Wal-Mart vs Target - Assignment Example

Wal-Mart vs. Target Introduction The aspect of shopping is regarded as an integral part of an individual’s everyday living. It is well noted that every person must shop in some way or another at some point. Concerning these assumptions, two of the largest and leading companies in the retail chain industry, Wal-Mart and Target have through the years managed to satisfy their loyal customers based on their preferences. It is due to the need to maintain a large customer base that the two largest retail stores in America have been battling for superiority over the years since their inception. Wal-Mart strives to operate under the premise of advocating for low prices while Target simply operates under the premise of focusing on style and fashion (Steverman 12). There are many brands that one can choose to shop in America, but based on their efficiency and affordability of their products, Wal-Mart and Target are the preferred brands. Most of the college students can associate with such brands because they can only afford to shop at stores that are pocket friendly thus the reason as to why we proposed this project. However, despite the fact that both Wal-Mart and Target are known for their efficiency and affordability, customers can only be loyal to one of them. Wal-Mart and Target have over the decades grown to establish their brands in the market and as a result, both have used different techniques and strategies to propel their growth (Bickle 21). The birth of discount retailing is traced back to the year 1962, which was the first year for operation of Wal-Mart and Target. It is during this period that Sam Walton’s small chain variety of stores was engulfed in competition from other discount chains. As a result, Sam travelled all over the country to study more about the new form of retail concept and based on his vision that most of the American consumers were shifting to a new form of general store he decided to put up the first ever Wal-Mart store. Together with his wife Helen, they both put in approximately 95% into the first Wal-Mart store, which was located at Rogers, Arkansas. Wal-Mart goals ever since its inception has been to provide great value as well as great customer service (Barstow 32). Walton’s vision was focused on establishing the brand at all cost with an aim of improving the lives of the people. During the same year, George Dayton launched the first ever discount Target chain store in Roseville, Minnesota. The two brands henceforth set to become the largest retail chain stores in America attracting larger customer base and giving their competitors a challenging ground. Wal-Mart and Target both had one ultimate objective from the start and that was to ensure that their customers would come back through the discount strategies that were put in place. Both Wal-Mart and Target have a lot in common rather that the fact that they both opened their doors based on the discount concept in 1962. Target and Wal-Mart share many similar features. However, despite the fact that both companies are similar in their operations and their general blueprint is parallel, both have sought to establish their own niche signifying the different strategies each of them has embraced. Building up on the pitch of the sales in order to save up the customer’s pocketbook Wal-Mart and Target both stay neck to neck with their strategies for a competitive pricing advantage (Steverman 45). These two retail giants generally provide well-structured stores, bargain pricing, online shopping, good customer services as well as large selection of products. Today, Sam Walton’s Wal-Mart is recognised as a global company having employed close to 2.2 million associates all over the world with 1.3million associates in the US alone and around 10800 stores as well as wholesale clubs all over 27 countries. The success of Wal-Mart is attributed to its well sought out supply chain management over the years. Wal-Mart began its operations with the sole goal of providing the customers with goods they wanted and where they wanted them. The brand also adapted cost structures that favoured it to be in a position to offer low prices on their products. The main factor that helped Wal-Mart to achieve this goal was based on the strategy of replenishing the inventory system, which mainly relied on the logistic technique of cross docking. It is through this strategy that Wal-Mart has been able to maintain a competitive pricing advantage that has enabled it to be known as the world’s biggest retail company. The slogan of Wal-Mart regarding low prices has been at the centrepiece of all its success. The mission statements as well as the advertising slogan for Wal-Mart are literally the same in which it states, “We save people their money so that they can live better”. Mike Duke, who became the president of Wal-Mart in 2010, has propelled the achievement of this mission statement. Having worked with the company for close to 23 years, Mike Managed to serve as the Vice President of the company from 2005 up to 2009 and later on he managed to take up the presidency of the Company (Barstow 56). His tenure is marked with a lot of success especially in fulfilling the mission and purpose of the company. The approach used by Mike concerning the mission statement of Wal-Mart has formed the basis for the different packaging facilities. In America, Wal-Mart stores are classified into four forms: discount stores, neighbourhood markets, and supercenters as well as marketsides stores. The discount stores sell a variety of products in large quantities such as office supplies, automotive products and groceries. Neighbourhood markets are regarded as small types of supercenters, which sell general merchandise, pharmaceuticals and groceries. The supercenters stores generally sell general merchandise as well as full grocery. Finally, the marketsides stores are regarded as grocery stores that offer meals at great prices. The start of Target dates back in 1902 where George Dayton bought Goodfellow Dry goods, which was located in Minneapolis. After a series of name changes, the result was Target, which has grown to be one of the