Research Korner: Wal-Mart Corporation

THESIS CHAPTER 2 ON THE ROLE OF GLOBALIZATION IN THE CONSTRUCTION OF GLOBAL BRAND ENTITIES

CHAPTER 2 Review of Related Literature If we learn anything from the history of economic development, it is that culture makes almost all the difference (Harrison and Huntington, 2000). Yet culture, in the sense of the inner values and attitudes that guide a population, frightens scholars. It has a sulfuric odor of race and inheritance, an air of immutability. In thoughtful moments, economists and other social scientists recognize that this is not true, and indeed they salute examples of cultural change for the better while deploring changes for the worse (Harrison and Huntington, 2000). But applauding or deploring implies the passivity of the viewer--an inability to use knowledge to shape people and things. The technician would rather change interest and exchange rates, free up trade, alter political institutions, manage. Besides, criticisms of culture cut close to the ego and injure identity and self-esteem (Harrison and Huntington, 2000), not only on the individual level but on an entire country. Because culture and economic performance are linked, changes in one will work back on the other. Global branding propelled by the economic activity of globalization paved the way for an integrated market that crosses cultural borders. As such, the focus on the local brands had been diminished and dwarfed by the multi-national companies who are more powerful in terms of brand recall and financial stability. Thus, their ability to manipulate cultural preferences is enhanced. Issues such as national identity and local fashion culture had been the main argument against the entry of global brands in the local market. However, its inevitability is in the offing. Klamer (1996) contended that his impression that the standard economic approach to national identity is a mess. It wobbles between the assumption of irrelevance of nationhood to rational behavior of firms, families and governments and implicit nationalism (national income, national competitiveness, and so on); between reduction of national identification to maximization of wealth or welfare and non-economic explanation, and between seeing nations as bearers of modernization and as primitive, anti-capitalist forces (Klamer, 1996). Further, the mess is unwarranted, since economic science in the sense of political economy contains the intellectual credentials and advanced tools of analysis to indigenize national identity and to enrich both its own stock of knowledge and the insight of the public (Klamer, 1996). Ferguson’s (1992) central premise about media globalization and nations in particular espouses that a globalist market need not necessarily be contained on a cultural universalism but rather, the reality would remain that there will always be economic nationalism. As such, there is no actual economic anarchy but a competitive economic nationalism focused on information and cultural industries that drives global capitalism into the twenty-first century (Ferguson, 1992). Such contradictions point to continuing problems with beliefs about globalization as the definitional force majeur of late-twentieth-century life. Nations and nationalism, like ethnics and tribalism, far from dissolving into a system of impersonal economic or technological forces or culturally fragmented spheres, have rarely been as visible or potent (Ferguson, 1992). The counter-arguments from globalist true believers, even critics, cite media technology, popular culture, markets, and consumption flow data as irrefutable signifiers of a more interdependent global capitalist system and consumer marketplace (Ferguson, 1992). However, when we look behind the rhetorical curtain of market globalism, we find neither the material condition nor its assumed impact to be as inevitable or universal as alleged. Globalism and localism co-exist in the 1990s in a context of transnational economic interdependence fed by direct foreign investment (DFI), common patterns of material and cultural consumption, and a pervasive, global information and entertainment system of satellite, computer, cable, VCR, telephone, fax, television, and digital technologies (Ferguson, 1992). The Language of Clothing An individual's clothing expresses meaning, contrary to what others saw as "a picture is worth a thousand words" and generally concede that dress and ornament are elements in a communication system. Social scientists recognize that a person's attire can indicate either conformity or resistance to socially defined expectations for behavior (Rubenstein, 1995). Writing on the changes that occurred in the early part of the nineteenth century in London and Paris, Richard Sennett (1974 cited in Rubenstein, 1995) pointed out that standardized modes of dress offered a protective "cover-up" at a time when the distinction between private space and public space first emerged. When one lived and worked among strangers rather than family members, there was a need to protect one's self and one's inner feelings. Wearing the expected mode of dress enabled individuals to move easily among the various spheres of social life(Rubenstein, 1995). There has always been some awareness of the role clothing plays in social life but the ways in which visual images direct, affect, and reflect societal, cultural, and personal discourse have not been fully appreciated. In his article "Fashion," George Simmel ( [1904] 1957 cite in Rubenstein, 1995) observed that fashion, the latest desired appearance, allows for personal modification, enabling the individual to pursue competing desires for group identity and individual expression. There is no institution, "no law, no estate of life which can uniformly satisfy the opposing principles of uniformity and individuality better than fashion." The self is also an audience, and clothing allows individuals to view themselves as social objects. By extricating the self from a setting or situation, the individual can scrutinize the image he or she presents in view of the social response that is desired. This separation and objectification, in turn, allows the individual to correct the image if necessary (Rubenstein, 1995). Although thrones, crowns, and pageantry are mostly gone, and the structure and expression of social life have changed, the inner necessities that animate social life have not (Rubenstein, 1995). Clothing signs enable a political authority, such as the police, to define itself and advance its claims. In the form of a visual image that transmits meaning, a clothing sign provides the cultural frame within which the political authority can function. Required attire, clothing signs specify a range of feelings and behaviors that are expected (Rubenstein, 1995) Familiarity with these images makes the existence of clothing signs inconspicuous, often too mundane to be consciously noted. More likely to be noticed are changes, increases or decreases, in the use of clothing signs (Rubenstein. 1995). Clothing symbols may also be misinterpreted and their meaning trivialized. Clothing symbols are an important component of a people's cultural heritage (Rubenstein, 1995).   The Emergence of Fashion Culture Rubenstein (1995) outlined the emergence of a fashion culture by tracing it to the early royalties. The court of Philip the Good, duke of Burgundy (d. 1467), is considered "the cradle" of fashion. Philip exploited the resources available in the territory he controlled to create new clothing styles. Until this time Paris had been the center of luxurious court dress. As mentioned, the International Gothic Style had been generated in Paris in about 1380, and attire in this style was worn in many of the courts in Europe, which were connected through a complex system of politics and marriage. After the beginning of the fifteenth century, however, Paris was eclipsed as the center of court dress by the court in the northern French duchy of Burgundy. This area lay along the spine of Europe, directly within the Mediterranean trade route for goods being transported to the North Sea and England. 