Wal-mart Economics

Wal-mart Economics

Sam Walton, a leader with an innovative
vision, started his own company and made it into the leader in discount
retailing that it is today. Through his savvy, and sometimes unusual, business
practices, he and his associates led the company forward for thirty years.

Today, four 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 organization has faced, and is still facing,
a significant amount of controversy over several different issues; however,
none of these have done much more than scrape the exterior of this gigantic
operation. 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.

Why is Wal-Mart so Successful? Is it Good

Strategy or Good Strategy Implementation? -- In 1962, when 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 discounts retailing not only made Wal-Mart the world's largest
retailer, but also the world's number one retailer in sales. Indeed, 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.

Wal-Mart is successful not only because
it makes sound strategic management decisions, but also for its innovative
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 word "always" can be seen in virtually
all of Wal-Mart's literature. One of Walton's deepest beliefs was that
the customer is always right, and his stores are still driven by this philosophy.

When questioned about Wal-Mart's secrets of success, Walton has been quoted
as saying, "It has to do with our desire to exceed our customers' expectations
every hour of every day" (Wal-Mart Annual Report, 1994, p. 5).

Walton's greatest accomplishment was his
ability to empower, enrich, and train his employees (Longo, 1994). He believed
in listening to employees and challenging them to come up with ideas and
suggestions to make the company better. At each of the Wal-Mart stores,
signs are displayed which read; "Our People Make the Difference." Associates
regularly make suggestions for cutting costs through their "Yes We Can

Sam" program. The sum of the savings generated by the associates actually
paid for the construction of a new store in Texas (The story of Wal-Mart,

1995). One of Wal-Mart's goals was to provide its employees with the appropriate
tools to do their jobs efficiently. The technology was not used as a means
of replacing existing employees, but to provide them with a means to succeed
in the retail market (Thompson & Strickland, 1995).

Wal-Mart's popularity can be linked to
its hometown identity. Walton believed that every customer should be greeted
upon entering a store, and that each store should be a reflection of the
values of its customers and its community. Wal-Mart is involved in many
community outreach programs and has launched several national efforts through
industrial development grants.

What are the Key Features of Wal-Mart's

Approach to Implementing the Strategy Put Together by Sam Walton -- 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,


Wal-Mart stores operate according to their

"Everyday Low Price" philosophy. Wal-Mart has emerged as the industry leader
because it has been