“[…] the work we do to help people live better goes far beyond our store walls. It extends into our communities and around the world and affects the lives of people we will never meet.” (Wal-Mart web page, 2014).
Wal-Mart is the world’s largest public corporation, the biggest private employer with over two million employees and also the largest retailer (Fortune, 2014). However, Wal-Mart is a company which has been confronted with many revealing headlines about its poor social sustainability in recent years; for example, employees in the US are significantly underpaid so that they cannot even afford health insurance (Wedekind, 2009). With regard to these facts, this essay is aiming to analyse the following question:
“How can Wal-Mart create customer value in a low price industry in such a way that its customers disregard its lack of social sustainability?”
Table of Contents
1. Relevance of analysing Wal-Mart's customer value creation in combination with its social sustainability reputation
2. Status quo regarding Wal-Mart’s social sustainability reputation and its activities for customer value creation
3. Managerial recommendations for a strategy to create sustained customer value
3.1 Short-term solutions
3.2 Long-term solutions
4. Conclusion
Objectives and Core Themes
This essay explores how Wal-Mart maintains its position as a market leader by delivering customer value in a low-price sector, despite significant public criticism regarding its social sustainability practices. The central research question examines how the company preserves customer loyalty and market share while simultaneously managing negative perceptions surrounding its labor and social ethics.
- Analysis of Wal-Mart's customer value creation strategies.
- Examination of the company's social sustainability reputation and controversies.
- Application of VRIN-resource theory to build sustainable competitive advantage.
- Utilization of dynamic capabilities to navigate changing market environments.
- Formulation of short-term and long-term managerial recommendations.
Excerpt from the Book
Status quo regarding Wal-Mart’s social sustainability reputation and its activities for customer value creation
The secret of Wal-Mart’s success consists of complex bundles of organizational capabilities and strategies. However, one of the basic beliefs on which Wal-Mart’s founder, Sam Walton, built the company was, “Service to Our Customers”, which aims at the lowest prices with the best possible service. Activities creating customer value are, for instance, the “greeters”, who welcome customers and hand out shopping baskets; the expectation for all employees to look customers in the eye, smile at them, and offer a verbal greeting; the “Satisfaction Guaranteed” program, which assures customers that Wal-Mart accepts returned merchandise on a no-questions-asked basis; and last but not least the low prices (Grant, 2008).
Moreover, Wal-Mart communicates frequently about its activities for global and social responsibility, reporting, for example, that it has pledged $2 billion in cash and in-kind contributions to help towards ending starvation in America (Duke, 2010).
Nevertheless, there have been many headlines and studies about Wal-Mart’s bad practices with regard to its social sustainability in recent years. Amongst other things, Wal-Mart is accused of lowering wages by entering local communities and killing small businesses as well as reducing social connectivity (Zhang et al., 2009). Lawsuits have alleged that, for instance, Wal-Mart forced its employees to work longer hours without a lunch break, or that it failed to provide suitable seating for its cashiers (MarketLine, 2014). Even more striking are the accusations made by Wal-Mart employees that the company discriminates against race and sex with unethical and unfair practices (Sellers, 2005). Independent audits have found serious, repeated violations of safety standards, social issues, and unauthorized subcontracting in its manufacturing plants in Bangladesh (Smith, 2013). These developments not only impact Wal-Mart’s brand image disadvantageously, but also affect its growth opportunities.
Summary of Chapters
1. Relevance of analysing Wal-Mart's customer value creation in combination with its social sustainability reputation: This chapter introduces the case study by highlighting Wal-Mart's market dominance and the paradox between its business success and the negative headlines regarding its social sustainability.
2. Status quo regarding Wal-Mart’s social sustainability reputation and its activities for customer value creation: This section details the organizational strategies behind Wal-Mart's customer service success while contrasting these with documented reports of labor issues and ethical controversies.
3. Managerial recommendations for a strategy to create sustained customer value: This chapter proposes strategic improvements using the VRIN-resource framework and dynamic capabilities to enhance customer value through both short-term store operations and long-term business model adjustments.
4. Conclusion: The final chapter summarizes that while current profits remain stable, long-term success requires Wal-Mart to evolve into a more transparent and socially responsible corporation to mitigate potential future losses.
Keywords
Wal-Mart, Customer Value, Social Sustainability, VRIN-resources, Dynamic Capabilities, Competitive Advantage, Retail Strategy, Corporate Responsibility, Market Share, Organizational Capabilities, Consumer Loyalty, Ethical Practices, Strategic Management, Supply Chain Ethics, Business Model.
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines how Wal-Mart successfully delivers customer value in a highly competitive low-price industry while simultaneously facing severe criticism regarding its social sustainability record.
Which theoretical frameworks are applied to the analysis?
The analysis utilizes the VRIN-resource framework (valuable, rare, imperfectly imitable, non-substitutable) and the concept of dynamic capabilities to propose strategic improvements.
What is the primary research question addressed?
The study aims to determine how Wal-Mart can maintain sustained customer value in a way that leads consumers to disregard the company's lack of social sustainability.
Which methodological approach does the author use?
The author employs a case-study approach, analyzing existing literature, media reports, and strategic business frameworks to evaluate the company's current practices and provide recommendations.
What topics are covered in the main body of the text?
The main body covers the status quo of Wal-Mart's reputation, the mechanisms behind its customer value creation, and proposed managerial strategies for long-term survival.
Which keywords define this work?
Key terms include Wal-Mart, customer value, social sustainability, VRIN-resources, dynamic capabilities, and competitive advantage.
What are the specific short-term recommendations mentioned for Wal-Mart?
Recommendations include improving the in-store shopping experience, refining the e-commerce strategy, and deepening relationships with key suppliers to maintain competitive pricing.
Why does the author argue that social sustainability is critical for Wal-Mart's future?
The author argues that as competitors close the price gap, Wal-Mart risks losing customers if its negative reputation for poor working practices and ethical issues continues to overshadow its value proposition.
- Quote paper
- Pia Boehm (Author), 2014, Wal-Mart. How can the low price industry create sustained consumer value?, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/287942
