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Bus 109 – Competitive and Strategic Analysis

Exam 2

Tiffany Giang. 24 July 2015. Discussion #121 T (11:10 A.M.-1:00 P.M.)

1. On Functional Strategy – Pertaining to your CEO Project Company

a. Jack Welch once affirmed that “strategy is all about making-clear cut choices on how to compete”1 through the allocation of bridging suitable candidates to their appropriate jobs. In essence, the implementations of multiple strategies have abetted Walmart, Inc. in everyday operations, which have magnified their competitive advantage. Walmart has effectively taken strides to formulate their mission statement and values in order to pertain to consumers’ wants and needs. By providing the lowest prices in the industry to help consumers live better, Walmart entails the concreteness that Welch mentions in his book Winning – the concreteness of securing an unwavering stance in the market it partakes, through its clarity of goals and straightforwardness.

Strategy is comprised of three cardinal concepts – corporate strategy, business strategy, and functional strategy, which integrate in togetherness to direct an organization towards success. Walmart’s institutional headquarters is preeminently liable for the administration of corporate strategy, which entails directional strategy, portfolio analysis, and corporate parenting. Directional strategy orients a Walmart towards potential advancement by classifying its appropriate fit among stability, growth, and retrenchment. In regards to directional strategy, Walmart has horizontally integrated itself its operations by expanding in an abundant amount of geographical locations, being present in over 28 countries and operating over 11,000 retail units.2 A portfolio analysis determines the industry or market in which a Walmart contends – subsequently, highly regarded executives generally view this portfolio as an array of their investments to which they anticipate profitable returns. In contrast, top management views the corporate parenting strategy as the synchronization of activities within its firm through the allocation of resources and capabilities to formulate value in its product line beyond its rivals. For sizeable multinational establishments like Walmart, the notion of corporate strategy hauls the responsibility of oversight in production procedures, in order to generate superlative profits and warrant value in the company.

Adjacent to the concept of corporate strategy, business strategy focuses on the accentuation of a firm’s competitive stance in the industry or market segment it employs. To employ a substantial amount of the industry it targets, Walmart has correspondingly adopted competitive and cooperative tactics. Namely, Walmart has embraced its competitive edge through its cost leadership strategy, offering the lowest prices in the industry backed by ad match. Furthermore, the company has employed cooperative strategies through its alliance with multiple organizations in foreign countries in order to maintain a global competitive advantage in opposition to its competitors. Through its relationship with foreign markets, Walmart has been able to export goods from the United States overseas to increase revenue substantially, and retain profits. Walmart has been able to establish a commendable partnership with India, which was made possible through its joint venture with Bharti Enterprises, as a result of India’s restriction on foreigners’ entrance in their market. By conjoining their resources and providing expertise in togetherness, Walmart and Bharti Enterprises integrated to form an equal partnership in the wholesale industry, resulting in the new company name, Bharti-Mart scheduled to open in 2015.3

In addition to corporate and business strategy, functional strategy has employed a vital role in capitalizing productivity for Walmart, in order for the company to retain its position as number one on Fortune’s Top 500 Companies.4 According to Wheelen and Hunger (2012) in their text, Strategic Management and Business Policy, functional strategy is “concerned with developing and nurturing a distinctive competence”5 in order to rear the company towards a sustainable competitive advantage that is not easily replicated by rivals. Moreover, functional strategy is comprised of several underlying departments, namely – marketing, finance, research and development, operations, purchasing, logistics, human resource, and information systems. Individually, these departments are accountable for their sole operations but collectively; they are responsible for highlighting the organization’s paramount success, as they each contain an imperative element contributing to Walmart’s thriving business.

However, there is an issue that has always been overlooked and disregarded over the past decade that requires acknowledgement and justification – what is it about Walmart that customers persistently complain about? An array of questions follows as to why Walmart is perceived negatively in the market place, disregarding its position as number one in the industry. Is the only leverage Walmart preserves is its ability to keep low prices? Is Walmart treating its employees so badly that they are unwilling to provide customer service anymore? What about its consumers, does Walmart actually care about the community that supports it to provide excellent service or is the company engaging in unnecessary “fluff” as Richard P. Rumelt would say? The numerous allegations against Walmart overtime have placed it under the limelight for being a company that disregards its workers and employee satisfaction. Hence, that is Walmart’s most burning issue in its functioning strategy. To resolve this issue, Walmart must take the initiative to allocate the company’s funds appropriately to implement programs that will educate its workers on customer service and stress the importance of their satisfaction. The idea of raising wages will not affect how the workforce will react; rather they must be educated in why they are being employed.

