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Effectiveness of Improving Customer Service of Wal-Mart

CHAPTER 1: RESEARCH PROPOSAL AND INTRODUCTION

Section I: Introduction to the Organization

1.1 Corporate name, founding a date, founder leaders

Wal-Mart was started in 1962 by Sam Walton and has grown over the years to be the largest corporation globally (Wal-Mart, 2015).

1.2 Essential events and critical incidents in the history of Wal-Mart

The history of Wal-Mart is more than what the corporation has built, the partnerships they have made and the consumers they have served. In 1960s, the strategy of Sam Walton was to build a foundation that is unshakeable under the philosophy of lowest price anywhere and anytime. Sam Walton created Wal-Mart and began operating in 1962. In 1969 Wal-Mart had opened 24 stores. Through the 1970’s Wal-Mart was being traded on the stock exchange. In the 1980’s Wal-Mart opened their first wholesale club Sam’s Club. The 1990’s Wal-Mart became the largest retailer in the U.S. They also had started to open stores in neighboring countries (Wal-Mart, 2015).

1.3 Historical (initial) products, current products/services, and the evolution of new products

The company started by retailing general merchandise but has evolved over the years on the products and services it offers. Currently, Wal-Mart offers a variety of products and services to its customers ranging from grocery to entertainment to crafts and sporting goods. Wal-Mart Supercenters offer one-stop shopping for apparel, electronics, home furnishings and toys with the added convenience of grocery stores with bakery, fresh produce, meat and dairy products, and deli. The Wal-Mart supercenters also include specialty shops like banks and pharmacies, nail and hair salons, health clinics, vision centers, optical departments, tire and battery center, photo center, and restaurants (Wal-Mart, 2015).

1.4 Description of entry into new business lines

Wal-Mart entered into the Mexico market by 1991, Wal-Mart began its international expansion. They also created: Sam’s Club their wholesale club, Wal-Mart Supercenters which incorporate supermarkets, and most recently Neighborhood Marketplace a neighborhood supermarket. By Wal-Mart expanding and entering into new markets, the corporation aimed at increasing its sales to $400,000 billion so as to solidify its scale-based advantage (Wal-Mart, 2015).

 

1.5 Industry competitors

According to Roberts & Berg (2012, p. 78), Wal-Mart for many years has been known by consumers as a low-priced retailer in the United States. Considering its strategy of “Everyday Low Prices (EDLP),” the perception of price has been so strong to the point that it has position Wal-Mart as the leading retailer in United States (Roberts & Berg, 2012, p. 78). This leadership position is being challenged by its competitors who are also big retail players such as Target and other online retailers like Amazon. Many other small retailers who also offer competition to Wal-Mart include Family Dollar stress and Dollar General. The high competition is because consumers in United States are becoming sensitive to price and, therefore, look for retailers who can offer lower priced products. In 2012, the study conducted by Click IQ also indicated that online retail stores are offering very stiff competitions to the brick and mortar stores and despite the fact that consumers actually browses over the Wal-Mart stores, they actually buy from online stores like Amazon because of the offered low prices online (Porter, 2010, p. 114).

Section II: Statement of the Problem

Wal-Mart Corporation has the following corporate strategies:
1. Broadening their appeal to all their customers
2. Becoming a better place to work
3. Driving growth in their international business
4. Improving business efficiency and operations
5. Making contributions that are unique to the communities (Wal-Mart, 2015).

Despite Wal-Mart’s goals for their corporate strategy may lead them to achieve their objectives, it is not certain that they will lead Wal-Mart to continuous success. The company has successfully implemented their corporate strategies. Wal-Mart’s success although are driven by the goals, has major problems arising when implementing the goals. Some of the recommendations provided will be more at the local level, where some of the company’s goals need to be put into action globally. The company’s public image needed to be addressed. The way Wal-Mart treats its employees with regard to their pay scale in addition to traumatic treatment shown in the media also needs to be addressed. Additionally, corporate hunger for international expansion and additional market gain has clouded Wal-Mart’s judgment when it comes to hiring versus retaining to fill the head count. Furthermore, the company needs to address its perception on how to infiltrate, navigate and dominate the global discount of the retail industry (Richard & Wenti, 2007, p. 229).

