Wal-Mart Corporation Mission and Vision Statement Analysis

¶ … Wal-Mart Corporation

Mission and Vision Statement Analysis

Linking Wal-Mart's Mission and Vision to Their Strategic Goals ands Objectives

Assessing the Link Between Wal-Mart's Financial Performance And Its Strategic Goals

Wal-Mart Competitive and Marketing Analysis

Wal-Mart Marketing Analysis

Selecting An Appropriate Strategy (low cost, differentiation or niche) For Maximizing Organization's Return on Shareholders

Potential Wal-Mart Merger & Acquisition Strategy

Incentive and Reward Strategies for Wal-Mart Employees

Evaluating How Current Strategies Define Ethicacy Levels at Wal-Mart

Wal-Mart Ratio Analysis

Income Statement Analysis, 2007 -- 2011

Wal-Mart Capstone Analysis

Mission and Vision Statement Analysis

The foundations of the Wal-Mart value chain and its global success is predicated on how well this company aligns every internal system and strategy to their unique value proposition of Low Price Everyday (LPED) leadership. This unique value proposition galvanizes the mission and vision statement of Wal-Mart and is one of the foundations of their success and continued growth. Their competitors give lip-service to price competition yet only Wal-Mart has engrained the LPED value proposition deep into their logistics, supply chain management (SCM), supply chain planning and optimization, advanced pricing, real-time logistics and most of all, in-store retail operations. Wal-Mart also is a very analytics, and metrics-driven company, measuring every aspect of their operations with a focus on continual process performance improvement. Wal-Mart sees the LPED value proposition as critical to their functioning as a continually improving business, continually striving for greater efficiency and performance gains over time. Wal-Mart evaluates each product line, retail location, distribution center and supplier with a strict series of analytics and metrics to ensure performance meets standards while also looking for opportunities for improving the area itself (Wal-Mart Investor Relations, 2012). Wal-Mart believes passionately that all of these factors must be captured in analytics and Key Performance Indicators (KPIs) to support their mission statement which is "to help people save money so they can live better" (Mcginn, 2009) (Wal-Mart Investor Relations, 2012).

What galvanizes and energizes the Wal-Mart employee base is the belief and evidence from analytics that their many efforts to keep operating costs low translates into their core customer base being able to make ends meet. In a sense the Wal-Mart employees see themselves on a mission to make their vision and mission statements a reality for their customers., many of which are just making ends meet. This is why the mission and vision statements are so successful for the company. They are all concentrated on the core segments of their customer base that need the low prices to keep their family budgets balanced, making sure they make ends meet every month. Research indicates that the company's core business segment is the Price Value Shopper, which at 16% of the total customer base, generates a disproportionate amount of the revenue and the majority of in-store visits (Frazier, 2006). This segment also averages a per capita income of $47,000 a year, right at the median U.S. income, and is dominated by women running households on their own or with their husbands (Wal-Mart Investor Relations, 2012). It is important to see the woman as the primary purchasing influence at Wal-mart to understand how much saving money and delivering value to their families relates to their self-evaluation as wives and mothers (Frazier, 2006). Based on an analysis of the filings Wal-Mart has made over the years with the Securities and Exchange Commission (SEC) (Wal-Mart Investor Relations, 2012) an analysis of their customer base has been completed and is shown in Figure 1. This figure is a map fo the Wal-mart customer base by percentage of sales by psychographic segment. Wal-Mart has found that using psychographics is powerful for understanding and gaining greater insights into how their customers make trade-offs from one product to another (Tsai Lee, 2009). As the analysis shows, The Price Value Shopper visits Wal-Mart store up to ten times a month and is responsible for generating 16% of total revenue, in addition to delivering the majority of insights about which new products to stock and serving as the inspiration for making the vision and mission statements a reality across the global corporation (Wal-Mart Investor Relations, 2012). The Price Value Shopper is also where Wal-Mart executives turn to for feedback on how they are doing and how their customer service is trending (Wal-Mart Investor Relations, 2012).

