Walmart is the world’s largest retailer with $401 billion in sales for the fiscal year ending Jan. 31, 2009. In the U.S., Wal-Mart Stores, Inc. operates more than 4,200 facilities…. Internationally, Walmart operates 3,600 additional facilities in 16 markets worldwide…. Walmart employs more than 2 million associates worldwide, including more than 1.4 million in the United States. Walmart, whose total annual revenue represents “a sum greater than the economies of all but 30 of the world’s nations” and is growing faster than any of them, is an extremely successful and influential company. At the foundation of the company’s success, however, is its business strategy of minimizing costs, which relies on many policies and decisions that affect stakeholders in different ways. The giant retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey & Co. study concluded that about 12% of the economy’s productivity gains in the second half of the 1990s could be traced to Wal-Mart alone. Walmart gives consumers what they indicate (with their shopping practices) they want—low prices. Yet, the methods by which Walmart achieves these cost savings and low prices are also having a lasting impact, often negative, in the eyes of other stakeholders. The Walmart conundrum is magnified when the long term impact of the company’s policies are extrapolated The potential dangers for Walmart are many. What if consumers begin to worry about the impact the company is having on the economy and society more than they welcome the lower prices the company brings? Communities that worry about a megastore’s impact on rural downtowns have already restricted Walmart’s growth. Will employees continue to apply for positions at Walmart if better paid alternatives exist? As the company continues to expand, will the government begin to fear the monopolistic characteristics of such a huge market influence? Suppliers are stakeholders who both relish Walmart’s market scale and scope and fear their pricing pressures. How will these various stakeholder reactions affect Walmart’s business strategy over the longer term? What is the outlook for the company from a CSR perspective? First, Walmart has grown to such an influential point that it now dominates any industry it enters by driving down prices and imposing punishing margins on its competitors. Walmart arrives at its low prices by reducing costs through two separate strategies. First, it has revolutionized the management of supply chains and inventory within the retail industry. Now, thanks to Walmart’s innovations, many firms are better able to manage the flow of goods and materials that form an interconnected chain from providers (such as subcontractors and suppliers),through the firm, to the customer. The company uses information technology to track products—from the supplier to the warehouse to the shelf to the cash register—and ensure, as soon as they are sold, that replacements are back on the shelf waiting for the next customer. And, with this greater refinement in managing the flow from suppliers around the world, it has become easier for firms like Walmart and others to outsource supplies globally. In turn, due to Walmart buying on a global basis, this trend of outsourcing has caused higher-cost domestic producers to lose their supplying relationship to Walmart, company’s commitment to integrating radio frequency identification (RFID) technology throughout their distribution systems further pushes the technological boundaries of supply chain management. Walmart’s innovations have created savings across the board. And it passes these savings on to customers in the form of lower prices. Second, however, Walmart also seeks to cut costs in other areas by pursuing activities that impose specific outcomes. Examples include paying some of the lowest wages in the retail sector and making specific demands on suppliers. It achieves this advantage by virtue of its size and importance within the economies in which it operates: Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. Q. 6. What do you mean by stakeholders? In this case who are the stakeholders and why?
Walmart is the world’s largest retailer with $401 billion in sales for the fiscal year ending Jan. 31, 2009. In the U.S., Wal-Mart Stores, Inc. operates more than 4,200 facilities…. Internationally, Walmart operates 3,600 additional facilities in 16 markets worldwide…. Walmart employs more than 2 million associates worldwide, including more than 1.4 million in the United States. Walmart, whose total annual revenue represents “a sum greater than the economies of all but 30 of the world’s nations” and is growing faster than any of them, is an extremely successful and influential company. At the foundation of the company’s success, however, is its business strategy of minimizing costs, which relies on many policies and decisions that affect stakeholders in different ways. The giant retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey & Co. study concluded that about 12% of the economy’s productivity gains in the second half of the 1990s could be traced to Wal-Mart alone. Walmart gives consumers what they indicate (with their shopping practices) they want—low prices. Yet, the methods by which Walmart achieves these cost savings and low prices are also having a lasting impact, often negative, in the eyes of other stakeholders. The Walmart conundrum is magnified when the long term impact of the company’s policies are extrapolated The potential dangers for Walmart are many. What if consumers begin to worry about the impact the company is having on the economy and society more than they welcome the lower prices the company brings? Communities that worry about a megastore’s impact on rural downtowns have already restricted Walmart’s growth. Will employees continue to apply for positions at Walmart if better paid alternatives exist? As the company continues to expand, will the government begin to fear the monopolistic characteristics of such a huge market influence? Suppliers are stakeholders who both relish Walmart’s market scale and scope and fear their pricing pressures. How will these various stakeholder reactions affect Walmart’s business strategy over the longer term? What is the outlook for the company from a CSR perspective? First, Walmart has grown to such an influential point that it now dominates any industry it enters by driving down prices and imposing punishing margins on its competitors. Walmart arrives at its low prices by reducing costs through two separate strategies. First, it has revolutionized the management of supply chains and inventory within the retail industry. Now, thanks to Walmart’s innovations, many firms are better able to manage the flow of goods and materials that form an interconnected chain from providers (such as subcontractors and suppliers),through the firm, to the customer. The company uses information technology to track products—from the supplier to the warehouse to the shelf to the cash register—and ensure, as soon as they are sold, that replacements are back on the shelf waiting for the next customer. And, with this greater refinement in managing the flow from suppliers around the world, it has become easier for firms like Walmart and others to outsource supplies globally. In turn, due to Walmart buying on a global basis, this trend of outsourcing has caused higher-cost domestic producers to lose their supplying relationship to Walmart, company’s commitment to integrating radio frequency identification (RFID) technology throughout their distribution systems further pushes the technological boundaries of supply chain management. Walmart’s innovations have created savings across the board. And it passes these savings on to customers in the form of lower prices. Second, however, Walmart also seeks to cut costs in other areas by pursuing activities that impose specific outcomes. Examples include paying some of the lowest wages in the retail sector and making specific demands on suppliers. It achieves this advantage by virtue of its size and importance within the economies in which it operates: Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. Q. 6. What do you mean by stakeholders? In this case who are the stakeholders and why?
