WalMart, Inc.

: Under Attack

This analysis focuses on the intricacies of the Wal-Mart business model. The aggressive nature
of the company's dominance when it moves into a new market is analyzed in terms of the
negative causation that it represents. The overall corporate culture is viewed through the
framework of overall attitudes groups and individuals have directed towards Wal-Mart.
Specifically, this discussion reviews the core competencies and principles that drive Wal-Mart's
corporate culture and the determining factors that have driven Wal-Mart for the past several
years.

Additionally, this analysis discusses the problems that Wal-Mart's culture, towards its employees
and competition has created and the increasingly negative attention these problems are bringing
for Wal-Mart. As a result, this discussion presents several solutions that Wal-Mart could
implement. First, Wal-Mart could re-examine its aggressive corporate strategy in terms of
forcing smaller, more local shops out of business; second Wal-Mart could retool their charitable
giving strategy and lastly the company could alter its current position on allowing employees to
unionize. All of these solutions, when adopted in tandem, could greatly improve Wal-Mart's
standing both in the domestic market and international stage as well.

The Situation
To its fans, Wal-Mart exemplifies pure Capitalism-giving consumers the products they demand
at a price lower than the competition. Unfortunately, it is this practice that has condemned Wal-
Mart to be hated by a large subset of American society. Wal-Mart is viewed by many as being
the penultimate in destroying the "Mom & Pop" stores that so many of a certain generation had
grown accustomed to. To this group. Wal-Mart is seen as the
antithesis to everything that a small, upstart business in a local community, furthermore, Wal-
Mart represents, on some level, the corporate bully moving in throwing their weight around
undercutting the competition which ultimately drives the smaller shops out of business.

TOPIC: Case Study on Walmart Stores, Inc. Under Attack 2006 Assignment
In order to understand the "Wal-Mart Problem" the environment that gave impetus to such a
corporate behemoth must be analyzed. What were the main factors leading to Wal-Mart's rise to
domestic corporate dominance and what, if anything, can the organization do to remove the
stigma attached to its organization. The roots of Wal-Mart's growth can be traced to the
economic recessionary period of the 1970's. As individual income and personal spending
declined, customers were looking for retail outlets that sold consumer products at lower prices.
Sears was the largest retailer in the nation, however due to the sluggish environment they
attempted to cater to lower and middle class families. This altercation in the business model led
to an increase in overhead.
Wal-Mart's philosophy was to compete for the same group of consumers, however their prices
would be significantly lower and their overhead would be reduced beyond that of the
competitions. As a result, Wal-Mart would be ascertaining the same customer base but would be
able to offer comparable products at lower prices. As Wal-Mart grew in size, the company began
to diversify its business model. Wal-Mart recognized that as consumers began to search for low
cost products, consumers began to travel to the more rural areas and suburbs-getting away from
the urban centers that many larger retailers had targeted. As a result of this demographic shift,
Wal-Mart began to integrate their stores into the more rural and suburban area. This integration
has ultimately led to the negative impression, and attitude many individuals have toward Wal-
Mart. But is Wal-Mart totally to blame or is the company simply mastering the art of Capitalistic
business models? The next section will analyze Wal-Mart more in depth, its present situation and
the factors associated with the negative attitudes and what Wal-Mart can do to rectify this
scenario.

Analysis

Analysis of the Situation

There are four core corporate strategies relevant to Wal-Mart. The strategies that form the
backbone of the Wal-Mart corporate culture are: (1) Dominate the Retail market wherever Wal-
Mart has a presence; (2) Growth-by expansion in the U.S. Internationally; (3) Create and faster
widespread brand recognition wherever Wal-Mart has a presence and (4) Branching out into new
sectors of retailing such as pharmacy automotive and the recent addition of grocery stores within
the new "Super-Walmart" (Comerius & Hunger, 2006).

Sam Walton had a vision that Wal-Mart would compete in nearly all markets from the main
urban sectors to the more rural and suburban markets. To this end, Wal-Mart still follows this
core principle. Wal-Mart maintains the philosophy of lowering the mark-up on products as
possible while working customer volume to maximize bottom-line revenue. Every Wal-Mart
store is prodded to engage in ruthless competition until the local competition is rendered
meaningless and Wal-Mart asserts domination among the local market.
Wal-Mart has demonstrated exponential growth both domestically and internationally over the
past several years. Wal-Mart's expansion throughout the United States and across Europe is yet
another component of their corporate culture; a culture that seeks to not only increase their
dominance but ensure this dominance is maintained by essentially buying up the competition and
increasing the base network of Wal-Mart stores. Currently, Wal-Mart has approximately 1.3
million employees throughout the entire organization. Out of this total, over 1 million are
employed within the United States market. Furthermore, Wal-Mart operates over 4,000 stores
worldwide with over 1200 stores operating internationally (McGahn, 2004). Logically,
domestically, Wal-Mart is the largest consumer retailer.

This presence both domestically and internationally lends themselves to Wal-Mart's ability to
exercise its dominance over the U.S. retail market. This retail market expansion is not only
limited to the United States. Wal-Mart has exhibited the same dominance internationally. Wal-
Mart has engaged in the same dominance of the international market as they have domestically.
In 1994, Wal-Mart purchased 1200 WoolCo stores in Canada, as a result there are 196 Wal-Mart
stores throughout Canada. Additionally, in 1998. Wal-Mart bought the Wertfauk chain in
Germany consequently. Wal-Mart now operates close to 100 stores in Germany Finally, in 1999,
Wal-Mart bought the ASDA chain in the UK and operates 229 Wal-Mart stores in Britain
(McGahn, 2004)

The purchase of these local chains underscores the Wal-Mart corporate culture that is carried out
and implemented in order to attain dominance within a market. As a result of this organizational
culture, Wal-Mart places itself in a comparative advantage position to take over a new market
once Wal-Mart enters this market. Wal-Mart is able to, in one sweeping step, Wal-Mart can
overcome market barriers, Wal-Mart can capture a significant market sector of consumers and
most importantly, Wal-Mart eliminates the competition and therefore can exert near complete
control of an entire retail market within a given market area. Associated with this principle of
total market domination, the logical flow out of this domination is the creation and maintenance
of brand management wherever Wal-Mart has a presence. Given the analysis thus far, Wal-Mart
has brand management capabilities on an international scale.