The problem Wal-Mart faces is not implementing or lack of being able to implement the once believed philosophy that “customers are always right.” Wal-Mart needs to improve its customer service to its clients. The associates or the employees of Wal-Mart should treat the customers and the general public with admiration and respect. Improved services to the customer will increase the company’s profitability and increase their market share. The associates should take their customers into consideration. Wal-Mart would not be where the company currently is today without their customers loyalty.

Section III: Research Question

What are the consumer perceptions about Wal-Mart on its service to the customers compared to a competitor?

Section IV: Hypothesis

Wal-Mart could increase profitability and maintain market share by improving its customer service.

Section V: Research significance

The study is significant because by understanding the relationship between improving customer service and increasing profitability and market share of a company, it will allow the researchers to see if there is possibility of larger effect for companies when the factors are combined. This will make the Wal-Mart company more successful in its implementation of its corporate strategies. This study can be applied in other companies to improve their profitability and market share by simply improving their services to their clients.

Section VI: Purpose

The purpose of the study is to understand whether improving the customer service will increase profitability and maintain a market share of Wal-Mart compared to its competitors which include the online retailers. The study will also try exploring whether Wal-Mart will be the preferred United States retailer of choice to consumers when they improve their service delivery to their customers. Therefore, the study will explore the factors the factors that contribute to the profitability and increase in market share and the significance of improved customer service among other factors. Additionally, the study will try to find out the relationship between improved customer service and company profitability, and improved customer service to company’s market share.

Section VII: Data Collection/Research Methods

Relevant secondary & primary data will be extracted from different sources, and the findings will be explored and evaluated. The primary research will consist of onsite interviews and surveys using standard questionnaire. Secondary sources will consist of online articles and annual reports of Wal-Mart. Moreover, the researchers will review journal articles, read other pertinent literature, analyze onsite and online corporate records of Wal-Mart, government sites among others.

The study will adopt qualitative research method for completing the project. The qualitative research method is used in research with an aim of gathering an in-depth understanding information. It investigates the how and why of making of decisions. Therefore, samples that are smaller but focused are often used instead of large samples. According to Groves (2004, p. 14), qualitative research methods give information on specific studies cases and general conclusions on informed actions. Groves (2004, p. 14) observed that the qualitative researchers basically are concerned with processes and practices rather than the outcomes. The focus is mainly on the experiences and perceptions of the participants. Qualitative research involves fieldwork typically whereby observation and recording of events are done. The researcher goes to the site, setting and the people physically to observe the subjects naturally and normally.

Section VIII: Chapter Summary

The chapter is the project proposal on Wal-Mart Company on whether Wal-Mart could increase profitability and maintain market share by improving its customer service. A brief overview of Wal-Mart Company has been detailed in addition to the problem statement. The chapter also details the reasons for writing this paper by formulating the research question and the hypothesis. Furthermore, the chapter explains the importance of the project, why the paper researches on the subject and how the study plans to conduct the research. Primary (interviews and surveys) and secondary sources of information will be used in data collection.

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 2: LITERATURE SEARCH
Section I: Literature search

2.1 Research on how improved customer service affects company profitability

Güngör (2007, p. 21) in his study enumerates many key benefits of improved customer services for a firm. Generally, high satisfaction of the customers should show increased loyalty amongst the firm’s current customers, insulation of their current customers from the external competitive efforts, reduced price elasticity, lower costs to attract new customers, reduced failure costs and an enhanced farm’s reputation. Increased current customers’ loyalty implies that more customers will be retained and will repurchase in the future. Decker & Crisp Learning, Inc. (2001) stated that if a company has a strong loyalty of customers, it should make a reflection in the economic returns of the firm because it ensures a steady cash flow in future.

According to Allen & Rao (2000, p. 116), the more the customers services are improved, the longer they are likely to continue purchasing from the same supplier. A loyal customer’s cumulative value to a company can be quite high. Increasing satisfaction of the customer increases the firms’ customer assets value and future profitability.

