Key Concepts that Affect Wal-Mart Performance - Case Study Example

? MGT 202: Business Communication Dear Dr. J.L Waltman The purpose of this report is to highlight some of the key concepts that might affect organizations’ performance. In particular, this report is aimed at evaluating external factors that affects the performance of Wal-Mart. As you requested, several external issues affecting Wal-Mart operations have been articulated on in regard to ascertaining their impact on organizations’ performance, which may end up impacting on competitive advantage of the organisation. The findings of this report indicate that Wal-Mart has continuously paid tax in all the countries that its branches are located. Economically, Wal-Mart has been able to expand its sale to almost 50% even during the recession. Wal-Mart has been admired worldwide due to its social aspect in respecting it customers and other individual who form part of their social life. In addition, Wal-Mart has been able to create environmental sustainability through submission of important sustainability goals. However, the company has had allegations of disregarding its employee’s rights. In another dimension, Wal-Mart is a leader in the use and application of technology in the effort to maximize operational efficiency. I would like to thank all those helped me in the research. In particular, I would like to thank Dr. J.L Waltman for being part of my research as he guided me through, especially on the best approach to use in order to perfect my report. Table of Contents 1.1 Introduction 4 1.2 Political Factors 4 1.3 Economic factors 5 1.4 Social Factors 7 1.5 Environmental factors 8 1.6 Legal factors 9 1.7 Technological factors 10 1.8 Conclusion 11 References: 12 1.1 Introduction Wal-Mart is one of the renowned supermarket brands in America running numerous chains of large departmental store and warehouse stores (Wal-Mart Stores, Inc., 2011). Apparently, the multinational store has been able to maintain its thriving market especially in the United States of America and other parts of the world (Matusitz & Lord, 2013). According to a research that was conducted in regard to Wal-Mart operations, it is evident that the multinational corporation has immensely gained a negative bad image in most part of the world where most of its stores and branches are found (Hicks, 2009). In light of this, Wal-Mart is continuously seeking to lessen the brand image through ensuring that they work professionally. 1.2 Political Factors Initially, Wal-Mart Corporation has placed its stores in the United States of America and other parts of the world. As such, it is important to ensure that there is political stability in such countries as this plays a huge role in maintaining market. If it happens that the some of the countries where some of the branches are suffer from political instability, it is advisable for the corporation to withdraw it market avoid poor market generated through politics in specific countries. Similarly, the corporation should be aware of the different government regulations and deregulation in the United States of America and other foreign countries such as Canada, Argentina, and China where the branches are situated (Karlgaard, 2013). Also, it is worth noting that government regulation and deregulation varies according to different countries. Any organization, corporation or business entity that wants to thrive in business must work within the regulations of a given country or state. In relation to this, the corporation should ensure that it follows the trade restrictions that are used in all its locations. In relation to this, Wal-Mart has continuously paid tax in all the countries that its branches are located. Payment of taxes indicates that the corporation is politically responsible and is ready to work and follow the rules and regulations of the given countries. 1.3 Economic factors Economic factors specifically affect the corporation’s operations, as well as, the making of its decisions. Thus, there is must be economic growth, substantial rates of interest, over and above, inflation rate. In relation to inflation and deflation rate, the corporation should ensure that there are able to offer the best prices in the market. Through this, there is an assurance that the corporation will stay ahead of the competition (Luo, 2010). Inflation rates entail the increase of prices depending with the countries market while the deflation is the process where the prices are lowered. As a corporation that wants to make a profit and at the same time retain customer, it is crucial to understand the market rates for proper economic balance. Never the less, it is unethical for a corporation and other entities to practice excessive competition in the market as this automatically puts similar and other corporation out of business. Additionally, the economic factor also entails recession and prosperity. In essence, predicted recession for Wal-Mart and its chain of branches means that it is not in a position to increase the workforce in the given location (Lafferty, 2011). Conversely, prosperity in the economic field suggests that the corporation could be in a position to give more economic gains in terms of employment. However, it is worth mentioning that the corporation had been suffering from inflation rates, a process that led to economic imbalance in selected branches. Nonetheless, Wal-Mart Corporation aims at making economic gains in its chains of stores. The corporation is arguably able to expand its sale to almost 50% during the recession, a situation that makes it recession proof. In relation to this, the corporation has continuously obtained a distinctive competitive advantage by