3 People, talent, and commodities flowed into its markets. Members of the court took increased interest in their clothes, adorning themselves with elaborate costumes to display wealth and an awareness of style (Rubenstein, 1995) In the post-Civil War years, the boundary between youth and old age began to break down. The separate forces of feminism and the commercial beauty culture were behind the changes in society's perception of older women (Rubenstein, 1995). Fashion magazines and beauty advice books recommended that women of all ages should be permitted and even encouraged to look as young as they wished (Rubenstein, 1995). Fashion urges people to deconstruct the cultural attitudes that had been with their society for a long time. The fashion industry urged people to transform their clothed appearance in accordance with a set of quite traditional body ideals and signifiers of femininity, marketed to them as entirely new (Maynard, 1995). For instance, these ideals, spelled out via a rhetorical language and imagery expressing ideas about women's individualized sexuality and self-fulfillment, were conceptualized in the fashion for the 'New Look'--a style nevertheless redolent with references to the upper-bourgeois fashions of the late nineteenth century (Maynard, 1995). The style constituted part of the historical shifts marking out feminine desirability, increasingly defined during the 1930s and 1940s in terms of the dynamics of heterosexual attractiveness. The new femininity of 'sex appeal', and its 'Look', was significant in that it signaled changes to the ideals of femininity of previous decades, towards more modern incitements to sexual pleasure, especially suited to youthful consumers (Maynard, 1995). The style in question, initially conceived by the couture industry in Paris, and later given the label of the 'New Look' by the Americans, was a deliberate and nostalgic evocation of the luxury of the Belle Epoque in the years leading up to the First World War (Maynard, 1995). Picture Post, in 1947, described in glowing terms this vanished era which the 'Look' recalled. The new lavish use of furs, brocades like shimmering moonlight, glittering gold, silver and pearl-encrusted embroidery, and rustling taffetas, covered with cobweb fine lace, marked a return to the days when fashion was the prerogative of the wealthy, leisured woman and not the everyday concern of the typist, saleswoman, or housewife (Maynard, 1995). The American and World Culture There is a good chance that you or someone close to you is wearing clothing imported from Latin America. A quick check of the label may reveal that it is a shirt from the Gap made in Honduras, a pair of Lee Ryder jeans made in Brazil, Bali underpants made in Guatemala, a Levi's golf shirt made in the Dominican Republic, or a Haggar sports jacket made in Colombia (Figueroa, 1996). Garments produced in Latin America and imported into the United States represent a growing segment of the U.S. clothing market. As industry analysts, business people and, increasingly, workers, realize, such a development is by no means accidental. It is the product of a search for higher profits by U.S. apparel companies, by some of their competitors like Korean-owned contractors, and, above all, by large clothing buyers such as Wal-Mart and Macy's at the expense of low-wage labor in Latin America. It is also the product of trade policies and political decisions adopted by the U.S. and Latin American governments (Figueroa, 1996). Clothing is big business. In the United States, wholesale apparel sales were $78.4 billion while retail sales were $211 billion in 1994.1 There are about 30,000 clothing manufacturers in the United States, which employ over 800,000 production workers in this country (down 30% from the mid-1970s). They directly or indirectly employ at least 400,000 people overseas. More textile and apparel is produced and sold today in the United States than at any other time in the nation's history (Figueroa, 1996). The U.S. clothing market, one of the most attractive in the world, has become the final destination for an increasing amount of apparel assembled overseas, much of it in Latin America. Imported clothing represented 66% of total sales in the U.S. clothing market in 1992 compared to only 28% in 1973. Likewise, textile imports have grown from 5.8% of the U.S. market in 1973 to 21.7% in 1992.2 The share for garments imported from Latin America under special duty-free tariff programs has increased from 3.9% of the U.S. clothing market in 1970 to 16.7% in 1993 (Figueroa, 1996). The industry throughout the Americas is undergoing significant changes, which have produced clear winners and losers. Increased market integration -- in the wake of neoliberal economic restructuring and "free-trade" accords -- means that a particular country's role in the industry is determined to a large extent by the size of its domestic market, its level of industrialization, and its access to modern technology (Figueroa, 1996).   Branding Branding creates attachments between consumers and brand: the stronger the attachment, the better the branding. Nothing connected with "branding" should surprise anyone any more (Frank, 2001). Whenever the word is spoken, it seems, there instantly follows some scarcely believable anecdote of corporations expanding, metastasizing, covering more and more of our world and our culture, putting their mark in some unthinkable new spot or on some inviolable hero, ransacking the temples of art, laying claim to the legacy of the historical avant-garde, to that of religion, of bohemia, of the civil rights movement, of the left itself. We ride in subway cars whose every surface promotes an allergy remedy or the offerings of a TV network. We hear of "masterbrands" and "megabrands" (Frank, 2001).  And the claims attached to brands grow constantly: no longer simple guarantees of quality, brands are now thought to have a more high-minded aspect (Frank, 2001). The brand was everything, the very foundation of economic life. The brand was all that would survive, zealously protected and polished by a core of managerial workers, while the physical operations of the corporation were "outsourced" to those lands where people work for next to nothing (Frank, 2001). The most important thing to understand about integrated branding is that it is a model for building the most important asset any company has--its relationship with its customers (Lepla, 1999). If you understand that your best customer is the one you already have, then creating a rational system for deepening customer relationships is the logical next step (Lepla, 1999). Basing your product or service offerings on an integrated brand allows your organization to develop more saleable products over the long term by keeping it focused on your strengths as an organization. This focus opens it to new possibilities by broadening the corporate aperture from looking at what you are producing right now to looking at the bigger picture. Seeing the big picture is an essential prerequisite to company longevity. Strategy based solely on current product or service uniqueness ultimately results in decreasing market share, lower margins, missed opportunities, and price wars (Lepla, 1999).Integrated branding helps companies understand who they are and how to use that knowledge consistently to create better results. As with all worthwhile change, the process takes some investment in time and elbow grease up front, but results in a huge payoff (Lepla, 1999). Brand breadth is a function of not only the number and variability of products represented by the brand but also of the strength of association between the brand and the products it represents (Dawar, 1996). The strength of association is reflected in the retrievability from memory of product associations. This, in turn, influences the evaluation of fit of brand extensions. Two types of brands were studied: those with a strong association to a single product (and weaker associations with other products) and those with strong associations to multiple products. Results from an experiment showed that for brands with a single product association, brand knowledge and context interact to influence evaluations of fit for extensions to products weakly associated with the brand. For brands strongly associated with more than 1 product, context influences evaluations of the fit of brand extensions (Dawar, 1996). Given the importance of these associations, brand-extension researchers are now focusing on acquiring a deeper understanding of how cognitive representations of brands influence the evaluations of the fit of extensions with the original brand (Dawar, 1996). Park, Milberg, and Lawson ( 1991 ) reported that perceptions of brand-extension fit depend not only on similarity of product-based aspects, such as features or attributes, but also on the consistency of the extension product with an abstract mental representation, such as the brand-name concept. Primarily, branding starts with the effective use of media as an advertisement tool. Cultural diversity and the penchant for global fashion are increasingly reinforced in the media. Preferences for clothes, accessories and other fashion items rest on how a product is shown and perceived by the consumers around the world. Thus, fashion advertisements are not only focused on a specific market but rather on the global market by universalizing their product and thus their brands. The potential influence of globally shared television images, the informational power of the Internet, or how displays of popular culture artifacts or consumer goods proffer modes of articulation for sharing surface identities based on styles (Ferguson, 1992).   