largest retail companies. In the early 1990’s, Target was recognised as one of the retail giants, which is well known for offering style and fashion at discounted prices. Being ranked as the second largest retail company in America, Target attributes its success to the strategies of providing high-end quality products to its customers at affordable prices (Harris 24). Target has established 1797 stores in United States with 37 distribution centers, 127 stores in Canada with 3 distribution centers, an estimate of around 361,000 employee team base all over the world and global locations in India as well. Target’s mission is focused on two major aspects: larger vision and strong community values. The mission statement of Target is “To make Target the preferred destination for shopping for our guests through delivering continuous innovation, outstanding value as well as an exceptional guest experience through fulfilling the brand promise of “Expect more”, “Pay less.” In America, Target brand operates using two forms of stores: General merchandise stores and SuperTarget stores. The General merchandise stores are one level stores that are located within regional or community shopping districts. They are regarded as prevalent stores. The stores offer merchandise such as some grocery products, general merchandise, a pharmacy, photo processing services and a food restaurant (Harris 42). On the other hand, SuperTarget stores presents the brand Target beyond style, fashion as well as home décor that provides the customers with a pleasant and convenient shopping experience. SuperTarget store mainly offer full grocery as well as merchandise delights. In addition to all these, Target also has an online selling platform, Target.com that extends its services all over. Methodology To be able to gather all the relevant information regarding this project we used a variety of sources particularly from the internet. Through access of the companies’ websites as well as various database articles, it was easier to conduct our research to perfection. In order to get the required information, there was need to critically evaluate and analyse the sources from the internet to get the intended content. Using this research method was quite effective as it was the basis of our successful findings of our research. Results Wal-Mart has spent billions in establishing its own organizational culture in the best effective way possible. The principle drive in this context is based on their set cooperate culture, which focuses on three major beliefs: Respect for individuals, service to the customers and striving for excellence. The slogan for Wal-Mart, which focuses on making the lives of their customers different, is meant to reflect on the respect of the company as well as its commitment to its employees. However, with regards to the cooperate culture of Wal-Mart, there have been a lot of critics that have raised concerns and assumptions of the operations and success of the brand. Many complaints have been put across indicating that the current situation of Wal-Mart does not favour the associates (Banjo 56). It is through such criticisms that most people have drifted from believing the corporate culture of Wal-Mart based on the allegations that are labelled against it in relation to workers abuse. Having annual revenue of around $ 450 billion and a global workforce of about 2 million associates worldwide Wal-Mart has been the target of many labour advocates due to its status in the retail industry. As a result of thorough analysis done by the labour advocates, there is a clear indication that claims have been raised showing that there is some form of workers mistreatment. One common concern that is raised by most of the workers is based on scheduling. Workers are allocated tasks, which they must complete within the course of a full working day. However, this is not the case, as some of the tasks require more timing due to their nature. Wal-Mart has a strict policy that addresses the issue of over time. Another concern is because most employees in the company are paid low wages despite that fact that critics have argued that Wal-Mart is in a position to pay their customers better. During the recession period, Wal-Mart had to cut down the number of their employees. In a period of five years since then the number of American employees dropped approximately by 120,000 despite the fact that the Wal-Mart had opened 500 more stores in the country. Results of the decrease in the number of employees have steered up backlogged inventory; long checkout lines as well as poor customer service (Steverman 49). Additionally, there has been some employees protest all over the country based on the increase in sales and the decrease of the employees. Wal-Mart corporate culture has gravely been affected with criticisms based on their approach in changing the organizational culture. Below is a figure showing Wal-Mart’s increasing sales and the decrease in employees over the years: Target corporate culture focuses on achieving its mission and purpose by focusing solely on the needs of the customers. Based on their mission statement, Target is focused more on addressing the various communities where they have put up most of their stores. Every store is obliged to ensure the communities under which they are operating in have a feel of a better place to live in. It is well noted that approximately 5% of the profit that is received from Target’s sales go directly to the community (Hay 23). The company has set out to encourage more employees to donate and volunteer to charities within every community. In 2005, the company’s employees as well as the retirees volunteered close to 315000 hours into some of the community projects sponsored by Target. The company has been able to start up programs such as the Take Charge for Education, which is a program that aims to donate 1% to the purchase of red card based on the choice of the cardholder. Through the various programs that have been set up by the company, the community has benefited a lot. Target has thus managed to stabilize its corporate character in the community by staying true to their corporate