Performance and Compensation Management

This assignment provides a detailed analysis of performance and compensation management in Walmart. It includes an analysis of the external and internal environment, cultural analysis, and Porter's five forces analysis. The assignment also discusses the international expansion strategy of Walmart and its environmental analysis.

Running Head: PERFORMANCE AND COMPENSATION MANAGEMENT
Performance and Compensation Management
Student’s Name
University Name
Author’s note

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Table of Contents
1. Introduction..............................................................................................................................3
2. Organisational background.......................................................................................................3
3. International expansion............................................................................................................4
4. Environmental analysis of Walmart.........................................................................................4
External environment...................................................................................................................4
Socio cultural factors................................................................................................................4
Technological factors...............................................................................................................5
Political and legal factors.........................................................................................................6
Economic factors......................................................................................................................6
5. Internal environment analysis..................................................................................................6
Corporate structure.......................................................................................................................7
Analysing the resources of Walmart............................................................................................7
Physical resources....................................................................................................................7
Intellectual and intangible resources........................................................................................8
6. Cultural analysis.......................................................................................................................8
7. Porter's five forces analysis......................................................................................................9
Bargaining power of suppliers.....................................................................................................9
Threat of new entrants................................................................................................................10

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Threat from substitute products.................................................................................................10
8. SWOT analysis.......................................................................................................................11
Strengths.....................................................................................................................................11
Weakness...................................................................................................................................11
Opportunities..............................................................................................................................11
Threats........................................................................................................................................12
9. Competitive advantage of the organisation............................................................................12
Recommended Strategies...........................................................................................................12
10. Reference List and Bibliography........................................................................................16

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1. Introduction
In the initial section of assignment, detailed description of the chosen organisation Walmart and
the industry have been provided. In this context, external and internal situation analysis of the
company has been done. Analysis of the Macro environmental factors affecting the strategic
planning of the organisation, pestle analysis has been conducted. The micro environmental
factors also have strong impact on the strategic decisions undertaken by the organisation. SWOT
analysis have also been conducted in this report in order to highlight the factors like strength,
weakness, opportunity and threats based on which the organisation can make various strategic
decisions. Analysing the business environment organisation, undertaken by the organisation will
be evaluated. An evaluation of the industrial resources of the organisation has also been
conducted in this report in order to reflect upon the competitive advantage that over the other
organisations of the same industry. The sustainability of the organisation in the market is further
emphasizing upon, with an eye upon the core competencies of Walmart.
2. Organisational background
Walmart stores Inc. is the largest retail Organisation in the world. Currently it is also the biggest
Corporation in the world. The nearest competitor of Walmart, is Carrefour of France which is 3
times lesser in organisation and size strength and resources. There are over 1.2 million
employees in Walmart making it the biggest Non governmental employed of UK or USA. There
are almost 1500 discount stores located in all 50 states of USA along with almost 1400
supercentres which combines discount outlets as well as grocery stores (Pope and Pope 2015).
There are more than two to warehouse membership change of Walmart in both UK and USA and
the company has operations in our neighbourhood markets where the product offerings include
general merchandise. The international operations of the company started in 1991 and currently

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organisation has their stores in Canada, Puerto Rico, Brazil, Mexico, China, South Korea, UK
and other important markets also. The latest product inclusion of Walmart is there
neighbourhood market which is actually grocery stores with average area of 42000 square feet
(LeCavalier 2016). The neighbourhood market include full grocery lines, pharmaceuticals, health
and beauty products, Limited section of general Merchandise as well as photo developing
services.
3. International expansion
Walmart started to penetrate into the international markets with the belief that they can achieve
competitive advantage with application of their combined Technology, logistics as well as
human resources. The buying power of the company has been high and the multinational
suppliers' strength has also been stable. By the dint of these resources Walmart developed the
strategy of acquiring companies and developing them into Walmart stores. European retail
Agencies like Carrefour, Ahold have about 20 years of extra International experience compared
to Walmart. In conclusion, it can be stated that the international expansion strategy of the retailer
is based upon merger and acquisitions. The latest market entry of Walmart has been into the
retail market of Mexico where they have set up a joint venture with the retail organisation
CIFRA.
4. Environmental analysis of Walmart
External environment
Socio cultural factors
There is a large shift in consumer demographics observed in the last 5 decades in the retail
sector. The proportion of ageing population is highest now and parallely the birth rate is