Figure 1: Wal-Mart Psychographics Segmentation

Based on an analysis of:

(Wal-Mart Investor Relations, 2012)

(Frazier, 2006)

The central role the Price Value Shopper plays in the ecosystem is a strong indication of how critical this customer base is to Wal-Mart, and how their needs have become the catalyst or galvanizing force that makes their vision and mission statement a reality. The success of Wal-Mart uniting their mission and value statements is also reflected in the financial performance of Wal-Mart even in the midst of a global economic recession. Please see Appendix A: 2012 Wal-Mart Ratio Financial Analysis to see how the company has performed through their latest series of fiscal years, beginning in 2006 and through their latest full fiscal period, 2011. As is evident from the ratio analysis, the company has found a way to translate the momentum of their mission and vision statements to exceptionally strong asset management, quick operating cycles that are above average operating margins. Their Return on Equity (ROE) continues to show strength even in the middle of a global recession, which is a testament to how effectively the company is managing its entire value chain (Wal-Mart Investor Relations, 2012). It's clear from this analysis that Wal-Mart has been able to successfully galvanize their mission and vision statements into operating processes that deliver exceptional financial growth and stability.

Linking Wal-Mart's Mission and Vision to Their Strategic Goals ands Objectives

The basis of Wal-Mart's competitive advantage is the ability to align many diverse support functions into one cohesive series of strategies that all contribute to the mission and vision being accomplished (Wal-Mart Investor Relations, 2012). While the company is extremely well-known for its discount retailing operations and storefronts globally, its core strengths are in the areas of supply chain management (SCM), logistics, operations, discount -- based marketing and mass merchandising including value-added services specific to their core markets. Wal-Mart has been able to synchronize all of these diverse departments together into a unified value chain that continually fulfills the mission and vision statements of the company. Please see Figure 2, Wal-Mart Value Chain Analysis, for a graphical representation of how the company has been able to meld together all of these diverse aspects of their business into a unified global operation. Fueling this area of their strategy is the reliance within the company on analytics and real-time reporting of logistics, supply chain, and pricing strategies, giving the company greater competitive advantage than many other discount retailers (Christopherson, 2007). This aspect of Wal-Mart's performance has forced its competitors to continually and heavily invest in advanced analytics and Business Intelligence (BI) technologies to stay in step with Wal-Mart's insights and intelligence. Wal-mart for example uploads pricing analysis every evening through their satellite network and calculates pricing analysis in real-time, so the next morning their executives can evaluate overall performance (Wal-Mart Investor Relations, 2012). Wal-Mart is the only discount retailer who can manage this task with such quickness and accuracy, with impressive results. The Wal-Mart culture is very strong on analytics and business intelligence to unify their overall value chain, making it more efficient and focused on the unmet needs of their loyal customer basses including The Price Value Shopper (De Santa, 1998) (Powanga, Powanga, 2008) (Wal-Mart Investor Relations, 2012).

Figure 2: Wal-Mart Value Chain Analysis

Sources: (Christopherson, 2007) (Gosman, Kohlbeck, 2009) (Powanga, Powanga, 2008) (Wal-Mart, 2011)

Wal-Mart relies on its supply chain as the strategic catalyst for continually getting greater cost reductions from suppliers and further cementing its unique value proposition, mission and vision statements. To accomplish this, Wal-Mart continually invests in streamlining their global supply chain management, pricing optimization analysis, and streamlining their retail inventory planning and execution strategies (Wal-Mart Investor Relations, 2012). In addition to these internal initiatives, Wal-Mart continually uses their strong analytics and business intelligence expertise to better manage supplier alliances, strengthen global partnerships, and better manage their 3rd party logistics network which is critical to synchronizing their global operations (Sodhi, Son, 2009). Wal-Mart has been able to actually grow in a recession due to these factors.

