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Effectiveness of Improving Customer Service of Walmart

Apr 25, 2022 | 0 comments

Apr 25, 2022 | Essays | 0 comments


Section I: Introduction to the Organization

1.1 Corporate name, founding 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 the 1960s, Sam Walton’s strategy was to build an unshakeable foundation under the philosophy of the lowest price anywhere and anytime. Sam Walton created Wal-Mart and began operating in 1962. In 1969 Wal-Mart opened 24 stores. Through the 1970s, Wal-Mart was being traded on the stock exchange. In the 1980s, Wal-Mart opened its first wholesale club Sam’s Club. In the 1990’s Wal-Mart became the largest retailer in the U.S. They also 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 general retailing merchandise but has evolved its products and services over the years. Currently, Walmart offers a variety of products and services to its customers, 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 a bakery, fresh produce, meat, dairy products, and a deli. The Wal-Mart supercenters include specialty shops like banks and pharmacies, nail and hair salons, health clinics, vision centers, optical departments, tire and battery centers, photo centers, and restaurants (Wal-Mart, 2015).

1.4 Description of entry into new business lines

Wal-Mart entered the Mexico market in 1991, and Wal-Mart began its international expansion. They also created: Sam’s Club, their wholesale club, Wal-Mart Supercenters, which incorporates supermarkets, and most recently Neighborhood Marketplace, a neighborhood supermarket. By Wal-Mart expanding and entering into new markets, the corporation aimed to increase its sales to $400,000 billion 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 positioned Wal-Mart as the leading retailer in the United States (Roberts & Berg, 2012, p. 78). This leadership position is being challenged by its competitors, 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 the 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 competition to the brick and mortar stores, and even though consumers browse over the Wal-Mart stores, they 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 unique to the communities (Wal-Mart, 2015).

Despite Wal-Mart’s goals for its corporate strategy that may lead them to achieve its objectives, it is not certain that they will lead Wal-Mart to continuous success. The company has successfully implemented its corporate strategies. Although driven by the goals, Wal-Mart’s success has major problems arising when implementing the goals. Some of the recommendations prove to be more at the local level, where some of the company’s goals need to be implemented badly. The company’s public image needed to be addressed. The way Wal-Mart treats its employees regarding their pay scale and the 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 regarding hiring versus retaining to fill the headcount. Furthermore, the company needs to address its perception of 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 not 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 its competitive advantage, while the companies that are rigid to changes are left behind. This eventually can lead to drastic losses in profit and market share. The associates should consider their customers. Wal-Mart would not be where the company currently is today without its customer’s loyalty.

Section III: Research Question

What are the consumer perceptions about Wal-Mart’s 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 understanding the relationship between improving customer service and increasing profitability and a company’s market share will allow the researchers to see if there is a possibility of a larger effect for companies when the factors are combined. This will make Wal-Mart company more successful in the implementation of its ideal future state. Obstacles are not just corporate strategies. This study can be applied to 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 customer service will increase profitability and maintain a market share of Wal-Mart compared to its competitors, which include online retailers. The study will also explore 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 contributing 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 the relationship between improved customer service and company profitability and improved customer service to the 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 a 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, and analyze onsite and online corporate records of Wal-Mart, and government sites, among others.

The study will adopt a qualitative research method for completing the project. The qualitative research method is used to gather an in-depth understanding of information. It investigates how and why of making decisions. Therefore, smaller but focused samples 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 qualitative researchers are concerned with processes and practices rather than 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 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 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.

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 customer loyalty implies that more customers will be retained and repurchased in the future. Decker & Crisp Learning, Inc. (2001) stated that if a company has a strong loyalty to customers, it should reflect on the firm’s economic returns because it ensures a steady cash flow in the future.

According to Allen & Rao (2000, p. 116), the more the customer 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 the satisfaction of the customer increases the firm’s 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 the 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 translate to low satisfaction of the customers, and this results in higher replacement costs, higher turnover of the customer base, and because of the difficulty satisfied customers to do business with a rival, higher costs of customer acquisition. Price elasticity reduces 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 the future. If a company has 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 that satisfy customers increases a firm’s profitability and reduces failure costs. A firm that provides high customer satisfaction consistently has fewer resources devoted to reworking defective items, handling returns, and handling and managing complaints (Güngör, 2007; Decker & Crisp Learning, Inc, 2001; Allen & Rao, 2000).

According to Mohammad Hossein 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 to engage in 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 prospective buyers. Higher customer satisfaction through improved services may make media advertising more effective, allowing the company to offer more attractive warranties.

Improved customer services also enhance the overall reputation of a company. An enhanced reputation can aid in the new product introduction by instantly providing awareness and lowering a buyer’s risk trial (Allen & Rao, 2000; Mohammadhossein et al., 2014). Reputation can also be beneficial in establishing and maintaining 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 provides insulation from short-term environmental shocks. Güngör (2007, p. 229) also stated that improved customer services are important in building other significant company assets such as brand equity.

