The Good and Bad of Wal-Mart's Culture
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Case Details:
Case Code : HROB037
Case Length : 17 Pages
Period : 1943 - 2003
Pub Date : 2003
Teaching Note : Available
Organization : Wal-Mart
Industry : Retailing
Countries : USA
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'Good to Great'
However, over the years, the company became the target of
much criticism. It held the record for having been sued the maximum number of
times. Its work culture was criticized on various grounds which included
gender-based discrimination, its overtime policies, using sweatshop products and
'killing off' small local business.
Background
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Wal-Mart was the realization of the dream of Sam Walton (Walton), who wanted to
set up a store which provided customers 'high value, low prices and a warm
welcome.' Walton was born on March 29, 1918, in Kingfisher, in the state of
Oklahoma.
While he was in school, he worked part-time in his father's store which gave him
his first experience of retailing. In 1940, he graduated with a bachelor's
degree in economics from the University of Missouri at Columbia. Soon after
graduating, he worked as a management trainee at JC Penney5.
In 1942, he joined the US Army as a Captain in the Army Intelligence Corps
and worked in that position till the Second World War ended in 1945.
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On returning to civilian life, Walton decided to start his own
store. His father-in-law (Walton got married in 1943), who was a
banker, helped him with a loan of $20,000 to set up a Ben Franklin
variety store6 in Newport.
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Walton did not have any business experience. He soon gained the
requisite experience by attending training programs conducted by
Butler Brothers for their franchisees. He also visited a competing
departmental store across the street, to observe their prices and
policies, and derived valuable inputs.
Walton's store was very successful. Most of the success came from
his innovative ideas. He realized that he could obtain competitive
advantage by buying products in bulk directly from manufacturers and
offering them at lower prices to customers. |
He also kept the store open for longer hours than his
competitors and took advantage of its good central location. In the very first
year Walton earned a profit with his cost-cutting ideas.
Within five years his store became the number one Ben Franklin store in a six
state region and had earnings between $30,000 and $40,000 per year.
Some of the important operational policies adopted by Wal-Mart in later years,
such as giving importance to store location, purchasing in bulk and maintaining
longer store working hours, had their roots in Walton's first store.
Unfortunately, due to carelessness in negotiating the lease agreement, Walton
lost his store in early 1950...
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