Sunday, April 08, 2012

Wal-Mart Secret of Success

Wal-Mart is the biggest corporation in the United States and in the world in terms of revenues and number of employees.

It keeps growing at a rapid pace, showing no sign of letting up. In the first decide of the twenty-first century it appears as if no other company has a chance of catching up to it.

What is the secret of Wal-Mart’s success? Its philosophy, first set its motion by its founder, Sam Walton, is to offer the lowest prices to its customer, thereby undercutting all of its competitors.

Wal-Mart’s basic approach is to minimize margins and maximize returns (i.e., it emphasizes the speed with which goods more through the store over the profit it makes per unit).

Wal-Mart manages to keep its prices low by keeping its own costs down. This is achieved by abstemious management practice (limiting lavish spending by managers) and by keeping down the wages of its workforce (called “associates” by the company).

The low wage policy is maintained by providing weak benefits (for example, relying on spouses’ health care coverage) and by a fierce anti-unionism.

Wal-Mart has used every trick in the book, legal and illegal, to keep unions out.

For this reason along, it has become the prime enemy of the labor movement in the United States and elsewhere.

Wal-Mart is noted for its logistics excellence. It has been a leader in revolutionizing logistics processes, creating a form of just in time (JIT) retailing by developing high tech coordination with its suppliers.

In part for this reason, an in part because of its sheer size and power, the company has gained a dominance over its supplier, putting constant pressure on them to lower their prizes, sometimes with the consequence of pushing them to lower throe production off shore to lower wage countries such a China.

Indeed, its helps to play a role in maintaining and perhaps even driving down the low labor standards of poor developing countries.

In addition, the company puts pressure on it service providers, including transportation and warehousing companies.

These relational processes also cut the company’s costs, enabling it to offer lower prices.
Wal-Mart Secret of Success
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