Strategic choices and competitive alignment in Walmart's strategy formulation

Wal-Mart Porters

Wal-Mart Strategic Management

Wal-Mart mission is based on the model that by simply saving people money so they can live better. The philosophy and overall business strategy was developed based on a simple idea created by founder Sam Walton: offer shoppers lower prices than they can get anywhere else. This strategy has been the basis of an incredible history and growth record for the company. This strategy still guides the company in nearly all aspects of the organization. The company delivers the consumer the lowest costs possible through many of the strategic decisions in their human resources, their suppliers, their information, distribution and logistical systems as well as many more business functions.

Strategy Discussion

The success of this strategy is clearly evident from Wal-Mart's single location in the Midwest to its global presence as the world's largest private retailer. The company's current holding include more than 8,500 departmental and warehouse stores in 15 countries and is one of the world's most formidable low cost leaders (Ken, N.d.).However, despite all the company's successes, it faces a number of external pressures that can work to highlight many of the company's weaknesses. Since the company is so focused on maintaining its position is the low cost leader in the industry, it tends to neglect paying any more than the compliance level expenditures for many business functions such as environmental compliance and human resources.

Wal-Mart has the environment a priority and has set ambition targets for the company and their supply chain (Walmart Corporate, 2012). However, Wal-Mart's business model makes the environmental concerns difficult to effectively mitigate. One area that Wal-Mart Super Stores has done well with over the years is the energy efficiency in their buildings. However, much of these efforts were based on reducing expenses from energy use. Wal-Mart has not given equal attention to other areas of operations which do not offer similar cost reductions.

With almost nine thousand retail units, more than a hundred thousand suppliers, and over two million associates, it will take a substantial organizational effort to address their environmental impacts. Furthermore with increased transportation costs rising, Wal-Mart could also be subject to more transportation costs which might negatively impact the low cost leader strategy. In response to some of the negative publicity regarding the environmental practices of the company, Wal-Mart's has announced a goal is to be one hundred percent powered by renewable energy, however the current renewable energy mix currently being used is about two percent in reality (Gunther, 2011).

Another external threat could come various labor practice regulations that would affect the wages they pay for millions of their associates. For example, President Obama mentioned the possibility of increasing the minimum wage in the United States to nine dollars an hour (Lewis, 2013). Wal-Mart has been criticized for its treatment of labor as well as political influences. Wal-Mart has also been accused of illegal political activism, sometimes intimidating employees to vote for the political party of its choice (in the last presidential election that meant against Obama) (Cernansky, 2011).

Wal-Mart has been sued for both gender and disability discrimination for many instances of its employment practices. In Maine alone, Wal-Mart has been cited for more than 1,400 violations of child labor laws. Furthermore, Wal-Mart has also been cited for discriminatory practices and not employees fairly. One such practice that has generated a lot of negative publicity is that the company is known for shifting some full-time employees to part-time status, or maintaining large part-time staffs so that the company does not have to pay employees health insurance coverage.