Improved customer services should also reduce the current customers’ price elasticity (Mohammadhossein et al, 2014, p.11-31). Mafini (2014, p. 116-135) also pointed out that customers who get improved services and are satisfied are more likely to be tolerant of price increase and are more willing to pay for the benefits they receive, which implies customer loyalty and high margins. On the other hand, low customer services translates to low satisfaction of the customers, and this results into higher replacement costs, higher turnover of the customer base, and because of the difficulty satisfied customers to do business with rival, higher costs of customer acquisition. Price elasticies that reduce to increased profits for a company providing superior satisfaction for the customer.

Rajagopal (2010, p.88) also observed that improved customer services should reduce transaction costs in future. If a company has a higher retention of customers, it does not need to expend much on acquiring new customers each period. Customers who get improved services and are satisfied are likely to buy frequently more and in greater amounts, as well as purchase other products offered by the company.

Providing goods and services consistently that satisfy customers increased a firm’s profitability and reduce failure costs. A firm that provides high customer satisfaction consistently have fewer resources that are devoted to reworking defective items, handling returns, and handling and managing complaints (Güngör, 2007; Decker & Crisp Learning, Inc, 2001; Allen & Rao, 2000).

According to Mohammadhossein et al (2014, p. 11-31), the cost of attracting new customers by a company should be lower for companies that have improved customer services. For instance, customers who get good services and are satisfied have a reputation of more likely engaging in a positive word of mouth, and have a lesser likelihood of engaging in damaging word of mouth that is negative (Mafini, 2014; Rajagopal, 2010; Güngör, 2007; Decker, 2001). Furthermore, media sources convey positive information to the prospective buyers. Higher customer satisfaction through improved services may make the media advertising more effective, and this may allow the company to offer more warranties that are attractive.

Improved customer services also enhances the overall reputation of a company. A reputation that is enhanced can aid in the new products introduction by providing awareness instantly and lowering the risk trial of a buyer (Allen & Rao, 2000; Mohammadhossein et al, 2014). Reputation can also be beneficial in establishment and maintenance of relationships with key distributors, suppliers and potential allies (Mafini, 2014; Rajagopal, 2010). Additionally, reputation provides a halo effect for the company that influences customer evaluations positively and provide insulation from environmental short-term shocks. Güngör (2007, p. 229) also stated that improved customer services plays an important role in building other significant company assets such as brand equity.

2.2       Improved customer services and the market share

Improved customer services and the market share go hand in hand. Reidenbach (2010, p. 11-31) found out relative quality, and market share related positively to the companies in the PIMS database. The same relationship has also been shown to customer satisfaction, for instance, improved customer services and higher customer satisfaction helps in attracting and retaining customers. However, it is unclear where there is compatibility in high market share and improved customer services. Schieffer (2005, p. 116-135) and Denove & Power (2006) discussed in their studies the possibilities of negative relationship between market share and improved customer services. They argue that whereas a company with small market share may serve well a niche market, a large market share company must serve a more heterogeneous and diverse set of customers. There is a minimum of two principal forces at play in determining whether the relationship between market share and improved customer services is negative or positive. First, increasing the market share up to a point, can result in the economies of scale. This, for instance, may permit the company to charge lower prices, hence increasing the value of the offering of the company and consequently increase the satisfaction of the customer. On the other hand, there can be a dilution of efforts which goes with the attempt of serving an increasing number of customers or even market segments. The dilution may lead to low-quality services, and this has a higher likelihood of occurring in industries where preferences of the customer are heterogeneous, or even personal service is significant. However, in industries that are undifferentiated and has homogenous customer preferences, there is a higher likelihood that market share and improved customer services are related positively, especially in the long run (Allen & Wilburn (2002, p.65).

Because of no studies, it is significant to examine the arguments for companies that pursue different generic strategies such as low-cost leadership, niche and differentiation as suggested and categorised originally by Newell (2000). The companies that follow pure niche strategies have a higher likelihood of being successful in improved customer services compared to those that pursue other strategies. Despite the fact that it is true companies can differentiate their products and services offerings to meet their multiple segment’s needs, it may become costly or difficult to do so without diluting the quality of the products and services provided such as personal services. As a company grows bringing in further customers with preferences away from the target market of the company, the overall level of improved customer services is likely to fall (Thakur, 2005).

