The Establishment and Growth of Walmart Company

Introduction

Walmart is a multinational retail business that specializes in several hypermarkets, discount markets, grocery and department stores provides insight into strategic management leading to its continued success. The Company was founded in the year 1962 in Arkansas by Sam Walton who incorporated the firm in 1969 (Morningstar). The company trades under the name Walmart in the United States of America and the Canadian country whereas in Mexico, the firm trades under the name Walmart de Mexico. Currently, the company's headquarters is located in Bentonville in the state of Arkansas. The company deals with a variety of products such as electronics, movies and music, clothing, jewelry, health and beauty supply, groceries, furniture and party supplies (Morningstar). The company's success is underlined by a sudden rise in its market share. The growth in market share is attributable to the application of sound management strategies by the top leadership level personnel. The business grew to a multinational status from its initial retail stature between 1990 and 2005. The company has several branches around the world with a total of 2300000 employees worldwide.

Walmart company is steered towards its success by the vision that outlines the roadmap to the firm's success. Walmart's vision statement is 'To be the best retailer in the hearts and minds of consumers and employees.' The mission played a significant role in the rise of the company's status from a retail firm to a multinational corporation. The company's mission statement is 'Saving people money so they can live better.' The mission statement is coherent to the firm's slogan which stipulates the need to live better while saving money (Ferguson). Walmart company had several strategic goals that necessitated the implementation of strategic plans. The owner, Sam Walton devised the retail strategy that is the reference policy followed by the firm since its formation. The approach has enabled the company to sell its products at a relatively less amount compared to other businesses.

Moreover, the company also adopted a growth strategy that has allowed the attainment of its expansion goal (Blecher 263). The company started opening branches in ten years after it was founded in the year 1962. Even though several activities and operations have played a vital role in the growth of Walmart company, globalization remains to be the most critical aspect of its growth.

Globalization and Walmart’s Growth

Globalization refers to the aspect where a firm is in a position to operate without the fears that the regional or state boundaries will hamper its activities. As a result, a firm can undertake its business operations with ease around the globe.

Challenge Faced Before 2008

Although Walmart started opening branches in different parts of the globe ten years after its opening, the firm failed to take into consideration the cultural aspects of the people in the regions where the firm opened branches across the globe. As a result, the firm ended up having several of its products being stale and neglected by the customers as they felt they did not match their tastes and preferences (Johnston 229).

Also, the majority of the products designed did not take into consideration the economic capability of the people who inhabited a given region or area. As a result, some of the products were too expensive for the locals or natives in a given locality to purchase and consume. For instance, the company’s stores in the Chinese and Korean market faced a significant challenge as the products offered failed to suit the customer’s preference as compared to the locally available products. Similarly, the fact that the Chinese and Korean populace have different cultural aspects made it difficult for Walmart to have an easy penetration into the market as majority of the products did not correlate with the beliefs and practices of the people (Johnston 243). As a result, lack of compatibility with the overall way of life of the people proved to be a stumbling block to the firm’s motive to penetrate different parts of the world.

Walmart During 2008

Despite having a somewhat successful phase with regards to business activities, the firm faced a challenging situation in the year 2008 with regards to expansion activities. All in all, the period was characterized by the recession which had a negative impact on several businesses. Most parts of the globe faced a slump in the economic growth during this period as there was a reduction in the level of business activities. Walmart experienced a decrease in the level at which it opened its branches across the globe. Given the firm’s increased branches and employees as well as the reduction in the level of purchases experienced in the stores, the firm started running into losses (Morningstar). As a result, the firm faced a challenge of putting up with a large number of stores as well as employees. As a result, the firm suffered a problem as it cut its labour-force by six per cent besides closing its 20 stores due to lack of activities which generated profits to run the business effectively. The reduced growth and lack of severe activities during the period pointed to the prospect of a possible shut down of the business entirely.

PESTEL analysis of the two scenarios

PESTEL analysis relates to the political, economic, social, technological, environmental as well as the legal factors that influence the activities of a firm. As a result, PESTEL plays an integral role in determining the causes as well as understanding the elements that make companies or firms to take certain measures in a bid to improve their profitability or overcome specific challenges.

Before 2008

The Walmart corporation faced the challenge of designing products based on cultural beliefs, tastes and preference as well as their financial capabilities. The cultural beliefs underlined by the Chinese, Japan and Korean populace relates to the social aspects. The firm failed to take into consideration the social elements of the people at the time. Whereas the social issues related to how people interact with each other as well as with other people and objects surrounding them, the people’s tastes and preference also formed part of the social aspects. Globalization relates to availing to people from diverse settings the products (Blecher 271). Thus, they ought to meet the expected demands, tastes and interests of the buyers or customers. Also, the economic condition of the people made it difficult for the people to engage in business activities with Walmart at the time given the fact that the firm charged its products in a rather expensive manner as compared to the locally available products. Walmart did not embrace technology to a great extent at that time with regards to marketing and availing its products. As a result, a smaller fraction of the population opted to purchase products from its retailing stores. Similarly, the people in the regions such as Korea and Japan believed in their locally produced goods and thus did not find the Walmart products appealing.