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decreasing in developed countries and increasing in the underdeveloped countries. Advancement
in technology and medicine has increased the life expectancy. That is why it is evident batch
individuals will have to eat better and stay healthy. This is where the role of Supermarket chains
like Walmart comes in. They have unique ranges of health conscious product in every category.
At the same time the trend of family shopping has increased in the important markets of Walmart
which is favouring there clothing retail and accessories business and in fact almost all Lifestyle
categories. Nevertheless, because of increasing number of single parent households, the
disposable income has been low as well as the family time of adults have been diminished. This
is why they have to depend upon processed food products and other readymade products as well
(Li and Liu 2018). Again, the one stop shopping solution of Walmart is the best option available
for people from such households. The downsizing of the American market and stable
unemployment rate is providing the opportunity of hiring cheap labour as Frontline and back line
stone waters for Walmart also.
Technological factors
The recent impact of recession has force the government to search for alternative options in order
to save money. That is why, the government has instructed to reduce the budget in in almost all
non-military corporations. The only exception in this Slot is is retail organisations as research
and development programmes are very essential for them in the highly competitive environment.
The deal in so many product lines that without research and development they will not be able to
deliver new product lines continuously at regular succession. The technological advancement has
accounted for the growth in health, consumer goods as well as food. The increasing Technology
has also posted the demand among customers to get quicker access to best quality products
(Harrison 2019). That is why, Walmart has increased their digital convenience stores and is now

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emphasising upon increasing the number of customers of prepaid convenience shopping cards.
The production process of Walmart has become more automated in recent years because of
which many individuals in the company have lost their job. The availability of Internet in the
developed Nations has provided an opportunity to Walmart to launch E-Commerce websites in
almost all the major markets. The most recent example is acquisition of FlipKart in India by
Walmart.
Political and legal factors
Democratic form of government is prevailing in most of the big markets of Walmart because of
which they can have a greater exercising power as a pressure group. In fact, in America,
Walmart have their representatives in the US Congress as well as Senate. Hence, it is evident that
Walmart has an eye on the political policies as well as laws that can impact their business. They
have the market power of lobbying in case of breaking any market blockage faced by them.
Economic factors
Capitalist economy prevails in most of the important markets of Walmart, where production is
controlled by private Agencies mostly. That is why; it is evident that big retail marketing chains
like Walmart have favourable market condition for sustainable business which helps them to
deliver products at low prices to customers. Economic liberalization of the Asia Pacific region
has helped Walmart to spread their business Wings in this area also (Caraway 2016). Hence, in
conclusion it can be stated that globalisation, privatisation and liberalisation are the major
economic policies that is consonant with the growth as well as expansion of Walmart in the
existing as well as the new markets.
5. Internal environment analysis

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The simplified and largelyhierarchical organisational structure is a major component of the
strategic planning of the organisation.
Corporate structure
Majority of the stocks of the public corporation Walmart is still in position of the Walton family
members. Top level management includes significant involvement of the family. The control as
well as decision making capacity of the organisation is concentrated India headquarters at
Bentonville, Arkansas (Michelson et al. 2018). The stable higher management of the
organisation includes the most experience members of the company who looks down a
thoroughly hierarchical structure. However, the provided research article shows that there is
dearth in the operational management structure. This is mainly in regard to then employee
management and performance appraisals. Their appraisal is based on the performance reviews of
the store managers, much similar to Sally’s story as highlighted in the case study. In order to
develop the status of performance management, it can be commented that they need to
implement the performance management model of the Merill Lynch Company (Aguinis, Joo and
Gottfredson 2011). The annual employee objectives are jointly set by the management and the
employees in the organisation. This ‘is why it is easier for the employees to understand what is
needed of them and the higher management is certain about how to evaluate them also.
Analysing the resources of Walmart
The annual segment sales of Walmart stores in the year 2017 had been more than 50 Billion US
Dollars with the operational income proportion be more than 30%.
Walmart has a most developed internal staff management policy and almost 80% of the store
managers of Walmart are placed by internal promotion, compared to direct recruits. However, it