culture. However, in the 2005 Target was faced with a decrease in their sales, which led some of the employees losing their jobs. This was a major drawback for Target as it has been experiencing some on and off challenges regarding the increase and decrease of the sales. Results from various labour unions reviews have indicated that most of the employees at Wal-Mart are not satisfied and happy with their low wages, which does not reflect on the work that they are subjected to do. It is because of this that the largest ever worker revolt came into being, causing over 50 arrests. On the other hand, the employees of Target have never staged up a protest despite the fact that their salary wages are the same as that of Wal-Mart. This is quite strange as it raises a lot of concern based on the treatment of employees. For example, it is noted that the sales employees’ team members of Target make an average of about $8.34 in an hour while the team members, Wal-Mart make about $8.86 per hour. Additionally, cashiers at Target make about $0.41 less in an hour compared to the amount that is earned by Wal-Mart cashiers which is $8.51 per hour. This information clearly indicates that its the Target’s employees that should be staging up protests regarding their wages and not Wal-Mart (Chianis 62). Wal-Mart’s executives have no sign of adjusting or raising the wages of their associates any time soon unless they are forced to do so by the Congress. Current annual reports have indicated that the company is indeed planning to promote approximately 160000 employees within the next calendar year. At present Wal-Mart employees can only work with the hourly wages that is allocated to them with the hope that the future will favour their demands. Unlike Wal-Mart, Target employees are well contented with their employer’s services and packages to them and based on a survey conducted on the employees by various labour unions, most of the employees stated that they were happy with their working conditions as well as their reward and compensation packages. Providing quality as well as affordable healthcare is quite a challenge to most organizations. The healthcare benefits that are offered by Wal-Mart are unique. The company has health savings accounts in which employees are provided with access to health insurance and care needs. In addition to the insurance services that are offered by the company other health benefits include counselling services, vision care as well as discount on some of the prescribed pharmaceutical drugs. In 2006, Wal-Mart came up with a new health care plan that provided access to affordable health care treatment for its employees. The company continues to create a competitive environment with regards to most of the health care providers. However, recent reports and articles from Forbes and other newspapers articles have indicated that Target is in a better position with regards to their healthcare services. Target is committed in ensuring that their employees receive quality and affordable health care benefits. The company has a comprehensive health care plan option that covers various sections of the health care coverage such as vision care, pregnancy, vaccinations among many other extensive healthcare services (Steverman 63). Additionally, Target has an extra competitive advantage based on its flexible spending account that is attributed to the health care plan. Despite the fact that Target is regarded as more fulfilling based on the health care terms, both companies have wellness programs that are meant to cater for the employees and their families health care. With regards to a great shopping experience there are a lot of assumptions that have been made on both Wal-Mart and Target. To start with, when one goes in to a Wal-Mart store, it is guaranteed that they will receive some great deals. The location of the stores is also quite friendly as they are almost everywhere and are usually opened on a 24 hour basis throughout the year. Most of the Wal-Mart stores are able to offer wide range of products and services such as grocery, merchandise, photo labs among other delights. However, Wal-Mart stores are usually overcrowded and it is often the case that the customers are subjected to queue on very long lines. Another concern is that the shelves in most of the stores are often unorganized and it is difficult to find a sales employee to assist in the sales, as they are never there when needed. Unlike Wal-Mart, Target services are usually well sought out, as it is often the case that their shelves are well organized enabling the customers to help themselves with ease while shopping. This is the sole reason why Target is the better option when it comes to providing a great shopping experience (Dudley 42). Critics have caved on the fact that the CEO of Wal-Mart earns a huge salary than any of the employees in the store. This has been the major cause of protests as well as law suits against the company indicating that the full time as well as hourly employees are being stripped of privileges that they are rightfully entitled to, especially with regards to the pay differences. A report dated back to 2012 indicates that Wal-Mart is focused on offering its health care benefits only to the employees that work for more than 24 hours in a week. This is a disadvantage to those associates that work within certain work limits, especially to the temporary employees who have been hired by Wal-Mart because of various partnerships with third party companies. However, amendments have been implement recently that have seen the establishment of a strong working schedules that can now accommodate more employees to work up to 24 hours in a week. Wal-Mart is known to carry the largest number of employees who are solely dependent on the public and this has been noted as a critical aspect in terms of the cost that is inflicted on the taxpayers. In terms of the financial benefits that are experienced by Target brand, the 401(k) is regarded as the best in the retail industry. This is because it favours eligible members and offers them opportunities to plan for their future effectively. For each dollar that the team members are