Similarly, the Walmart company faced problems with the government in regions such as Germany as the firm tried to fix its prices lower as compared to other firms to ensure it would draw more customers. In Germany, the process of setting the costs of the commodities is often done by the government. As a result, the act did not augur well with the people of the German republic as the firm circumvented the law. Hence, the environment was not conducive the firm’s business activities. When the firm laid off 1500 employees in the year 2004, the negative aspects of the firm stuck in people’s minds as it was viewed as a negative public relation as far as the firm’s activities and administration were concerned (Morningstar).

In the year 2008

The firm’s main challenge correlated with the recession that strong effect on the global economy. The period was characterized by reduced business activities as well as the reduced level of profitability by firms. Low purchases of products characterized the environment. The recession had a significant impact on the people’s ability and willingness to purchase products both for home and corporate use. The decline in business activities of the firm during the period led to a reduction in the incorporation of technology and its application in the manufacture and supply of products both in the US and other areas around the globe. As a result, there was a reduction in the technological usage and application in the firm. The unsuitable economic conditions had a significant impact on the workers of the firm who demanded more money regarding wages as underlined by the fact that there was inflation and they had families to fend for as well as personal needs.

On the other hand, the firm was not making significant profits due to low activity levels experienced during this period. Therefore, the high number of employees and low activity level meant that the firm was unable to meet it the social needs of the employees, as well as the customer since some of the workers, was laid off in a bid to reduce the expenses incurred. The legal and political environments played a little role to ensure there was an upturn in the events that were related to this period as the legislative and the executive bodies did not formulate adequate rules and decisions to manage the situation on time.

Nonetheless, the Walmart firm was permitted to operate both in the USA and other regions across the globe. The low economic activities by other firms also during the year 2008 also led to a decrease in Walmart’s ability to obtain raw materials for its products. As a result, the firm also experienced low production of goods during this period.

Responses to the challenges posed during and before 2008

The activities relating to 2005 and 2008 played an integral role in the firm’s response in a bid to combat the challenging situations posed. In the year 2005, Walmart company devised ways of ensuring it had a good reception in some of the regions it had opened its branches such as Korea, Japan and China. For instance, the firm opted to employ staff who hailed from those regions as a way of ensuring the people would converse and have the perception that it is an inclusive firm. Similarly, the firm developed its products based on the tastes and preference of the people (Blecher 272). Also, the firm opted to work with the governments to ensure it had a smooth running of its activities. Similarly, the firm engages in remitting of taxes to ensure it adheres to the legal outlines of a given region or state. Also, it cooperated with the governments’ strategies with regards to setting prices of commodities and terms and conditions for operations.

Similarly, the firm opted to lay off employees as underlined by the move to relinquish its association with 1500 workers to ensure the firm was in pole position to reduce the costs incurred that resulted in losses. The firm improved its marketing activities as underlined by increased advertisement in a bid to ensure the people were more conversant with the operations of the firm and the products it engaged in. Walmart improved its market research to ensure it had adequate knowledge of the tastes and preference of the people to provide the company designed products that would suit their desires and needs. The firm also employed takeover strategies as underlined by the fact that the company took over Seiyu firm and made it a subsidiary company (Johnston 269). The takeover aimed at not only ensuring the firm had a good relationship with the people but also to increase the volume of goods availed to the customers since it would serve as an integral outlet.

Similarly, Walmart undertook several activities relating to upgrading the social lives of the people such as recruiting more personnel from the regions where it opens the stores to build a positive image and in return increase its profitability. Also, the firm has embraced technology to ensure the employees can also make their orders using the online platform as a means of reducing the number of employees and related costs (Morningstar). Hence, the firm is moving at a suitable pace with the changes in the technological field.

In conclusion, the Walmart company was established in the year 1962. Despite being formed as a single unit enterprise, it has since grown opening up branches and outlets in several parts of the world. The firm deals in a wide variety of products which range from the grocery, technological devices among others. Although the firm has enjoyed a positive growth over the years, it has faced periods of decreased business activities as underlined by the year 2008 when the great recession hit most parts of the world. Similarly, the firm faced challenges with regards to penetrating in new markets prior to the year 2008 as underlined by the case of China, Japan, Korea and even Germany. The effects of the challenges were grave that they led to the closure of some of the branches or outlets the company had as well as laying off some of the employees. In a bid to ensure the problem was kept under control, the company resorted to strategies such as takeovers as underlined by the Seiyu firm which was taken over in 2008. The acquisitions were not only meant to increase the firm’s profitability but also to ensure there was a positive reception in certain areas as the company retained a significant portion of the employees in the seized firms.