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Innovation Report – Wal-Mart Research Paper


Introduction

Wal-Mart is an American, transnational retail company, which runs warehouse stores and chains of large-scale discount stores. It is the world’s largest public corporation and the largest private employer globally, employing more than 2 million employees around the world (Vance and Scott, 1997). The company runs 8,500 stores throughout 15 nations, operating under 55 diverse names (Wal-Mart, 2012).

This paper explores the innovative operations of Wal-Mart, through the development of new, innovative products taking into account different market forces like competition, internal and external environments as well as the regulatory climate.

The innovative strategies of Wal-Mart

Competition and Wal-Mart

Gregory (2009) discussed Wal-Mart’s strategy of competing out its competition in the international market, through its shocking product prices. An example is the case of the USD8 Jeans offer, besides its strategy of stocking all consumer products, ranging from matchboxes, milk, and toys among others. Wal-Mart has employed a wide-reaching massive stocking and strategy remodeling known as ‘project Impact’.

The second innovative characteristic is enhancing the customer service capacity and the friendliness of their staffs. The third innovation is capitalizing on the stocking of the product categories, where the company can kill its competitors (Gregory, 2009).

Product life cycle of Wal-Mart’s products

Product innovation is one of the seven areas that are given emphasis at Wal-Mart. The goal of the company, in this area is channeling the capacity of the product development team, at exposing the deep-reaching social and environmental hot spots – with regard to the life cycles of their products. According to EDF (2010), the aim of the company is to realize an improvement of the overall sustainability of the products produced by the company.

The company requires the suppliers to deliver groceries and food inputs that can be processed into products with a longer shelf life. The effort is aimed at increasing the health and the safety aspects of the products sold by Wal-Mart (EDF, 2010).

New needs of a customer

Wal-Mart has been a favorite shopping destination for many low and middle class shoppers (Blair, 2010). Wal-Mart is losing out on the changing needs of its customers, including the need for budget shopping, limited customer services and the need for variety, which are areas that Wal-Mart stores are failing in.

Wal-Mart stores are losing in the capacity of service delivery, with many employees answering to customers, “that is not my department,” when they are requested to offer their help. Wal-Mart stores are also characterized by a dwindling selection of the products they offered (Blair, 2010).

Regulations and Wal-Mart

Straight (2010) discussed Wal-Mart’s innovative approach to regulation, towards realizing wider freight control. The change of approach to the supply chain will allow their suppliers to focus on the manufactory of products. The issue by employing the innovative supply chain approach, which will reduce the operational costs of suppliers.

The company will worsen the US trucking industry, which had been undergoing recovery after a three-year flight downturn. This approach by Wal-Mart, as discussed by Thomas and Stoneham (2011, p. 5), is likely to inflict uncompensated impacts on third parties.

Social Consciousness of Wal-Mart

Wal-Mart uses its reputation as a seller offering products at low prices to cover its lack of social consciousness (Kaiser, 2005). The effects felt by Wal-Mart include their failure of the attempts to expand into Europe, particularly Norway.

Norway disinvested Wal-Mart (Berglund, 2006), and in Germany, it had to sell 85% of its chains to Metro (Norton, 2006). These cases show that Wal-Mart uses their dismal social consciousness as an unethically innovative approach to the realization of more profits, at the expense of their employees and areas of operation.

The obstacles in the way of the Innovative strategies

Risk facing Wal-Mart’s innovativeness

The risks facing the innovative strategies of Wal-Mart, in the area of product development include the sharp increase in competition from other enterprises like Costco, which compete Wal-Mart’s Sam’s club to a great extent. Costco, as opposed to Wal-Mart’s outlet registers more sales volumes, thus revenues.

Costco is also visited frequently. For instance, it was the first outlet to sell luxury items and products like gasoline and fresh meat (Courtemanche and Carden, 2011). Wal-Mart faces the risk of restrictive trade and regulatory policies, which do not favor the business outlook of the company and its business (Berglund, 2006).

The project itself

Bender et al. (2001) discussed that Wal-Mart’s investment into new and innovative products has been a major source of value. Examples include their investments in infrastructure, including the use of point-of-sale UPC (Uniform Product Codes) scanning.

They also introduced the pricing of products using radio frequency broadcast between the central inventory and scanners operated by personnel at the shelves. Wal-Mart has also invested greatly in the facilitation of new and innovative ways of product offering, including the connectivity of its operations.

These innovative approaches to product offering have continually offered Wal-Mart a competitive edge, since the 1980s, including its installation of a satellite connectivity system for all its networks (Bender et al., 2001).

The uncertainty facing Wal-Mart

The uncertainties facing Wal-Mart include the threat of the pending lawsuits, which were filed by discontented employees, who felt that they were abused by the company (UW, 2013). Some of the lawsuits, which could affect the company in a negative manner, include those on the discrimination of female workers, forceful overtime work, minimal wage rates, and practices of firing the workers that question the negative strategies of the company.

Wal-Mart faces uncertainty, regarding the actions that could be employed by its major rivals. Therefore, Wal-Mart has remained watchful of their actions, so they can employ parallel innovative strategies to offset their strategies. As a result, Wal-Mart is faced by the uncertainty of strategies to employ, so as to maintain their position in the retailing industry (Wailgum, 2008).

The internal and the External environment of Wal-Mart

The internal environment of Wal-Mart is composed of its tangible resources including financial, technological, physical and organizational resources. The organization structure of Wal-Mart is organized according to regions. Thus, Wal-Mart is likely to battle with the same problems at different operational locations (Berglund, 2006).