Being, first of all, a pragmatic market instrument, ads have an important side effect: they reproduce dominant ideologies, social structure, power relations and a global cultural. The products consume by individuals are wide spread markers of their social status, and they can be analyzed as second-order signs, in Barthes's terms, or to put it another way, as myths of consumer society: goods are imagined as magic latchkeys, letting one to come into the dream world (Ross, 2000). Fairytale narrative in a 30-second advertisement. Role of advertisements in socialization and construction of identity; representations of males and females and construction of their subject positions in advertisements (Ross, 2000). New brand extensions are generally supported by substantial communication efforts to build on existing product associations (Dawar, 1996). For brands with a single strong product association, and for extensions close to that product, communication could cue either the strongly or the weakly associated product. However, if the extension is close to the weakly associated product, context cues should primarily focus on it, especially if the target consumers are knowledgeable about the brand. Activating the strongly associated product would be a mistake in this communications should cue the product close to the extension product in order to maximize consumer perceptions of fit (Dawar, 1996). Dawar (1996) argued that the proximity construct refers to the distance of extensions from the brand concept. The strength of brand-product association was used to refer to the relation between the brand and its associations with existing products. However, empirically in psychological research, the two constructs are often treated similarly in that both distance and strength of association are measured using response latency. We believe these two constructs are independent and can be tapped using different measures. In this study we used response latency measures to determine strength of association and a card-sorting task to determine proximity-distance. Future research could provide additional insight into the orthogonality of these constructs by crossing levels of the two constructs. The memorability of a brand name and of copy items in print ads is enhanced by relations between the element to be remembered and other ad elements (Millard and Schmitt, 1993). Differences in brand-name memory were stronger on unaided recall measures than on brand-name recognition or brand-name matching measures. As argued before, this result suggests that interrelations among ad components are especially valuable for retrieval processes (Millard and Schmitt, 1993). It could be argued, however, that related ad elements provide redundant information which allows for guessing; that is, if an individual is exposed to the same information three times, then he or she has to remember less information than when three different items of information are presented. We believe, however, that it is not clear how an individual could find information to be redundant without noticing the relation between the two concepts that supposedly constitute redundancy. That is, more fashion-conscious consumers may be more practiced in remembering brand names and brand characteristics and therefore may have a strategic advantage in learning them   Consumer Behavior Research in consumer behavior has provided many insights into how consumers respond affectively and make behavioral commitments to items within a set of alternatives such as brands of toothpaste or makes of automobile. However, consumer researchers have rarely gone beyond the selection or preference stage Previous work in consumer research has left questions concerning the duration of consumption largely unexplored and, in particular, has neglected the possible role of emotions in determining the length of time that consumers devote to consumption experiences (Gardner and Holbrook, 1993). Gardner and Holbrooks’ (1993) study on the effect of advertisement on radio and television proposes an approach to investigating these questions and illustrates its application to the context of examining the connection between emotional responses and listening receptivity to music. In an individually administered listening task, 58 subjects listened to these musical selections in different random orders for as long as they wanted before rating their feelings on the Affect Grid. Listening time was measured unobtrusively when rewinding the tapes between sessions with subjects. As hypothesized, the results show that log (tempo) strongly affects arousal, that listening time follows a nonmonotonic relation which peaks at intermediate levels of arousal, and that these peaks shift from left to right as pleasure increases. One of the major sources of value created by a brand lies in the memorial associations consumers have for products sold with that brand brand-building efforts that seek to develop greater brand awareness and foster favorable brand attitudes among consumers. A brand that is strongly associated with a particular product category will often enjoy substantial success in that category because it can effectively isolate itself from competing brands (Williams, 1992). Farquhar’s (1996) research investigated how a consumer's cognitive structure for a brand in a given product category affects the possible transfer of associations to other product categories. One key factor in evaluating such possible brand extensions is dominance, which can be defined as the strength of the directional association between the parent category and the branded product (Farquhar, 1996). Likewise, another important factor is the relatedness of the brand's parent category and the target category of the proposed extension. The 1st experiment measured dominance and relatedness via response latencies to recognize brand extensions. The 2nd experiment demonstrated that consumers' affect for strongly category-dominant brands (a) transfers better to an extension when the proposed extension is closely rather than distantly related to the parent category and (b) transfers better than a weakly category-dominant brand's affect. Together, the research demonstrated that consumers' response times to disconfirm the existence of product-brand pairs is related to their transfer of affect from the brand to the proposed product category. This disconfirmation method could be used as an unobtrusive measure for determining brand boundaries. The attractiveness of potential brand extensions may thus be determined without consumers making any judgments about a proposed extension other than answering whether or not it exists (Farquhar, 1996). Farquhar’s (1996) results support the assertions in H2 about consumers' ability to learn new associations. Subjects were better able to recall the proposed extension for strongly category-dominant versus weaker brands, and for closely versus distantly related target categories. The main effect of category dominance on recall may have been greater if we had chosen brands with greater separation in the parent categories. The rather distant target categories selected probably contributed to the strong main effect for intercategory relatedness.  On the other hand, the affect transfer patterns across categories do not mirror the recall data for learning new associations. Dominance and relatedness interact only for affect transfer. Although there are strong main effects for both dominance and relatedness, the affect associated with a strongly category-dominant brand transfers to an extended product best when the target category is closely related to the parent category. Thus, attitude differences are not due simply to subjects liking only what they could recall; rather, the brand transfers its associated affect across categories. Nevertheless, there is a limit to how far the brand can be stretched--the target category must be closely related to the parent category (Farquhar, 1996). In general, the relational model in that consumers' learning and liking of proposed brand extensions are influenced by two factors: the dominance of the brand in its parent category and the relatedness of the parent category to the target category of the proposed extension. Learning new associations for brand extensions is easier for (a) brands that are strongly (vs. weakly) category dominant and for (b) target categories that are closely (vs. distantly) related to the brand's parent category. It also demonstrated that the affect associated with strongly category-dominant brands transfers to an extension primarily when the target category is closely related to the parent category. Finally, controlling for category dominance, consumers' response latency to disconfirm the existence of a hypothetical extension is inversely related to the affect transferred to the extension (Farquhar, 1996). From a managerial perspective, a strong category-to-brand association is both a blessing and a curse. Strongly category-dominant brands have widespread customer recognition and often enjoy substantial market share. But this strength in the parent category may also limit the brand's direct extendibility to other product categories. A strong category-to-brand association appears to restrict a brand's ability to transfer affect across categories, underscoring the need for caution in extension decisions for brands that might appear to be natural platforms for building equity.   