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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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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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

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.

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.

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...

Excerpts >>

5] JC Penney is a chain of stores specializing in apparel, accessories and home furnishings. The first JC Penney store was opened in Wyoming in 1902 by founder James Cash Penney. JC Penney was the pioneer of retailing, chain stores and of catalogs.

6] Ben Franklin was a franchise of Butler Brothers, which ran Federated departmental stores and Ben Franklin variety stores. Butler Brothers Incorporated was the pioneer of the departmental store setup in the US.