In the aspect of physical resources, Wal-Mart buildings are located at remote centers, which require the transportation of supplies. This resource allocation increases the costs resulting from the logistics of the company, towards getting the products to the customers (Jones, 2010).

The second aspect of the internal environment is the intangible resources of the company, including the innovation, human resources, and reputation. Wal-Mart’s innovation is suppressed by its inability to safeguard the rights and the welfare of their employees as exemplified from the suits leveled against the company (UW, 2013).

The external environment of Wal-Mart includes the general environment of Wal-Mart: economic, global, and social-cultural. Wal-Mart maintains its warehouse style shops with minimal decorations, which are not favored by the outlook of different socio-cultural contexts, including the upcoming generation, which is inclined to social dynamics.

The global environment has not favored Wal-Mart at all its target markets as exemplified by the European outlook that did not allow the company to grow in Norway and Germany, as opposed to its success in America (Kaiser, 2005).

The second aspect of the external environment is the industry environment (Wailgum, 2008). In this environment, there is the obstacle presented by the need to maintain the expected standards of price and quality, which could shift customers to the competitors of Wal-Mart.

The external environment is also composed of the opportunities available to Wal-Mart and the threats facing it, including the lawsuits leveled against it and the many competitors that are re-grouping towards developing strategies of breaking Wal-Mart’s dominance (UW, 2013).

Wal-Mart as an obstacle in itself

From the review of the corporate profile of Wal-Mart, the company has tainted its social image many times and in many aspects of operation, which could impair the company’s success in business. Examples include that the company has not maintained long term relations with their employees as exemplified in the male dominance issue and the wrangles between the company and its employees (UW, 2013).

Wal-Mart has also focused on the narrow business outlook, which should emphasize on tapping emerging markets like India and China, as opposed to limiting their operations at established markets (Norton, 2006).

Justification of pushing innovation to a higher level

Pushing innovation levels and technological change to higher levels at Wal-Mart will increase the closure of employment opportunities and increase the resources consumed on the training of employees. In the case of Wal-Mart, the change of technology and the adoption of higher innovation levels will not be cost-effective for the company (UW, 2013).

For a company that emphasizes on employing low cost employees, the change will not be justified as it will eliminate the need for untrained or semi-trained labor, to pave the way for the trained employees who are likely to require better salaries.

The best innovation process to implement

The best innovation processes available to Wal-Mart include eliminating the structural and the administrative incoherence that makes the company a non-preferred economic player among many target markets like Norway and Germany (Berglund, 2006; Kaiser, 2005).

Wal-Mart should also focus on eliminating the obstacles within its internal and external environment as they are likely to limit its market entry strategies at different global (Wailgum, 2008). The other innovative strategy that Wal-Mart can employ towards realizing future market success is increasing their social consciousness (Kaiser, 2005).

Recommendations

Wal-Mart should emphasize on the need to develop long term relationships with their employees, as a way of reducing the high turnover of employees. In this case, the company will also improve its tainted corporate image globally, which is likely to affect its success within the target market areas (Berglund, 2006).

Wal-Mart should focus on developing a wide business perspective, as opposed to maintaining its narrow one. Through the change, they will be able to expand their business in emerging markets like those in Asia, including India and China. Wal-Mart should emphasize on the improvement of its corporate image, with regard to the cultural and the social responsibility expected from it.

Conclusion

The innovative strategy of project impact, which sought to eliminate Wal-Mart’s competitors have worked well for the company. The improvement of product life cycle and confronting limiting regulations can help Wal-Mart to gain higher capacity. The social consciousness of Wal-Mart does not favor the future of the company.

The obstacles in the ways of the innovativeness of the company include the risks of increasing competition, the uncertainty regarding the legal suits facing the company and the internal and the external environment, including increasing market rivalry. The best innovations to implement include eliminating structural incoherence of the company’s outlook.

References

Bender, A., Howell, A., Lavin, A., and Torgerson, D. (2001). WAL-MART.COM: A Case Study in Managing Technical Transitions. Web.

Berglund, N. (2006). Norway dumps Wal-Mart stock. Web.

Blair, B. (2010). Wal-Mart Stores Not Catering to Customer Needs, Losing Customers. Web.

Courtemanche, C. and Carden, A. (2011). Competing with Costco and Sam’s Club: Warehouse Club Entry and Grocery Prices. Web.

EDF. (2010). Wal-Mart: Our Seven Areas of Focus. Web.

Gregory, S. (2009). Wal-Mart’s Latest Move to Crush the Competition: Time, Business and Money. Web.

Jones, G. R. (2010). Organizational theory, design, and change. Upper Saddle River, NJ: Pearson.

Kaiser, E. (2005). Majority Says Wal-Mart Bad for America: Poll. Web.

Norton, K. (2006). Wal-Mart’s German Retreat. Web.

Straight, B. (2010). . Web.

Thomas, C., and Stoneham, G. (2011). Innovative Approaches to Regulation: The role of Information and Incentives. Web.

UW. (2013). Trust Funds: Wal-Mart Corporate Record. Web.

Vance, S. and Scott, R. (1997). Wal-Mart: A History of Sam Walton’s Retail Phenomenon (Twayne’s Evolution of Modern Business Series). Woodbridge, CT: Twayne Publishers.

Wailgum, T. (2008). . Web.

Wal-Mart. (2012). . Web.

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