targeting small groups of customer who facilitate lower operating cost of the corporation. However, Wal-Mart has only been able to increase its sales by increasing the number of retail outlets. Data indicates that Wal-Mart’s same-store growth continues to decline. For instance, as indicated in figure 1.0 below, it is clear that the firm’s same-store growth has been declining between quarter one of 2009 and quarter 4 of 2011. This can be seen as being caused by the fact that household incomes have declined over the past few years. As inflation continues to affect people whose incomes are not increasing at the same rate as the inflation, fewer and fewer people have less disposable income and are buying less. Completion has also led to the decline in same store sales. This completion is coming from both smaller and bigger retailers who have come up to share in the retail market. The implications for these same-store sales declining despite the overall corporate sales growing are much more serious than may meet the eye. For instance, the same-store sales decline means that the operational costs for Wal-Mart are more likely to increase, thus reducing its competitive edge in the market. Above, fig 1.0. showing the same-store declining growth between Q1 2009 and Q4 2011, Retrieved from http://picsbox.biz/key/walmart%20stores%20sales 1.4 Social Factors Basically, social factor entails the cultural and demographic aspects of the various environments that the corporation and its branches are related to. It is important to note that social factors mostly revolve around age distribution, population growth rate, as well as, emphasis on safety (Ping, 2013). Never the less, the recent research carried out argues that the corporation has in the recent past allegedly been accused of products tampering and embezzlement. In fact, the corporation had to fight with malice in most of its branches, a situation that led to low sales in the given areas. Products tampering and embezzlement is one of the many social factors that require the company to come up with a strategy in which the emergence of such incidence does not affect or lower the level of sales in the corporation and its branches. Additionally, it is obvious that as the customer continue to flood the market; their demand gradually shifts to other products. This denotes that their social policies also change a situation that transforms the market in a social way. Similarly, every market has an age distribution which is incorporated in the rate of population growth in the given country or states. Wal-Mart is a corporation that has been admired worldwide due to its social aspect in respecting it customers and other individual who form part of their social life (Kingman, 2013). Apparently, they argue that their customers are the most important because they have enabled them to grow in most part of the world. In the same way, the corporation is strict in ensuring that they frequently participate in social responsibility in the various countries while full respecting their social life. It is without doubt that social responsibility improve the image of a corporation, as the bring the society close that expected while opening more opportunities for cooperation between the society and corporation. 1.5 Environmental factors The issue of the environment is a sensitive issue in regard to how organizations conduct themselves in concepts revolving around corporate social responsibilities. In light with the business of Wal-Mart, it is crucial that all its activities be addressed with caution since the materials used for wrapping its product plays a critical role in determining their effects on the environment especially during disposal. In essence, any material used by the company might affect the environment in a negative way if they are not disposed correctly. For example, polythene bags and other non discomposing materials posses a great threat in degrading the environment whenever they are disposed irresponsibly. Of importance to note is that, although Wal-Mart may be seen as an organization that is sensitive on matters related to environmental conservation, there have been concerns on how the company should handle its customers in the efforts to conserve the environment. This is arguably true because although the company may design and implement programs that aim at conserving the environment, the issue of sensitizing customers is a crucial concept that ought to be looked at critically (Hanan, 2009). This involves educating its customers on how they can dispose its products after use. Wal-Mart has experienced a great challenge due to allegations of failure to educate its customers on the best ways of disposing its products after use. Although this may be seen as a minute issue, it has great consequences to the company and its future operations and prosperity (Banjo & Zimmerman, 2012). For instance, the company may experience low turnover as a result of people failing to purchase from its stores when they realize that the company has no regard to issue revolving around environment conservation. In another dimension, Wal-Mart has been able to create environmental sustainability through submission of three important sustainability goals; supply of 100% renewable energy, selling products that sustain people and the environment, and creating zero waste (Barbaro, 2012). For example, Wal-Mart has a re-thinking process whereby recycling and reducing plastic bag use has been prioritized. In addition, some of its products are renewable and affordable for customers. 