. There will be desirable products that they won’t sell, customers that won’t shop at Wal-Mart, and geographic markets in which they will never be able to put a store. However, they’re willing to accept these tradeoffs and let those customers go elsewhere. As with Jiffy Lube, they understand that their chosen strategy is determined as much by what they’ve chosen not to do as it is by what they’ve chosen to do.
Considering those strategies and functions, it is recommended that, with a saturation of stores in the rural areas in America, Wal-Mart can successfully employ the same strategies for setting up stores in the cities.
The difficulties that Wal-Mart may encounter are-
Being number one means that you are the target of competition, locally and globally.
Being a global retailer means that you are exposed to political problems in the countries that you operate in.
The cost of producing many consumer products tends to have fallen because of lower manufacturing cost. Manufacturing cost has fallen due to outsourcing to low-cost region of the world. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.
Because of a huge span of management, Wal-Mart could leave it weak in some areas.
Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
Q.2 Can the organization culture, which was so effective in the United States, be transferred to other countries? What changes, if any would you suggest?
Yes, the organization culture can which was so effective in the United States be transferred to other countries.
Wal-Mart organization culture is built on three basic values promulgated by Sam Walton. It was established in 1962 and still permits the organization. The values are (1) respect for the individual, (2) service to the customer and (3) striving for excellence. Other factors influencing the organization culture include exceeding the expectations of customers, assisting people so that they can make a difference, quickly approaching customers to help, doing today what can be done today rather than postponing it, and pricing for providing value to the customer. The organization culture has an impact on the staffing function. Associates are created with respect in this lean organization. Having a great of authority motivates people. Training is decentralized with management seminars offered at the distribution centers instead of at the company headquarters. The company atmosphere encourages employees to submit suggestion, many of them being implemented through the “Yes we can sum” Suggestion system. Associates are rewarded bonuses for cost reduction through the “shrink incentive plan”. Supervisors and managers received a salary as well as
incentive compensation base on store performance. Associates can also participate in profit sharing plan. With Wal-Mart is contributing a certain percentage. Above strategies will work in every corner of the world. As they provide better goods at low cost through highly competent employee and skill management and as they maintain good relationship with its supplier, they can provide vital input which will help it to grow in any sphere of the world. Their management is decentralized, that’s why department managers can take decision of their own. So they can take decision according to the demand of that market in which they are operating. As the scenario varies from country to country, they can easily cope up with the unique situations that may arise in case of operating outside of the United States.
Their strategy “everyday low prices” obviously would be welcomed all over the world, but it might create some questions in the mind among certain communities “are they providing quality goods? In this case they may clarify through providing information about their strategies in case of going for operation in a new country.
Only one thing that can be recommended in this case of them is that they should focus on their employees’ health care benefits. If employees remain satisfied, then they will create value for the organization.
Q3.Could competitors copy the inventory system of Wal-Mart?
An inventory control system is a process for managing and locating objects or materials. In common usage, the term may also refer to just the software components.
Wal-Mart is the world's largest and most profitable retailer, with $44 billion in 1992 sales and 380,000 employees. Its growth from a single store in Rogers, Arkansas to almost 2,000 bright, attractive stores in 43 states is legendary in American business. As it is the largest retailer company, its inventory system is unique and of course better and bigger. It has an effective, efficient inventory control system, or inventory management system. Wal-Mart's system helps it maintain its signature "everyday low prices" by telling store managers which products are selling and which are taking up shelf and warehouse.
Wal-Mart uses the SMART system. SMART is basically a tracking system, it keeps track of all inventory, the on-hand counts, and can automatically reorder product that is low or empty. As stated last week, most interaction with the SMART system is through the Telxon. Just to recap, the Telxon is a 900 MHz wireless handheld terminal equipped with a barcode scanner. When a barcode is scanned, almost instantly the item numbers, a short description, on hand counts and amount on order are displayed. The Telxon is linking to the SMART database to retrieve all of this information. All from a simple thing like a barcode which is just a set of numbers that are unique, like a primary key.
