Wk 7 Walmart Audit (COMPLETE PACKAGE)
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WALMART-Phase1.docxRunning head: WALMART OPERATIONAL ANALYSIS 1
WALMART OPERATIONAL ANALYSIS 7
Walmart Operational Analysis
Marcos Vazquez
DeVry University
Walmart Operational Analysis
Introduction
Walmart has been operational since the early 1960s. Founded by Sam Walton, it has been operational since 1962 and it has gained a lot of traction. At the time of its inception, the founder envisioned a retail store that would offer the lowest prices to customers (Walmart, 2014). Since its inception, the retail chain has opened up other outlets in various countries around the globe. Additionally, Walmart has been progressive in the way it conducts its business operations and currently, it employs more than 2 million people and earns revenue of over $1 billion (Walmart, 2014).
Corporate Culture
In order to understand where a business is heading, one needs to understand the history of the factors that influenced it. Walmart is customer oriented and it bases its business on satisfying the needs of its customers with regards to providing the best quality products at an affordable price (Seaman, 2012). Walmart has a strong corporate culture; each and every decision made by the executives of the company is communicated to the various associates and shareholders who have a stake in the business’s operations. Walmart lets its customers, shareholders and anyone invested in the company know that it runs its operations on their strong beliefs which advance their corporate culture; service to Walmart’s customers, strive for excellence and perform its operations with integrity (Walmart Corporate, 2014).
Sam Walton, the founder, believed that Human Resources formed an important aspect of the company. He knew that for a company to be successful, it depended on the employees’ motivation to treat customers well and work harmoniously with one another (Bergdahl, 2010). The tactic is reflected by the enormous number of employees that Walmart has across the various countries that it runs its operations. The Human Resource department is constantly searching and mentoring leaders to take up positions at the company. The executives understand that for any company to remain successful, leadership is an important part and therefore emphasis is placed on the recruitment, development and retention of visionary leaders (Walmart, 2011).
One of the commendable strategies the company is implementing is the recruitment of female leaders. More emphasis is placed on female leaders because women represent more than 50% of the overall workforce. Additionally, women have a lot of influence on consumer spending and therefore, will lead to improvement of sales leading to more profits for the company (Walmart, 2011). With regards to productivity, a team responsible for developing and implementing processes like improved workforce productivity has been working tirelessly to understand consumer preferences and consequently, streamline the products with consumer options (Walmart, 2014).
As of 2014, Walmart has maintained the largest market share in comparison to its competitors- Costco, Target and other retailers. The company is able to be the best performing company in terms of profits that it earns because it sells many units of its cheap-priced items (Retail Owner, 2014). In the past couple of years, Walmart has been experiencing robust profits; a fact which is making its shareholders very happy (Mergent, 2014).
Since the major competitors of Walmart, Costco and Target, are using the same strategy of using discounts on various items to top the market, the three companies are playing on the same field. Walmart, however, is the leader in this category as its operations are customer focused and therefore the company has a wide market for its many products (Mergent, 2014).
One of the other reasons for the success of Walmart is that its business operations are segmented into three; Walmart U.S, Walmart International and Sam’s Club (Walmart, 2011). By segmenting its operations, the retail chain is able to identify the weak areas and act upon the weaknesses in time to allow for quick recovery of the ailing sectors. Walmart U.S. is also looking to get more market share through creation of super centres and new mediums of conducting business that cater to the various needs of the demographics of the market; stores in rural areas have a different marketing strategy in comparison to urban areas (Walmart, 2011). Internationally, Walmart is doing well. It is recording good profits and expanding its market share by buying other retail businesses and opening up new outlets.
Financially, as of 2014, Walmart posted its largest revenues of $473 billion; surpassing all of its competitors (Mergent, 2014). Its Return on Equity was 22.09%, a value that is in line with the industry mean of 22.10% (Hoovers, 2013). Return on Equity is a measure of total value of shareholders’ investment and the profit that is generated from it. Although Walmart has recorded its highest revenue, it has a low revenue growth of 1.52% which is lower than its competitors (Bianco, 2014). The implication is that the company is less profitable for the investors as they are getting less money per share. Generally, Walmart is doing well financially although it can improve in some sectors like revenue growth and profitability.
Functional Strategy
Over the past couple of years in which Walmart has been enjoying great success, it has managed to streamline its processes in order to enable more victories (Alliance, 2014). A big part of the success is due to the company’s management of its procurement and supply chain management. To achieve success in procurement and supply chain, the company developed a procedure called docking which allows large quantities of products to be shipped to Walmart warehouses across the world and then they can be distributed to the various stores (Alliance, 2014). The strategy cut down on the amount of time and labour required to keep an inventory of all the products being distributed to the various outlets. The strategy not only cut down on production costs but also enabled the company to lower the price of its products and therefore, make them more affordable to customers. It also enabled the supply chain segment to concentrate their efforts on procurement.
The procurement process is a tedious one that aims at delivering goods that are most likely to be bought by Walmart customers. The main focus is on demand planning, product forecasting and managing inventories in the most effective way possible (Bianco, 2014). After the three factors have been considered, products are procured and then distributed to the various warehouses according to the forecasts and customer demands (Alliance, 2014). The whole procurement and supply process is completed with a focus on quality and pricing in mind. Walmart prides itself on delivering quality products at affordable prices to its customers across the globe (Walmart, 2011).
Auditing
Walmart conducts regular audits of its suppliers and internal segments. The company has a standard that all its suppliers should meet with regards to auditing of their operations (Walmart, 2017). By so doing, Walmart allows external auditors to carry out an operational audit of its suppliers and then generate a rating for the various suppliers based on the findings of the external auditor. As per the company policy, any supplier may be audited randomly, at any time (Walmart, 2017). The company allows its partner firms to conduct a third-party audit of their operations and then submit a report. The company can, however, order an audit to be conducted as dictated by various strategies and factors (Walmart, 2014).
Analysis
Walmart Inc. is a great company for both its employees and customers. However, there are some aspects of the company’s functions that can be streamlined to make it an even greater company.
Senior management should be audited every once in a while. Conducting an operational audit of the management team will ensure that processes run smoothly from the upper echelons of power to the last person on the hierarchy. It will mean greater efficiency as all the operational loopholes will be sealed. Additionally, it will create a good relationship between the various employees of the company as they will feel that the company’s processes are similar for everyone regardless of the hierarchy. The company should also maximize on its revenue allocation; it should consider opening more stores in untapped markets like Africa. By doing so, it will generate more revenue and increase profitability for the company.
Conclusion
Walmart Inc. has the potential to generate more revenue from its various outlets across the world. With the right attitude, team and information, this venture will be possible. Operational audits are also very important for a company as they increase efficiency and profitability by cutting costs of production and maximizing solutions to meet consumer and company needs.
References
Alliance, U. (2014). Walmart’s Keys to Successful Supply Chain Management; University of San Francisco. Retrieved on March 06, 2018 from
www.usanfranonline.com/resources/supply-chain-management/walmart-keys-to- successful-supply-chain-management/
Bianco, Carolyn. (2014). Walmart Strategic Audit. Slideshare.
Bergdahl, M. (2010). How the HR division at Walmart drives the company’s success through people. HR Magazine.
Hoovers, I. (2013). Walmart Stores Inc. Retrieved March 06, 2018, from Hoovers: A D & B Company.
Mergent, Online. (2014). Company Financials. Retrieved March 06, 2018, from;
www.mergentonline.com/companyfinancials.php?
Walmart 2011 Annual Report.
Walmart. (2017). Responsible Sourcing.