To begin, the functional strategies that will be focusing on this burning issue will be the human resource strategy and financial strategy, which in essence, impacts the corporate and business strategy at Walmart. Wheelen and Hunger (2012) believe that the human resource strategy “confronts the issue of whether or not a company should hire an abundant amount of low-skilled employees who perform their jobs repetitively and are more inclined to quit” or vice-versa.6 This is concept holds true, backed by Walmart’s Corporate website, stating that pay starts at minimum wage $9/hour and how the company aims in 2016, to provide workers in the United States with $10/hour.7 Because of the wages offered to them, Walmart workers have the preconceived notion that their jobs are irrelevant and do not require a lot. On the contrary, these workers fail to realize that many people are unemployed in today’s economy, all of who would love to take a job offered to them, such as being a Walmart associate. However, Walmart cannot tell their employees to take their job seriously as they can be replaced easily, rather they must formulate a strategic analysis on how to relate facts to employees to encourage them to perform better. Human resource departments need to construct attitude surveys and feedback devices to better understand the needs of their workers through their communication on the overall satisfaction towards their job, department, store, and corporation. The HR department needs to encourage employees to converse freely and with integrity in order to make strides towards improving their working experience, which as a result translates to better customer experience. To support employees in regards to sharing their heart felt thoughts, HR can present an incentive system that will matter to employees such as weekly raffles on prizes, monthly giveaways, additional vacation time, and an opportunity to become a corporate executive to represent workers’ thoughts and processes on the organization. Furthermore, these feedback measures should be anonymous in the workforce or located at a private location for employees to feel more comfortable in sharing their thoughts. An emphasis should be made on such measures that the employee would not face consequences such as getting fired, laid off, or demoted as a result of sharing their feelings as the organization is serious in providing change to benefit the workers. Should an employee obtain one of the few incentive packages, their name should be concealed for privacy reasons and be notified personally. Through the implementation of this feedback system, HR will undoubtedly be able to determine procedures necessary to help employees during the time they work to feel happy and comfortable, in order to relate positivity and compelling service to customers. Notably, in providing compelling service to customers alongside their low prices and appreciated workforce, Walmart’s HR strategy is in alignment with its business and corporate strategies.

Walmart’s financial outlook is thriving by the minute, as the company provides the lowest prices among competitors through their cost leadership strategy. The company’s 2015 fiscal year did extraordinary well as revenue grew by more than $9 billion leading the company to nearly $486 billion, presenting earnings per share at $4.99, with a 3% increase from 2014.8 Because of this, the finance department must allocate the appropriate amount of funds to invest towards employees who work countless hours in order to maintain the organization’s stability in providing quality products to consumers at the lowest prices. It is clear that Walmart gives back to its community from partaking in global responsibility action plans to providing scholarships to the world of tomorrow to supporting countless numbers of foundations to help individuals of the world; however, Walmart must not neglect the fact that much of the possibility to do so comes back to its employee working at its distribution centers and stores. These employees need the recognition and appreciation from management high and low in order to improve how they treat consumers. If workers are treated in a manner where they feel neglected, they will reflect the same to those they encounter during their work time, in this case, the most important people to step foot in Walmart stores, the customers. Because of this, Walmart must construct incentive systems in accordance with HR’s feedback in order to motivate its employees to do their best, and only their best. Furthermore, the company is in the process of allocating funds to educate its workers in providing better service according to its 2015 Global Responsibility Report. Walmart plans to “accelerate economic mobility of workers in their sectors through relevant training and clearer career paths”9, as well as affording them the support services to listen their concerns and act upon them, which the company will invest $100 million over the next five years. Doing so will raise customer satisfaction aligning with the business and corporate goals Walmart presents.

i.1. As mentioned in Walmart’s 2015 Annual Report, the company’s primary goal for 2015 is to achieve sustainability in its growth through its cost-leadership strategy and providing consumers with a memorable experience that sheds a positive light on the organization. The functional goal for human resources is to determine employee satisfaction and feedback in the workforce to which they occupy during operational hours. The goal is to take the feedback of the workers that represent the corporation and listen to their thought process in what is affecting them as workers and what has helped them as workers and integrate them into policies, incentive systems, and provide the necessary resources if appropriate to help workers feel good about working for the organization, so that can reflect on the customers. The functional goal for financial strategy would be allocating the appropriate funds to provide incentive systems not only for the community that supports the organization, but those who are the foundation of the organization that are employed to make sure operations run accordingly. The goal is to make workers feel appreciated as business partners and not merely assets of the organization; it is to stress the importance of how much workers mean to the business and how the company strives to provide solutions if possible, to improve worker satisfaction as a whole. Furthermore, the organization hopes to provide employees with classes they can take to improve customer experience during the worker’s convenience, which will be paid for.