Strength of SMART:The actual database has to be enormous. There are so many products that the Wally keeps track of. All of which must be in the same database because products we don't carry will still scan and give all the relevant information. This is helpful because it allows people to return products from a "Super Center" that carries a much larger stock than we. Another strong point of the SMART system is that it is linked to the cash registers. When a product is sold, inventory is updated automatically. On hand counts are updated and on some products they are reordered automatically, depending on how many are left.So it is not easy for the competitors to copy the inventory system of wal-mart. For copping the system the competitors have to big enough and have to maintain a huge database and the SMART technology as well.
Q4.Would you like to be a manager at Wal-Mart? Why or why not?
Managerial work is a conceptual work. Becoming a manager may mean that the status of a project becomes more important than the technical nuances of that project. It’s going to be a different focus from what you’re used to so you’ll need to prepare yourself for it. One change that the shift to management will bring is that you will now represent your coworkers when interacting with your boss. Your boss may not want to hear every technical detail and may be more focused on whether the project will be completed successfully and on time. You’ll need to start thinking like a manager before you can act like one.
Many techies want to go to the office and work in solitary confinement. However, if you want to mentor others and guide them through their tasks, then you may very
well make a good manager. Being a manager and accepting responsibility for those under you by definition places you in a high profile position. I find that developing my employees’ skills and seeing them advance in their careers is the most valuable part of being a manager.
A manager doesn’t necessarily have to be a people person, but it helps. Managers spend most of the day working with others so it’s generally a good idea to have strong interpersonal skills. Managers have to solve people problems and it helps to feel a sense of accomplishment after doing so.
There is a difference between a manager and a leader, but each manager must have some basic leadership skills and the desire to influence coworkers. A good manager is not only responsible for himself, but also for his team. Leadership is something that you’ll have to be comfortable with if you want to be a manager. The ability to make decisions and the capacity to carry them out are essential management skills.
A good manager has to understand group dynamics and how best to facilitate employees working together. If you see a challenge in interacting with coworkers and their personalities, then management will provide you with those challenges on a daily basis. It takes patience and understanding to be able to guide employees and to build consensus during team meetings. A good manager knows how to bring out the best in his team and that usually requires maintaining a delicate balance between team members’ personalities.
Being a Wal-Mart manager is a chance to stand at the forefront of retailing. It’s a job with big responsibilities, and one which requires true leadership and in-depth knowledge of our stores. Millions of customers come to Wal-Mart Stores each week looking for great values, and our managers are vital in helping them return home satisfied.Wal-Mart’s three levels of store management—assistant manager, co-manager and store manager—call for individuals with great communication, organizational and financial skills. These qualities help managers motivate their teams and ensure that our stores continually move forward. Above all, we look for individuals with great people skills, because the most important product we offer is customer satisfaction.Considering my managerial level of skills and Wal-Mart’s functions, position as well as organizational environment, I would like to be a manager of Wal-Mart.
Q5. What should Wal-Mart do to be successful in other countries?
In 1991, Wal-Mart became an international company when they opened a Sam's Club near Mexico City. Just two years later, Wal-Mart International was created. They’ve created stores with different styles and formats to fit in with local customer needs, desires, and customs. More than 75 percent of our international stores operate under a different banner than Wal-Mart. But, whether they’re Pail in Costa Rica, Todo Dia in Brazil, or Despensa Familiar in Central America, all of our stores share a common goal: Save people money, so they can live better. Today, Wal-Mart International is a fast-growing part of Wal-Mart’s overall operations, with 4,573 stores and more than 730,000 associates in 14 countries outside the continental U.S. In fact, on November 29, Wal-Mart confirmed an offer to acquire 51 percent of Mass mart in South Africa.
Wal-Mart has expanded its operation in Argentina, China, Honduras, Nicaragua, Brazil, Costa Rica, India, United Kingdom, Canada, El Salvador, Japan, Chile, Guatemala, Mexico, and Salvador.
But Wal-Mart doesn’t succeed in all those areas. Wal-Mart’s strategies fail in Europe especially in Germany. The main reason behind this failure was Wal-Mart’s attempt to apply the company’s proven US success formula in an unmodified manner to the German market, however, turned out to be nothing short of a fiasco. Moreover, instead of attracting consumers with an innovative approach to retailing, as it has done in the USA, in Germany the company does not seem to be able to offer customers any compelling value proposition in comparison with its local competitors.