Wal-Mart is one of the best organizations in the modern era to work on creating and maintaining
positive brand management. For Wal-Mart to maintain its cutting edge brand management, even
in areas where the story is dominant, Wal-Mart relies on several core competencies. These
principles involve respecting the individual, enhanced service to the customer and a constant
strive for excellence. These principles are prevalent within the Wal-Mart business model and are
part of the paradigm that allows Wal-Mart to establish its stature within various retail markets
and compete against well established companies such as Target, Inc.

Wal-Mart's business model possesses several strengths, weaknesses, opportunities to improve its
image within the community and threats against its model. Wal-Mart's key strengths include the
cost advantage of its model, including lower overhead which in turn allows Wal-Mart to reduce
the general overhead leading to an undercutting of product costs to consumers. Furthermore,
Wal-Mart has a strong supply chain management apparatus for constant flow from vendors to
Wal-Mart stores. Wal-Mart also has several weaknesses that are among some of the most
common complaints that customers of Wal-Mart tend to express (Van, 2008).

First among these weaknesses is that Wal-Mart ignores store decorations in creating an
environment that is welcoming for customers to experience. Also, Wal-Mart's size and
multidisciplinary approach to their business model may in and of itself be a weakness. In today's
environment, flexibility is key in navigating the treacherous business environment. Therefore,
Wal-Mart may find that it is not as flexible as some of its more focused competitors. Finally,
there are threats to Wal-Mart, even though the company is the largest retailer in the United
States. Wal-Mart…

Citation: https://www.essaytown.com/subjects/paper/walmart-stores-inc-attack-2006/5518414

By Michael Barbaro
Aug. 29, 2006

Wal-Mart, under attack now from unions and prominent Democrats, yesterday introduced a
marketing campaign that closely resembles the television advertisements used by political
candidates.

In a local experiment that is eventually to be seen across the country, the giant discount retailer
began broadcasting two television spots that, in unusually detailed terms, trumpet its health care
plans, charitable contributions and positive impact on the American economy.

The ads do not attack Wal-Mart critics but introduce its merits, much as a candidate would. "Our
low prices save the average working family $2,300 a year," says the narrator of one ad. "Which
buys a lot of things -- and a whole lot of freedom."

For Wal-Mart, the ads represent a significant departure from its practice of rebutting critics in the
media but presenting itself, at least in consumer television marketing, as untroubled by its image
problems.

Increasingly, however, Wal-Mart appears to believe it has failed to persuade the public that its
benefits and wages are generous, leaving it open to attacks from union-backed groups and
political parties. Democratic presidential contenders, for example, have seized on the company
as a symbol of substandard pay and health insurance, hoping to address voters' economic
anxieties.
Robert S. McAdam, Wal-Mart's vice president of corporate affairs, said the new ads were not a
response to attacks by senior Democrats like Senators Joseph Biden of Delaware and Evan Bayh
of Indiana but, rather, an effort to "clear up" what he called inaccurate perceptions.

"There is a lot of misunderstanding about what we do in health care," he said. "It has been
troubling that we cannot get our message out."

As a result, he added, "these ads are more direct than anything we have done before."

The ads look and sound like campaign spots -- and are a far cry from previous Wal-Mart TV
campaigns, which featured a yellow smiley face and blue-smocked employees. One of the spots,
which evokes Bill Clinton's "A Place Called Hope" message during the 1992 presidential
election, begins with an image of Sam Walton's first five-and-dime store. "It all began with a big
dream in a small town," says the narrator, "Sam Walton's dream."

Later, the narrator ticks off a list of Wal-Mart's benefits: "Last year alone, Wal-Mart created tens
of thousands of new American jobs -- many in areas where they're needed most. And we offer
eligible associates health insurance for less than a dollar a day."

The ads, running in Omaha and Tucson, underscore Wal-Mart's transformation over the last
several years from an insular company obsessed with low prices and technological efficiency to
one that openly acknowledges its public relations troubles and has introduced numerous
programs to counter them.

In the last year, the company has expanded health care coverage to the children of part-time
workers, has committed to sweeping reductions in energy use and has promised to work with
competing retailers in urban areas where it builds stores.

The ads also reflect the influence of Edelman, the public relations firm Wal-Mart has hired to
rehabilitate its image. The firm has assigned former political operatives to develop a public
relations strategy for the retailer, including a rapid-response war room and a blog that attacks its
union-backed critics, like WakeUpWalmart.com, which organized a bus tour featuring
Democratic leaders. Blue Worldwide, a division of Edelman, created the ads.

Eric Dezenhall, a veteran corporate crisis expert and president of Dezenhall Resources in
Washington, said it appeared that Wal-Mart had become tired of communicating its message of
change through news organizations. "There is no guarantee of effectiveness," he said of the new
TV ads, "but there is a guarantee that your message goes out undiluted."

Citation: https://www.nytimes.com/2006/08/29/business/media/walmart-counters-criticism-
with-a-politicalstyle-ad-campaign.html