Wal-Mart is the trading name or more simply the brand name for Wal-Mart Stores Incorporated which is an American public multinational corporation. The Wal-Mart Stores Incorporated has interests in large discount stores and warehouse or depots all over the United States of America. Several Wal-Mart stores are also coming up in other countries with economic stability such as those countries in Europe, China and even South Africa.
The authoritative Forbes 2000 List ranked Wal-Mart as the 18th largest public owned corporation in the world. This ranking was based on revenues the company had amassed last year. In addition, Wal-Mart was ranked as the largest private employer in the world having over two million directly employed and indirectly employed people.
Target Store is the trading name for Target Corporation headquartered in Minneapolis, Minnesota. The Target Corporation has business interests in the American discount retail market and runs a chain of retail superstores all over the United States of America and in some other countries too. The Target Corporation was in 2010 ranked at position 30 by the Fortune 500 and is considered to be the second largest retail discount trader after the Wal-Mart Stores Inc.
This paper seeks to compare and contrast these two corporations namely the Wal-Mart Stores Incorporated and the Target Corporation. In comparing and contrasting the two corporations, this paper seeks to show the nature of these organizations and how they have strived to ensure organizational performance is improved.
Origins and Growth of the Two Corporations
The Wal-Mart Stores Inc was founded by Sam Walton in the year 1962 in Rogers Arkansas. Walton is reported by Walton & Huey to have opened the first Wal-Mart store after gaining experience in the retail market business as he worked for other retail store owners. In his marketing endeavors, Walton learnt that by selling quality at relatively low prices, he could make high sales volumes.
By using this retail business model of offering goods at slightly low prices, the new company experienced rapid growth and in a period of five years it had opened up to twenty for retail stores in the state of Arkansas with overall sales turnover topping 12.6 million dollars. By the year 1968 the company had began to expand outside the state of Arkansas by opening new retail stores in the cities of Sikeston and Claremore in Missouri and Oklahoma respectively.
The company was incorporated in late 1969 with the name Wal-Mart Stores, Inc. the name was changed to Wal-Mart in the year 2008. When Wal-Mart began trading in the NYSE as a publicly held company one year after the incorporation in 2008, the company had grown to about thirty eight retail stores in five states in America with remarkable sales being witnessed thereof.
The Wal-Mart Store Incorporated can be said to be one of the few corporation in the United States. This is because by its twenty fifth anniversaries in 1987 the company had expanded its retail stores to 1,198 outlets, had two hundred thousand employees and partners and the sale volume had reached around 16 billion dollars. During this time the corporation had also started to expand into other overseas destinations like Argentina, Brazil and Europe (Walton & Huey 15-30).
According to the Target’s Website, The Target Corporation’s origins can be traced back to the beginning of the 20th century, more specifically to 1902 when businessman George Dayton completed the construction of a building in the city of Minneapolis central business district and leased the building to the Ruben Simon Goodfellow Trading Company.
The trading company then moved their Goodfellows department store into Dayton’s downtown Minneapolis building and in 1903 the store was sold to Dayton who renamed it Dayton’s Dry Good Company and later in 1911 it became the Dayton Company.
The Dayton Company was successful in Minneapolis but its first form of expansion did not come until 1950 when it acquired the Portland, Oregon based Lipmans Department Store Company. In a very unusual move for a business which had just bought out another one, the Dayton Company did not fully integrate the Lipmans Department Store but it operated its new acquisition separately.
It was in 1962 that Dayton Company entered into the discount retail store business when it opened its very first discount retail store which went by the name Target. The name “Target” was used to prevent customers from associating the new discount stores with the Dayton Department Stores.
Business was not good for the new Target Stores in their early years but by the years 1965 they had sales volumes topping at 39 million dollars and the Dayton Company was able to expand the business by opening and acquiring new stores in other areas. By 2000, the Dayton Company changed its name to the Target Corporation with branches in all the states except for Alaska and Hawaii.
Finance and Management
Between 2010 and 2011, annual reports from Wal-Mart’s website show that the company had revenues of 421.849 billion dollars. The corporation had an operating income of 25.542 billion dollars, a total net income after taxes and other deductions of 15.355 billion dollars.