2. The resources required to implement HR’s goal would be the allocation of funds for the department to construct a feedback device with corporate. Such a device would be electronic, providing users privacy and the right to remain anonymous to freely share their thoughts. Furthermore, to showcase the incentive system to its workers, HR would require additional funds to construct incentive packages to prove to workers it isn’t an issue that they are simply testing out, rather in all seriousness they want to know what worker’s think in order to help them. Again, such incentive packages would include raffle prizes consisting of community events, theme parks, movie tickets, vacation packages, additional vacation time covered by the company, and an opportunity to step into corporate level management to improve worker satisfaction to achieve the end goal of satisfying the customer. Resources required for the financial department in functional strategy would be enhancing the current technology involved in providing budgets and increasing the task force to analyze where funds can be pulled to be put towards incentive packages and classes for employees.

3. To measure the success of Walmart’s goal, it can rely on its customer reviews per store that has implemented the incentive system strategy and/or educated through the company’s customer service course. Furthermore, Walmart can refer to its employees’ surveys and feedback measures on the electronic device provided to them to give their input and determining if overtime, employee satisfaction has gone up. If employee satisfaction has increased over time, Walmart can do a cross-analysis on its correlation with customer satisfaction or fieldwork in the actual store. In essence to fieldwork, Walmart can send representatives out to each store and obtain customer feedback on the stores who have started to use the strategies HR and Finance has constructed. Walmart will indefinitely continue to sustain its competitive advantage, however it must remain mindful of its employees and customer satisfaction, as those are the burning issues in its market today. All and all, if the organization is able to take into account the functional strategies and their various suggestions, the corporation will undoubted align with its corporate and business strategy for long-term period.

1. On Strategy Implementation –

a. Winning by Jack Welch introduces the concept Six Sigma and how it contributes towards the attainment of success for an individual or establishment. In essence, Six Sigma is “a quality program that improves your customers’ experience, lowers your costs, and builds better leaders”.10 This quality program conducted by Six Sigma is not only executed by the reduction of waste and inefficiency, but is also achieved through the formation of a company’s products and internal processes. In turn, customers exhibit satisfaction towards the company because they have received what they wanted, when they wanted, and in the time frame they were promised.

To comfortably grasp the idea of Six Sigma, one can remember the acronym DMAIC - define, measure, analyze, improve, and control. The first step towards the integration of Six Sigma to improve quality management is defining the problem, project goals, and customer requirements (internally and externally). This means that the business’s strategy must stay in alignment with customer demands in order to provide seamless consistency. The next step is measuring the process to diagnose its performance in order to quantify the problem. Following the measurement is the analysis process, in which the source of variation is determine, as well as any possible defects. Succeeding the analysis is the improvement process – eliminating any unwanted variations that are linked between you and the customer because evident inconsistencies can lead to a lack of credibility. Lastly, the control phase warrants against poor performance in the future by documenting the success from improved processes.

To someone as successful as Jack Welch, Six Sigma is the effective quality improvement program that is incomparable to anything else when talking about improving a company’s operational efficiency, raising its productivity, and lowering costs.11 To him, Six Sigma has not only improved design processes by transferring products more quickly with fewer defects, it has become the most beneficial tool in developing great leaders by helping them build a loyal customer base. Moreover, Welch asserts that Six Sigma has developed itself as one of the most powerful methods in regards to increasing a company’s competitiveness. He stands behind the notion that you should always satisfy your customers more than your competitors can, whether you’re a big or small business. He is ambitious in exceeding his customer needs by “washing out anything that might cause waste, inefficiency, or unpredictability for the customer”12. In simpler terms, he wants to eradicate distasteful surprises to improve customer experience.

1. Having achieved commendable success in his career, Jack Welch, author of Winning, former chief executive officer and chairman of General Electric once led his company through years of recognized success, while defeating his vicious competition. Six Sigma is one of the implementation programs Welch has used in order to achieve his notable success that is globally acknowledged today. He has been known to improve customers’ experience, lower costs, and shape better leaders through his strategy to reduce any inefficiency apparent in company’s products or internal processes. General Electric has used Six Sigma to improve performance by removing variation in its routinely tasks and safeguarding sizeable, problematical projects in their first run. Because of General Electrics’ participated in a substantial investment of hundreds of millions of dollars on a new jet engine/gas turbine, there was no room for error in the amount of money being spent. No inconsistencies may occur near the performance process day because there was no way to afford it. As a result, Six Sigma became effective in pointing out any possible inconsistencies through mapping out procedures – building critical thinking and discipline for its users.13

2. Six Sigma is a widely subscribed philosophy in the world of business with its strength being proven success in improving customer value. If implemented correctly, many establishments are able to reduce inconsistencies in their operations and increase customer satisfaction by providing a specific product within the due time promised. However, a weakness that Six Sigma suffers from is that it requires total participation of the business, which can be difficult because it is a complicated process requiring a significant amount of time that some employees are not willing to put in.

