Wal-Mart Critical Priorities the Many

Wal-Mart Critical Priorities

The many challenges that Wal-Mart is confronting today that are potentially impeding their growth and current operations are the topic of this analysis. These are the most critical strategic issues and problems that require Wal-Mart senior managements' attention and prioritization. Organized into general environmental, industry, competitive and internal factors, this analysis provides an insight into why these priorities are the most important for Wal-Mart's management team today.

General Environmental Analysis

First, the global economic slowdown is at the top of Wal-mart's senior management's agenda when the general environmental factors are discussed. Paradoxically the slowing economic growth of the U.S. economy has led to gains in sales over the last nine months according to analysis from the Wall Street Journal (Opdyke, 2008). Wal-Mart is a brand that excels when consumers sense fear, uncertainty and doubt about economic conditions, and has become a brand that has been able to capitalize on these concerns consumers have about the economic future (Hein, Miller, 2008). it's too simplistic to say however that tough economic times benefit Wal-Mart as their supply chain is one of the most extensive in global retailing. Difficult economic times put stress on the company's supply chain including suppliers' viability as many of them rely on Wal-mart for the majority of their production (Blanchard, Comm, Mathaisel, 2008).

Tough economic times are a mixed blessing for Wal-Mart. On the one hand the greater the fear, uncertainty and doubt consumer have regarding the condition of the economy the greater their reliance on Wal-Mart for lower prices which contribute to their ability to make ends meet. Yet on the other, difficult economic conditions jeopardize their supply chain partners' viability, and their ability to keep up with the major investments necessary to sustain Wal-Mart's requirements for automating their operations including supporting Radio Frequency Identification (RFID pilots.

Industry Analysis

Of the three areas covered in this analysis, the majority of priorities emanate from this sector of Wal-Mart's business. The issues of local and globally-based competition, the critical importance addressing e-commerce competitors and their it initiatives, supplier quality management and product recalls and the backlash against big box retailing globally are all high priorities for Wal-Mart senior management.

Most critical from an industry perspective is the need for define strategies for countering both locally and globally-based competition. Tesco has successfully launched into several U.S.-based metro areas using a strongly executed localization strategy (Duff, 2008). Retailing analysts agree that Tesco's execution of extensive localization efforts is superior to Wal-Mart's as the former concentrates on first understanding thoroughly a given regions' unmet needs then planning their stores to meet those needs. Wal-Mart has often been accused to taking a more ethnocentric approach to globalization, and the result has been mixed success in this area. Tesco's thoroughly planned and executed localization strategy is considered best-in-class throughout the industry.

Another key industry factor Wal-Mart executives are prioritizing is staying current from a technological perspective with the e-commerce and it-based initiatives competitors including Carrefour and Tesco are pursuing. Wal-Mart has been a leader in the adoption of RFID technologies for streamlining their supply chain operations, yet Tesco and Carrefour both have better customer-facing integration and better e-commerce systems, which has led to their lead in selected countries from a multi-channel management and selling standpoint. Wal-Mart concentrates on supply chain management however in this area of the industry and dominates it with their metrics- and scorecard-based approach to managing these operations (Blanchard, Comm, Mathaisel, 2008). The challenge for the industry however from a supply chain standpoint is ensuring supplier quality management is a top priority in their suppliers. Wal-Mart has stringent quality control standards yet still experiences costly recalls as many of their competitors do as well. The Mattel fiasco regarding their lack of quality control standards at their factories earlier this year in China is a case in point. Industry-wide, this is certainly one of the top priorities that retailers and toy manufacturers must work to alleviate, especially as the holiday shopping season has began for 2008.

The backlash against Big Box retailers throughout the U.S. And westernized nations Wal-Mart and others are attempting to expand has been aggressive and focused on stopping their attempts to build stores in metro and rural areas. The recent backlash against big-box retailing is occurring now at an increasing rate, with state and local judges ruling in favor of local groups attempting to stop Wal-Mart opening new stores in their regions (Wistrom, 2008). There is an increasing amount of research also showing how big box retailers including Wal-Mart when they enter local economies, are driving smaller retailers that provided a basis of price competition and employment are being driven out of business (Harris, 2006).

On top of their fear and anti-growth sentiment many communities have about big box retailers moving into their communities, many also fear Wal-Mart will move their manufacturing jobs overseas by shifting their product orders from local companies tot hose off-shore. Worst case, local communities see their manufacturing base going away and their entire communities becoming more reliant on Wal-Mart wages to the exclusion of higher value jobs.

Competitive & Internal Analysis

From a Wal-Mart specific standpoint, in addition to an internal analysis perspective, Wal-Mart executives need to make the issues of the company's lack of ability to globalize their operations, the continue costs of litigation, and the lack of accuracy of their pricing systems as all critical. All of these factors contribute to one of the key metrics the company also concentrates on, which is same-store visits by customers, a measure they consider critical of customer loyalty.

Beginning with the lack of execution of their globalization strategies beginning with the failure to successfully penetrate the German market (Dieckmann, 2007) followed by the tentative launch into China and the reliance on the incomplete infrastructure of their nation (Bowers, 2007) Wal-Mart has made strategic mistakes ranging from ethnocentrism dominating their decision making to attempting to capture a nascent market before it is ready. Wal-Mart executives need to make this a top priority internally for the company to continue growing.