Walmart Case study solution –

Company overview –

 an American multinational retail corporation that operates a chain of hypermarkets,

discount department stores, and grocery stores, headquartered in Bentonville, Arkansas.
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 The company was founded by Sam Walton in 1962 and incorporated on October 31,
1969
 As of July 31, 2020, Walmart has 11,496 stores in 27 countries, operating under 56
different names. -  as Flipkart Wholesale in India, Walmart in usa and Canada.
 Walmart is the world's largest company by revenue, with US$514.405 billion, according
to the Fortune Global 500 list in 2019.
 It is also the largest private employer in the world with 2.2 million employees.
 On May 9, 2018, Walmart announced its intent to acquire a 77% majority stake in the
Indian e-commerce company Flipkart for $16 billion.

Three basic competitive strategies for a company –

 Cost leadership - achieve the lowest possible production and distribution costs
through economies of scale. Increasing profits by reducing costs, while
charging industry-average prices. able to set lower prices to capture more
market share

 Companies using differentiation strategies target quality and value-seeking

customers with premium offerings and strong brand equity

 Some businesses choose to focus on one or more narrow market segments to

protect themselves from competition. A focus strategy helps companies with
limited resources compete.

Walmart Company is obviously taking the cost leadership strategy

low-cost leader in the retail industry – like our Big Bazar, Dmart

Q) How are they achieving this?

 satellite-based distribution system,

 keeping store location costs to a minimum by placing stores on low-cost land outside small
to medium-sized towns across the globe.
 Walmart purchased massive quantities of items from its suppliers to form scale economy.
 efficient stock control system helping make its operating costs lower than those of its
competitors.
 it imported many goods from China, “the world factory” for its low cost.
 Walmart imported $15 billion worth of goods from china - not only for the strategic
consideration of supplier chain economy, but also Walmart has some factories in china,
whose products are branded with Walmart name.
 In 2002, operating costs for Walmart were just 16.6 percent of total sales, compared to a
20.7 average for the retail industry as a whole,
Q) How analysis of Corporate strategy done in Walmart?

Managers engage in three levels of strategic planning –

 the corporate-level strategy & the business-level strategy - low cost leadership

 the function-level strategy – focusing more on HR strategy ( functional strategy should serve
the overall company strategy so the corporate & business strategy could be implemented
more effectively and efficiently.)

Q) How the analysis of HR policies done in Walmart?

HR practices are different for different organizations adopting alternative strategies (cost leadership,
differentiation, focus).

3 HR practices identified depending upon the different organization’s strategies –

 the universalistic best practices – HR practises similar across organizations in an industry

 the contingency perspective of “best fit” – what is the right fit for that particular
organization based on their competencies, finances, workforce strength & various other
internal parameters. – Walmart chosen.
 the resource-based configuration perspective

examine the “fitness” of HR practices in Walmart –

1. Recruitment Perspective –
 reduce the recruitment cost considering so big number of its employees .
 the New York Times audit report - “extensive violations of child-labor laws (recruited
child labour for low cost) -e cheap price of children labors and minors make it earn
more cost competitive advantage over other companies
 state regulations requiring time for breaks and meals. – absolute min / zero time for
breaks.
 discriminates against workers with disabilities - recruitment of these guys means
providing more facilities for them and the lost of efficiency to some extent.

2. Training Perspective – Walmart refers to its employees as “associates”, and encourages

managers to think of themselves as “servant leaders”, that is, to encourage them to serve
others while staying focused on achieving results in line with the organization’s values and
integrity.
 Through Training Walmart tried to adjust the employee behaviors and competencies
to what the company’s strategy requires, that is to low down cost more.
 “lock-in” of its night time shift in various stores – not allowed to take breaks
 enforced policy - “shrinkage” behavior of its employees, to eliminate unauthorized
cigarette breaks or quick trips home.

