success of Wal-MArt Essays - Walmart, Sam Walton, Discount Store

Wal-Mart?s Success by Utilizing Four Components of Business Abstract This paper is the result of internet research on the Wal-Mart retail chain. During the research, I focused on the four components of business which are Business, Profit, Business Environment, and the Economy. I was able to find resources that depicted all of these within the confines of Wal-Mart?s success. After reading this essay, you should find that Wal-Mart is a successful business that continues to have success through the original vision and strategies of its founder, Sam Walton. Sam Walton was a leader with a vision. He started his own company and made it into the leader in discount retailing that it is today. Through his smooth, smart, and sometimes unusual business practices, he and his associates led the company forward for thirty years. Even now years after his death, the company is still growing steadily. Wal-Mart executives continue to rely on many of the traditional goals and philosophies that Sam's legacy left behind, while simultaneously keeping one step ahead of the ever-changing technology and methods of today's fast-paced business environment. The future also looks bright for Wal-Mart, especially if it is able to strike a comfortable balance between increasing its profits and recognizing its social and ethical responsibilities. In 1962 Sam Walton opened the first Wal-Mart store in Rogers, Arkansas. No one could have ever predicted the enormous success this small-town merchant would have. Sam Walton's talent for discount retailing not only made Wal-Mart the world's largest retailer, but also the world's number one retailer in sales. Wal-Mart was named "Retailer of the Decade" by Discount Store News in 1989, and on several occasions has been included in Fortune's list of the "10 most admired corporations." Even with Walton's death (after a two-year battle with bone cancer) in 1992, Wal-Mart's sales continue to grow significantly. The Wal-Mart Philosophy leaves it successful not only because it makes sound strategic management decisions, but also for its implementation of those strategic decisions. Regarded by many as the entrepreneur of the century, Walton had a reputation for caring about his customers, his employees (or "associates" as he referred to them), and the community. In order to maintain its market position in the discount retail business, Wal-Mart executives continue to adhere to the management guidelines Sam developed. Walton was a man of simple tastes and took a keen interest in people. He believed in three guiding principles: 1. Customer value and service; 2. Partnership with its associates; 3. Community involvement (The Story of Wal-Mart, 1995). The key features of Wal-Mart's approach to implementing the strategy put together by Sam Walton emphasizes building solid working relationships with both suppliers and employees, being aware and taking notice of the most intricate details in store layouts and merchandising techniques, capitalizing on every cost saving opportunity, and creating a high performance spirit. This strategic formula is used to provide customers access to quality goods, to make these goods available when and where customers want them, to develop a cost structure that enables competitive pricing, and to build and maintain a reputation for absolute trustworthiness (Stalk, Evan, & Shulman, 1992). Wal-Mart has leveraged its volume buying power with its suppliers. It negotiates the best prices from its vendors and expects commitments of quality merchandise (Thompson & Strickland, 1995). The purchasing agents of Wal-Mart are very focused people. "Their highest priority is making sure everybody at all times in all cases knows who's in charge, and it's Wal-Mart" (Vance & Scott, 1995, p. 32). "Even though Wal-Mart was tough in negotiating for absolute rock-bottom prices, the company worked closely with suppliers to develop mutual respect and to forge long-term partnerships that benefited both parties" (Thompson & Strickland, 1995, p. 866). Just how Successful is Wal-Mart? A forecast of Wal-Mart's income for the period 1995-2000, considering increases of 30.6% in Net Sales, 27.7% in Operating Expenses, and 52.3% in Interest Debt (a level which is below Wal-Mart's historically compounded growth rate of 55.6%) indicates that the company should continue to report gains each year through 2010. According to most analysts and company projections, sales should approximate $425 billion by 2012, representing an increase of 30.6% as compared to 2005. The growth on sales that