Operations Management: Analyzing Wal-Mart Corporation's Strategies

This report provides a comprehensive analysis of Wal-Mart's operations management. It begins with an introduction to the company, its goals, and objectives, followed by an examination of key operations management aspects such as operations strategy, competitive priorities, and order qualifiers and winners. The report delves into Wal-Mart's practices in designing products and services, managing quality, process layout, capacity and process design, location strategy, and supply chain management. It also explores expansion and inventory management, as well as the determination of productivity. The report concludes by considering environmental changes, changes in operations management, and the factors driving these changes, including intense competition and evolving customer demands. The report highlights Wal-Mart's strategies and processes, emphasizing its focus on low-cost operations, supply chain efficiency, and customer satisfaction within the competitive retail landscape.

Running Head: OPEARTIONS MANAGEMENT 1
Operations Management: Wal-Mart
Corporation

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Table of Contents
Introduction......................................................................................................................................3
Company Introduction.....................................................................................................................3
Goals and Objectives of Wal-Mart..............................................................................................4
Operation Management Aspects......................................................................................................4
Objectives of Operations Management........................................................................................4
Operations Strategy......................................................................................................................5
Contribution to competitive priorities..........................................................................................5
Order qualifiers and winners........................................................................................................6
Customers.....................................................................................................................................7
Operations Management at Wal-Mart.............................................................................................7
Designing products and services..................................................................................................7
Quality Management....................................................................................................................8
Process Layout.............................................................................................................................8
Capacity and process design........................................................................................................9
Location Strategy.......................................................................................................................10
Supply Chain Management........................................................................................................10
Expansion Strategy....................................................................................................................11
Inventory Management..............................................................................................................12
Determination of productivity....................................................................................................12
The Next Five Years......................................................................................................................13
Environmental Changes.............................................................................................................13
Changes in Operations Management.........................................................................................14
Factors behind Changes in Operations Management.................................................................14
Intense Competition...................................................................................................................15
Changes in the customers’ demands and preferences................................................................15
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

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Introduction
Managing the operations effectively is very important for an organization. Operation
Management is an approach that includes a specific structure, which is associated with the
production of products by converting the inputs into outputs. For each and every company,
Operations Management process is an important process, whether it is operating its business in
production industry or service industry. Operations strategy is primary component of under this
process, which is utilized as a long term strategy for making use of organizational resources to
develop compatibility between company’s business strategy and key resources. Moreover, it
consists of many processes of a business entity, like; designing the products and services,
managing supply chain and quality etc.
The company, which is chosen for this discussion is Wal-Mart Corporation that is based in
United States. This report includes different concepts of operations management about Wal-Mart
Corporation, such as; operations strategy, order winners and qualifiers, goals and objectives and
contribution to competitive priorities. Moreover, there is the discussion about the practices and
processes that are processed to convert the raw materials into finished products. At the end, it
includes the discussion about the reasons behind the fact why Wal-Mart requires changing its
process of operations management and strategy over the duration of coming five years.
Company Introduction
Wal-Mart Corporation is international retailer that was founded by Sam Walton in United States
in the year 1962. Wal-Mart is regarded as one of the largest retailers in the world and it is a fast-
growing firm in the area of supply chain and retail management. Its business operations and
presence is very strong in the states of Latin America and America. The company is operating its
business through supermarkets, retail stores, grocery stores and departmental stores. Currently, it
owns more than 11695 stores and clubs in over 25 nations (Wal-Mart Stores, Inc. 2017). Apart
from these facts, the company is the largest revenue generator in the world. It has expanded its
business processes in several organizations such as; Canada, Brazil, Chile etc. It has been ranked
in American Magazine Fortune 500 firms from last three years. After some year of its
establishment, the company has been listed on New York Stock exchange in 1972. Other than
this, the company was named as most revenue generator and cost effective in United States of
America. Now, Wal-Mart is well-known as a leading player in global retail sector. In order to

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fulfill the changing global demands, the company always practices an effective operations
management. In this report, it is taken into consideration that Wal-Mart is adopting very effective
operation strategies and processes (Wal-Mart, 2017). The major objective of this report is to
make focus on the operations management process of Wal-Mart.
Goals and Objectives of Wal-Mart
The mission statement of Wal-Mart is “to assist the people in saving their money, so they can
live life in a better way”. The primary goals and objectives of the company are to offer the
grocery and other products to the customers on discounted prices, so that they can save their
money and use it in living their life in an effective manner (Agrawal & Smith, 2015). By doing
this, company wants to reach to its mission, i.e. “to become one of the best retailers in the minds
of employees and its customers”. Along with this, it is aiming to attain a top rank in retail sector
worldwide.
Operation Management Aspects
Adopting an effective operations management process is very important for each and every
business. At Wal-Mart, operational planning has been working as a key success factor. This
organization is the most suitable example, when it is about the process of operations
management. Operations management at Wal-Mart includes various approaches, which are
emphasized on managing the sales performance, inventory and supply chain management (Aviv,
Lariviere & Terwiesch, 2009). By looking at the facts and figures, it can be stated that the
success of company is somewhat based on the performance of its operation management process.
Wal-Mart is serving an extensive customer base by handling the operations in an efficient
manner. There are some important aspects of operations management that need to be included by
an organization. Some of these aspects are given below;
Objectives of Operations Management
As mentioned above, Operations Management is a significant process to improve it business
processes and operations. Under its operations management, Wal-Mart is putting in efforts to
enhance its operations and retail services, so it can attain desired revenues and profits (Ball,
2011). By developing this process, the company wants to fulfill its overall goals of business and
overcome the issues, which may cause inefficiency in the operations and business.

