Most Admired American Company: Wal-Mart

Wal-Mart was founded by Sam Walton in the 1960s, its growth level has been a strength for the firm, becoming the largest retailer in the United States, with recorded annual sales of approximately $32.6 million by the early 1990s. This potential growth that led a small Arkansas retailer to become a nationally recognized company was based on a premium administrative team, which developed a series of highly innovative operational strategies, thus supporting the company's commitment to providing consumers with a wide selection of high-value goods at a low cost. Like many other big corporations, Walmart has been involved in scandals such as bribery and mistreatment of employees. Lawsuits have been made against Walmart by its employees. These were due to being subjected to employment abuses such as discrimination, lack of coverage, low wages, non-overtime pay, etc. All this has led many organizations to support and criticize the way this company operates.

Walmart has been suspected of acts of corruption that can be evidenced in the way senior executives did not want to invest either time or money in doing things properly and resorted to bribery to speed up the opening of new stores, this often happens in Latin America where bribery is perceived as 'just another way of doing things.' At the organizational and international level, the impact it had is that several high-level executives were fired and large fines were incurred. Wal-Mart's administrators set growth as their greatest goal. However, the attempt to meet this goal has been threatened by thousands of criticisms and lawsuits that the company receives daily for many causes such as employee abuse, irresponsible practices, discrimination, in this and many things that affected the company. But let's not forget everything Walmart has accomplished throughout the years worldwide and what Sam Walton has done for Wal-Marts associates. Wal-Mart is the largest and most successful retailer in the world, with annual sales of $408.2 trillion and14.3 trillion in 2010, representing about 10% of total retail sales in the United States. The company has millions of employees worldwide, in its 3200 stores in the United States and 1100 in other countries. Wal-Mart grows at a rate of hundreds of new stores per year, those visited by more than one hundred million customers weekly.

Wal-Mart dabbled in a radial distribution system, in which central distribution warehouses are strategically located to supply groups of stores; this situation helped reduce logistical and operational costs. Wal-Mart was also the first company to use a computer-based information system to track store sales and transmit this information immediately to suppliers. The information provided by computer systems was used to determine the pricing and storage strategy, as well as improve inventory control and management. So, Wal-Mart, today it is still a leader in its information systems. Wal-Mart stores, distribution centers, and suppliers are linked by sophisticated information systems and satellite communication systems, which allow the daily adjustment of stock orders and prices.

Its success rests on the nature of the strategic control systems that its founder established for the company its founder, Sam Walton, created a strategic control system that gave employees at all levels continuous feedback about self-performance and the company. In addition, Wal-Mart, a pillar in the development of a dynamic and egalitarian culture; provides authority to warehouse managers, department heads, and individual employees (known as associates); they are given extraordinary treatment but at the same time they are required to be high commitment and excellent performance. Wal-Mart has developed a culture and control system that creates incentives for both partners and managers to give their best to the company. This culture is backed by a generous plan of sharing profits and ownership of shares with all employees, including partners

To achieve this, a financial control system was developed that provided managers with daily performance monitoring across all aspects of the business; information regarding store profits and the turnover rate of assets is provided to managers who in turn communicate it to employees; Thus, by sharing the information, the Walton method allows all partners to learn the fundamentals of the retail business so that they can improve it. If a store performs poorly, managers and associates come together to discuss reasons and find solutions that improve performance. Each manager's individual performance is measured by their ability to meet specific production goals or objectives, and is reflected in pay increases and promotion opportunities, for this purpose, Wal-Mart promotes and incentivizes from within the company, rather than hiring managers from other companies. Just as top managers receive huge stock options related to the company's performance objectives and share price; ordinary partners can also benefit from such action; for example, an associate who started working in the 1970s, by this time he may have amassed more than $250,000 in shares due to the appreciation of Wal-Mart's shares over time.

Walton devised and instituted an elaborate system of rules and budget-based controls to determine employee behavior. Each store performs the activities in the same way and all employees receive the same training so they know how to behave in front of customers, so Wal-Mart can handle standardized operations, recording greater cost savings and making changes in stores with greater flexibility; Wal-Mart, unsatisfied with just using behavioral controls and monetary rewards, of engaging its employees in the business and encouraging them to develop behaviors at work that focused on providing quality customer service, established strong cultural values and company standards, among which stand out, the ten-foot attitude, developed by Walton, during his visits to the shops, where he encouraged associates to promise that whenever they were within ten feet of a customer, they would look him in the eye, greet him and ask him if they could help him. Since its inception Wal-Mart, analyzed each of the business areas, where there are significant costs, and made permanent efforts in the management, to improve continuously and thus guarantee its customer's low prices and quality in the products offered. Wal-Mart became the world's largest retailer with more than 6,500 stores worldwide, including stores in all 50 states and 15 countries. Wal-Mart in 2006 has a total of 1.8 million employees worldwide, with the attention of more than 138 million customers each week.

Sam Walton took care to establish strategic alliances with the suppliers of the products offered, in order to obtain good prices and have the goods just in time, when customers require it. Wal-Mart's purchases from major suppliers became so important, allowing for better trading purchase prices for product sales volumes. It is characterized by managing open information of the products and prices offered, in order to be transparent and gain trust among the main collaborators, who are employees and associates. He pioneered the availability of a product database with online stock information, and the generation of automatic purchase orders suppliers. The stores were installed in strategic locations, with good access to their customers, avoiding competition between two stores of the same company and facilitating the supply of the products offered in terms of transport. Wal-Mart introduced the concept of supplying products with its own brand, quality, and attractive prices for customers. This strategy was copied worldwide for the effects it caused in customers. Wal-Mart has the largest private fleet of trucks for product transport to all distribution centers in the United States. Wal-Mart made important efforts for the standardization of boxes, to be able to carry out the transport in a simpler and more friendly way. Transport services were also offered to prevent trucks from transiting without loads. This is how Wal-Mart topped the Fortune Chart 500 and in 2003 it was named, by the same magazine, as the most admired American company.

07 July 2022
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