In summary, the relationship between market share and improved customer services is an issue emerging that needs greater understanding. Being successful in one way may reduce the performance of the other. Gaining of the market share can be realized by attracting customers with a preference that are distant from the target market of a company. Service capabilities can also be overextended as the volume expands. Moreover, alluding to the study by Szymanski, Reidenbach (2010), effects of market share on profitability are equally problematic. Evidently, there can be scenario where increasing one or the other cannot be yield profit to a company. Conversely, a “one size fits all” or a high market share strategy can only be profitable if enough customers possess similar preferences. Similarly, there is a possibility that differentiation may also fail in providing improved customer services because of the difficulty in serving several customers within each segment. Therefore, a company that manages both provision of improved customer services by customizing it, is offering to every customer and maintaining a large share of the market would definitely enjoy very high economies of scale and scope (Schieffer, 2005).

Section II Comparative company analysis

In this section, the paper will analyze two major competitors of Wal-Mart, that is Amazon Inc. and Target Corporation (TGT) which are in the same industry and experience the same problems of getting profitable and expanding its market share. Moreover, it will examine the solutions implemented by Amazon and Target Corporation (TGT) on improving its customer services to create a large loyal customer base since it is viable and applicable to the problem facing Wal-Mart.
(1) Amazon Company

Amazon is the largest online store in the world that sells lots of merchandise like Walmart. Founded in 1994, Amazon first publicly traded in 1997 and made the first profit in 2001 (Stone, 2013, p. 10). The company started as the major internet retailers solely on online books. Because of the success, the company diversified into other services and product lines until today where it is the largest online retailer in the world.

According to Goldfayn (2011, p.332), Amazon invested a lot of money and lost a staggering amount in a bid to grasp market share and build its brand to the position where it was dominating Amazon Company lost several billion dollars of money in its early years. The problem of expanding its market share and gaining profits are similar to the problems that face Wal-Mart. However, by improving its customer service, Amazon Company has been able to gain profits in the past decade. The company cares about their customers, and it seems the customers also like it. According to Rossman (2014, p. 171), Amazon has a history of taking to extreme length its customer service policies and, therefore, it was not a surprise that it surpassed Apple Inc. As he most trusted company in United States.

However, being the most trusted company should not be confused with the profitability of a company. As much as Amazon ousted Apple, Apple still gets 46 times more profit compared to Amazons (Yahoo, 2015). Landau (2013, p. 81) observed that the difference is that Amazon Company is never intending or is waiting to cash on its success by continually ploughing back their profits into the company and focusing on long-term growth. This implies that no or little profits but an astounding large size of the market and a large base of loyal customers. In this comparative analysis, the paper will examine how self-investment by Amazon is helping it dominate the market of e-commerce and how they offer their obsessive services to customers.

1. Building warehouses in different regions

Few giant warehouses according to Stone (2013, p. 36) would have worked well for Amazon since housing everything under one roof saves on inventory costs, salary, renting and building. However, Amazon built over 50 warehouses which spread across 19 states in the United States with more plans for constructing more. The large number of warehouses in United States allows them to provide cheaper and faster delivery to a huge number of customers. More locations of the warehouses also imply more locations and an extended holiday season for buyers to pick up their purchased products.

2.         Getting more personal to the customers

Amazon is constantly perfecting a genuinely personalized shopping experience by suggesting relevant and interesting products to every customer. These include site zones, personalized emails and even shipping items closer to the customers before they make an order. Depending on how long or the number of times you view an item, Amazon may choose to bring the product to the warehouses in your area so that the customer and get them much faster when they order (Goldfayn, 2011, p.16).

3. Prime Air

In a bid to continue offering better customer service, Amazon announced their plan for “Prime Air,” which will be the company’s unmanned aerial vehicles service which will be able to drop ordered packages within 30 minutes. The announced futuristic service is the most convenient delivery method. While this may be true, Amazon created the right blend of futuristic to captivate its customers (Amazon 2015).