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is evident that until the organisation is able to implement a proper performance evaluation policy
that incorporates a proper personal development plan for the employees, the store employee
turnover rate will not reduce (Aguinis, Joo and Gottfredson 2011). Walmart believe that it is
better to recruit people in higher positions to have considerable customer service Experience so
that they can deem their subordinates by injection of strong company values in them. As
informed by Muñoz (2017), the employees are respected as stakeholders in organisation and
perhaps Walmart is the only retail Corporation in the world where 70% of the employees have
shares involved in the company and the stock returns help them to get substantial incentives also.
Physical resources
Walmart has implemented fully computerised inventory tracking system in the 1990 which help
them to decrease their checkout time as well as re-ordering time. The distribution centres of
Walmart are also fully automated thereby helping the organisation to reduce their shipping cost
and time. Implementation of Advanced technology, earlier than their competitors has helped
them to develop sustainable competitive advantage and currently the organisation is enjoying the
benefit of developing more upgraded systems as well as digital policies which is facilitating them
by decreasing their time, money as well as investment over resources. However, the physical
resources like technological assets are mostly required for the instances like performance
monitoring only. The case study reflects that an organisation is not able to progress if the fluidity
of communication is lacking (Aguinis, Joo and Gottfredson 2011). That is why, in alignment to
the discussions of the case study it can be inferred that in big organisations like Walmart, it is
easier to implement software for 360 degrees feedback sharing platform software.
Intellectual and intangible resources

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The primary sources of the organisation are their customers who numbers over 40 million
increments every year. More than 1.3 million employees as well as associate employees are
working with Walmart at their individual stores around the world. The employee retention rate is
about 50% which is itself a commendable achievement within organisation operating a global
workforce of more than 1 million. The technological capabilities of the organisation which help
them to gain sustainable cost leadership in terms of distribution as superior inventory system
actually help them to concentrate upon employee benefit and compensation. However, in this
context, it can be commented with reference to the case study article that the basic success in
employee management by the organisation lies in the employment of multiple sources for
performance management (Aguinis, Joo and Gottfredson 2011). There, is a unique as well as
individual source for professional behaviour assessment and another source for assessment of the
employment outcomes. The authors of the case study article also consider it as one of the best
policies of employee performance management (Aguinis, Joo and Gottfredson 2011).
6. Cultural analysis
The customer service of Walmart has been exemplary and the corporate citizenship of the
organisation in most of the major markets helps them to work for community development for
the state of education, environment and health. Under the core Adam policy, the neighbourhood
markets of Walmart have a children tracking facility so that the families can shop without any
worry. Customer Management regulations like the 10 foot rule, sundown rule and so promote the
culture of treating the customers properly and with due respect (Muñoz, Kenny and Stecher
2018). The everyday morning cheers of the Frontline sales team helps in developing a feeling of
inclusion among the members. Lastly, the policies of treating the customers at entrance in all the
Walmart stores across the world make the customers feel prioritised and special.

