Thursday, July 12, 2012

Wal-Mart

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Wal-Mart Stores Inc., employs more than 1. million associates worldwide. The company has more than ,000 stores and offices across the United States and more than 1,000 stores internationally. It has also expanded online with Walmart.com, which has brought the vision of Sam Walton’s to the internet. After researching on the internet and several books based on the conduct in which Wal-Mart does business, this paper will touch upon the overall environments of the organization and the changes they should consider.

At Wal-Mart there are specific environments that define the culture of the company. The main objective of the organization is their customer base. The mission of Wal-Mart is to give people high value, low prices and a warm welcome. The major clientele Wal-Mart caters to is the blue collar individuals, who are searching for savings and value in their one stop shopping. In order to closely monitor the changes in taste of its clients, Wal-Mart was one of the earliest users of an EDI system. The electronic connection is served on domestic and international levels. In the 180s, Wal-Mart and Proctor & Gamble started sharing sales data so P&G goods could be automatically replaced as they were sold off the shelves. For example, Proctor & Gamble would instantly distribute Pampers to Wal-Mart stores without managers having to place an order. Today Wal-Mart expects all manufacturers to manage its own in-store inventory and use EDI networks linked to Wal-Mart’s private collaborative hub called SupplierLink,

Large retailers like Wal-Mart have gained much clout, thus allowing them to dictate contracts instructing suppliers what to make, how to make it, and how much to charge for it. Wal-Mart’s extensive supplier standards, for example, require CD companies to edit songs and visual covers and remove “offensive material” if they want their product(s) on Wal-Mart’s shelves. One incredible fact is even with these strict standards, Wal-Mart sells more than fifty million CDs yearly. The music industry is not the only ones who have changed certain components of their product, magazine publishers have come to the same fate. Wal-Mart has refused to sell copies of certain magazines which enclose photos or stories which might offend some customers. To minimize an incident such as that, publishers provide this retail giant with advance copies for review. Should a publisher refuse to supply an advance copy, Wal-Mart will delist the magazine and never sell it again. The stern principles are held in attempt to strengthen community ties and reduce the activists who block two or three new stores a year because of certain products.

In efforts to being socially responsible and acknowledging environmental issues their customers may have, Wal-Mart began an ecosystem base on renowned brands and low prices in rural and small community markets. Wal-Mart cannot be classified solely as a retailer, but as a wholesaler, a logistic company, and an information service company. This Company has developed relationships with hundreds of organizations diagonally on conventional business boundaries.

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Wal-Mart has progress further strategically by incorporating information technology (IT) in their managerial decision making, which in turn has influenced the industry as a whole. Information Technology can smooth the progress of assembling and improving strategies by supplying better figures and information internally in addition to redefining their support for customers, suppliers, and other external organizations. Wal-Mart benefits from EIS and DSS immensely to form decisions on stock, prices, promotes and reorders. These systems assist managers on keeping track of items that are top sellers and verifying those top sellers are in constant supply. Head managers take advantage of this information to evaluate purchasing patterns, which allows them to recognize problems and/or prospects. Closely surveying the purchasing patterns, also gives the Company the chance to cross-promote those items, to escalate sales.

It is not surprising large retailers such as Wal-Mart are adamant about certain policies, procedures, and techniques used by its suppliers. Wal-Mart maintains a huge coercive force on their suppliers, but will claim this is the best way to preserve relationships with their suppliers. The Company’s large supplier standards and required connection to SuperLink, helps eliminate the middlemen by reducing costs of salespersons and distributors for both companies. In addition to this factor, the computer-to-computer tool developed into sharing customer information, shopper loyalty information, and other statistics that provides strategic advantages for both parts of the exchanging partnership. The integration of this hub also assists both parties gain good reputations by dealing fairly and honestly with each other.

The Company has gradually made way into the international market. The international division was opened in 1, which encountered many disasters. When first entering South America, the Company was hit with a $48 Billion loss in the first two years. Since the introduction to the international market, Wal-Mart has grown with 1,0 stores in Puerto Rico, Mexico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom. The international sales for Wal-Mart continue to increase with sales at $40.7 billion as the end of January 1, 00, a fifteen percent hike from the year before. Of the company’s 1. million employees, this market employs 00,000 associates worldwide. In the process of opening internationally, Wal-Mart entered many of these countries through acquisitions of their competitors. Wal-Mart currently owns a 6% interest in Seiyu, Ltd., a leading retailer with over 400 stores throughout Japan. This position of power firmly regulates whom total sales are benefiting in Japan.