Assessing The Link Between Wal-Mart's Financial Performance And Its Strategic Goals

Wal-Mart's financial performance continues to be strong even in the middle of a global recession. The company's focus on exceptional cost control, continual pursuit of operating efficiency and its heavy reliance on analytics all contribute to the company's ability to continually grow. As their latest full fiscal years provide the most solid foundation for analysis, they are used in this section of the capstone paper. The discussion in this section is based on the financial analyses completed in Appendices A and B, which detail full fiscal year results from 2006 to 2011.

What is immediately noticeable from evaluating their performance is how effective they are in managing risk through strong operating efficiencies and the ability to continually gain cost reductions through supply chain improvements (Wal-Mart Investor Relations, 2012). What is also evident is that their intensive investments in analytics and logistics-based technologies are having a major impact on streamlining their complex and often costly logistics processes. Of the many investments the company has made, their leadership in Radio Frequency Identification (RFID) tags and systems (Krotov, Junglas, 2008) have revolutionized the entire area of global logistics management including the development of more effective in-warehouse performance and processing (Wal-Mart Investor Relations, 2012). These investments in RFID have also given the company a strong value proposition for attracting 3rd party logistics providers to partner with the company in regions of the world Wal-Mart is interested in expanding into (Sodhi, Son, 2009). As of the close of their latest full fiscal year that results are available, Wal-Mart earned $440M in revenue, leading to a Gross Profit of $118M and Operating Profit of $26M. These figures are the highest they have been in six years, which is further proof of how effectively the company is managing internal costs for greater efficiency. This also illustrates clearly that the LPED value proposition is doing really well and resonating with the core market segments where the highest Lifetime Customer Value (LCV) (Christopherson, 2007) which is the Price Value Shopper.

Analyzing their financial statements and ratios further, it is clear that the strong use of analytics and business intelligence, combined with the strong logistics and supply chain performance, is making the company very competitive from an operations standpoint as well. For example, the company has dropped Days to Sell Inventory down from 47 days to just 40 days, a remarkable accomplishment when the industry supply chains had been consolidating and running into execution issues over time. Second, the Operating Cycles metric, which shows the days it takes a business to translate sales into cash, also dropped from 49 days to 44 days. All of these metrics are dwarfed by the strength of Operating Margin growth from 6.6% in 2006 to 7.4% in the period analyzed. All of these figures and more shown in Appendices A and B. indicate that the LPED value proposition, combined with the mission and vision statements are continually driving the company to greater levels of performance while keeping costs under control.

Wal-Mart Competitive and Marketing Analysis

Despite their global growth and success in markets beyond the U.S., Wal-Mart has many significant competitors in North America and throughout other markets as well. While the company faces competitors in many other geographies, their greatest competitive challenges and intensity are in the U.S., where big-box and discount retailers dominate key markets. This competitive intensity in the U.S. is also reflected in how strong the supply chain expertise and logistics knowledge are of its primary competitors shown in Figure 3. Their three most dominant North American competitors are Costco (20% market share), Target (4% market share) and BJs Wholesale Club (2%) market share. Please see Figure 3 for a breakdown of market share by competitors as of the close of FY 2011 for the company.

Figure 3: Wal-Mart Competitive Analysis of Market Shares, FY 2011

Source: ((Wal-Mart Investor Relations, 2012 )

From a global standpoint, Wal-Mart competes with Carrefour and Tesco, two companies located in France and the UK respectively. Both have extensive supply chain expertise and Tesco has advanced store planning initiatives and a highly competitive process for getting a new store completely defined and operational in 120 days or less (Wal-Mart Investor Relations, 2012). Wal-Mart is not as strong as Tesco is at new store development, often taking up to nine months to get a store up and running. In terms of competing with Carrefour, their other major international competitor, Wal-Mart has strong analytics and business intelligence, logistics and supply chain performance capability, yet Carrefour has greater expertise with emerging technologies including RFID and advanced forms of logistics planning and execution including being able to plan and execute logistics optimization through constraint-based programming (Wal-Mart Investor Relations, 2012). Carrefour is better at melding into new cultures as well, while Wal-Mart has historically struggling with getting a foothold into new markets that have cultures drastically different than the U.S. And other western nations.