So, it is recommended that, to be successful in other country, Wal-Mart should follow the following strategies:
1. Different methods of communication across different cultures:Communication is the process of conveying messages. ‘’Successful communication in the international business environment requires not only an understanding of language, but also the nonverbal aspects of communication that are part of any community. Different countries are going to have different ways of communicating. If certain executives of a company want to do business with people from different countries, they need to understand how to communicate clearly with them, without mistakenly doing something wrong. The most obvious way of communicating with different people is with words, and therefore, some executives learn how to speak the language spoken in the foreign country. This act can show that the executive is truly dedicated to the work, and that he is willing to do anything to complete the deal. Greeting rituals are sometimes overlooked, but they shouldn’t be because they are more important in some parts of the world than others. In Japan, failure to show respect by exchanging business cards can get negotiations off to a very bad start.
While in France, greetings are highly personal and individual…as workers expect to be greeted individually. Another form of communicating is through hand gestures. Often goes unnoticed, hand gestures are as important as words themselves because they too have meaning behind them. Cultures located in southern Europe and the Middle East employ a wide variety of gestures frequently with purposefulness. Some hand gestures have different meanings in different countries. For example, the hand gesture where the index finger and thumb touch and create a ‘zero’ can mean different things in different places. In the US and UK, it means ok. In Russia it means zero. In Japan it refers to money. While in Brazil, it is viewed as an insult.’’ Time is another communication system. In western cultures, people like to get to the point of the matter in business meetings and conversations. However, in other countries like Saudi Arabia and Russia, it is customary to converse first about unrelated matters before starting the business discussions for which the meeting was arranged. Barging straight into the business issue, without informal small talk at the beginning, may make them very uncomfortable and may ruin the negotiations.
2.METHODS OF MANAGING ACROSS CULTURES:(1) Hierarchy: This refers to the way people view how much they defer to people in authority, whether they feel entitled to express themselves and how empowered they feel to take the initiative on matters before them. For example, Canada believes in egalitarianism, while nations like India, Japan, China, Germany, and Mexico are highly hierarchical.(2)Group focus: This refers to whether people consider that accomplishment and responsibility are achieved through individual or group effort, and whether they tend to identify themselves as individuals or members of a group. Canadians are individualists while Brazilians, Chinese, Mexicans and Japanese are group-focused.(3)Relationships: This is about whether trust and relationships are viewed as a prerequisite for working with someone. Canadians focus primarily on the transaction, rushing to deal, while the Chinese, Italians, and Spaniards, for example, focuses on nurturing relationships first.(4)Communication styles: This covers matters like verbal and non-verbal expression, how directly or indirectly people speak, and whether brevity or detail is valued in communication. Israel, Denmark, Germany and Sweden use a direct style, while indirect communication styles are the norm in China, United Arab Emirates, and Japan.(5)Time orientation: This refers to the degree to which people believe adhere to schedules United States, Germany, Denmark and Switzerland follow schedules while countries like Saudi Arabia, Spain, Thailand, and the United Arab Emirates are unconcerned about schedules and deadlines.(6)Change tolerance: How people are comfortable with change, risk-taking and innovation. Along with Australians, Canadians are the most tolerant of change, while Saudi Arabia, Indonesia, Mexico and Russia are change-averse.
(7)Motivation: work/life balance: This characteristic examines whether people work to live or live to work. Canadians are driven by work and the status it provides - although not as much as people in China, Japan, and the U.S. - while in Norway, Saudi Arabia, United Arab Emirates, India and Mexico, family-work balance is treasured.
Last of all, it is recommended that, at the same time, Wal-mart also should stable on its legendary “we sell for less – always“, “everyday low prices” and “excellent service” and “value Proposition”.
Q6. How can Wal-Mart control the global enterprise?
Control is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action. Thus, control comprises these three main activities.According to Henri Fayol, Control of an undertaking consists of seeing that everything is being carried out in accordance with the plan which has been adopted, the orders which have been given, and the principles which have been laid down. Its object is to point out mistakes in order that they may be rectified and prevented from recurrin.According to Harold Koontz, Control is checking current performance against pre-determined standards contained in the plans, with a view to ensure adequate progress and satisfactory performance.