Psychology of Global Fashion Culture Perhaps, the main issue in global branding, psychology of the consumers has been the main culprit in the establishments of global brands. Radford (1993) first revealed the hazards of psychological perspectives of fashion when they are detached from any recognition of the complex particularities of social and historical patterns. But secondly I hope to show how this psychoanalytic approach, far from maintaining any position of scientific objectivity, in fact reflects disguised misogynistic and hornophobic currents of thought, prevalent within a given social ideology. Fashion has throughout history been exposed to a constant didactic of disapproval. Indeed the emergence of fashion as a topic for comment in the first place seems to have arisen from the desire to censure it. Whether the complaint is against excessive show of wealth or against sexual immodesty, whether the appeal emanates from the values of Christianity or Humanism, the sins of pride and lust (note the church Latin for lust is 'luxuria") are accusations which are inextricably woven into the history of fashion. So it is perhaps not so surprising, then, that psychology should be drawn into collusion with the puritanical and patriarchal aims of post-Second World War American ideology, in supplying a more modern basis for constraining self-expression in terms of fashion and personal appearance, by marginalizing fashion as potentially deviant and dangerous (Radford, 1993).   REFERENCES Dawar, Niraj, Extensions of Broad Brands: The Role of Retrieval in Evaluations of Fit, Lawrence Erlbaum Associates, 1996 Dawar, Niraj, Extensions of Broad Brands: The Role of Retrieval in Evaluations of Fit, Lawrence Erlbaum Associates, 1996 Farquhar, Peter, Impact of Dominance and Relatedness on Brand Extensions, Lawrence Erlbaum Associates, 1996 Ferguson, M. (in press). Media globalization: Myths, markets and identities. London: Sage. Figueroa, Hector, In the Name of Fashion: Exploitation in the Garment Industry, North American Congress on Latin America, 1996 Frank, Thomas, The big lie. The Guardian, July 9, 2001. Available at http://media.guardian.co.uk/Print/0,3858,4218121,00.html Gardner, Meryl, and Holbrook, Morris, An Approach to Investigating the Emotional Determinants of Consumption Durations: Why Do People Consume What They Consume for as Long as They Consume It?, Lawrence Erlbaum Associates, 1993 Harrison, Lawrence, and Huntington, Samuel, Culture Matters: How Values Shape Human Progress, Basic Books, 2000 Klamer, Arjo, The Value of Culture: On the Relationship between Economics and Arts, Amsterdam University Press, 1996 Lepla, Joseph, Integrated Branding: Becoming Brand-Driven through Companywide Action, Quorum Books, 1999 Maynard, Margaret, The Wishful Feeling About Curves': Fashion, Femininity, and the 'New Look' in Australia, Oxford University Press, 1995 Millard, Robert and Schmitt, Nader, Memory for Print Ads: Understanding Relations Among Brand Name, Copy, and Picture, Lawrence Erlbaum Associates, 1993 Radford, Robert, Women's Bitterest Enemy': The Uses of the Psychology of Fashion, Oxford   University Press, 1993   Ross, Cassandra, Seeing Ourselves: An Analysis of Ideology and Fantasy in Popular Advertising, Queen's University Film Studies.   Submitted to Jean Bruce for FILM 231*: Media and Society I, December 2000 Copyright © 2000   Rubenstein, Ruth, Dress Codes: Meanings and Messages in American Culture, Westview Press,1995

THESIS CHAPTER 2 ON THE ROLE OF GLOBALIZATION IN THE CONSTRUCTION OF GLOBAL BRAND ENTITIES

CHAPTER 2 Review of Related Literature If we learn anything from the history of economic development, it is that culture makes almost ...

Governance and Management of Distribution Strategy of Wal-Mart

Governance and Management of Distribution Strategy     INTRODUCTION               Nowadays, in today’s top performing business, distribution strategy is an essential factor to really reach the purpose of business operations and management and make the products and services known to the global market because of having effective distribution strategy. The fulfillment of the process can be linked towards such distribution channels and resources in order for organizations to truly actualize and execute proper governance and management of distribution strategies being used. The assessment then will be pointing towards certain issues of governance and management in the distribution strategy as well as distribution channels in support with comprehensive literature studies through such critical evaluation of the process involved. Thus, the business organization in focus then will be Wal-Mart, due to the fact that their business environment centers on the process of distribution and that such related governance and management of certain distribution approaches is relevant factor for operation effectiveness within markets. Then, analysis of information and content should be seen and applied for a complete understanding of the situational value that can be affected by the reality imposed by modern distribution structures in review to technology within the evolution of global market stance.       CRITICAL ASSESSMENT   Development of Effective Distribution               The development of effective distribution approach has affected the ways Wal-Mart distributes products and services in such collaboration to the suppliers as directly as possible helping in promote satisfaction of the consumers (Cited from, Carroll and Siguaw, 2003). Although there can be presence of price disparities among the distribution channels of Wal-Mart which shaped the perceptions of shoppers who are now shopping around for better deals through online process (Cited from, Murphy et al., 2006; Thompson and Failmezger, 2005). However, by setting consistent governance management across distribution channels, Wal-Mart can assure its customers of better distribution ways that provide such effective products in lieu to theoretical perspective of channel equality. The primary contribution allows accurate picture of such Wal-Mart distribution process that can be based on the issues of ample market distribution. Aside, there can be distribution strategies in the market in light of major strategic and legislative developments taking place. In order to explain the changes in distribution it is necessary to provide context, thereby demonstrating the central role which distribution strategy is playing in the marketing plans of Wal-Mart along with its indication of globalization, a touch of internationalization of market values from within.        Wal-Mart Distribution and Factors for Managing Distribution             Thus, for majority of Wal-Mart distribution has been and still is led by the requirements of the distributors or the strong product orientation of the providers. In context the customer has no role to play and will result in such disillusioned public which is skeptical in the business industry. Thus, on the other side distribution strategy can be influenced by disclosure as known as the significant amount of price and cost information within the business domain as such providers and channels will become a commonplace. The implications for distribution strategy are related to customer retention, the need to provide added value through the distribution process itself and the extension of the process to allow the customers’ time to take effective decisions. Direct sellers and tied agents will need to satisfy customers that the products and services from their company really are appropriate for the customer’s needs, while Wal-Mart management will need to capitalize on their unique proposition of being able to linked in the market strategically and provide bespoke solutions for individual shoppers, the customers. Furthermore, key success factors for managing distribution can be as follows: -       control over the Wal-Mart sales teams in terms of time management and customer targeting -       Wal-Mart customer relations – the development of long term customer relationships like on single product sales -       improved productivity at Wal-Mart             Meanwhile, players in the market will need to maximize productivity from existing customers, particularly given the fact that the cost of acquiring new customers will be increasing. It is no longer appropriate for distribution to be treated as a short-term and tactical issue because it is inextricably linked with the longer-term customer retention policies. Wal-Mart networks are expected to change and the more successful will take a proper customer-oriented franchise approach. At present such networks have been constructed to provide shelter for unviable business partnerships which benefits from effective market positioning and complete consistency in operation. As Wal-Mart can comprise tailored one stop service, simple and complete product presentation and customer acceptance. They have set new standards in customer relationship building and servicing which are light years ahead of most existing banks and life companies. In their part of the market, which is likely to extend into more and complex products and advice as time passes, they will be formidable benchmark. The low cost base provides enormous scope to compete from business directions particularly price and the existing providers and advisers ignore the direct writers at their peril.      