Strategic Planning - Research Paper Example

?Outline For final Research Paper I. Introduction II. Video case study a. Brief history of Company b. Components of environment c. RBV Analysis of organization III. Identify functional Control systems IV. Identify dysfunctional control systems V. SWOT Analysis of organization a. Strengths b. Weaknesses c. Opportunities d. Threats VI. Interpret criteria for developing and evaluating criteria for control systems a. Criteria for Developing Controls b. Criteria for Evaluating Controls VII. Analyze and illustrate the essentials of quality management a. Benchmarking b. Knowledge management c. Utilization of general quality management skills VIII. Conclusion a. General Statements about Wal-Mart. b. Strategic Planning Abstract This is an 8 and half pages of in depth evaluation and analysis of Wal-Mart. The paper focuses on a resource based analysis and SWOT analysis of Wal-Mart’s strategic planning. There is also a look at control development and evaluation followed by a discussion of quality management at Wal-Mart. Wal-Mart: A Master of Strategic Planning Name: (fill in) Strategic Planning Ashford University Wal-Mart: A Master of Strategic Planning Since its beginnings Wal-Mart has implemented strategic plans and innovative concepts to move to the place of the number one retailer in the world. What has made Wal-Mart a world leader in the retail industry? The purpose of this paper is to evaluate how Wal-Mart’s corporate management has succeeded through innovative strategic planning and implementation of the plans to grow Wal-Mart into a multibillion dollar operation. First section of this paper will contain a brief corporate background, an evaluation of culture and environment, and a resource-view analysis of the corporation will make up the first section of this paper. In section two, a deeper analysis of strategic planning and implementation, leading to the conclusion. Humble Beginnings Wal-Mart was the brainchild of Sam Walton. Sam Walton began Wal-Mart in the 1960’s after he had researched the changes in retail environments across the country. He drafted a plan for deep discounted operation that not only sold a variety of merchandise, but would include a pharmacy. His plan also would expand to include four types of retail stores; discount stores, supercenters, Sam’s clubs and neighborhood markets. Sam Walton opened his first discount store in the Rogers, Arkansas in July 1962. Walton incorporated his stores in 1969 with corporate headquarters in Bentonville, Arkansas. In 1970 his corporation went public. (Gamble and Thompson 2011) By this time his company had grown from the one store in the beginning to 38 stores. A short nine years later, in 1979, the company was at 276 stores in 11 states. Culture and Environment The culture that Sam Walton promoted and developed with his company was part of the strategies that lead to his company’s success. Walton’s four core principles for managing are treat employees as partners, build for the future, recognize the road to success includes failing, and involve employees at all levels in the total decision making process. The three basic beliefs that underlie the culture at Wal-Mart are respect for the individual, service for the customers, and strive for excellence. Walton was a hand on manager and has passed this philosophy on to the current CEO of the company. Walton’s legacy is still very present in the way the company handles employees, customers, and expansion. Resource-based Analysis This analysis will look at the resources that are unique to Wal-Mart and produce and maintain a competitive edge for the company. Wal-Mart’s most unique resource was the founder Sam Walton and his business philosophy. His willingness in pioneering discount stores in no traditional settings, pioneering just-in-time inventory, online processes with suppliers, maintained corporate offices in a low cost environment, and set an example for others that few have been willing to repeat. (Price 1996) The analysis done shows that as a corporation Wal-Mart demonstrates; a great deal of tolerance for high-risk projects, is innovative in developing procedures, systems, and methods, challenges its major competitors, is bold in strategic planning and continues to implement well its changes in strategy, emphasis long term goals, not just short term goals, introduce new products to the market, and rewards taking calculated risks. The analysis demonstrates that the organizational culture of Wal-Mart is team orientated while valuing individual input in decision making. The company demonstrates that it values; being a team player, consensus in decisions, rewarding exceptional performance, as a store and as an individual. External culture of Wal-Mart shows strategic advantages are; regularly track changes in market, listens to customers wants, and needs, works with suppliers to keep cost down, works with suppliers to inventory costs low and resistant to actions of competitors. As a corporation Wal-Mart is open to change, encourages employees to challenge the status quo, is decentralized in its decision making, and maintains open communication channels. Finally the analysis looks at the controls the company has in place. Financial controls employed at Wal-Mart are; cash flow controls such as division of responsibilities, locked security