b.According to Jack Welch, a good strategy will consist of a relatively, fast way to gain sustainable competitive advantage, allocate people to the right jobs, and seek practices in achieving effectiveness through continual improvement.14 Furthermore, a good strategy will detect a direction, and heads towards it while finding ways sustain itself. In regards to Walmart’s burning issue that makes it a prime candidate for continuous improvement would have to customer service. Overtime, Walmart has developed negative publicity that has dampened its image in the industry, notorious for bad customer service. The leverage Walmart has on its competitors and customers that then want to come back for more is their low prices on individual units and high product quality. However, the company still struggles on its customer service constantly receiving feedback from unsatisfied customers in its inability to open another line, reduce wait times, and provide notable service. This issue is a great candidate for continuous improvement with Six Sigma. Walmart can implement the previously mentioned acronym DMAIC - define, measure, analyze, improve, and control towards its employees. It can define what the problem is in the process of serving customers, and what the employees have not been doing or have been doing to negatively affect customer experience. It can measure performance by evaluating employees during store operational hours, as well analyzing the process to determine where in operations did the employee/store perform poorly. With this analysis, Walmart can work to better improve its performance by addressing the root cause – say the employee to customer ratio is tremendously off at 1:10, which as a result flusters the employee leaving him to retreat to a different location in the store that is more calm. To control this issue to ensure it doesn’t happen again in the future or present inconsistencies, Walmart can hire more employees or strategically allocate employees to heavily populated of the stores through communication on devices that are instantaneous such as walkie-talkies.

3.On Evaluation and Control

a. Formulated by Robert S. Kaplan and David P. Norton in 1992, the balanced scorecard has presented a myriad of companies with the opportunity to reinvent their conventional method of thinking in regards to performance metrics. Moreover, the balanced scorecard has employed itself as a strategic management system, in which it provides the organization clarity of goals. It permitted companies the ability to track financial outcomes and monitor progress in structuring competencies to acquire unattainable assets. Namely, the balance scorecard supplemented traditional financial measures by adopting three additional perspectives – the customer’s, internal business processes, in addition to learning and growth.15 Each perspective is characterized by four categories that support the implementation process – objectives, measures, targets, and initiatives. Fundamentally speaking, the balanced scorecard was utilized as a performance measure to translate vision and strategy to achieve performance excellence; overtime, it became an accountability tool for organizations to take responsibility for their actions.

The internal business processes perspective inquires, “What actions in regard to business must we partake in to satisfy our shareholders and customers?” Here, managers are concerned with how their business is operating in regard to customer satisfaction through their products and services. Walmart executes strategy flawlessly through its cost-leadership methodology, which provides it economic sustainability against competitors that cannot be reproduced easily. Such a cost leadership strategy is made possibly by Walmart’s supply chain – one that operates under a cross docking system. This system is responsible for unloading incoming shipments directly to the distribution center, reducing time spent time spent in transportation procedures, leading to reduced storage costs by billions.16 Because the company is able to lower supply chain costs, it is able to effortlessly offer customers everyday low prices in addition to enforcing its ad match promotion. However, the company still lacks in store operations in regards to customer satisfaction, due to long wait times causing impatience and frustration to the customer. The company can set an objective of increasing customer satisfaction through the reduction of wait time in stores. This can be measured by the average wait time per consumer; Walmart can introduce a wait time kiosk per lane in which consumers input their time upon arrival and have it halt when they are checking out. If it falls under a specific amount of time, customers are essentially satisfied, and if not, Walmart should offer a discount or incentive for the consumer to return. The target can be reducing customer wait time by 25% within a two year span and its initiative to achieve the objective would be training employees to handle the checkout process better or assigning multiple employees the task of allocating customers to appropriate lines dependent on wait time. As a result, Walmart can use this strategy to increase sales and consumer base by getting customers to try out their wait time process as an incentive to get cheaper prices, leading to satisfied customers in due time as well as shareholders.

The learning and growth perspective inquires, “What action plan will we implement to align with our vision?” This perspective chimes in on the importance of employee training in regards to the corporation as a whole, and the individual themselves. With technology consistently fluctuating in today’s society, it is essentially important for employees of an organization to pay attention to the change that takes place. Walmart is strict on its low cost strategy in order to help the community that encompasses it achieve the best savings possible, in order to live a better life. However, the company struggles in customer service as a result of incompetent unmotivated workers and the increasing ratio of customers to employee is constantly on the rise. Walmart’s objective in learning and growth would be to provide incentives to workers to increase motivation such where their feedback would provide them opportunities of good on a vacation of their choice, a chance at corporate to represent its employees, paid leave, and raffle prizes to theme parks, restaurants, etc. This can be measured by employee feedback systems and surveys that will be collected weekly to see if employees have begun to feel more motivated as a result of the incentives system. The primary target is to receive ¾ of the store’s employee feedback within a month span. The initiative that can be taken is filling out a funds request sheet to finance, requesting to purchase a kiosk for employee survey/feedback that would preserve their anonymity but aid the organization in ways to provide better service.