CHARACTERISTICS OF CONTROL: Control is a continuous process.
Control is a management process.
Control is embedded in each level of organizational hierarchy.
Control is forward looking.
Control is closely linked with planning.
Control is a tool for achieving organizational activities.
The culture of Wal-Mart can be defined in one word: control. The company has grown to be the world’s largest retailer through a process of tightly-managed aggressive
expansion. From the supplier’s stockrooms to the store’s shelves, the corporate model of Wal-Mart is one that permits little deviation. It is therefore unsurprising that attempts to compel the company to change its ways have been doomed to failure.
PROCESS OF CONTROLLING: Setting performance standards.
Measurement of actual performance.
Comparing actual performance with standards.
Analysing deviations.
Correcting deviations.
In normal thinking, Wal-Mart can control the global enterprise by following those normal controlling process. But the most important part of Wal-Marts contolling process of global enterprise are organizational control and operational control.Organizational Control: The concept of organizational control is implicit in the bureaucratic theory of Max Weber. Associated with this theory are such concepts as "span of control", "closeness of supervision", and "hierarchical authority". In contrast, Wal-Mart operate and "control" the system with respect to the daily inputs of material, information, and energy. In both instances, the elements of feedback are present, but organizational control tends to review and evaluate the nature and arrangement of components in the system, whereas operational control tends to adjust the daily inputs. The direction for organizational control comes from the goals and strategic plans of the organization. General plans are translated into specific performance measures such as share of the market, earnings, return on investment, and budgets. The process of organizational control is to review and evaluate the performance of the system against these established norms. Rewards for meeting or exceeding standards may range from special recognition to salary increases or promotions. On the other hand, a failure to meet expectations may signal the need to reorganize or redesign.Operational Control: Operational control serves to regulate the day-to-day output relative to schedules, specifications, and costs. The most difficult task of management concerns monitoring the behavior of individuals, comparing performance to some standard, and providing rewards or punishment as indicated. Sometimes this control over people relates entirely to their output. For example, a manager might not be concerned with the behavior of a salesman as long as sales were as high as expected. In other instances, close supervision of the salesman might be appropriate if achieving customer satisfaction were one of the sales organization's main objectives.
Control mechanisms are used by organizations to help regulate processes which add to company-wide goals. Wal-Mart is a huge industry functioning to meet the needs of its customers, employees and suppliers by using controls; controls consist of market control, clan control, manager audits, and performance standards. Each control is important to prosper efficiently in the business world; in addition, increasing customer, employee and supplier assurance. The efficiency of each control impacts the four functions of management; organizing, planning, controlling and leading. Wal-Mart’s success is motivated by control mechanisms that are regulated and constantly evaluated.
Conclusion
Wal-Mart has been extremely successful in the past, and has a very promising future
ahead of them. Unfortunately, there is always a negative side to success. For Wal-
Mart, they are faced with opposition from people who are concerned with the “little
guy.” The fact that Wal- Mart has the ability and resources to be such a major
competitor in the retail industry scares some people. Small stores in small
communities, as well as employees, target Wal-Mart because they know it is a large
company with the resources to defend itself. In order to improve its image in the eyes
of these people, Wal-Mart may want to address these issues head on. Wal-Mart has
already taken giant strid to be seen as a more environmentally friendly organization,
as well as to increase the benefits of its employees. They should continue this
approach, possibly even more publicly than other retailers in the industry. Wal-Mart
could even start a campaign to help the “little guy.” Since they have such a global
Wal-Mart could even start a campaign to help the “little guy.” Since they have such a
global impact, any issue they raise will undeniably get a great deal of attention. In a
campaign of this sort, Wal-Mart could focus on promoting the other small specialty
stores in their community. They could help advertise for local shops that do not sell
competing products, but complimentary ones. Instead of taking sales away from
themselves, Wal-Mart could change their image to one of a company that cares about
the community.
Along with this, Wal-Mart should focus on their employees. Publicly giving employee
benefits or rewards will increase morale as well as their image. Once Wal-Mart has
invested in their image in their home country, they should also focus on increasing
their market share in the international markets that they are not already involved in.
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