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Key Issues/Problem Statement: How can Wal-Mart's low cost strategy remain competitive?
Root Cause(s): Wal-Mart targets low-income consumers. When forced to raise the price of essentials like food, sales go down. Sales are also down at the end of the month when consumers are running low on their funds and waiting for their paychecks.
Wal-Mart will continue to pursue a cost leadership strategy.
Advantages/Disadvantages: Advantages include the fact that there are many price-sensitive consumers and Wal-Mart's main attraction is the prices of its goods, not the quality and uniqueness of its merchandise. But low-cost strategies can be challenging when low-income consumers are forced to drastically cut back on their purchasing because they are more affected by higher prices and economic downturns than high-income consumers.
Recommendation: Wal-Mart should focus in the items its core consumer base needs the most (such as groceries and other necessities) and keep these prices at rock bottom. It can raise the prices of some of its other goods and services (such as electronics and toys bought by more middle-income consumers) to support these subsidized items.
Case Problem Questions:
1. Wal-Mart uses the generic strategy of cost leadership. It offers a wide variety of goods and services to consumers at the lowest prices possible it can sustain while still making a profit. Even when it must raise the price on certain goods and services, such as food, it will lower the price on other items like technology to encourage consumers to continue to shop at the store (although this particular decision is somewhat problematic). Wal-Mart does not offer a particularly interesting or ambient location in which to shop, but focuses on marketing according to price alone.
2. Unfortunately, the idea of becoming a global company, understanding business challenges, playing a leadership role, and having a strong organizational culture does not really constitute a 'strategy.' A strategy really means what value the business offers to consumers (uniqueness or low prices, for example) and how it will support that strategy (such as operating on an economy of scale). Instead, the so-called strategy that has been developed merely seems like empty, generic words. There is no 'game plan' as to how Wal-Mart will achieve these objectives, and these statements could be made about any company. There is no detail as to how Wal-Mart's cost leadership strategy will be sustained or how it needs to be reformed in the coming decades.
3. The CEO must be concerned about this because it is reflective of a larger organizational strategy that is likely to fail. Wal-Mart originally was trying to clean up the appearance of its stores by down-scaling the amount of items it stocked: however, because this resulted in a reduction of the goods and services consumers wished to buy, it was ultimately not an effective strategy.
4. Wal-Mart must keep prices lowest for the most in-demand necessary goods that its low-income consumers wish to purchase: instead of subsidizing the price of high-tech items, it should be focusing on keeping the prices of groceries and other basics low.
Case study: Louie
Key Issues/Problem Statement: Although successful, Louie's Mighty Muffler Break service is facing potentially serious allegations of alienating customers through inappropriate comments. There is a great deal of discontent amongst the staff because of what is seen as Louie's outdated attitudes towards women employees and employees of color. To preserve the company reputation and also to avoid potential lawsuits in the future, change must be undertaken immediately.
Root Cause(s): Louie seems like a good manager and most of his comments do not have a malicious intent, but both customers and employees have been seriously offended by them.
Solution(s): Louie clearly wants to do a good job -- the store is doing well and none of his comments seem motivated by malicious prejudice and are merely clumsy and politically incorrect. This indicates that Louie could benefit from sensitivity training, versus having to be fired or disciplined. Also, every incident should be evaluated individually, given that not all are equally serious in scope.
Advantages/Disadvantages: Although Louie's actions and comments (asking a woman to talk over a repair with her husband or asking a female employee not to indicate to a biker she was working on his repair) are not in keeping with today's moral standards, they do not indicate that Louis is actually prejudiced, but rather that he comes from a different era with different standards of behavior.
Getting rid of Louie would mean getting rid of a good manager, but the business cannot afford to alienate customers and talented employees.
Recommendation: Louie deserves a second chance to adapt this behavior to the current needs and values of the organization.
Case Problem Questions:
1. In some instances, people may be too sensitive (such as Louie's 'high-fiving' an African-American employee). However, other instances of Louie's behavior show that he acts differently towards customers based upon their gender -- not maliciously, but in a manner which reflects older mores that are not keeping with the modern attitude and projected, inclusive image of the store.
2. Quite simply, Louie needs to learn to think before he speaks. Louie's actions actually do seem well-intentioned -- he may genuinely think that a woman should discuss her repair with her husband and he does not seem to mistrust the competence of the female mechanic, merely worry about the impression the woman might give to a male customer. Louie would likely change his behavior if he knew how and why it is perceived as offensive.
3. There are many effective sensitivity training programs which could be instituted at the store to improve Louie's customer and employee relationships. Louie needs to learn how to project himself into the mindset of customers and employees, rather than operating on his default, outdated assumptions. However, a general sensitivity training for all employees would benefit the entire organization. Although Louie's attitudes are the most outdated, no person is free of prejudice. Greater dialogue between all members of the workforce would result in more effective employee-customer relations.
Case study: Malcolm
Key Issues/Problem Statement: Malcolm is an extremely ambitious young man who has prepared himself his entire life for assuming a leadership position within the corporate hierarchy. However, rather than focusing on the needs of the company he is serving, Malcolm is solely focused upon his own advancement and career prospects, which ultimately does not impress the corporate leadership.
Root Cause(s): Malcolm is very much part of a millennial 'me' generation: instead of asking what he can do for the company, he asks what the company can do for him. He has little interest in fulfilling his duties and is more focused upon getting a showy and impressive position.
Solution(s): Malcolm must reevaluate his priorities and make a commitment to succeed at the position he does have, rather than constantly thinking about the position he wants to have in several years.
Advantages/Disadvantages: Malcolm is a committed worker who has prepared himself for the workforce. He has learned foreign languages, obtained an MBA, and clearly has a strong work ethic. However, he must learn to apply that work ethic to making actual accomplishments, versus simply using his credentials to obtain better and better positions. Malcolm must establish a 'track record' at the company.
Recommendation: Malcolm has to 'buckle down' and apply himself at his current position. Malcolm should not be promoted until he demonstrates competence at his current position.
Case Problem Questions:
1. All too often, people think that leadership is 'all about them' -- in other words, that being a leader is synonymous with self-promotion. The ideal of the great, charismatic leader who transforms an organization a la Steve Jobs has become very popular in the cultural imagination. However, for most people, the demands of leadership are far more mundane and practical. A leader inspires through example, by…[continue]
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