Wal-Mart Global Business               Today’s changing global business requires Wal-Mart to develop better approach to global manufacturing operations and of its particular importance is the interaction between logistics and manufacturing activities. As Wal-Mart business continues to globalize, effective governance of distribution is essential to the long-term success of Wal-Mart Company in the area of constant business innovation. Moreover, the process that embraces the effectiveness of the global distribution caters to ample potentials of such global companies within its desirable and better valued logistics programs and business putting such significant competitive advantage over other sectors involved in the process of distribution success (Cited from, Richardson, 1995). Thus, there indicates that certain global distribution perspectives as well as logistics participation can be deemed essential in carrying useful strategic weight that are nice execution of the logistics power by stable companies. Meanwhile, by means of upright logistics mechanisms in believing that improved strategic vision will be handled suitably to clearly define such roles and objectives of global logistics utility as being contributed directly to economic profitability and strong performance in the global market sense (Cited from, Bowersox et al., 1990).       Governance and Management of Distribution at Wal-Mart               In addition, distribution strategies must reflect that Wal-Mart is just simply good in operations with increased customer satisfaction within physical distribution of products from within. Although costs and customer satisfaction may be measurable across industries, the concerns, problems and challenges of international distribution are often unique to Wal-Mart industry as noted cited (Cited from, Christopher, 1993, p. 260; Wood, 1993 p. 56). Wal-Mart distribution is regarded as one of the most critical determinants of business success within unbalanced economic development reflecting visible factors of fragmented distribution with presence of management value and ways of getting more sales. Therefore, beyond situations, Wal-Mart will have to face bureaucratic restrictions that prohibit them from legally importing, selling, and servicing products in straightforward manner. There have been strong demands of distribution and logistics services should lure greater investments into the distribution and logistics sector.               Managing the process of distributive governance lies at the core of business in practice of global relations. (See, Hedley) There agree that the problems associated with distribution issues are growing in scope and often appear inadequate to manage Wal-Mart as distributive governance and management does not replace business authority to develop sanctions for governance and to condition management expectations of appropriate marketing conduct. (Cited in Krasner, International Regimes, p. 1) To begin, Wal-Mart networks contribute to establishing international policy agenda and offer mechanisms for developing global business policy. Second, the Wal-Mart networks facilitate the process in negotiating and setting global standards in specific issue areas. A third key role global networks play is in the development and dissemination of market knowledge that is crucial to addressing business challenges. They also contribute to the creation, deepening, and effective regulation of global markets and to the provision of innovative mechanisms for implementing global agreements in specific issue areas. Finally, Wal-Mart networks try to address the participatory gap that afflicts current international institutions by creating inclusive processes that build trust and social capital through effective distribution interaction. Wal-Mart adaptability allows them to influence the international distribution process as new management issues does emerge. With little institutional legacy to overcome, such distribution channel at Wal-Mart can influence global business governance efforts as new operation issues for instance do become part of the international business agenda of Wal-Mart, particularly related to Wal-Mart corporate governance as focus on economic effects of Wal-Mart system in impact to domestic policies of involved country for business.               There normally combine strong measure of protection for shareholder interest while balancing management interests regulating Wal-Mart's exposure to financial and other risks and ensuring that stringent procedures for internal and external auditing and fiscal transparency are in place. From Wal-Mart's perspective, the emerging consensus is that corporate governance is about maximizing value subject to meeting the corporation's financial and other legal and contractual obligations. This inclusive definition stresses the need for boards of directors to balance the interests of shareholders with the employees, customers, investors, and communities upon achieving a sustained value for distribution systems.               The construction of distribution standards is aided by the guidance given by broadly based private and public international organizations. Although not exercising the legal authority of national governments, such institutions are not burdened by the controversies associated with existing national patterns of corporate governance and provide national regulators with sufficient flexibility to maintain their policy autonomy. In certain respect, the business contribute to distributive governance framework for the particular issue area of corporate governance that buttresses domestic governance, in so doing complementing, rather than replacing, the state. There include an emphasis on a consistent accountability to shareholders, the ability of Wal-Mart board to review distribution management activity and the ongoing commitment to provide enhanced transparency in financial dealings. More significantly, much of the text within these codes indicates that their primary purpose is to guide, rather than replace, national patterns of corporate governance regulation. For example, Wal-Mart statement of corporate governance principles argues that its purpose is "to serve as a reference point. They can be used by policy makers as they examine and develop their legal and regulatory frameworks for corporate governance that reflect their own economic circumstances and by market participants as Wal-Mart develop their own practices.                     The political implications of distributive corporate governance are several as the distributive governance framework helps overcome the noted difficulties associated with the unilateral extension of national law by providing a more inclusive and flexible forum for debate, dialogue, and standards formation. In this respect, distributive governance contributes to the phenomenon of soft law by helping to overcome the specific difficulties associated with creating and enforcing international law in general. The concept of distributive governance presents a daunting challenge to some traditional axioms of international relations research. The purpose of maintaining islands of theory and of limiting the application of those theories to specific issue areas is to provide analytic clarity from which testable hypotheses can be made and observed findings reported. Yet the phenomenon of globalization has made that process increasingly difficult; what is gained in clarity may engender a cost in relevance.               Nevertheless, the established lexicon of international relations scholarship continues to provide some helpful concepts in understanding the process of governance in diffuse issue areas. Consequently, Wal-Mart distribution of power and legitimate authority between participating actors is clear as the distributive governance involves examining traditional international relations problems in new ways. It also provides a measure of freedom to turn the lens of international relations analysis in new directions, to examine issues that were once thought outside the field's purview and to incorporate extant literatures from adjacent fields that may bear weight on Wal-Mart’s distribution strategy system.     