1.6 Legal factors When incidences such as failure by the company to observe on environmental conservation prevail, other consequences such as legal obligations might come in when allegations of the company’s failure to conserve the environment are reported. Legal cases have a great impact on how the organisation operates. Consequences are felt in terms of the company losing its income during the legal batter. The company may be ordered to pay a substantial amount of money, as a fine to cater for damages caused by the company’s failure to honor environmental conservation requirements. In another dimension, the company has an obligation to ensure that all its operations are legal and that it meets all requirements laid by the government. Although Wal-Mart has been observant on such issues, some incidences have been a legal battle between the company and employees (Boudway, 2012; Ford, 2011). In Georgia, a customer service manager sued Wal-Mart for failure by the company to include cost of contraceptive in the health insurance plan. The case was argued that Wal-Mart violated Title VII of the civil rights Act of 1964. In another case, Wal-Mart was sued for sex discrimination in regard to showing inequality in women’s pay, promotion, and compensation (Featherstone, 2011). The failure by Wal-Mart to prevent sexual harassment of women by co-workers, at one time, led to the company at the corridors of the court (Eidelson, 2013). 1.7 Technological factors In order for any organization to thrive in a highly competitive market, it is indispensable for the organization to become innovative in its operations. In fact, technological advancement is considered to be one of strategies for an organization to develop and maintain competitive advantage. Wal-Mart is a leader in the use and application of technology in the effort to maximize operational efficiency (Basker, 2013). The company has employed a private satellite network in a bid to meet the realization of value of proactive investment in technology. Its distribution channels have also been advanced in order to facilitate its logistics. This is more efficient when it comes to international logistics systems. Through its website, Wal-Mart has been able to interact with its customers. This is very instrumental in terms of the company getting feedbacks from its customers. In addition, the company has been able to market its products through its website. One of the ways by which the organization has been able to maintain competitive advantage has been by developing a culture of wanting to share some of its profits with its employees. This has been facilitated by generating a general electric system in order to increase speed and productivity. In addition, Wal-Mart has employed a computerized system where every item sold is identified and recorded. This way, the company is able to identify products that are running out in order to restock them. It also helps in avoiding overstocking. 1.8 Conclusion Wal-Mart should be aware of the different government regulations and deregulation in all areas it operates. Economic factors specifically affect the corporation’s operations, as well as, the making of its decisions. Wal-Mart Corporation aims at making economic gains in its chains of stores. The corporation has continuously obtained a distinctive competitive advantage by targeting small groups of customer who facilitate lower operating cost of the corporation. Social factors mostly revolve around age distribution, population growth rate, as well as, emphasis on safety. Wal-Mart is a corporation that has been admired worldwide due to its social aspect in respecting it customers and other individual who form part of their social life. The issue of environment is a sensitive issue in regard to how organizations conduct themselves in concepts revolving around corporate social responsibilities and sustainability. Although Wal-Mart may be seen as an organization that is sensitive on matters related to environmental conservation, there have been concerns on how the company should handle its customers in the efforts to conserve the environment. Wal-Mart has been able to create environmental sustainability through submission of three important sustainability goals; supply of 100% renewable energy, selling products that sustain people and the environment, and creating zero waste. Although Wal-Mart has been observant on legal issues, some incidences have been a legal battle between the company and employees. On the side of technology, Wal-Mart is a leader in the use and application of technology in the effort to maximize operational efficiency. References: Banjo, S., & Zimmerman, A. (2012, November 23). Protesters Wage Campaign Against Wal-Mart. Wall Street Journal. Retrieved June 17, 2013, from http://online.wsj.com/article/SB10001424127887323713104578136992890118444.html Barbaro, M. (2012).Wal-Mart: A Giant Gone Green. Saturday Evening Post, 279(2), 68-104. Basker, E. (2013).The Causes and Consequences of Wal-Mart's Growth. Journal Of Economic Perspectives, 21(3), 177-198. Boudway, I. (2012). Labor Disputes, The Walmart Way. Bloomberg Businessweek, (4309), 57-60. Datamonitor: Wal-Mart Stores, Inc. (2011). Wal-Mart Stores, Inc. SWOT Analysis, 1-13. Eidelson, J. (2013). Wal-Mart Workers Walk Out. Nation, 296(1/2), 11-15. Featherstone, L. (2011). Wal-Mart v. Women. Nation, 293(3/4), 5. Ford, R. (2011). Beyond Good and Evil in Civil Rights Law: The Case of Wal-Mart v. Dukes. Wall Street Journal, 32(2), 513-529. Hanan, J. (2009). The Ecology of Empire: Capitalism, Sustainability and the Multitude. Conference Papers -- National Communication Association, 1. Hicks, M. J. (2009). 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WalMart Stores Sales. Retrieved July 01, 2013, from WalMart Stores Sales gallery: http://picsbox.biz/key/walmart%20stores%20sales Read More