The customer perspective inquires, “To align with our vision, how should we treat customers?” If corporations cannot satisfy their customer needs, they may find themselves in deep waters as a result of customers switching to businesses or products that will alleviate their problems. For the customer, switching to another supplier relatively costs nothing. In today’s society, Kaplan and Norton emphasize that poor customer satisfaction can lead to an organization’s downfall, as competition in the market place continuously expands to mold to its consumers’ demands. One of the company’s main adversaries in the industry is Costco Wholesale Corporation, the wholesale retailer. Costco values their workers like family, believing that they should be paid and appreciated through their hard efforts to keep the store running, which is reflected in the company’s wages to its employees, benefits and compensation packets, and frequent breaks during working hours. The competitor’s most recent quarterly earning reports announces an astonishing 8% growth and membership fees approximating $528 million as opposed to their last quarter in the previous year of $459 million.17 Costco Wholesales owes its due success to its employees, in which they pay workers double the wage of Walmart in order to provide its workers with livable wages to afford meals and a healthy standard of living, so that when they come to work they are able to perform exceptional service to consumers. Furthermore, Costco seeks to provide employees with career advancement opportunities by developing personal growth, a supportive work environment, stability, great benefits, and formal training programs to better serve its community.18 Referring back to Walmart, who aims to be the retailer of every customer by offering low prices and superior service and quality products, the company is far from its reputation of being the customer friendly store. The firm can set an objective to reduce the number of customer complaints. To do so they can analyze store review websites, feedback systems, customer service calls to measure the proportion of customer complaints. Their target can be a 10% reduction in customer complaints within the first year, and slowly incrementally increase that percentage. They can take the initiative of stocking shelves in a neat manner, making sure the items are facing appropriately, update signs to emphasize to consumers where certain products are, introduce a kiosk system of a map for consumers to state what aisle a product is in, as well increasing the number of associates available per operation hours in high volume areas to maximize efficiency.

The financial perspective inquires, “How should we appear to our shareholders to reinforce our financial success?” Though not capitalized upon like the other three perspectives, finance formulation is still important. It provides us with the administration of financial data, however it bears little relationship to a company’s progress in achieving long-term strategic objectives. Furthermore, managers need not to be dependent on short-term financial measures for their performance measure. Walmart currently is thriving in its financial performance, with its 2015 fiscal year growing by more than $9 billion to achieve approximately $486 billion in revenue and earnings per share offered at $4.99.19 Walmart can set an objective to increase return on investment to reinforce their shareholders of their financial success. To do so, the company can measure their return on investment ratio by examining their gain from the investment subtracted by the cost of the investment, over the total cost of investment. This will help evaluate the corporation’s efficiency on investment and calculate their beneficial returns. Walmart needs to compare and contrast the last five years trend on ROI to determine its progress. It can set a target to increase ROI by 3% every two years and increase in increments after its allotted time period. To achieve this, Walmart must take the initiative in reducing operational costs by continuing its effective supply chain as well as introducing a larger economies of scale in order to increase its bargaining power with suppliers.

b.Walmart’s Balanced Scorecard Model

The financial perspective can help improve the three additional perspectives of learning and growth, internal business processes, and customer by providing them with the appropriate funds to carry out tasks. Furthermore, if customers are able to have a positive experience during their time at Walmart, the internal business processes has set out to do what it has achieved. However, learning and growth may come in to better improve such processes as in increasing customer satisfaction even more by first beginning to motivate their employees. By motivating their employees with incentive programs, they are more likely to give the corporation feedback necessary to help support the employees in daily operations. As a result, employees will enjoy their time at work and are more incline to help customers improve their experience, thus reducing their complains, all which are entailed in the vision and strategy of Walmart.

Walmart’s Balanced Scorecard Model

Financial

Objective Increase Return on Investment

Measure Return on Investment (Gain – Cost) / Cost

Target 3% every 2 years

Initiative Reduce operational cost and introduce larger economies of scale

Internal Business Processes

Objective Reduce customer wait time in lines to increase their overall satisfaction

Measure average wait times

Target 25% reduction in wait times over a two-year span

Initiative develop training programs for employees to better serve customers and increase checkout procedures as well as allocating workers to cashier stations when necessary promptly

Customer

Objective Reduce customer complaints

Measure analyze feedback systems, customer reviews, online input

Target 10% reduction for the first year, and then slowly incrementally increase

Initiative stock shelves appropriately displaying products, emphasize signs to easily direct consumer, introduce kiosk system to help customer identify specific product in specific aisles, allocate employees in high volume areas accordingly