Wal-Mart Distribution Image             For Wal-Mart to sustain its double digit growth rates, it needs to develop non-US markets. In this context, Europe is a logical target market for Wal-Mart. It comprises highly industrialized, developed nations with relatively familiar religious, government and economic institutions. Wal-Mart is not conventional retailer and acts proactively. There works, in addition to Treadgold’s attempts in the late 1980s/early 1990s to provide taxonomy of retail international development strategies (Cited from, Treadgold, 1990), provide partial explanation of the motives for internationalization and face difficult challenge when they attempt to transfer format and brand images want to develop global brand image that encompasses all of its products. Where the distribution chain is stretched, it is common to gain market share through acquisition of Wal-Mart into their target market. Wal-Mart is the exemplar of the low cost strategy and it has fine-tuned the low margin, high inventory turnover, volume selling practice (Cited from, Walton with Huey, 1993; Wagner, 1998). Volume buying in turn enables lower costs of goods. Furthermore, Wal-Mart demands vendors forgo all other amenities and quote the lowest price. In some circumstances, Wal-Mart buyers go to vendor premises to work on cost reduction. In addition to becoming supplier for the world’s largest retailer, a successful vendor may also become category manager (Cited from, Berry, 1998). Then, each department effectively becomes an individual shop proprietor with all the attendant feelings of ownership. Wal-Mart executives are not reliant only on computer-generated information.               Wal-Mart premises the retail proposition on four determinants of store choice: low prices, wide assortment, friendly service and community support. Low prices are derivative of a margin schedule that in the US averages 27.5 percent over various product categories (Cited from, Redman, 1998). The margin also varies by international market according to the inherent competitive forces. Wal-Mart is the ultimate exemplar for it wants customers everywhere to recognise its retail brand as standing for “low cost, best value, greatest selection of quality merchandise and highest standards of customer service” (Cited from, Smiddy, 1998, citing Bob Martin, head of Wal-Mart International Division). Complexity Stance               Notwithstanding the complexity of Wal-Mart issues confronted by global marketers, legal ways on product distribution has been uncharacteristically limited in scope and vision as most of the literature has been devoted to describing the distribution contract and the laws of various countries relating to Wal-Mart product distribution including and multidimensional strategies at work in global product distribution. There implicitly suggests that the multidisciplinary issues of product distribution strategy are more appropriate for managers than for lawyers. Indeed, some attorneys may even take the position that the proper role of the lawyer in any global product distribution is merely to implement marketing and distribution strategies developed by management.                 Consistent with market perspective, some managers may view some lawyers doing anything more than drafting the distribution contract as interfering with the client's operations. While there is some merit to these concerns, the current and evolving global business environment demands reassessment of the proper role for lawyers. In order to establish the most effective marketing and distribution systems, global enterprises need rationally driven array of strategic options that take into account all the important variables. The matrix of strategic choices will improve if the impact of specific legal requirements is included in the analysis of options from the outset. For this effective strategic planning to occur, the collaboration between lawyers and the global marketers must precede contract formation. Deliberate use of the law to develop and select the distribution method within broader Wal-Mart business approach will tend to protect the global enterprise in the long run. For instance, some managed distribution strategies may be feasible only because of some facilitating or permissive laws. Others may be effectively crafted in spite of the law as with the help of lawyers, managers may come to view the law as an instrument for, rather than an impediment to, achieving corporate objectives.   Wal-Mart Integration             Wal-Mart is beginning to integrate ASDA suppliers into their Retail Link intranet system and initiatives have been undertaken to apply best practice principles to both chains. ASDA store managers have been “twinned” with their US counterparts to share ideas. Despite all the operational improvements that will occur to the ASDA chain in the next year or so, the main profitability enhancements are likely to be achieved in the non-food areas. Remember that Wal-Mart’s move into super centers was to entice food shoppers to spend more on higher margin home and apparel lines. Thus Wal-Mart’s global buying power may be used to source health and beauty products and electrical appliances to challenge established chains in their core product categories. Boots’ share price is low despite a solid financial performance and this has been attributed to the Wal-Mart effect.   CONCLUSION               In conclusion, with significant process of distribution systems Wal-Mart, as global enterprises are inevitably pushed towards the development of coherent and counteractive global product distribution strategies. Then, to certain degree, Wal-Mart strategic behavior is inherent in the nature of the global enterprise as the product distribution goals may only be achievable if other antecedent and complicated investment, product design strategies are implemented. While product distribution in Wal-Mart global operations could simply entail appointing foreign distributor, each specific management and laws for the distribution relationship may implement part of complex and efficient overall corporate approach of Wal-Mart to the global market.               Therefore, in developing an appreciation for the business and strategic considerations of the future, there are several relevant factors to consider. First, the nature of the current and emerging global business environment provides the background necessary to understand the different distribution channels adopted by global enterprises. Second, in order to provide appropriate legal protection, attorneys, like global managers, must fully understand the reasons for various channels of distribution. Third, transnational practitioners must become more aware of product characteristics. If corporate counsel fully appreciate the differences among the types of products industrial, standardized, customized, specialty, or consumer, they can more easily develop an effective legal structure. Product differences have business significance in determining the appropriate channels of distribution and may also make a difference in the type of legal structure or contract form used in the transaction. Fourth, consideration of the preceding factors will enable lawyers more easily to understand the strategy behind the choice of one channel of growing linkage among the world's economies has been described as the globalization of business.     REFERENCE   Berry, B (1998), "Wal-Mart expectation of suppliers", London Bowersox, D.J., Daugherty, P.J., Droge, C.L., Rogers, D.S., Wardlow, D.L. (1990), Leading Edge Logistics Competitive Positioning for the 1990s, Council of Logistics Management Carroll, B., Siguaw, J. (2003), "The future of electronic distribution: effects on hotels and intermediaries", Cornell Hotel and Restaurant Administration Quarterly, Vol. 44 No.6, pp.38-50 Christopher, M. "Logistics and Competitive Strategy," European Management Journal, 11(2), 1993, 258-261 Murphy, J., Schegg, R., Qiu, M. (2006), "An investigation of consistent rates across Swiss hotels' direct channels", Information Technology and Tourism, Vol. 8 No.2, pp.105-19 Redman, M (1998), "Wal-Mart Image", QEII Conference Centre, London Richardson, H.L. (1995), Logistics help for the challenged, Transportation & Distribution, Vol. 36 No.1, pp.60-4 Smiddy, P (1998), "What does all of this mean for UK retailing", QEII Conference Centre, London Thompson, G., Failmezger, A. (2005), "Why customers shop around: a comparison of hotel room rates and availability across booking channels", Cornell University; CHR Reports, Vol. 5 No.2, pp.12. Treadgold, A (1990), "The developing internationalization of retailing", International Journal of Retail & Distribution Management, Vol. 18 No.2, pp.4-11 Wagner, D (1998), "Wal-Mart merchandising", QEII Conference Centre, London   Walton, S, Huey, J Sam Walton: Made in America – My Story, Bantam, New York, NY Wal-Mart (1999), http:/www.wal-mart.com/newsroom/4thqtr99.html Wood ,A.L. "Develop an Agile Approach to Change," Transportation and Distribution, 34(11), 1993, 56   Other sources: Hedley Bull, The Anarchical Society (New York: Columbia University Press, 1977). Stephen Krasner, "Structural Causes and Regime Consequences: Regimes as Intervening Variables," in Krasner, International Regimes, p. 1. 16

Governance and Management of Distribution Strategy of Wal-Mart

Governance and Management of Distribution Strategy INTRODUCTION Nowadays, in today’s top performing bus...