2.2       Improved customer services and the market share

Improved customer services and market share go hand in hand. Reidenbach (2010, p. 11-31) found the 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 help attract and retain customers. However, it is unclear where compatibility exists in high market share and improved customer services. Schieffer (2005, p. 116-135) and Denove & Power (2006) discussed the possibility of a negative relationship between market share and improved customer services in their studies. They argue that a company with a small market share may serve a niche market well. A large market share company must serve more heterogeneous and diverse 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 economies of scale. This, for instance, may permit the company to charge lower prices, increasing the value of the offering of the company and consequently increasing customer satisfaction.

On the other hand, there can be a dilution of efforts that goes with the attempt to serve an increasing number of customers or even market segments. The dilution may lead to low-quality services, which is more likely to occur in industries where customer preferences are heterogeneous, or even personal service is significant. However, in industries that are undifferentiated and have 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 categorized originally by Newell (2000). Companies that follow pure niche strategies are more likely to succeed in improved customer services than those that pursue other strategies. Even though companies can differentiate their products and service 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 to bring in further customers with preferences away from the target market of the company, the overall level of improved customer service 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 performance in the other. Gaining market share can be realized by attracting customers with a preference that is distant from a company’s target market. Service capabilities can also be overextended as the volume expands. Moreover, alluding to the study by Szymanski and Reidenbach (2010), the effects of market share on profitability are equally problematic. There can be scenarios where increasing one or the other cannot 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 provisions of improved customer services by customizing it is offering to every customer and maintaining a large market share would 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, Amazon Inc. and Target Corporation (TGT), which are in the same industry and experience the same problems of getting profitable and expanding their market share. Moreover, it will examine the solutions implemented by Amazon and Target Corporation (TGT) to improve their 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 with over 142 million people in the U.S registered as Amazon Prime Members that sell lots of merchandise like Walmart. Founded in 1994, Amazon was first publicly traded in 1997 and made its first profit in 2001 (Stone, 2013, p. 10). The company started as a major internet retailer solely of online books. Because of its success, the company diversified into other services and product lines until today, where it is the largest online retailer in the world.

According to Goldman (2011, p.332), Amazon invested a lot of money and lost a staggering amount to grasp market share and build its brand to the position 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 is 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 its customers, and it seems the customers also like it. According to Rossman (2014, p. 171), Amazon has a history of taking its customer service policies to extreme lengths, and, therefore, it was not a surprise that it surpassed Apple Inc. As the most trusted company in the United States.

However, being the most trusted company should not be confused with a company’s profitability. As much as Amazon ousted Apple, Apple still gets 46 times more profit than Amazon (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 plowing back its profits into the company and focusing on long-term growth. This implies no or little profits but an astounding market size 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 its obsessive services to customers.

1. Building warehouses in different regions

According to Stone (2013, p. 36), a few giant warehouses 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 spread across 19 states in the United States with more plans for constructing more. Many warehouses in the United States allow them to provide cheaper and faster delivery to many customers. More warehouses also imply more locations and an extended holiday season for buyers to pick up their purchased products.

2.         Getting more personal with 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 bring the product to the warehouses in your area so that the customer can get them much faster when they order (Goldfayn, 2011, p.16).

3. Prime Air

To continue offering better customer service, Amazon announced their plan for “Prime Air,” which will be the company’s unmanned aerial vehicles service that 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 items often repeatedly ordered, such as foodstuffs, toiletries, and diapers, among others, Amazon offers the easiest subscription. When combined with one-click ordering, this easy subscription makes it more convenient and easy for customers to get their essentials (Rossman, 2014, p. 22).

5. The policy of Lax Return

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

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 is found everywhere, troubleshooting in chat rooms, blogs, and everywhere there is a problem. Moreover, it is just not available, but the team can solve problems

7. Using technology to offer customer services

Amazon also used several strategies to turn its Iron customers into Gold clients. Initially, Amazon Company focused on getting any book that its customers needed. However, it started developing individual customer profiles as a winning strategy after establishing its ability. After a customer buys an item from Amazon, the company builds its information databases based on the customer’s preferences. Whenever a customer ordered a book, the Amazon database produced a list of books on similar topics and from the same author that could expand purchases. According to Zeithaml, Rust & Lemon (2001, p. 118-142), the suggestions 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 about the new products through their emails. This way, Amazon communicated with their clients about their interests (Zeithaml, Rust & Lemon, 2001, p. 118-142).