4. Offering orders that recur

For the items that are often repeatedly ordered such as foodstuffs, toiletries, diapers among others, Amazon offers the easiest subscription. This easy subscription, when combined with one-click ordering, makes it more convenient and easy for the customers to get their essentials (Rossman, 2014, p. 22).

5. The policy of Lax Return

If a customer is not satisfied with the one-click ordering, the Amazon clients cannot worry because it is very easy to change mind before shipping and its simple as placing an order. Moreover, if the product is shipped, the return policy is flexible and easy. The willingness of the company to put first their customers in disputes is what has helped in developing the loyalty of the customers. Miller & Clifford (2012) indicated that this is why Amazon in the e-commerce searches are more frequent compared to Google.

6. Incredible and everywhere customer service

The customer service center of Amazon is everywhere digitally. Landau (2013) observed that the customer service team at Amazon Company are found everywhere troubleshooting in chat rooms, blogs and everywhere there is a problem. Moreover, it is just not available, but the team has the ability to solve problems

7. Using technology to offer customer services

Amazon also used a battery of strategies to turn its Iron customers into Gold clients. Initially, Amazon Company focused to being to get any book virtually that their customers needed. However, after establishing its ability, it started developing individual customer’s profiles as a winning strategy. After a customer had bought an item from Amazon, the company would build their information databases on the preferences of the customer. Whenever a customer ordered a book, the Amazon database produced a list of books on similar topics and also from the same author that could expand purchase. The suggestions according to Zeithaml, Rust & Lemon (2001, p. 118-142) were welcomed by customers who might not be aware of the existence of other books. Before, the company expanded its product lines to CDs and movies after discovering their preferences. Additionally, the company asked their clients if they wanted to receive news and information of the new products through their emails. This way, Amazon created an ongoing communication with their clients on their personal interest (Zeithaml, Rust & Lemon, 2001, p. 118-142).

 

(2) Target Corporation (TGT)

Target Corporation (TGT) is a discount retailer in United States. This means that the corporation generates revenue by offering consumer goods that are priced competitively. Target Corporation is one of the major competitors to Wal-Mart apart from Amazon and Costco. Opening its first store in Minneapolis in1962, the focus of Target Corporation was for convenient shopping with prices that are discount competitive. Currently, the corporation remains steadfast to providing for its guests a one-stop shop experience for delivering outstanding value and differentiated merchandise with its “Expects More, Pay Less” brand. Its website is ranked as one of the retail websites most visited apart from being the second largest retailer f general merchandise (Pressroom, 2015).

Target Corporation (TGT) deals in hardliners, household essentials. Home furnishings and décor, apparel and accessories, groceries and pet supplies among others. Moreover, it offers several services including a pharmacy, Target Optical, Walk-in clinic, portrait studio, photo center, in-store pickup and Target REDcard among others (Target, 2015). However, just like other major retailers in United States, Target Corporation (TGT) faces the problem of profitability and market share. However, the corporation has recorded robust financial profitability compared due to its marketing strategies and improved customer services (n.a, 2004). Some of the improved customer services that has led to the success of Target Corporation (TGT) and are viable and applicable to Wal-Mart include the following:

1. High-end atmosphere

Target Corporation (TGT) offers high-end atmosphere to their clients since customers prefer shopping in environments where they feel good about the store and are treated well. The results of those are the willingness of the customers to pay more for the goods and services and individuals who are not very sensitive to prices (Rowley, 2003, p. 254).

2. Larger inventory

Target Corporation (TGT) is regarded as an upscale discount store in United States because it has major designers designing product lines just for their corporation. They see their upscale discounter images focus on enhancing and building their brand personality, with the ability of better targeting key groups of customers (Gilbert, 2015, p. 139).

3. Gaining customer loyalty

Maritz Research conducted a study and found out that 20% of the shoppers of Target Corporation (TGT) are highly loyal and shop regularly at TGT. Moreover, 80% are under the age of 40 years and also have a college education and are in the middle of upper range of income. There are more females compared to men. Similarly, Target Corporation (TGT) customers prefer shopping in places where their families and friends are likely to shop, and they are not sensitive to prices (Target Corporation, 2000, p. 19).