Strategic Analysis of Wal-Mart

Economics of Business Strategy Strategic Analysis of Wal-Mart Introduction             Central to the achievement of sustainable organizational development are strategies. Sustainable competitive advantage is the ultimate goal of strategizing. Amongst the motivations to strategize are to grow fast ahead of the competitors, grow in the line with the industry or to simply catch up and defend an existing status. Materialization of these strategies, however, is hindered by different challenges, threats and risks experienced by the organization in the process of pursuing strategies. As such, strategic decision-making is a multi-approach that requires careful consideration of the firm seeking to widen scale, scope and reach. Strategies, nevertheless, depends on the resources and capability of the organization. In this report, strategic management and its drivers, nature and dynamics will be discussed through investigating the case of Wal-Mart. Brief Background of the Company             Wal-Mart was founded in 1962 through opening the first Wal-Mart discount store in Rogers, Arkansas. The world’s largest public corporation by revenue, Wal-Mart is an American corporation that operates a chain of large discount department stores. Wal-Mart employs 2.1 million employees, known as associate internally, worldwide, all of which contribute to the $401 billion sales within fiscal year 2009. The company serves more 200 million times per week its customers and members in more than 7, 800 retail units. These units are under 55 banners in 15 countries. Its super center, with the first one opened in 1983, is now the dominant format, featuring a complete grocery plus general merchandises. Further, Wal-Mart ranked first among retailers in Fortune Magazine’s 2009 Most Admired Companies survey for the reason of sustainability, corporate philanthropy and employment opportunity (Wal-Mart online).      Porters Five Forces Analysis             Wal-Mart operates within the retail industry as the preeminent low-cost retailer, a strategy that is embedded on its pricing philosophy of Everyday Low Prices. What drives the competitive advantage of Wal-Mart are the broad assortment of merchandise that enables grocers a one-stop shop experience and the high in-stock levels which provide these grocers the confidence that Wal-Mart stores will have what they need as well as its long operating hours that allows customers to shop at their convenience. Besanko et al (2003) also contend that a firm should assess competitive pressures and evaluate responses to competitor price and non-price strategies. Whether or not Wal-Mart maintains sustainable competitive advantages within the retail industry could be determined by a five forces analysis, consisting of barriers to entry, supplier power, buyer power, substitute and competition. Barriers to entry             Penetrating the retail industry would have immediate barriers that are relatively low. This is because opening a retail store is low-capital intensive, fixed costs are also low and the specific knowledge of operating a discount store was realistically obtainable. Besanko et al (2003) asserted that it is important for a firm to evaluate its strategic positioning for the purpose of coping with entry decisions.  Because Wal-Mart, and the likes of K-Mart and Target, has the ability to drive other small businesses out and with its inherent ability to set low prices over its major competitors, entry barriers in the discount retailing industry today is high. Wal-Mart, most specifically, is able to do this because of the long-run average operating cost which is much lower due to economies of scale it realizes.             Today, Wal-Mart offers consumer staples both food and non-food. Wal-Mart, to address the wealth of substitute products from rivals, shifted its strategy to increase food categories in addition to hard and soft and durable items and apparel from 1999 (Senne, 2005). Brick and mortar stores and online shopping are the two main substitutes for Wal-Mart although the latter was addressed through creating www.walmart.com. Understandably, the threat of online shopping cannibalizing sales would have no significant effects to Wal-Mart’s operation at this point and in the case that Wal-Mart saturates the market through its retail stores, online shopping would be detrimental to its store sales.             Even before, Wal-Mart has power over its competitors. Sam Walton, its founder, was able to push suppliers to sell merchandise at much cheaper prices so that Wal-Mart could sell those at cheaper prices as well. Bulk buying and contract agreements were critical in its supplier relationship. According to Barbaro (2006), Wal-Mart embraced the ‘plus one’ philosophy and demanded that each supplier either lower its price or increase the quality every year on every item. This very same philosophy still exists today coupled with operating own distribution centers, telling that supplier power is fairly nonexistent. Sushil (n.d.), nevertheless, noted that Wal-Mart represents a large percentage of the suppliers’ businesses.             Wal-Mart maintained that the ultimate power rests in the hands of the buyer. Wal-Mart finds low-cost products to offer at low prices, dubbed as ‘Everyday Low Prices’ philosophy, was claimed to be consistent with great buyer power. This might be also because of Wal-Mart’s powerful position relative to the supplier which in effect shapes the seller profitability. Barbaro (2006) maintain that what makes Wal-Mart appealing to the end consumers from its inception onward was its cost advantage while also avoiding erratic price changes in the market. On the other hand, I could also consider that individual buyer has little to no pressure on Wal-Mart because of its pricing techniques. As such, Wal-Mart then could be considered as both powerful over its suppliers and buyers.             Ortega (1999) accounts that instead of gambling in the discount store segment, Wal-Mart, through its founder Sam Walton, had created a segment to compete for and where it will emerge as the leader. Wal-Mart stores were also strategically located on a connector highway outside a small community, drawing away business from small local retailers, enclosed malls and specialty stores.   SWOT Analysis Wal-Mart is also perceived as dependable because of the ultimate convenience of shopping for what people want and need at a time most suitable for them; Wal-Mart stores have longer operating hours (Marquard and Birchard, 2006). As such, what maintains a strong and sustainable competitive advantage is its lowest-cost, one-stop-shop business model. In what particular ways such business model provides competitive edge for Wal-Mart is explored as follows by means of analyzing its strengths, weaknesses, opportunities and threats. Strengths             Firstly, Wal-Mart is very customer-oriented; decisions are built upon strategies to maintain effective customer relationship. Aside from offering on-stop shopping, Wal-Mart also enables its customers to buy bulk. Satisfaction guaranteed programs are also evident which were perceived as promoting customer goodwill. Wal-Mart also aids the economy by means of buying from local merchants whenever possible (Barbaro, 2006; Spotts, 2005). For its employees, stock ownership and profit-sharing are provided while also providing these associates an ongoing development through seminars, workshops and trainings. Wal-Mart also has a strong community involvement both the associates and top management.    Weaknesses             One of the primary weaknesses of Wal-Mart is that it lacks a formal mission statement, which is important in setting future directions of a company. Because of its old fashioned store policies, the company is also tended to keep poor performing employees on hand. Another weakness is that its top management accommodates very few women and minorities (Hummer, 2006). Opportunities             When it comes to the consumers, they are increasingly demanding for ease of shopping aside from increasingly becoming ethical and/or environment conscious consumers. The elderly population is growing with which could be exploited as a significant market niche segment (Spotts, 2005). Nevertheless, Asian and some European markets are relatively untapped by retail. In terms of operation, similar shopping patterns worldwide could be also exploited.   Threats             Immediate threats to Wal-Mart are variety of competition locally, regionally and nationally, all of which can be regarded as substitute. Another threat is the value of dollar that is declining if not really stable as this can decrease the expected retail sales output of the company (Hummer, 2006; Spotts, 2005). Others include, regulations relating to retail operations and bad media exposure of specific brands. Small towns do not want the entry of Wal-Mart as it can kill various small businesses in that town.  