(2) Target Corporation (TGT)

Target Corporation (TGT) is a discount retailer in the 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 on convenient shopping with prices that are discount competitive. Currently, the corporation remains steadfast in providing its guests a one-stop-shop experience for delivering outstanding value and differentiated merchandise with its “Expect 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 and household essentials. Home furnishings and décor, apparel and accessories, groceries, pet supplies, among others. Moreover, it offers several services, including a pharmacy, Target Optical, a Walk-in clinic, portrait studio, photo center, in-store pickup, and Target REDcard, among others (Target, 2015). However, just like other major retailers in the United States, Target Corporation (TGT) faces the problem of profitability and market share. However, the corporation has recorded robust financial profitability compared to its marketing strategies and improved customer services (n.a, 2004). Some of the improved customer services that have 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 a high-end atmosphere to its 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 the United States because it has major designers designing product lines just for the corporation. They see their upscale discounter images focus on enhancing and building their brand personality, with the ability to target better 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 regularly shop at TGT. Moreover, 80% are under the age of 40, have a college education, and are in the middle of the 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 are not sensitive to prices (Target Corporation, 2000, p. 19).

4. Online customer services

Customers who cannot physically go shopping at the TGT stores can shop online. Moreover, these tech-savvy buyers can search and review products online. The Target Corporation (TGT) platform allows customers to see where TGT contributes their money, such as charities, donations, and corporate social responsibilities.

Moreover, they have a mobile app that notifies customers of updates, the latest news, sales, deals, coupons, and many more. They also act on 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 shops with them, their Target shopping trip is exciting and enjoyable. They perform this through friendly services from their team members willing and ready to assist with the customer’s shopping list. Moreover, their shelves are fully stocked and 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 the 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.

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


Section 1: Current Company Operations

Financial aspects of Walmart

(a)   Income statement

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

(b) Balance sheet

Even though, 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 not had 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, inventory levels relative to the cost of sold goods are typical for the industry but have demonstrated a consistent rise for the past four years. This means a potential efficiency loss or pricing power, as shown in appendix 2 (Wal-Mart, 2015).

(c)    Wal-Mart’s competitors

Comparing the results of Wal-Mart to its competitors, Walmart reported an increase in its total revenues in the four quarters of 2014 by 1.43% yearly, as shown in appendix 3 (CSI Market, 2015). the revenue growth was below Wal-Mart’s competitor’s 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 a net income contraction of -22.32%, as shown in appendix 4 (CSI Market, 2015)

Organizational hierarchy and structure

The hierarchy and structure of Wal-Mart comprise the board of directors at the top. The board of directors is made up of independent directors and the CEO of Wal-Mart. Some committees report to the board and must always be at the board. They include the compensation committee, audit, nominating and governance committee, stock option, executive, finance, and strategic planning committees. Each committee has its charters which set forth the responsibilities, goals, and purposes of the committee in addition to the committee membership, committee structure, and procedures for appointing members and removal and operations (Wal-Mart, 2015).

The leadership style adopted by Wal-Mart is transformational. The leaders of Wal-Mart are not limited to the perception of the competitive advantage. It revolves around being hardworking and putting the customer first. Employees or customers. Its main objective is to transform and satisfy its customers’ needs and redirect internal marketing and interactive marketing. The service triangle is premised on organizations attending to their employees’ thinking. Moreover, they challenge and inspire their employees with a sense of purpose, communicate their ideas, and create a vision for them for maximum productivity (Wal-Mart, 2015).

Human source management

Recruiting and communication methods between the company and its affiliates depend on respect, near communication, high expectation, and clear advantages. Workers receive low pay but appreciate other advantages such as insurance options, retirement methods, 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 headlines because of its infamous employment malpractices. Many ethical and legal issues arise and criticize its policies because they symbolize the employer’s wrongdoings. 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 were about 5000 lawsuits against Wal-Mart, or approximately 17 lawsuits 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 delivers mineable data assets that are superior and unmatched in the United States retail industry. The culture of Wal-Mart is built on getting the most current information about the needs of the customers, ideas from employees, and how to run the stores effectively. Wal-Mart has a point-of. A sale system is a computerized system that identifies every good sold, finds its prices in the databases, create a correct receipt of sales for the customers, and stores the sales information item by item for use in reordering inventory and sales analysis (Miller & Clifford, 2012).

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

Wal-Mart also uses bar-code scanners to record every item’s sale, which relays the information for sales analysis and reordering. The bar codes function 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 come in (Miller & Clifford, 2012).

Environmental factors that threaten Wal-Mart’s future success

These industry environmental factors are divided into five categories, economic forces and political/legal, technological, and socio-culture shock upon arriving in the United States. These students must understand the cultural and environmental forces.

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

Political/legal forces such as many lawsuits provide 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, the use of illegal immigrants, violations of child labor laws, and poor working conditions for its employees or associates. Politically, many government interventions, such as the governments of Canada, Oregon, Cedar Mill, California, and Inglewood, rejected the expansion plans of Wal-Mart. The company has also been in political headlines on political issues like healthcare, trade, discrimination, and the 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 shortly in the retail industry. Moreover, the 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. 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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