The Wal-Mart Stores, Inc also had a total asset base of 180.663 billion dollars and equities of 68.542 billion dollars. The corporation also had approximately 2.1 million employees as of the fiscal year ending January, 2011. In summary the Wal-Mart Stores, Inc made a profit of 15.4 billion dollars on about 422 billion dollars which represented a 24.7 increase in the corporation’s gross profits.
On the other hand, in the same period, annual financial reports from Target Corporation indicate that the company had revenues of 67.390 billion dollars. The corporation had an operating income of 47.705 billion dollars, a total net income after taxes and other deductions of 2.920 billion dollars. The Target Corporation also had a total asset base of 44.533 billion dollars and equities of 15.487 billion dollars. Based on the above statistics, Wal-Mart can be said to be performing better than Target Corporation in terms of finance.
The operations of the Wal-Mart are separated into three divisions namely: Wal-Mart US, Sam’s Club and Wal-Mart International. A further classification of the businesses shows that there are nine specific areas of formats in which the corporation conducts business in. The nine areas are listed below.
- Supercenters which are physically large stores that contain a lot of merchandize.
- Food and Drugs which is a form of supermarket or grocery store with food and household goods.
- General merchandise stores.
- Cash and carry stores.
- Apparel stores.
- Soft discount stores.
- Membership warehouse clubs.
The Wal-Mart Stores is the largest division in the corporation. This is so because this division accounted for more than half of the total sales made by the corporation according to the corporation’s annual financial reports for the fiscal year 2010-2011 (Wal-Mart’s Website). The Wal-Mart US division is made up of three formats listed above which are most common in the United States of America. These retail formats are Supercentres or superstores, discount centres and Wal-Mart Markets (Fran)
The next division operated by the Wal-Mart Stores, Inc is known as the Wal-Mart Discount Stores which sell general merchandise and some groceries. These stores try to be a one stop place for shoppers as they have pharmacies, fast food outlets, gas stations and even branches of banks.
The Wal-Mart Supercentres on the other hand sell everything that is found in the discount stores plus such amenities such as meat markets, pet shops, restaurants, one-hour photo processing centers, garden centre, gasoline stations, banks and other numerous amenities (Slater 15-35).
The corporation also controls what are known as Wal-Mart Markets. The Wal-Mart Market concept is a chain of grocery stores used by the corporation to be the link between the Wal-Mart Discount stores and Supercentres. The Wal-Mart Markets usually stock and sell a limited selection of general goods, groceries, pharmaceuticals and beauty products
The second division of the Wal-Mart Stores is known as the Sam’s Club. This division consists of a chain of warehouse stores selling large quantities of groceries and general merchandise. For a person to make purchases in these Sam’s Clubs he or she must be a member and members will enjoy huge discounts.
However, non-members can also buy good in these clubs but they will pay an extra fee on top of their purchases. The niche market for the Wal-Mart Stores is the small business owners who they sell goods to at much discounted prices to allow them to make profits later. According to Fran, that is Sam’s Club have the slogans “Savings made simple” and ‘We are in business for small business”. The third division of the Wal-Mart Stores is known as Wal-Mart International.
According to Wal-Mart’s website, the operations of this division cover 4,623 stores and about 700 thousand employees in fifteen countries. This division of the corporation came as a result of the corporation’s expansion and acquisition of other similar businesses in countries outside the United States of America (Boselie 20-30).
The Target Corporation also has its operations divided onto several divisions. According to Barwise and Meehan, the operations at the Target Corporation are divided into different stores as detailed in the breakdown below.
The first type of store is the Target Store which is a grocery store chain stocking and selling clothing, health and beauty products, jewelry, furniture, sporting goods, toys, electronics, and seasonal goods such as Christmas décor, auto supplies and hardware supplies.
The target stores also stock limited amounts of perishable groceries. Depending on the location of these Target Stores, some stores may have the other subsidiaries of Target such as Target Clinic, Target Photo, Target Optical and Target Pharmacy.
The next division of the Target Corporation is known as PFresh. The concept of the PFresh was to give to its clients an array of stores that specialize in a wide range of fresh but perishable goods such as frozen food, meat, fruits and vegetables. The stores also have freshly baked breads and cakes. The merchandize in these PFresh stores mainly constitute products from the brand of Target Corporation that is owned by the likes of market Pantry and Archer Farms (Target’s Website).