3. Performance Management Perspective - Walmart has very high demanding standards and
job designs. Very stringent performance appraising process and forced them into Walmart
had extensive violations of state regulations requiring time for breaks and meals.
  minors working too late, during school hours, or for too many hours in a day.

4. Career management Perspective – they can go to any crude levels to achieve their low cost
strategy- many instances one of them –
 discriminated policy against women by systematically denying them promotions and
paying them less than men.
 Women are pushed into “female” departments – not giving equal treatment as men.
 demoted if they complain about unequal treatment – again this helping the company in
controlling their cost strategy.

5. Compensation management perspective – So far they have showed very aggressive HR

policies and activities to fit the “low-cost” strategy.
 As I have mentioned above walmart’s connection with China, they import goods at low
cost from them plus they have factories set up in china as well - Walmart pays much less
to Chinese labors in this “world-factory” .
 Walmart workers in California earn on average 31 percent less than workers employed
in large retail as a whole.
 other operating and inventory costs set by higher level management, store managers
must turn to wages to increase profits, and Walmart expects the labor costs to be cut
by two-tenths of a percentage point each year – thus abiding by their aggressive cost
strategy.

6. employee benefit and safety perspective - Walmart was frequently accused of not providing
employees with affordable access to health care.
 workers eligible for benefits such as health insurance must pay over the odds for
them - 1999, employees paid 36 percent of the costs. In 2001, the employee burden
rose to 42 percent.
 US, large-firm employees pay on average 16 percent of the premium for health
insurance.
 Unionized supermarket workers they don’t have to pay anything.

7. labor relations perspective - Walmart has strong anti-union policy - firing workers
sympathetic to labor organizations - all new employees are shown a propaganda video tape
which said joining a union would have bad implication for them - employees should never
sign a union card.
 In UK, they came under a trade battle with GMB trade union to remove Collective
bargaining rights - Walmart withdrew a 10% pay offer to more than 700 workers
after they rejected a new package of terms and conditions included up rights to
collective pay bargaining.
 Walmart has recently allowed unionization in their stores in China, where
unionization is mandatory - doing business in China is particularly difficult – because
If it ignores the Chinese government’s firm rule, its cost would just outweigh what it
would save by organizing no unions in its labor relations management.
 so Walmart made this exception of have unionizations is just in accordance with its
corporate strategy and HR strategy

understand how Walmart would adjust its HR policies and activities to fit its corporate strategy
contingency.
Q) the role of the HR manager in this company?

Managers have tried their best to “fit” the corporate strategy to low down cost.

implement anti-union policy in its stores.

implement “lock-in” policies;

tried to resist disability people for the efficiency loss;

discriminate women by giving them much fewer money and opportunities to be promoted.

actually, the male workers in Walmart also got much lower salary compared with industry average
level.

So far all these have proved how Walmart has applied the “best-fit” strategy.

 Universal best approach - Walmart HR managers refers to its employees as “associates”,

and encourages managers to think of themselves as “servant leaders”, that is, to encourage
them to serve others while staying focused on achieving results in line with the
organization’s values and integrity.
 resource-based view focuses on firm resources that can be sources of competitive
advantage within the industry. Three basic types of resources can provide this competitive
advantage
 skills, judgment, and intelligence of the firm’s employees

HR policies to low down the cost to the minimum level, which would certainly reduce the loyalty and
dedication of those human resource in the company.

s little training and other activities taken to develop its valuable human.

. As for the specific training and develop methods and forms, it would depend upon the specific and
proper time, place and the right store.

e HR managers should pay more dynamic and long-term attention when it calculates the future
benefits of such HR practices.

Walmart HR professional would harvest more by seeing the long-term potential cost, and with more
advanced management tools.

top managers besides the HR executive should pay more attention to the everyday employment
management

they should play more positive roles in training and using their human resources, and maybe
cultivating better organization culture, all of which may prove more cost-saving

thus creating a positive, healthy and better approach to adding to the mission of “bringing more
values to customers”.