Value Chain Analysis             Wal-Mart is built around four retail concepts, the first being its discount stores which follows the same pattern since the company’s founding in Roger, Arkansas. The second concept is the combination of these discount stores with a total inventory of almost 100, 000 items into super centers. A third concept point to a Wal-Mart neighborhood market which provides services of a traditional grocery store in a building format and the fourth concept is a membership warehouse store which carries a constantly changing inventory of about 4, 000 items. With this said, logistics, or its attitude toward its supply chain management, is believed to be the cornerstone in achieving and sustaining the competitive advantage (Marquard and Birchard, 2006). As such, Wal-Mart operates a hard to beat global network of 146 distribution centers included in the total are 103 distribution centers in the US which provides service to approximately 2, 800 discount stores super centers and neighborhood markets and 525 membership stores known as Sam’s Clubs. In addition to this, there are also 1, 300 international units dispersed in 9 countries (Marquard and Birchard, 2006). Such strategy had resulted into a trickle-down effect which helps in reducing lead times in serving stores, and for suppliers shipping merchandise to the distribution centers. Wal-Mart’s supply chain is illustrated below. Troy (2003) asserted that shorter lead times mean less safety stock has to be kept on mind and when out-of-stock situations arise it can be resolved quickly because stores receive daily or multiple daily deliveries. Marquard and Birchard (2006) also assert that to serve such a wide distribution network, Wal-Mart strategize to own one of the largest private fleets of more than 3, 000 tractors and 12, 000 trailers while most of the competitors are outsourcing trucking. This is an important part of corporate governance to give the company control of its operation which would be impossible in contract situations. Fleet has an on-time delivery record of 99.5%. Wal-Mart termed this as a saturation strategy wherein the standard was to be able to drive from distribution center to a store within the day. Troy (2003) relates that Wal-Mart implemented a satellite network system, allowing informations to be shared between the company’s wide network of stores, distribution centers and suppliers. Each store is equipped with a satellite dish for the purpose of linking data into the largest single sales database worldwide by means of two earth station transmitters at corporate headquarters. This system enables Wal-Mart to consolidate orders through buying full truckload quantities without incurring the inventory costs. The system keeps track of sales and inventory results in a total of 75 million point-of-sale transactions per week. Core Competences Analysis             A culture within Wal-Mart is based on profit-derived no from the pricing end but from the cost end of every transaction. Singh et al (2009) outlined the seven basic rules of operation: forming partnerships with vendors, keeping expenses low with the belief that suppliers can provide timely deliveries at low prices, proper store location selection, company ownership of distribution fleet, ‘knowing the numbers’ or the detailed sales figure by department and by individual store associate, knowing its competition, and taking care of the customers. To have the lowest prices in the market as a tool for driving up sales and generating profits is the core competence.             Wal-Mart’s executives continuously rely on several traditional goals and philosophies that Sam Walton’s legacy left behind. The frugal culture for instance as opposed to corporate extravagance is one aspect that is consistent with the lowered prices of products sold or the ‘Always Low Prices’ philosophy at Wal-Mart stores. The idea is to make the customer No. 1, encompassing the idea that by responding and serving customers’ needs first, the business would also serve the needs of its associates, shareholders, communities and other stakeholders. Another cornerstone of its culture is making Wal-Mart accessible to everyone through exclusive channel that are known as discount stores worldwide.             Although the reputation is increasingly becoming weaker, Wal-Mart maintains to be the strongest brand in its industry. Wal-Mart brand stood for both value and values such as patriotism, community and opportunity. For Wal-Mart, taking pride on its brand means to provide a better quality of life to its customers (Marquard and Birchard, 2006). Wal-Mart’s business model that is embedded on the shopper’s desire to buy a trusted item as quickly and as cheaply as possible is what makes the brand strength. The brand also caters to both basics and special item categories, an activity known to tap the mass market such as low to middle income categories. Intended to be the smart choice for the consumers, Wal-Mart as a brand is also overwhelmed by other strong brand names related to every category.             Educating and developing associates is another process important to Wal-Mart. Investing in its people, Wal-Mart tries to grow talent internally and it has developed a detailed selection process to identify the best talent and is providing formal training to build skills that is required for the expanded roles. Spotts (1995) claims that Wal-Mart had also harmonized senior leadership teams and operations through offering new roles to high potential senior executives from other areas such as merchandising and logistics. Internal promotions are also complemented by internal promotions. A completely redesigned compensation program that reward all store associates on the basis of achieving store goals in order to improve execution and close the gap between strategy and performance was also implemented.               Further, Wal-Mart had reorganized field operations so that associates could take ownership and improve customer service to better improve customer experience. Some of the changes that Wal-Mart recently implemented are store cash office redesign, front-end service, customer needs scheduling, positive associate experience and store manager routines, merchandise flow and increasing customer touch points (Marquard and Birchard, 2006). Aside from leveraging know-how of the associates, these processes enabled Wal-Mart to extract more knowledge from the customer, which could help in improving profitability as well. Wal-Mart’s generic strategy is cost leadership, a strategy that emphasizes efficiency and take advantages of the economies of scale (Hummer, 2006). There are threats, however, that Wal-Mart must understand and respond to. The first is process threat (Spotts, 2005) wherein the customers want the lowest price but these customers do not always trust the lowest price especially when there is no brand name that could provide assurance. Customers perceive low prices as an actual suggestion of low quality. Further, Wal-Mart is undisputed as a preferred choice for buying all the basic needs but when it comes to special items, the name Wal-Mart is not a strategic choice (Hummer, 2006). Further, another generic threat is the stability and applicability of business models. Wal-Mart also struggled in exporting brand elsewhere because of its objective to reproduce the business model (Sushil, n.d.). Conclusion             In sum, Wal-Mart is the most significant player in the retailing industry; in fact, Wal-Mart is the very manifestation that such an industry exists. Wal-Mart thrived in the retail industry amidst the fierce competition is because of lowest-cost, one-stop shop business model. The unique selling proposition that are low prices, in-stock positions and customer service are the key strategies. Strategies involved are competitively reduced cost, consumer-centric sales, and co-operated suppliers.    References About Us, Wal-Mart Corporate Website, Wal-Mart, retrieved on 26 May 2009, from http://walmartstores.com/AboutUs/. Barbaro, M 2006, ‘Wal-Mart Tries to Find Its Customer,’ New York Times. Besanko, D, Dranove, D and Shanley, M 2003, The Economics of Strategy, John Wiley and Sons, New York. Fishman, C 2006, The Wal-Mart Effect, Penguin, New York. Hummer, R 2006, Wal-Mart Stores: Competitive and Financial Analysis. Marquard, W H and Birchard, B 2006, Wal-Smart: What It Really Takes to Profit in the Wal-Mart World, McGraw-Hill Professional. Ortega, B 1999, In Sam we trust: the untold story of Sam Walton and how Wal-Mart is devouring the world, Kogan Page Publishers. Senne, S 2005, ‘Wal-Mart struggles with deeper problems,’ MSN-BC. Spotts, G 2005, Wal-Mart: The high cost of low price, The Disinformation Company. Sushil, A n.d., Capability Analysis. Troy, M 2003, ‘Logistics still cornerstone of competitive advantage - Wal-Mart The Category King: A New Era of Excellence,’ DSN Retailing Today. Singh, A, Kasarwani, R J, and Agarwal A 2009, Wal-Mart – Competing in the Global Market, Online resource.

Strategic Analysis of Wal-Mart

Economics of Business Strategy Strategic Analysis of Wal-Mart Introduction Central to the achievement of sustainable...