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7. Porter's five forces analysis
Bargaining power of suppliers
Walmart has occupied more than 50% share of the discount Retail Industry. This implies that the
supplier’s power in context of Walmart is automatically low although in terms of the whole
industry the powers of suppliers are slightly unstable. The company deals with more than 3000
suppliers which includes the likes of Procter and gamble, Clorox as well as Johnson and
Johnson. Although Walmart is the biggest customer of the consumer Product Suppliers, they do
not want to develop their reputation as being too much dependent on individual supply means
(Taillie, Ng and Popkin 2016). This is why, Walmart has constitutionalised the policy that no
individual vendor will be responsible for more than 4% of inventory volume of the organisation.
Walmart also has the facility of electronic hook up with the suppliers because of which there is
really and issue in inventory management of the organisation in spite of dealing under so many
product categories. About 85% of all product categories, available in the stores are shipped to the
stores by means of their own distribution systems. The saturation strategy for store expansion
implies that there has to be a distribution Centre located so strategically that it will be able to
serve 150 to 200 Walmart stores within one day. The distribution centres operate 24 hours with
the help of laser guided conveyor belts as well as cross Docking Technologies which receives
goods on one side and parallelly fills the orders on the other side. A fleet of mod in 2500 trucks
and 50000 trailers operate for the company every day (Taillie, Ng and Popkin 2016). In fact, for
computation of the Technologies as well as tracking their resources and facilities, Walmart has
implemented their own satellite network which allows Information sharing between the wide
encrypted network of Walmart stores, suppliers as well as distribution centres. This system has

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the capability of consolidating orders for goods, thereby helping the organisation to purchase full
truck load of products without inquiring much inventory cost.
Threat of new entrants
The threat of new entrants is absolutely low. Walmart has a capacity of dictating over any small
retailer in any target market area. They have significant market share in overseas operations
because of which new entrants in the international markets, is also able to have a very less
impact on the business of the organisation. As informed by Elder and Dauvergne (2015), in their
home market, Walmart is invisible and because of the height market Occupancy, no major retail
group competes with Walmart in the distribution Retail Industry of the country. In countries like
USA, Canada and Mexico, Walmart is recognised as the biggest retail chain in and in UK it is at
the third position.
Threat from substitute products
Threat of substitute products is generally low to medium Singh’s consumers prefer to shop in the
Supermarket stores of Walmart where the products are easily available and categorised and
always helping Frontline store staff are ready to assist the customers at anytime of the day.
Retail organisations like Walmart has recently launched antitrust lawsuit against Visa and
MasterCard alleging that they are deliberately releasing expensive debit cards because of which
the retailers are having to bear the cost of transaction (Richards 2019). This might upset the
market in the future also.
These are the important factors of porter’s forces that affect the organisation.
8. SWOT analysis

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Strengths
Walmart is the biggest retail Corporation in the whole world and which is the biggest strength.
They have a strongly integrated organisational learning system, because of its able to adapt with
any new market conditions. Culture of frequent meeting and communication with the in house
aisle managers, Walmart exchanges about 8.4 million update every minute within their internal
stakeholders from all stores over the world. The distribution Centre as well as the logistics
capabilities is the primary strengths of the organisation which adds value to the entire system. As
per Hill et al. (2017), Cross Docking as well as effective inventory management a procedure
provides more than 5% advantage to the organisation which helps them to implement everyday
low price policy for the customers.
Weakness
One of the major weaknesses of the organisation is that they exhibit less adaptability to the
format in the overseas extensions. This shows that they still need to develop their expertise in
terms of international. For example, in Germany, the fully functional expansion plan of
developing 15 in retail stores in Germany has been into implementation since 1990.
Nevertheless, the source has not yet been operational. The internal weaknesses include lack of
organisational efficiency in retaining efficient store employees because of which they incurs
excess training and development cost.
Opportunities
The middle class customers of Walmart are growing in their new encompassing markets like
China and India. The growing consolidation of retail market along with the weak economy is
leaving them scope to balance the sales output even if the purchasing parity of customer

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seducing in there developed market (Schuetz 2015). Emergence of e-commerce has helped the
company to develop new Business channel because of which Walmart is being able to add
assembly capture as well as create their presence in the new medium of e-commerce in their
established as well as the developing markets.
Threats
Recently, the Retail Industry all over the world has experienced anti-globalization new friends
namely the trade war between USA and China which has affected Europe and Asia Pacific
equally. This has affected Global companies as well as American companies equally and
Walmart have been facing stiff resistance from their consumers in the developing markets in
Asia. This is one reason why, the company has still different from making direct foreign
investment in the Asian countries and is adopting the strategy of merger and acquisition to
operate in this highly mobile market. Another big threat for the organisation is increasing
competition from their mature markets like various countries of Europe including UK. the
growth in trade blocs and regulations of free trade zone is also hampering the expansion plans of
Walmart. However, researchers like Wood and Pasquier (2018), hold that, the lack of expertise
in international expansion is the major reason because of which Walmart is unable to utilise the
trade regulations and related policies to their advantage.
9. Competitive advantage of the organisation
Recommended Strategies
The generic strategies implemented by Walmart along with their supportive value chain are the
major source of their competitive advantage. The quick and effective implementation of new and
developed processes in terms of supply management, inventory management, stock price

