Wal-Mart Strategic and Financial Planning

The Strategic Planning Initiative of Wal-Mart

Wal-Mart has put in place long-term plans aimed at increasing its competitiveness in the market and maintaining its industry leadership position. The strategic plans are aimed at improving the customer relationship with the firm that leads to the repeat business (Wal-Mart, 2014). The increased competition that is majorly from newly formed retail firms has pushed Wal-Mart to come up with new strategies aimed at attracting and maintaining the customers. The first initiative has various components including the price leadership, the integrated brand communications and the private label as well as leveraging all its selling and administrative expenses (Wal-Mart, 2014).

The price leadership strategy is aimed at providing the products at affordable prices to the clientele. The firm is known for its low-pricing strategy within the retail industry. However, the price leadership strategy is aimed at providing quality products in order to maintain its competitive advantage and retain the market share (Wal-Mart, 2014). The other strategies such as the consumables, private label, integrated brand communication and leveraging expenses mainly target the maximisation of the product line and increased advertising.

The second strategic planning initiatives are aimed at optimising the value of the products in all the stores both physically and online. The optimisation of the products’ value approaches are attained through various initiatives including reduction of prices. Essentially, Wal-Mart will only store assorted items that are valued by the customers (Wal-Mart, 2014). The third strategic planning initiatives are aimed at improving the customer experience both in and out of the firm’s premises. The initiative is also aimed at improving the customer experience in all products provided online (Wal-Mart, 2014). The initiatives are achieved through increased efficiency in all service provisions and customer-oriented operations.

How the Initiatives Affect the Organisation’s Financial Planning

The outlined strategic planning initiatives greatly affect the financial planning of the firm. Wal-Mart puts a lot of emphasis on low-price strategy as well as leveraging its selling and administrative expenses. The strategies directly affect the financial planning initiatives. The strategies have the potential of reducing the expected gross and operating margins (Wal-Mart, 2014). In the last two financial years, the increased selling expenses have adversely affected the operating, gross and net profit margins of the firm (Yahoo Finance, 2014). In order to reduce the operating expenses and increase its returns, Wal-Mart has put in place strategies aimed at increasing efficiency and effectiveness in the general operations.

Even-though the price leadership initiative has enabled the firm to maintain its headship position in the retail stores market, the strategic planning initiative has greatly affected the overall sales. However, the sales have increased in the last two financial years. The reduced prices of the products coupled with increased operating expenses have reduced the overall profit of the firm (Yahoo Finance, 2014).

Besides, the overall expansion strategy, focus on highly moving consumables as well as other stores moderations need large capital outlay. However, the initiatives are highly effective in the overall continuation of the retail store. Besides, the initiatives are aimed at reducing the overall high-cost load for the existence of the firm (Wal-Mart, 2014).

How the Initiatives Affect the Costs and Revenues of the Supply Chain

Wal-Mart third strategic planning initiative aimed at improving and increasing efficiency as well as improving effectiveness in its stores focuses on the supply chain. In fact, the initiative has three main components including improving the merchandise flow, zero waste facilities and supply chain transformations. The merchandise flow and supply chain transformation are initiatives aimed at improving the supply chain to ensure reduced costs and improved value to the customers (Wal-Mart, 2014). The merchandise replenishment cycle the firm has adopted requires an efficient supply chain.

The firm replenishes its supplies at least within forty-eight hours. Such a short time span requires an efficient supply chain system. As such, the firm has adopted efficient systems including cross-docking processes, which have various advantages ranging from reduced operating costs to decreased levels of stock in stores (Wal-Mart, 2014).

The initiatives aimed at transforming the supply chain focus on the improvement of efficiencies, particularly in the transportation of the merchandise. The initiatives have enabled the firm to attain efficiencies in the fuel consumption resulting in over 21% savings in the fuel costs. Other reductions in such area as empty truck miles as well as shipped miles have also been realised through the initiatives (Wal-Mart, 2014).

Ethical Concerns Related to the Initiatives

The initiatives related to cost reductions also have negative effects on the worker’s demotions. The firm has a history of unlawful removal of workers. In fact, the firm normally rewards employees below the minimum wage rate in order to reduce the overall operating and administrative expenses. The initiatives that have an effect on the overall wages and benefits as well as removal of workers are considered unethical. However, the firm has to leverage these initiatives with ethical considerations in order to remain competitive in the market. Ethical considerations are also put on the initiatives that have an impact on the suppliers. Through the strategic planning, the firm has to reduce the number of dealers and maintain supplies of the selected items.

References

Wal-Mart (2014). 2014 annual report. Web.

Yahoo Finance (2014). Wal-Mart key financial indicators. Web.

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