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 discount retailing not only made Wal-Mart the world’s largest retailer, but also the world’s number one retailer in sales. Sam Walton has made certain changes that help Wal-Mart to achieve its success today. His change techniques involve changing people, technology, and product. 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.”
Wal-Mart is successful not only because it makes sound strategic management decisions, but also for its innovative implementation of those strategic decisions. In order to become a superstore, Wal-Mart decided to change the skill level of its workforce. Walton’s greatest accomplishment was his ability to empower, enrich, and train his employees. 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. 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 and Strickland 93).
Wal-Mart stores operate according to their “Everyday Low Price” philosophy. They 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 (Evan, Shulman, and Stalk, 55). Through Sam Walton’s “Buy America” policy, Wal-Mart encourages its buyers and merchandise managers to stock stores with American-made products. In a 1993 annual report management stated the “program demonstrates a long-standing Wal-Mart commitment to our customers that we will buy American-made products whenever we can if those products deliver the same quality and affordability as their foreign-made counterparts” (Thompson & Strickland 68). With a variety of product and low cost, Wal-Mart has attracted more consumers.
Wal-Mart has invested heavily in its unique cross-docking inventory system. Cross docking has enabled Wal-Mart to achieve economies of scale which reduces its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the individual managers more control at the store level. A company owned transportation system also assists Wal-Mart in shipping goods from warehouse to store in less than 48 hours. This allows Wal-Mart to replenish the shelves 4 times faster than its competition. Wal-Mart owns the largest and most sophisticated computer system in the private sector. It uses a massively parallel processor computer system to track stock and movement which keeps it abreast of fast changes in the market (Daugherty 24). Information related to sales and inventory is disseminated via its advanced satellite communications system.
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 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 future also looks bright for Wal-Mart, especially if it is able to continue its customer-driven culture, it should remain a retail industry leader well into the next century.