4. Online customer services

For the customers who are unable to go physically go shopping at the TGT stores, they have an option of shopping online. Moreover, these tech-savvy buyers have the ability of searching and reviewing products online. The online platform for Target Corporation (TGT) allows the customers to see where TGT contributes their money such as charities, donations and corporate social responsibilities.

Moreover, they have Mobile app which notifies their customers on updates, latest news, sales, deals, coupons and many more. They also active in the social media such as Twitter and Facebook for marketing their products and also for customer services (Datamonitor, 2000)

5. Great guest service

Target Corporation ensures that whenever a customer shop with them, their Target shopping trip is exciting and enjoyable. They perform this through their friendly services from their team members who are willing and ready to assist with the customer’s shopping list. Moreover, their shelves are fully stocked, and they also have speedy checkout processes (n.a, 2004).

Other customer services provided by Target Corporation include:
6. Gift Registry
7. Credit card services to their customers through their “Target Card” which offers discounts and savings
8. Large shopping carts for their clients with built in baby seat
9. Price checkers found in all their stores
10. No solicitation policy to provide shopping distraction free
11. Savings programs like Cartwheel and REDcard (Rowley, 2003, p.87).

Section III: Summary

In summary, chapter 2 majorly dealt with literature search and company comparative analysis. The literature search of section one detailed key theoretical concepts on the relationships between company profitability and improved customer service, and also the relationship between market shares of a company with improved customer care.

On the comparative company analysis, the paper examined two major competitors of Wal-Mart, that is Amazon Inc. and Target Corporation (TGT) since thy all experience the same problem of market share expansion and need to profitability of their companies. The paper then examined the viable solutions applied by both Amazon and Target Corporation (TGT) of improving their customer services. These solutions are also applicable in the case of Wal-Mart’s problem of profitability and market share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 3: ORGANIZATIONAL OPERATIONS AND STRATEGIES

Section 1: Current Company Operations

Financial aspects of Walmart

(a)   Income statement

Every year, Wal-Mart has recorded minimal changes in their bottom line that is from $16 Billion to $16.4 Billion. Similarly, top line revenues also recorded minimal changes that is from $476.3 Billion to $485.7 Billion. On the positive side of Wal-Mart, the company has been able to reduce the sales percentage that is devoted to the cost of sold goods to 1.64% from 1.70% as shown in appendix 1 (Wal-Mart, 2015).

(b) Balance sheet

Despite the fact that over the last fiscal year, the debt as a percent of the Wal-Mart company’s total income decreased to 37.24%, the debt is still in line with the Staples and food retailing industry norm (Wal-Mart, 2015). Furthermore, even though the company has no enough liquid assets that satisfy the current obligations, the company’s operating profits are very much adequate in servicing the debt. Receivable accounts are among the worst in the industry with 5.06worth of outstanding sales. This means that revenues are not being collected efficiently. Finally, levels of inventory relative to the cost of sold goods, are typical for the industry but have demonstrate a consistent rise for the past 4 years. This means a potential efficiency loss or the pricing power as shown in appendix 2 (Wal-Mart, 2015).

(c)    Wal-Mart’s competitors

Comparing the results of Wal-Mart to its competitors, Wal-Mart reported an increase in their total revenues in the four quarters of 2014 by 1.43% yearly as shown in appendix 3 (CSI Market, 2015).the growth in revenue was below Wal-Mart’s competitors average growth in revenue of 3.17% reported in the same quarter as shown in appendix 3 (CSI Market, 2015). Furthermore, the net income for Wal-Mart in the four quarter 2014 grew year by year by 11.57% whereas most of the competitors of Walmart experienced net income contraction by -22.32% as shown in appendix 4 (CSI Market, 2015)

Organizational hierarchy and structure

The hierarchy and structure of Wal-Mart comprises of the board of directors at the top. The board of directors is made up of the independent directors and the CEO of Wal-Mart. There are also committees which report to the board and must always be at the board, and they include compensation committee, audit, nominating and governance committee, stock option, executive, finance and strategic planning committees. Each committee have their individual charters which set forth the responsibilities, goals and purposes of the committee in addition to the committee membership, committee structure, and procedures for appointment of members and removal and operations (Wal-Mart, 2015).