There are always market risks when entering a market of unknown possibilities. At the end of 00, Wal-Mart terminated certain cross currency instruments that hedged portions of the Company’s investments in Canada, Germany and the United Kingdom. They routinely enter into currency exchange contracts in the regular course of business to manage their exposure against foreign currency fluctuations on cross-border purchases of inventory. These contracts are generally for the durations of six months or less. The fair values of the currency swap agreements are recorded in their consolidated balance sheets.

At times the competitive nature of Wal-Mart tends is questioned overseas and domestically. One example is the Alabama Motor Fuels Marketing Act, which states it is illegal for oil companies to “eliminate competition” by advertising gasoline at prices well below the “normal market price” in the local area. Two convenience stores in Huntsville, Alabama filed a legal complaint against Wal-Mart stating it violated this particular law. According to the compliant, Wal-Mart stores posted a price at least 10 cents per gallon below the average price charged at other retailers in the area. This legal strategy, which failed as an end result, was obviously to squash competition.

The tables have turned on the competition level between Wal-Mart and small businesses. It has become easier for smaller businesses to compete with this retail giant. What small businesses have that Wal-Mart does not is the ability to be much more flexible. In this situation a small business cannot compete on prices and must rely on their flexibility to woo clients. Wal-Mart has the economy-of-scale advantages from mass purchasing and distribution that can knock the small business owner out of a head-to-head price war. The Company’s success is directly related to its efficiency, which goes straight to the bottom line. Wal-Mart holds a gross margin of %, compared with Sear’s 0%. Wal-Mart has dealt serious blows to retail giants like Sears because their organizational structures were flatter, they were faster in responding to customers’ changing desires, and they were more flexible in changing their products and services. Thus, Wal-Mart yielded a 4% net profit margin-nearly doubling Sear’s.

From all the examples of Wal-Mart’s mass purchasing power, enhancing technology, receiving supplies just-in-time, and computerized tracking it is easy to recognize the functional level strategy of this company is based on low cost. Since influence on consumer products have transferred from vendors such as Rubbermaid to the big discount retail chains, they can request and obtain special pricing deals. Suppliers normally have no choice but to agree if they want to maintain the relationship with the array of big chain stores. What is definitely not typical is the amount of revenue place on marketing. Strangely enough Wal-Mart spends only 0.5% of sales on advertising, relying heavily on word of mouth like a small business owner, unlike other competitors who spend % on advertising.

The creation of new corporation forms, with an emphasis on distributing power and removing levels of the hierarchy, blended with the rising use of information technology, makes it unproblematic for companies to be large and small concurrently. Wal-Mart captures the advantage of each by using the advantage of size in areas such as advertising, purchasing, and raising capital. They also attempt to grant each individual store the freedom necessary to support customers as if they were a small business shop.

Wal-Mart strategy and effectiveness towards commitment to diversity across all levels of the organization is quite clear. One example of the retailer’s commitment is the annual Hispanic Heritage Program during September. This program shows the stakeholders the dedication Wal-Mart has to diversity for its’ internal employees and its’ external customers. Wal-Mart also supports the following organizations National Council of La Raza, LULAC Women’s Conference in Texas, La Prensa Foundation, National Association of Hispanic Publications and the Hispanic Association of Colleges & Universities. Wal-Mart has been noticed in the Hispanic communities, Hispanic Magazine has recognized Wal-Mart as one of the “Top 100” companies for Hispanic employment. In 00 Wal-Mart was presented with the 00 Corporate Partner of the Year Award by the Hispanic National Bar Association in recognition of its consistent support and best practices in the area of diversity. This years Wal-Mart will produce the publication of the calendars and “Viviendo” (Living) Magazine in celebration of Hispanic Heritage Month.

In summary, Wal-Mart has continues to try to serve their 18 million weekly customers with the highest value at the lowest prices since their first opening. It strives to be the leader in innovation, technology, equality, corporate culture and profits. However, maybe looking into other sides of the spectrum would benefit Wal-Mart’s image much more. There are many websites and individuals, such as the former Miss America, Carolyn Sapp, who will vouch something completely different from the Wal-Mart image.

Reference List

Daft, Richard L Organization Theory and Design 8th Edition Ohio Thomson South-Western,

004

Hatten, Timothy S Small Business Management entrepreneurship & beyond nd Edition

Boston, Massachusetts Houghton Mifflin Company, 00

Miller, Roger LeRoy Economics Today The Micro View 1th Edition Boston, Massachusetts

Pearson Education, Inc., 004

Http//www.walmartstores.com

Http//www.walmartwach.com

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