able to deposit, up to 5% of their pay, Target is able to match their dollar and that match received is usually for the team members. Some of the low investments funds that have been set up by Target has managed to help the team members in planning up for their future in terms of their retirement goals. Additionally, Target has worked with the community in setting up community-based programs that offer them opportunities to further their education as well as empower the community in embracing development activities. The 401(k) plan using financial engines focuses on ensuring that every team member will be able to receive some online suggestions on how they can improve their retirement outlook (Forbes 14). Wal-Mart tried to match up the 401(k) plan but based on various assumptions and claims of employees, Forbes and Gawkers based articles have indicated that it is not clear whether the company is actually supporting employees to take up various training programs that have been established. Thus, there is no assumption that can be made indicating that Wal-Mart financial benefits are greater than that of Target. Based on article that appeared in Forbes, Wal-Mart has been criticized of having improper facilities, which are not able to cater for critical operations (Banjo 29). This is based on the incident that occurred in one of the Stores in Bangladesh whereby a store factory was on fire and the fire extinguishers available were non-functional. An article appearing in New York Times also gave out the results of a survey conducted on both companies, which indicated that the customer satisfaction for Target was 81 while that for Wal-Mart was 71. Many allegations that have been put up regarding the employee benefits of Wal-Mart have indicated that a lot of attention needs to be put to deal with various challenges that have emerged. Based on the critical evaluation and analysis of Wal-Mart and Target, there is a clear indication that the employee benefits of Wal-Mart need to be greatly improved. Even though Wal-Mart is trying to stay true to its mission of providing low prices to their consumers so that they are able to live great lives, it is important that they ensure that the plan will offer great opportunities for their employees, as well. Wal-Mart has been faced with a lot of criticisms and allegations based on employee mistreatment and, hence if the root cause of the complaints and criticisms is attributed to the lower prices then something needs to be done to ensure that the needs of employees are also catered for. Despite the proposals that the company has tabled to deal with all the criticisms that have been brought towards them, no actual implementation of the proposals can be seen, For instance, in Bloomberg Business Week article dated back to September, 2013 Wal-Mart had given out a statement, which indicated that they were going to hire more full time employees, but up to now there is no valid proof that that statement has been put to action. Therefore, Wal-Mart needs to channel all their efforts in establishing flexible working structures because as it stands right now Target has an advantage in this context. Conclusion Based on the information that have been provided above regarding the current situation of Wal-Mart and the challenges it is subjected to, there is no doubt that the Company is in need of some assistance in terms of management. Facts have shown that the company is progressively making profits in their sales but this feature is unfortunately accompanied with the decrease in the number of employees despite the profits and revenues. In order to better the general outlook and performance of the company especially concerning the corporate culture, it would be better for Wal-Mart to treat their employees with utmost respect to improve the perception of their organization culture that has been tainted by critics. To improve the image of their brand, especially based on the current situation, Wal-Mart needs to plan carefully how to deal with these challenges. To start with, Wal-Mart must first satisfy the needs of their employees before moving to their customers. Wal-Mart should motivate their employees by rewarding them with the profits that they get the same way that Target has done by offering 5% of their profits to the community. Through this approach, Wal-Mart will gain full employee support in the company’s operations. Another feature that Wal-Mart should focus on to improve their employee support is by creating some kind of plaza in their stores that will function as a meeting place, as well as a comfortable zone for the employees to relax in. Additionally employees will have some parking space for their cars and bikes. This plaza will function the same way as Target Plaza, which has generated a lot of success for the brand. Wal-Mart should also focus more on trying to connect with the community by initiating programs that are productive and benefit the communities. Target has steered up many charities and programs that have managed to capture the trust of their employees and the community in general. This has created a great platform for teamwork and growth of the company. The same way Wal-Mart can learn from Target by involving the community in their programs and learning from them on how they can improve the performance of their company. A thorough follow up by the company concerning the stated recommendations will guarantee a successful growth of Wal-Mart corporate culture and brand image. Works Cited Bickle, Marianne. Best But, Target and Wal-Mart: Forbes, 2013. Banjo, Shelley. Wal-Mart accused of violating the workers’ rights, The Wall Street Journal, 2014. Barstow, David. Wal-Mart Stores, New York Times 2013. Chianis, Alexia. Target vs. Wal-Mart-Which discount Giant Deserves your Dollar? 2013. Dudley, Renee. Customer Flee Wal-Mart Empty Shelves for Target, Costo: BloombergBusinessWeek 2013. Forbes. Target and Wal-Mart operations, 2014. Hays, Constancel. Can Target Thrive in Wal-Marts Cross Hairs, New York Times, 2002. Harris, Elizabeth. Target corporation, New York Times, 2014. Steverman, Ben. Target Vs.Wal-Mart: The next phase. BloombergBusinessWeek, 2009. Read More