Vision & Strategy

Learning & Growth

Objective Increase employee motivation

Measure surveys/feedback systems (anonymous to store, only HR would see it) to encourage employee feedback

Target ¾ of employee responses within a month span

Initiative introduce a kiosk system that employees can take surveys on in private and allowing them to see how many employees have given feedback and the incentives available for their participation

4. On Good Strategy/Bad Strategy

a. In his book Good Strategy/Bad Strategy, Richard P. Rumelt consistently reiterates to readers that there is distinctive difference between the two and in order to thrive in the business world, it is essential to diagnose bad strategies and find its root cause. He introduces that notion of the kernel as the underlying structure of good strategy, the conception of “coherent action backed up by an argument, an effective mixture of thought and action”.20 He asserts that it is acceptable for a good strategy to entail more than one kernel, however if the kernel is absent or distorted, Rumelt fears for the organization as this can pose a serious risk in operations. According to Rumelt, the kernel, contains three elements – diagnosis, guiding policy, and coherent actions that contribute to good strategy. The element of diagnosis confronts the obstacle an establishment is dealt with in order to simplify the reality of the situation to determine its critical proponents. In regards to the guiding policy, Rumelt implies this is the organization’s blueprint in conquering the impediment preventing them from performance excellence. The last element consists of a set of coherent actions. These actions adhere to the situation hindering good strategy and combat them by employing the appropriate solutions as set by the guided policies.

Walmart engages in good strategy on an everyday basis, which has lead, it to its thriving success as the number one company in the retail industry. By offering customers, everyday low prices, backed by Ad Match Guarantee towards any competitor in the industry, Walmart has been able to retain a large sector of the market share. Walmart strives to be the number one store globally, in order to accomplish such a goal; the company has carried in good grace Rumelt’s kernel of good strategy. In the scheme of things, Walmart has carried the three elements of diagnosis, guiding policies, and coherent actions in their operations day in and day out. To begin, Walmart’s diagnosis of its organization needs to focus on what the nature of its everyday challenge entails. For Walmart, the challenge is making strides to conquer performance excellence in their customer experience. Due to its bad publicity of labor contracts and lawsuits, Walmart customers do not expect much when they enter the store. Not only because of such labor disputes do customers think negatively of Walmart, but from many complaints of Walmart’s rude customer service to long wait times to inefficient allocation of employees around the store.

To fix this problem, Walmart must establish a guiding policy to deal with the hindrance it faces. To properly do this, Walmart must highlight an overall approach to confront the diagnosis. “It must channel actions in certain directions without defining the exact methodology”21, Rumelt suggest which in turn will eliminate the meaningless programs as the company focuses on emphasizing sources of advantage. The guiding policy that Walmart develops must be comprised of advantages it has over its rivals in order to prepare itself for unanticipated turnaround. By anticipating unforeseen events, Walmart can hone in on its strategy by diminishing the ambiguity and intricacy that may occur. Consequently, this leverages Walmart as they will have their blueprint ready in case of economic turnaround, or said situation. In their concern to improve customer experience, Walmart can establish policies to implement said plans should said event occur that is unforeseen. Walmart must key in on the fact that just because it is advantageous upon its competitors in having the lowest prices, that does not mean it can lack in service.

Finally, the company can follow through with coherent action to resolve such diagnosis they have formulated. Rumelt stresses to readers that a set of coherent actions means togetherness in regards to the organization. It is the consistency between resource deployments, policies, and maneuvers that are undertaken to carry out the leverage of advantages.22 To implement actions to improving customer satisfaction, Walmart must refer to its guiding policies and look at what situation prompts it in that day. For example, the manager of Walmart gets a call from the cashier over the speakers that something requires his attention at the front; she gives him the code over the speaker to notify that he needs to come as soon as possible. He then shows up to ask her what’s wrong, to which he finds himself answering his own question. With only 5 cashier lanes open and unhappy looking customers, the manager finds himself in a sticky situation. He recalls his meeting with upper management and remembers that he must properly allocate his employees in this moment to service his dissatisfied customers. He makes a store announcement, in which he gives code to workers in said aisles to come promptly to the front of the store to open up more lanes. Having the workers arrive, he allocates each one to a specific lane and heads towards the long lines of disgruntled shoppers. He apologizes and assures them that their next experience will be better as he will find ways to properly fix the wait time. He stresses to them that Walmart as a corporation and always have more than necessary lanes open to put their needs first as his customers’ priorities are his priorities.

b.Richard P. Rumelt dedicates a majority of his book, Good Strategy/Bad Strategy toward differentiating the underrepresented qualities that make the two distinctive, apart from obvious reasons of one being good and one being bad. To begin, Rumelt tackles that notion that many organizations believe that having a good strategy means having multiple goals and initiatives, however in his defense, he asserts that such companies fail because they have no “coherence” in their approach. These companies lack the consistency necessary to achieve their organizational goals and believe that their failure is due to their scare financial investment in their strategies. That is not the case because spending more and trying harder does not translate into profits and sustainability in the world of business, rather it is based on the formulation of good strategy and defining your kernel of good strategy – diagnosis, guiding policy, and coherent actions. The kernel as previously discussed articulates the underlying structure of the organization, providing guidance, but not in exact details to assist the organization. A good strategy will identify the challenge the firm faces, how to fix it, and the steps required to implement change for the organization’s well being. A good strategy requires top management and leaders who are willing to say no to suggestions that deem unfit to the alignment of the firm.

