Walmart Business Analysis
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Wal-Mart Business Analysis
For the final group project we chose to complete a management analysis on Wal-Mart. Covered in this paper are the issues of productivity, hiring practices, corporate social responsibility and culture, diversity and affirmative action, the use of information technology, leadership, teamwork, and managing ethics.
Productivity is very important to any successful business. Wal-Mart has increased its productivity through many different advances. Business analysts have long admired Wal-Marts logistics management, even though the public recognizes them for their low discounted prices. Wal-Mart has always been resourceful at moving and stocking goods, building its stores as branches around distribution center hubs. But, instead of simply maximizing efficiency at the warehouse, for example, Wal-Mart began to analyze costs over the entire shipping process, including how quickly goods can be moved onto shelves once they arrive at the store. Just one example of these analyses found, that by not completely filling a pallet with goods can save so much time in stocking the store, that what seems “inefficient” at the warehouse is more productive over all. Through the analyses they have put into place the RFID, a new system of tracking merchandise. The RFID begins at the registers, when customers go through the checkout lines, the RFID immediately takes that point-of-sale data on their purchases combined with the RFID-generated data to create a list of what is available to produce a pick list. The use of this technology has enable associates to change the process in which inventory is tracked. The scanners automatically send the input and output data directly to suppliers, vendors and the distribution warehouses. This system allows for fewer middlemen, which in turn increases productivity by reducing costs, from the shipments leaving the warehouse, to the merchandise being unload and stocked on shelves in the stores. “The message is that the data that RFID collects can allow for process improvements.” (DC Velocity, 2006)
The next area analyzed was the hiring practices of the corporation. Wal-Mart employs 1.6 million Associates in the United States alone and the majority of store associates work full-time, which is well above 20 to 40 percent found in the retail industry today (Wal-Mart Facts, 2006). Wal-Mart promotes from within the store and over seventy-six percent of the store management started in hourly positions (Wal-Mart Facts, 2006). According to Business Week, 2003, a sales associate earned an average of $8.23 an hour for annual wage of $13,861.00. In 2003 the poverty line for a family of three was $15,260.00 (wakeup, 2006). It seems that Wal-Mart has to promote within to keep the moral up. If the promotion is not there, employees will only stay for the so-called benefits or until another “job” comes their way.
In the areas of corporate responsibility and culture, the results of the analysis were bittersweet. Wal-Mart violated the Clean Water Act in 9 states in October 2004 they were sued for $3 million to make changes to their building codes (The real, 2005). But on a positive note, according to Business Respect, “Wal-Mart pledges major focus on the environment targeting the ultimate use of renewable energy sources and producing zero waste through their doubling the fuel efficiency of the truck fleet within the 10 years” (Business Respect, 2005). Wal-Mart stores founder Sam Walton learned of a technique used in factories in South Korea that involved calisthenics and a company cheer that motivated the employees (CIO, 1999). Impressed by what he called the “whistle while you work philosophy,” he introduced a similar idea into Wal-Mart stores called the “Wal-Mart corporate cheer” (CIO, 1999). Setting forth the company cheer set the way corporate culture is today in Wal-Mart stores across the nation. “Though its not unique for a company to want satisfied and engaged workers, these companies believe that their corporate culture yields tangible bottom-line results” (CIO, 1999). Employees enjoy a few perks here and there to keep moral above water, but benefits should not be confused with the culture of the company (CIO, 1999). According to Frederick F. Reichheld, “a telltale sign of an effective culture is loyalty, the percentage of employees and customers who stay with the company” (CIO, 1999). Corporate cultures are not one size fits all; the effectiveness of a given culture depends on the companys business goals (CIO, 1999). Robert Goffee, co-author of “The Character of a Corporation: How Your Companys Culture Can Make or Break Your Business” said “there is no right culture” (CIO, 1999).
Diversity and affirmative action are very important to maintaining a positive working environment. Wal-Mart employs both men and women in its daily operations and prides themselves as being one of the largest retailers to apply diversity throughout its workforce. They continually insist what a great job they do in diversifying its workforce but when you visit any one of its stores, this is not apparent. Women employed by Wal-Mart fill the vast number of lower level job positions, such as sales associate. Therefore, while the burdens that fall on Wal-Mart employees descend on employees of both sexes, particularly that of low wages, the worst maltreatment is toward women at the lowest levels of the employment ladder. There have been numerous lawsuits filed by women against Wal-Mart for sex discrimination. These suggest that the companys policies used to base promotions on may lead to discrimination, wage abuse and anti-unionism. In all of these sex discrimination lawsuits filed, the women claim to not get the same opportunities for advancements as