boxes, and secure deposit pickups, monitors return on investment, uses objective criteria, such as return on assets, and employs performance appraisal. Strategic controls that are used by Wal-Mart are; formal face-to-face managerial meetings to evaluate performance within each store, informal management meeting to evaluate performance of corporate goal achievements, and valuate company performance on subjective criteria, i.e. customer satisfaction. Functional versus Dysfunctional Controls Functional controls utilized by Wal-Mart are corporate management meetings to evaluate the performance of strategies already in place, discussions of where the company plans to go in the future, and what changes need to take place to keep the company a leader in the retail industry. These meeting focus on the Corporation as a whole, and filter down to each individual store. An example of this would be the use of technological controls that allows the company to operate in a just-in-time mode that responds to changing customer demands. (Price 1996) Furthermore they utilize technology to benefit the employees at all levels within the stores. This includes the ability to track sales, cost of goods sold and expenses in a real time environment. In respect to Wal-Mart there is little in the controls or the approach to strategic planning that could be considered dysfunctional. When a situation that presents its self as a dysfunctional control is present, it is dealt with and turned around. The company monitors so much of the performance and functional operations that its approach to management doesn’t allow for a dysfunctional controls to be present long enough to impact the operations. SWOT Analysis One of Wal-Mart’s strengths is keeping expenses low and passing on the savings to customers. Others strengths that Wal-Mart possess are attractive stores, location of stores, variety of merchandise and technology in place to manage a global operation. Wal-Mart also values its individual employees and their input into the decision making process. Wal-Mart as a corporation has in place a strategic plan that will move the company on into the future. They are working on developing low energy stores, from recycled materials and stores that are self-sustainable. Wal-Mart also supports local communities thru donations to local charitable organizations. What are the weaknesses within the company? A significant weakness for Wal-Mart is employee satisfaction causing high turnover at store level. This is not a problem at upper management levels, but the stores themselves have experienced this in some areas. Dealing with this could be as simple as improving wage scale or benefits that might attract more stable employees. Wal-Mart’s opportunities are to continue to strive for better employee satisfaction and customer satisfaction. Opportunities exist for growth of more stores in new markets and continued success of current operations. Another opportunity would be to improve perception of brands offered at Wal-Mart. A threat to Wal-Mart would be losses caused by shrink, losses caused by damaged goods, internal theft and external theft. Shrink in the retail environment refers to losses from internal or external theft and losses due to damage either at their store or while in transit. Shrink can be handled by increasing awareness that damaged goods need to be accounted for, theft from employees is not tolerated and external thieves will be charged and punished to the fullest extent of the law. Another threat to Wal-Mart would be from competitors. Even though, Wal-Mart tends to keep threats from other retailers at bay due to their huge success and wide recognition. CVS recently over took Wal-Mart in pharmaceutical sales because the copied Wal-Mart’s $4.00 generic prescriptions for a month’s supply. (Case 13 Video) A final threat to Wal-Mart would be the negative publicity that has been aired about their use of low cost foreign products from overseas. This perception can cause a negative impact on the number of customers willing to shop at Wal-Mart. Whereas improving their image among customers and utilizing local products Wal-Mart could combat this image and improve customer’s image of the company. Wal-Mart’s Criteria for Developing and Evaluating Controls Wal-Mart utilizes a process to identify, and evaluate the functioning of controls. The process begins with management identifying an area of concern or problem that needs dealt with. Once the company has identified the problem then management teams meat to brains storm solutions to the problem. Once a strategy to deal with a problem is developed, management needs to implement it. After implementation management will have to evaluate the success of the control or the failure. In order to determine the success the criteria would need to have a quantitative or measurable improvement from what was the previous condition. An example would be a product not moving off the shelves. Sells reports for this item shows no sells in the last 30 days. What are the things that could keep a product from selling? Is it out of season? Is it marketed properly? Is it too pricy? The store moves the items location and places bright signs that explain the benefit of the product. Sales jump significantly in the first week. Product is now moving and the problem was the marketing. Wal-Mart’s criteria