Target is the most dominant competitor Wal-Mart faces domestically, and the well-known promotion of 100 toys every holiday season is entirely aimed at this competitor (Christopherson, 2007). While Target does not have the expertise with advanced analytics and business intelligence, they do have exceptional expertise with Enterprise Resource Planning (ERP), logistics planning and a world-class distributed order management platform that manages 27 regional distribution locations and warehouses, and also support over 1,700 stores and just over 900 general merchandise points of distribution. Target is the most formidable competitor there is for Wal-Mart and will continue to be for the long-term.

Costco, a regional competitor who operates primarily in the western United States, has exceptional logistics and merchandising expertise. It has also devised its own distributed order management platform and has also created a highly effective pricing management and fast-moving logistics planning and execution system. As a result of these efficiencies, Costco has one of the most admired distribution and logistics networks in the U.S. As they can support up to 600 warehouse locations from just several stocking distribution centers, and also work with partners to reseller through an additional 400 locations. Costco dominates the states of California, Washington, Oregon, Nevada and Arizona in addition to having a better online ordering and e-commerce system than Wal-Mart today (Wal-Mart Investor Relations, 2012). Costco is known for having highly unique merchandise of high value to drive shoppers into their stores, which is completely opposite of the direction Wal-Mart continues to go.

Wal-Mart Marketing Analysis

The total market size worldwide for discount retailers was $395B in 2011, predicted to rise to nearly $407B by 2015 (Wal-Mart Investor Relations, 2012). Overall this industry is facing relative slow growth due to economic conditions including flat and shrinking per capita disposable income, large variations in tax rates, and overall fear over what is going on with the economy as evidenced by slowing customer spending (Wal-Mart Investor Relations, 2012). Due to these factors the overall industry is slowing down in terms of growth, forcing consolidation in smaller markets overall. Over time the consolidation of this industry will occur, driving down revenues and growth. Wal-Mart will have to deal with slowing revenue per employee over time as well. Figure 4 analysis is based on analysis of the discount retailer market and its projected position of growth relative to per capita income in the U.S.

Figure 4: Economic Analysis of the Warehouse Clubs and Supercenter Industry Sources: (Wal-Mart, 2012) (Sodhi, Son, 2009) (Gosman, Kohlbeck, 2009)

Selecting An Appropriate Strategy (low cost, differentiation or niche) For Maximizing Organization's Return on Shareholders

Given the impressive track record Wal-Mart has been able to accomplish over the last several decades of operations aligned with their vision and mission statement of being the low-price leader, they need to continue on with this strategy. Taking their expertise in logistics, supply chain management and optimization through analytics, they need to move into higher-end electronics and durable goods, challenging regional competitors Costco in both of these areas. Wal-Mart needs to also take their approach to creating new stores and go to the mid-market, away from SuperCenter concept and towards more integrated store operations. Pricing is not their sole differentiator and never has been, but performance to customer expectations at the mid-range of the market is through an intensive array of products and services is. Their LPED value proposition is resonating extremely well during these uncertain economic times and will continue to drive of their stores in the mid-market. They need to open up a new store format that will serve suburban markets just as well as they have in the rural regions of the country where their supercenter store concept continues to resonate (Wal-Mart Investor Relations, 2012).

In making this recommendation to pursue mid-market stores Wal-Mart will be able to unify all of their core strengths, from their ability to manage logistics and supply chain complexity to their innate strength at launching new stores. Pursuing the midmarket with new store concepts will be highly profitable for the company as they will be also able to use their RFID technologies to streamline mixed-pallet mode shipping and logistics to these smaller format stores in more suburban locations as well. The innate strength or ability to launch new stores is so part of the company's core strengths that they need to capitalize on this innate knowledge to gain greater sales and market share over time. The following visualization illustrates how fast Wal-Mart was able to expand in the U.S., further supports the strategy of expanding into the midmarket with stores that include merchandise managed through their logistics functions cost-effectively. Please link on the link below the image to see the visualization online at the website Flowing Data.