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regulation, install management as well as customer service is the major reason why they have
been able to achieve and outperform their Rivals in the major markets like UK, USA, Latin
America as well as major sections of Asia Pacific as well (Reich and Bearman 2018). As an
outcome of this market expert is, the markdowns have been low and the stock out have also been
reduced.
However, Walmart have to develop low cost leadership strategies in their developing markets as
the return on investment is marginally lesson in such markets because of turbulent political and
economic atmosphere. We can achieve Bass by appointing experienced local executive and
operational employees from the same industrial sector. Cost leadership model that have been
implemented in major markets like USA and UK needs to be implemented in their emerging
markets in various other European countries as well as the Asia Pacific countries. Walmart will
be beneficial if the implement Strategies for holding stocks lesser than 48 hours in their
inventory.
It can also be recommended that we can negotiate with suppliers for follow product cost without
adding any frills. This will help them to develop a more loyal supply base. Deccan anticipate
project it caused by adding the marketing expenses to the cost later. The purchase by truckload
strategy is commendable which helps in cost saving, tremendously. However, the truckload
policy needs to be changed since in the emerging markets like the Middle East, Australia or
North Asian nations, it will not be possible to manage fleet of 2000 + trucks everyday for their
personal distribution channel (Pasquier and Wood 2017). The road carrier regulations, increased
traffic as well as excessive population are the major issues because of which distribution network
of the company can be hampered as well as incur high cost. Although they have been relying
upon their own distribution system, in order to expand into the new markets, they have to rely on

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the supplier networks which will be actually beneficial for reduction of cost. However, it can be
recommended that if Walmart is able to develop a proper distribution network in a short time,
they can revive their own distribution network in the new markets also.
The product differentiation strategy is also significant to the success of the organisation. This
helps in increasing customer value, who perceives Walmart to be a destination for something
unique all over the market. However, Walmart has not been able to implement the policy of
appointing store greeters in also categories including the neighbourhood stores and their Sam's
shops. Along with this, Walmart needs to implement there no questions asked product return
policy which will also be a major imperative in their differentiation strategy along with the
everyday low price strategy that helps the customers to be convinced about the lowest price
factor regarding Walmart.
The third generic strategy that can be recommended for the market expansion of Walmart is the
focus strategy of Michael porter. Focus strategy emphasizes on differential bias segments unique
segment of product line which varies with Geographic markets as well as with differentiation.
Walmart has located their stores in offbeat locations. This has helped the company to gain a
strategic investment. Stores located over popular shopping destinations suffer from market
segmentation. In this context, the biopsychology is to cover the least distance to get the best
product. In this context, they are ready to negotiate with price to some extent, in case they get the
products at the convenience of their own locality. However, Walmart has been able to keep them
differentiated from this psychology since the customers of Walmart are loyal and dedicated and
they know that they can complete their entire family shopping from individual Walmart
destinations. However, it can be emphasized that Walmart should locate their neighbourhood
market in the popular super market or shopping mall locations. This is because, it can be

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negotiated, as for the ideas of Marr (2017), that it is evident that the stores located in urban and
most populated areas attract customers more than estranged store locations.
However, it can also be recommended that before including these policies with the core
strategies of Walmart, the Global validity of thesestrategies have to be tested. It is most
important that they are able to maintain cost leadership in all their business activities and
emphasize on market and product differentiation by providing exemplary service. Because of
this strategic planning parameters, the organisation have been able to expand in the European
market with the tide zoning regulations and have been able to to ensure their market entry into
the Asia Pacific market where consumers have significantly lower purchasing parity, by means
of mergers and acquisitions. However, it is lastly recommendable that Walmart should be
emphasising on the policy of focusing on specific customer segments and thereby format the
store categories, based on the local area demand. The company need to implement significant
geographical survey in order to understand the market compromises and market conditions
which will help them to shape Walmart as a global retail giant.