In essence, bad strategy is not about the deficiency of good strategy, rather it the resulting effect of dysfunctions in management. 23 Rumelt emphasizes that the ability to detect bad strategy will lead anyone interested in establishing a good strategy in the right direction. A bad strategy in fact, is comprised of four major fundamental errors – fluff, failure to face the challenge, mistaking goals for strategy, and bad strategic objectives. Fluff is the downfall of many organizations as they prepare proposals and missions/values for investors, shareholders, or the public eye. The reason being fluff is exactly what it sounds like, unnecessary additions that distance it from what it is trying to convey. Fluff is gibberish that conceals expertise through its masquerade of words. Often times, organizations try to come off as intellectual individuals, when in fact they are regurgitating the same statement in five different methods – this is fluff. Next, bad strategy is derived from failure to face the problem at hand. Because good strategy hones in on the diagnosis of the problem, bad strategy has the inability to do so. If an organization cannot define the root of its problems or obstacles that confront its operations, how will they evaluate it and solve it? The truth, they don’t, which leads room for organizational havoc in the future. Lastly, a bad strategic objective that cannot identify the burning issues of the organization contributes to its inability to predict unforeseen events, cause it to dwindle towards catastrophe.

Walmart undoubtedly has good strategy working in its favor, as it has been recognized as the number one retailer in the industry globally, bearing substantial amounts of revenue unattainable to its competitors through its sustainable competitive advantage. The practices Walmart employs that are in accordance with Rumelt’s beliefs is its implementation of the kernel of good strategy – providing a diagnosis for its problems through its team of experts globally, guiding policies to lead management of all levels towards the direction of success in fixing these problems, and lastly its development of coherent actions to carry out tasks necessary to resolve its issues. Walmart’s supply chain management can almost be described as flawless, yet thriving for continuous improvements. The good strategy in Walmart is its ability to manage its supply chain and change the processes involved. The company realized that reducing the links in the supply chain that were necessary in increasing efficiency and reducing operating costs to translate to lower prices for consumers. Around the 1980s, Walmart decided to take the initiative to eliminate links it deemed as unnecessary and began to work in accordance with manufacturers. Under the Vendor Managed Inventory initiative, Walmart and manufacturers filled orders quickly and efficiently managed their inventory. This gave the company the flexibility to manage procedures to selectively choose its merchandise and the ability to transport it directly to stores that are lacking in such products, resulting in a near 100% fulfillment.24 Because the company has grasped the concept of an effective supply chain management, it guarantees consumers the lowest prices, which has given it the competitive sustainability against rivals and safeguarding against unforeseen events.

Walmart’s bad strategy however, has been harder to resolute. The leverage that its low prices offers helps the company sustain its position in the industry, however if Walmart ever loses this cost leadership strategy, there will be a very limited scope as to what the company can achieve in the industry. The bad strategy that Walmart employs is its inability to reduce consumer wait times over the past decade efficiently and provide better customer service. Customers complain as a result of waiting for extensive periods even in the express lanes, which is ridiculous as the express lane is supposed to afford them efficiency and convenience to get in and out. The stores poor allocation of workers has been its downfall as many employees restock and dwindle in aisles that require little attention whereas electronics, the cashier, household goods necessitate the need for associates. As mentioned earlier on how to resolve Walmart’s burning issue of customer satisfaction, to rid of its bad strategy Walmart must implement devices to measure customer experience in order to solve the problem. It needs to account for customer wait time and take the appropriate measures to handle the issue the moment it occurs through guiding policies and coherent actions, and not only when the issue is blown up.

c.The question of the quarter in Dr. Jasso’s Competitive and Strategic Analysis Course, does strategy matter? Without a doubt, strategy matters in each and every way. Strategy acknowledges the challenges organizations are dealt with and assists in conquering them with tactics that analyze trends in the industry, to attack the issue head on. To formally understand strategy, we must be constantly reminded of the fundamentals of a good strategy to develop the parallel capability of confronting a bad strategy when it is present.25 Falling into the fallacies of bad strategy can lead an organization to its pitfall, as they would have to exert all efforts into the recovery process. Jack Welch in Winning suggests pondering less when it comes to strategy and doing more.26 This is particularly insightful for aspiring leaders and anyone who participates in the business industry, for it tells us strategy isn’t all about brainstorming, rather it is it is through the implementation of taking charge and testing our waters with what we believe holds true.