for developing controls would be to prevent shrink, to improve sales, to keep quality employees and to improve customer service. To evaluate Controls would be to see an improvement in reduction of loss caused by shrink, reduction of turnover in employees and an increase in the number of customers. Management has the technology in place to track and evaluate every aspect of the companies control system. Essentials of Quality Management Wal-Mart uses the essentials of quality management to handle the corporate processes as well as store level operations. Benchmarking is a significant quality management tool used by corporations. Benchmarking is applied when Wal-Mart looks at the cost of advertising compared to sales for competitors. For example Wal-Mart’s advertising costs run 3% of sales where the average for their nearest competitors is 1.9% of sales. This tells Wal-Mart that their expenses for advertising are lower than the market average for their closest competitors. This is achieved by limiting number of circulars and relying heavily on reputation and word of mouth to drive sales. (Gamble and Thompson 2011) Another way that Wal-Mart incorporated benchmarking was in their initiative to develop more energy efficient store. They developed models with the aid of architects, engineers, contractors and landscape designers to build more energy efficient stores, reduce pollution and conserve natural resources. . (Gamble and Thompson 2011) Another way that Wal-Mart utilizes quality management is the function of knowledge management. In the beginning Sam Walton took knowledge from what others in the discount retail market to develop his own store plan. When he adopted what he had learned to his stores he designed a set of knowledge that is adaptable and functioning in his stores. Knowledge management is also shared I the operation of stores that post the procedures for identifying and dealing with shrink. Examples of this would be the procedure a store uses to write off damaged goods, processes for handling cash deposits, and cash controls. Knowledge management is also used by Wal-Mart in developing the plans more cost efficient stores. Knowledge was shared among those consulted and the representatives of the Wal-Mart. The knowledge learned became part of the development plans for new Wal-Mart stores that would pioneer the lower energy usage technology applications being developed. The implementation of LED lighting into all store across the United States, plans for new stores that use 20% less energy than the average supercenter, utilization of recycled materials for building and additional stores that use solar power are all ways that knowledge was shared with Wal-Mart by those consulted to help design lower energy stores. Over all Wal-Mart has effectively engaged in practices the key elements of quality management. Wal-Mart continuously monitors operations using technology, focusing on preventing problems before they start. Wal-Mart utilizes a decision making process that empowers all employees to input into the process, they work with suppliers to keep expenses down and prevent unnecessary losses. Wal-Mart monitors and reviews the processes and uses evidence to back decisions. Wal-Mart created a work environment that safe and diverse. Wal-Mart uses quantitative measures to back up decisions. Wal-Mart effectively develops strategic plans and implements them with proficiency. Conclusion As a company Wal-Mart has successfully grown from its humble beginnings into a global retail chain. Once fully owned by its founder, it is now a publically owned corporation that has entered into markets around the globe. Wal-Mart brings brand names and aesthetically pleasing stores to its customers. Wal-Mart continues to grow revenues even in older stores by meeting the changing demands of its customers. Wal-Mart has demonstrated over the years that it can plan new strategies and implement them into their environment and culture most successfully. Strategies without the ability to implement are what have caused some of their competitors to fail. It isn’t that the strategies are that mysterious or unique, but without ability to effectively implement strategies, all strategies would be failures. (Koopman 2001) All companies have to implement some sort of strategical plan. The difference is that many lack the unique ability to implement them with ease and maintain a management team that can adequately see the strategical plans brought to fruition. Wal-Mart has done this with excellence and has thus become a leader in the retail industry. References Case 13 Video: CVS Vs Wal-Mart: Chains Cut Drug Costs: Retrived Jan. 4, 2011 from: http://bevideos.mhhe.com/business/video_library/0077402723/swf/Clip_14.html Building Brands at Wal-Mart. (cover story). (2009). License! Global, 11(12), 18. Retrieved from EBSCOhost. Gamble, J.E., & Thompson, A.A. (2011). Essentials of Strategic Planning; The Quest for Competitive Advantage (2nd ed.). New York , NY: McGraw-Hill Companies Inc. Koopman, J. (2001). Strategic Execution. Canadian Manager, 26(3), 19. Retrieved from EBSCOhost. Price, R. M. (1996). EXECUTIVE FORUM: Technology and Strategic Advantage. California Management Review, 38(3), 38-56. Retrieved from EBSCOhost. WAL-MART. (2009). Drug Store News, 31(4A), 23. 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