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10. Reference List and Bibliography
Aguinis, H., Joo, H. and Gottfredson, R.K., 2011. Why we hate performance management—And
why we should love it. Business Horizons, 54(6), pp.503-507.
Caraway, B., 2016. OUR Walmart: A case study of connective action. Information,
Communication & Society, 19(7), pp.907-920.
Elder, L. and Greene, S., 2016. The politics of Walmart moms: Parenthood and political attitudes
in the 2012 election. Journal of Women, Politics & Policy, 37(4), pp.369-393.
Elder, S.D. and Dauvergne, P., 2015. Farming for Walmart: the politics of corporate control and
responsibility in the global South. The Journal of Peasant Studies, 42(5), pp.1029-1046.
Harrison, J.A., 2019. Working for Respect: Community and Conflict at Walmart. Social Forces.
Hill, W.A., Wall, G., Karki, L.B., Vaughan, B. and Robinson, M.D., 2017. Overview of the
Small Farmer-Tuskegee University-Walmart Project Articles. Professional Agricultural Workers
Journal, 4(2), p.1.
LeCavalier, J., 2016. The rule of logistics: Walmart and the architecture of fulfillment. U of
Minnesota Press.
Li, C. and Liu, M., 2018. Overcoming collective action problems facing Chinese workers:
Lessons from four protests against Walmart. ILR Review, 71(5), pp.1078-1105.
Marr, B., 2017. Really big data at Walmart: Real-time insights from their 40+ petabyte data
cloud. Forbes. com, 23.

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Michelson, H., Boucher, S., Cheng, X., Huang, J. and Jia, X., 2018. Connecting supermarkets
and farms: the role of intermediaries in Walmart China's fresh produce supply chains. Renewable
Agriculture and Food Systems, 33(1), pp.47-59.
Muñoz, C.B., 2017. Building power from below: Chilean workers take on Walmart. Cornell
University Press.
Muñoz, C.B., Kenny, B. and Stecher, A. eds., 2018. Walmart in the Global South: Workplace
Culture, Labor Politics, and Supply Chains. University of Texas Press.
Pasquier, V. and Wood, A.J., 2017. The power of social media as a labour campaigning tool:
lessons from OUR Walmart and the Fight for 15. ETUI Policy Brief.
Pope, D.G. and Pope, J.C., 2015. When Walmart comes to town: Always low housing prices?
Always?. Journal of Urban Economics, 87, pp.1-13.
Reich, A. and Bearman, P., 2018. Working for respect: Community and Conflict at Walmart.
Columbia University Press.
Richards, P., 2019. Building Power from Below: Chilean Workers Take On Walmart.
Schuetz, J., 2015. Why are Walmart and Target next-door neighbors?. Regional Science and
Urban Economics, 54, pp.38-48.
Taillie, L.S., Ng, S.W. and Popkin, B.M., 2016. Packaged Food Purchases at Walmart and Other
Food Retail Chains Changes In Nutritional Profile From 2000 to 2013. American journal of
preventive medicine, 50(2), p.171.

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Taillie, L.S., Ng, S.W. and Popkin, B.M., 2016. Walmart and other food retail chains: trends and
disparities in the nutritional profile of packaged food purchases. American journal of preventive
medicine, 50(2), pp.171-179.
Tapia, M., 2019. Building Power From Below: Chilean Workers Take on Walmart by Bank
Muñoz, C.(2017).
Wood, A. and Pasquier, V., 2018. The Power of Social Media as a Labour Campaigning Tool:
Lessons from Our Walmart and the Fight for 15.