Through the CEO project, I was able to learn about strategy. The strategy Team Walmart implemented from the start was to allocate tasks accordingly to our strengths. Certain members of the group were finance majors, so they were able to better grasp logistics and investment returns. Other members of the group were marketing and management majors, so certain tasks such as human resource strategy, marketing, e.g. were allocated to these members. We compensated our weaknesses with our strengths, and collectively met deadlines as a group. With a five-week course of heavy reading and material, we were able to allocate our time wisely and not stress in the very last week as we had split stages one, two, and three over the five week span. Our communication methods of a creating a group chat and Google Document was insightful, as we were always able to inquire about each other’s parts and provide feedback to one another. A question in which one member didn’t know the answer to, another did and the cycle repeated itself throughout the last five weeks, as we assisted each other towards the end of the quarter to attain performance excellence.

Dr. Jasso once said that strategy provides clarity of goals to firms by directing them towards a specific obstacle or burning issue. All and all, strategy is essential in organizations because without strategy, you have no competitive edge to confront competitors with which puts you at a disadvantage – no one wants to feel powerless, mostly in the dog eat dog world of business.

1 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.169. Winning. London: HarperCollins.

2 Walmart Locations Around the World. (n.d.). Retrieved July 24, 2015.

3 Wheelen, T., & Hunger, J. (2012). Strategic Management and Business Policy: Toward Global Sustainability (13th ed.) p.213. Upper Saddle River, N.J.: Pearson Prentice Hall.

4 Fortune's Top 500 Companies. (n.d.). Retrieved July 24, 2015.

5 Wheelen, T., & Hunger, J. (2012). Strategic Management and Business Policy: Toward Global Sustainability (13th ed.) p.238. Upper Saddle River, N.J.: Pearson Prentice Hall

6 Wheelen, T., & Hunger, J. (2012). Strategic Management and Business Policy: Toward Global Sustainability (13th ed.) p.246. Upper Saddle River, N.J.: Pearson Prentice Hall.

7 Our People Make the Difference. (n.d.). Retrieved July 24, 2015, from http://corporate.walmart.com/working-at-walmart

8 2015 Walmart Annual Report. (2015). Walmart Stores, Inc. Retrieved from http://stock.walmart.com/files/doc_financials/2015/annual/2015-annual-report.pdf

9 2015 Walmart Global Responsibility Report. (2015). Walmart Stores, Inc. http://cdn.corporate.walmart.com/f2/b0/5b8e63024998a74b5514e078a4fe/2015-global-responsibility-report.pdf

10 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.247. Winning. London: HarperCollins.

11 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.245. Winning. London: HarperCollins.

12 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.248. Winning. London: HarperCollins.

13 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.249. Winning. London: HarperCollins.

14 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.167. Winning. London: HarperCollins.

15 Kaplan, R. S., & Norton, D. P. (2007). Using the Balanced Scorecard as a Strategic Management System. Harvard Business Review, 150.

16 Soni, P. (2015, February 18). Interested In Walmart? What Investors Need To Know. Retrieved July 24, 2015.

17 Ungar, R. (2013, April 17). Walmart Pays Workers Poorly And Sinks While Costco Pays Workers Well And Sails-Proof That You Get What You Pay For. Retrieved July 24, 2015.

18 Career Opportunities For You. (n.d.). Retrieved July 24, 2015, from http://www.costco.com/careers.html

19 2015 Walmart Annual Report. (2015). Walmart Stores, Inc. Retrieved from http://stock.walmart.com/files/doc_financials/2015/annual/2015-annual-report.pdf

20Rumelt, R. (2011). Good Strategy/Bad Strategy: The Difference and Why it Matters. p.77. London, England: Profile Books Ltd.

21Rumelt, R. (2011). Good Strategy/Bad Strategy: The Difference and Why it Matters. p.84. London, England: Profile Books Ltd.

22Rumelt, R. (2011). Good Strategy/Bad Strategy: The Difference and Why it Matters. p.91. London, England: Profile Books Ltd.

23Rumelt, R. (2011). Good Strategy/Bad Strategy: The Difference and Why it Matters. p.32. London, England: Profile Books Ltd.

24 Lu, C. (2014, May 8). Incredibly successful supply chain management: How does Walmart do it? Retrieved July 25, 2015.

25Rumelt, R. (2011). Good Strategy/Bad Strategy: The Difference and Why it Matters. p.7. London, England: Profile Books Ltd.

26 Welch, J., & Welch, S. (2005). Strategy, It’s all in the Sauce. p.166. Winning. London: HarperCollins.