Chapter14: Marketing Channels And Supply Chain Management
Section14.1: Taza Cultivates Channel Relationships With Chocolate
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Walmart is the world’s largest retailer with $401 billion in sales for the fiscal year ending Jan. 31, 2009. In the U.S., Wal-Mart Stores, Inc. operates more than 4,200 facilities…. Internationally, Walmart operates 3,600 additional facilities in 16 markets worldwide…. Walmart employs more than 2 million associates worldwide, including more than 1.4 million in the United States.
Walmart, whose total annual revenue represents “a sum greater than the economies of all but 30 of the world’s nations” and is growing faster than any of them, is an extremely successful and influential company. At the foundation of the company’s success, however, is its business strategy of minimizing costs, which relies on many policies and decisions that affect stakeholders in different ways.
The giant retailer is at least partly responsible for the low rate of U.S. inflation, and a McKinsey & Co. study concluded that about 12% of the economy’s productivity gains in the second half of the 1990s could be traced to Wal-Mart alone.
Walmart gives consumers what they indicate (with their shopping practices) they want—low prices. Yet, the methods by which Walmart achieves these cost savings and low prices are also having a lasting impact, often negative, in the eyes of other stakeholders. The Walmart conundrum is magnified when the long term impact of the company’s policies are extrapolated
The potential dangers for Walmart are many. What if consumers begin to worry about the impact the company is having on the economy and society more than they welcome the lower prices the company brings? Communities that worry about a megastore’s impact on rural downtowns have already restricted Walmart’s growth. Will employees continue to apply for positions at Walmart
if better paid alternatives exist? As the company continues to expand, will the government begin to fear the monopolistic characteristics of such a huge market influence? Suppliers are stakeholders who both relish Walmart’s market scale and scope and fear their pricing pressures. How will these various stakeholder reactions affect Walmart’s business strategy over the longer term? What is the outlook for the company from a CSR perspective?
First, Walmart has grown to such an influential point that it now dominates any industry it enters by driving down prices and imposing punishing margins on its competitors.
Walmart arrives at its low prices by reducing costs through two separate strategies. First, it has revolutionized the management of supply chains and inventory within the retail industry. Now, thanks to Walmart’s innovations, many firms are better able to manage the flow of goods and materials that form an interconnected chain from providers (such as subcontractors and suppliers),through the firm, to the customer. The company uses information technology to track products—from the supplier to the warehouse to the shelf to the cash register—and ensure, as soon as they are sold, that replacements are back on the shelf waiting for the next customer. And, with this greater refinement in managing the flow from suppliers around the world, it has become easier for firms like Walmart and others to outsource supplies globally. In turn, due to Walmart buying on a global basis, this trend of outsourcing has caused higher-cost domestic producers to lose their supplying relationship to Walmart, company’s commitment to integrating radio frequency identification (RFID) technology throughout their distribution systems further pushes the technological boundaries of supply chain management. Walmart’s innovations have created
savings across the board. And it passes these savings on to customers in the form
of lower prices.
Second, however, Walmart also seeks to cut costs in other areas by pursuing activities that impose specific outcomes. Examples include paying some of the lowest wages in the retail sector and making specific demands on suppliers. It achieves this advantage by virtue of its size and importance within the economies in which it operates:
Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don’t change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year.
Q. 6. What do you mean by stakeholders? In this case who are the stakeholders and why?
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