The leadership style adopted by Wal-Mart is transformational leadership style. The leaders of Wal-Mart are not limited to the perception of the employees or the customers. Their main objective is to transform and satisfy their customers’ needs and redirect the employees thinking. Moreover, thy challenge and inspire their employees with a sense of purpose, communicate their ideas and create the vision for them for maximum productivity (Wal-Mart, 2015).

Human source management

Recruiting and communication methods between the company and its affiliates are depending on respect, near communication, high expectation, and clear advantages. Workers receive low pay but appreciate other advantages such as insurance options, retirement methods, and stock buy plans and profit incentives (Mooradian et al 2012).

Legal and ethical issues

Despite being the largest private employer and the largest retailer globally, Wal-Mart has grabbed headline because of its infamous employment malpractices. Many ethical and legal issues arise and criticise its policies because they symbolise of wrong doings of the employer. Many legal and ethical issues that arise from Walmart include inadequate healthcare, wage law violations, anti-union stance and exploitation of workers. Altogether, in a year there about 5000 law suits against Wal-Mart or approximately 17 law suits every working day (Riper, 2005).

Technology and information systems

Wal-Mart shows how a retailer of physical products can create and even leverage data assets for efficiency in global supply chains. Tightly coordinated technology in Wal-Mart deliver mineable data assets which is superior and is unmatched in United States retail industry. The culture of Wal-Mart is built on getting most current information about the needs of the customers, ideas from employees and how to effectively run the stores. Wal-Mart has a point-of. Sale system which is a computerised system which identify every good sold, finds their prices in the databases, create a correct receipt of sales for the customers and store the sales information item by item for use in reordering inventory and sales analysis (Miller & Clifford, 2012).

Wal-Mart also applies telecommunications to connect directly its stores with the central computer system and also to the computers of their suppliers allowing better coordination and automatic reordering

Wal-Mart also uses bar-code scanners for recording the sale for every item which relays the information for sales analysis and reordering. The bar codes functions with the Retail Link, a propriety system of Wal-Mart where every scanned item automatically relays information for reordering, delivery and rescheduling. Back office scanners also assist in keeping track of the inventory as shipments from suppliers comes in (Miller & Clifford, 2012).

Environmental factors that threatens Wal-Mart’s future success

These industry environmental factors are divided into five categories, economic forces, and political/legal, technological, sociocultural and environmental forces.

Economic forces such as free trade agreements in future between United States and other countries can shape the markets. Moreover, the customers are sensitive to prices and this can affect future success of Wal-Mart if the economic forces makes the prices of goods to rise

Political/legal forces such as many law suits provides a soft ground for the competitors of Wal-Mart to inflict damage on the company’s reputation. Some of the accusations facing Wal-Mart include environmental violations, use of illegal immigrants, and violations of the child labour laws, and poor working conditions for its employees or associates. Politically, many government interventions such as governments of Canada, Oregon, Cedar Mill, California and Inglewood rejected the expansion plans of Wal-Mart. The company has also been on political headlines on political issues like healthcare, trade, discrimination and environment. Lastly, they break antitrust laws by using their power in micromanaging markets.

Sociocultural forces that could affect the firms’ future success include the issue of female workers discrimination in pay, promotions, job assignment and training. Moreover, customers are becoming more specific and keen on their purchases because of socio cultural or lifestyle tendencies.

Among the technological forces, Radio Frequency identification (RFID) is gradually gaining momentum and is expected to play a significant role in supply chain management in the near future in retail industry. Moreover, increasing pervasiveness of internet broadband access and unabated e-commerce growth in most developed countries could pose a challenge since Wal-Mat has extensively invested in technology and therefore advancement in technology could render their current technology inferior.

Lastly, the environmental forces include the multiple accusations faced by Wal-Mart resulting in fines due to violation of the environment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Appendix

Appendix 1: Income statement of Wal-Mart

 

Appendix 2: Balance Sheet of Wal-Mart

 

Appendix 3

Appendix 4

 

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