The Target Corporation also operates a division known as Target Greatland. Target Greatland is, in essence a chain of superstores that deal general kinds of merchandise. This division is comprised of stores that were expanded to be larger than the Target Stores after the year 2004. The Target Greatland Stores are reported to stock and sell an array of merchandise. However, they are said to lack some groceries like dairy market, meat, bakery and poultry market which are loved in USA.
The third division of the Target Corporation is the Super Target Stores. The Super Target Stores is a chain of large stores usually on a single storey building.
The Super Targets can be said to be the mother of all Target Stores because they offer everything found in the Target Stores, PFresh Stores and Target Greatland Stores. The Super Target Stores have full-line groceries, branches of bank, fast food outlets and other Target Corporation subsidiaries like Target Clinic, Target Photo, Target Optical and Target Pharmacy (Barwise and Meehan).
Both corporations have undertaken expansion projects outside their country of origin, The United States of America. However, Wal-Mart Stores has reportedly done more global expansion than the Target Corporation. This can be attributed to Wal-Mart’s greater financial muscle than the Target Corporation (Ortega 5-15).
Wal-Mart Stores operates under different names in many countries. This is because it bought out several retail outlets in these countries but the names have not been changed to Wal-Mart. The corporation operates in Mexico as Walmex, in Japan as Seiyu, in India as Best Price and in the United Kingdom as Asda.
Yet still, Wal-Mart Corporation continues to expand global operations by buying supermarket chains in countries like Brazil, Chile and India. Newswire.ca reports that Wal-Mart also entered the African Market by buying out the Massmart Holding Ltd of South Africa
Target Corporation has also shown its intention to venture into the global markets. This was done in January, 2011 when the corporation announced that it had purchased the leaseholds to two hundred and twenty two retail stores of the Canadian retail marketer Zellers (Target Pressroom).
Philanthropy and Corporate Social Responsibility (CSR)
In America, the Target Corporation has been often ranked as one of the top philanthropic corporations. The corporation says in its official website that it is dedicated to giving back 5% of its net profit, about 3 million dollars a week, to community outreach and development projects in the communities in which it operates.
According to Forbes (2006), the Target Corporation does its philanthropic activities through volunteering, sponsors programs and exhibitions that facilitate artistic talents of children in USA and, finally, providing basic needs to members of the society in crises such as hurricanes and support in disaster preparedness (Patrick et al. 57-66).
Wal-Mart Stores has also been involved in some philanthropic work. In the year 2010, it donated 2 billion dollars to aid hunger relief efforts in the United States of America. The corporation has also been giving money to fund education development and scholarship to the needy students in America (Wal-Mart’s Website).
Another example of the philanthropy of the Wal-Mart Corporation was seen in 2006 when it began to sell generic drugs at a paltry 4 dollars a prescription while other stores retails these same drugs at an average of 29 dollars a prescription.
Both corporations have faced a lot of criticism due to their business models and practices. Wal-Mart Stores, for example, has always been criticized as a multinational corporation that rakes in massive profits but still pays its employees meager salaries and sometimes below the minimum wage.
Many labor unions in America have always criticized the Wal-Mart Stores directive that bars its employees from joining the unions and that the corporation discriminates against the female employees in terms of pay and promotions (Mallaby).
The corporation has also been criticized for sourcing a lot of its products from outside the United State hence killing homegrown business. Many business analysts have also criticized the Wal-Mart, Stores Inc for killing small businesses in the towns where they set up shops (Frontline).
The Target Corporation has also not been spared of criticism. The corporation has been criticized for barring its employees from joining labor unions and for paying low wages to the employees who work in poor conditions.
The corporation has also faced the huge opposition from the group named Planned Parenthood for its conscience clause which is alleged to allow pharmacists to refrain from selling emergency contraceptives to women (especially the under-aged ones) basing their argument on religious beliefs (Marcotty).
Based on the above discussions, it can be said that, in the effort to improve organizational performance, both organizations have done extremely well. However, if progress is to be sustained, both companies should find a way of improving working conditions, avoiding unnecessary controversies while continually striving to better their operations.
This way, the negative endeavors will be avoided while the positive ones are proliferated thus encouraging efficiency and profitability in the company as well as the satisfaction of their customers (Armstrong 15-25).
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