Source: http://projects.flowingdata.com/walmart / please click on this link to see the visualization

Potential Wal-Mart Merger & Acquisition Strategy

Given the fact that Wal-Mart excels at logistics and supply chain management, and also offers a 3rd party logistics service to many other companies globally (Wal-Mart Investor Relations, 2012) the most logical merger or acquisition candidate would be in these areas. Across the many potential acquisition candidates, United Parcel Service (UPS) makes the most sense strategically to pursue, as their strength in large-scale 3rd party logistics, advanced analytics and the ability to manage complex freight management scenarios (Alghalith, 2005). UPS is also very strong in the analytics, predictive analytics, logistics planning, supply chain optimization and the ability to orchestrate very complex supply chain architectures. UPS is also one of the leading providers of advanced 3rd party logistics services across many industries globally, with proven value delivered in terms of streamlining electronics components And high tech supply chains specifically (Sodhi, Son, 2009). These two industries are critical for Wal-Mart from a product and merchandising strategy as well.

The merger or acquisition with UPS also makes sense from the standpoint of how well aligned the information systems, analytics platforms used, and depth of insight into running effective logistics programs. The skill sets UPS brings to Wal-Mart include expertise with advanced supply chain and logistics processes including how to implement Vendor Managed Inventory (VMI) across diverse supply chains, the fundamentals of revere logistics and how they related to high tech companies, and how to implement Earned Value Management (EVM) enterprise-wide (Alghalith, 2005). All of these areas would significantly strengthen the Wal-Mart's value-added services they sell to corporations who are interesting in streamlining their supply chains. UPS and Wal-Mart share several corporate accounts and would serve as the foundation of the new business unit that would be created after the merger or acquisition was completed. Wal-Mart could afford to purchase UPS in an all-stock transaction and still not dilute their shareholder value as well (Wal-Mart Investor Relations, 2012). With the advantages of strong supply chain integration expertise, depth of VMI and reverse logistics expertise on the part of UPS and the global supplier and corporate client base of Wal-Mart, this acquisition could quickly deliver significant revenue increases for the UPS service business. The pick, pack, ship operations of Wal-Mart are exceptional from the standpoint of their efficiency against global standards, and acquiring UPS would give the company and even broader portfolio of services to sell to corporate accounts looking for supply chain expertise (Wal-Mart Investor Relations, 2012).

Incentive and Reward Strategies for Wal-Mart Employees

If given the responsibility of defining incentive and reward strategies for Wal-Mart, I'd immediately put into place a series of programs that motivated employees to continually gain greater expertise and intelligence in their job areas and reward them for improved performance. I'd want to create a culture of aggressive learning and use of knowledge to make sure the many innovations that are occurring throughout many areas of retailing were captured and acted on quickly. The learning and earning program would concentrate on creating a platform of continual innovation, supported by an employee feedback program that would encourage new product, service and cost reduction strategies. I'd put in a program to reward employees for excellent ideas as well, which is defined later in this section of the paper.

At the center of my strategies for translating increased learning into earning power would be the three dominant values of autonomy, mastery and purpose. Combining autonomy, mastery and purpose together when designing new jobs would serve as the foundation of motivation for employees to continually improve over time and learn even more about their jobs. I'd also make it possible for the clerks working in retail to earn a promotion based on exceptional performance and would open up a very liberal program of educational reimbursement for full-time associates who want to pursue a degree in the evening or weekends. Retail sales persons with the company over a year could quality for up to $3,000 a year in educational reimbursement for college, universities and accredited, real trade schools that were related to their jobs. This would be a tremendous motivator to employees to continually improve the level of morale and stability in the workforce as well. For those employees in analytics and business intelligence functions, I would pay for their graduate degrees in full as long as they stayed with Wal-mart for a year after graduation. Analytics and business intelligence is a strategically important skill set within the company and would be rewarded as such.