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Operations Strategy
Operations strategy is a strategy that is practiced by any firm to achieve its business goals.
Executing most appropriate operations strategies assist the organization in using effective
process for using its human resources and other key resources. As a leading player in retail
industry, Wal-Mart makes changes in its operational plan, so that it can satisfy the changing
demands and preferences of its potential customers. The operation strategy of Wal-Mart is very
effective (Barratt & Choi, 2011). Under its operations strategy, the company is trying to capture
a significant market share with its low price strategy. It is giving response to the strategy of
competitors, for example; it has introduced cents-n-pennies stores over dollar stores. In addition,
it is conducting training and development program for its employees as there are the key
resources of the organization. Wal-Mart’s operations strategy primarily focuses on inventory and
supply chain management.
Contribution to competitive priorities
Competitive priorities refer to the operational measurements that are included in the process to
meet the needs and requirements of internal and external stakeholders. These competitive help
the company in developing effective plan and activities for choosing the suitable process. At
Wal-Mart, major competitive priorities are its low cost operations, on-time delivery and diverse

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range of products and services (Beske, Land and Seuring, 2014). Its low cost operations made
the Wal-Mart able to attain the top position in the retail sector. It provides its customers excellent
shopping experiences, as its employees are very helping and customer-friendly. Offering diverse
range of products at stores assists the organization in gaining more competitive advantage
against its competitors. By evaluating its competitive priorities, it can be said that Wal-Mart has
a responsive operations management.
Order qualifiers and winners
Order qualifiers are some measurement criteria that a company should meet for its customers
after looking at itself as an effective supplier. The company requires being as good as their
potential competitors (Brea-Solis, Casadesus-Masanell & Grifell-Tatje, 2012). Furthermore,
order winners are other measures, which assist the organization in winning the orders. Under
this, company needs to be better than other leading players in the industry. At Wal-Mart, low
cost operations can be considered as major order qualifiers.
Order Qualifiers at Wal-Mart:
 No-stock out
 Availability of right products at right place on right time
 Store opening hours
 Big parking space with strategic store locations
 A broad range of products
 Customer-friendly staff at stores
Order Winners at Wal-Mart:
 24*7 shopping
 Able to position its stores near the customers
 Continuously out-price the competition
 Variety of products under one roof
 Discounted prices and giving free stuff
Customers
Wal-Mart is targeting the customers on the basis of different characteristics, like; social,
psychographic, demographic and behavioral. The company is targeting the people, who want to
save their money on grocery products and invest it on improving their lifestyles (Brown, Bessant,

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& Lamming, 2013). These customers approach Wal-Mart by knowing that they will get great and
competitive prices here and best customer services. It is offering the products at lower prices and
providing discounted prices. It attracts more customer base to purchase the products from Wal-
Mart. Thus, the target customers of this company are the lower to middle income level people. It
has made various efforts to attract these lower income level people to do shopping at their stores
for the products, like; cloths, grocery products, household items etc. With these products and
services, the target customers of the company are in vast majority (Chu, 2014).
By implementing these operational practices, Wal-Mart is hoping to become largest retailer
across the world. These practices assist the organization in fulfilling its business and strategic
objectives. Adoption of these operational processes will help the company in converting its
inputs in tangible outputs and results. Wal-Mart is a retail service corporation, so above-
mentioned aspects will assist it in effective delivery of services and products. This is the major
reason behind its increased market share and customer base in global retail sector.
Operations Management at Wal-Mart
Wal-Mart has adopted effective processes and systems to implement its operation management
process successfully. It is going through various steps for maintaining its operations and
processes (Edelson, 2014). Practicing these tactics will help the company in transforming the
objectives into tangible outcomes. Due to this, Wal-Mart is able to attain a sustainable growth
and success by its low-cost business operations. Different strategies and operations of Wal-
Mart’s operations management are given below;
Designing products and services
This process of operation management includes the strategic description of products. At Wal-
Mart, this process includes the products and services, which the company offers under its retail
services. However, the company has its brands of products, like; Sam’s Choice and Great Value.
The operations management of Wal-Mart includes offering the retail services by focusing on
different components of cost-effectiveness and efficiency. As stated above, Wal-Mart is well-
recognized for its low cost operations due to implementation of its cost leadership strategy
(Eroglu, Williams & Waller, 2013). To meet this specific strategy, the business corporation
emphasizes on increased level of efficiency of people involved in the retail services. In order to

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address the products and service design, this retail organization focuses on minimum costs of
production and manufacturing for its own brand, i.e. Great Value Brand. For instance, the goods
of Wal-Mart are produced in a manner that it is very easy to produce the goods in mass.
Quality Management
This area of operations management is implemented by Wal-Mart via its three levels of quality
principles. Under this process, the lower level includes the minimum quality outlooks of the
customers. The organization keeps this level for almost it’s all brands, like; Sam’s Choice, Great
Value etc. Middle level of this quality management process specifies the average quality of
market for retailer with lower cost products. Wal-Mart implements this level for the performance
of its workers, especially for sale department employees. The third tier of this quality
management model is upper tier that specifies the quality standards, which increase averages of
market. It is implemented to one of the outputs of Wal-Mart, such as; products under Sam’s
Choice brand. Thus, this firm addresses this aspect of operations management for managing the
quality by this three level approach, which ensures appropriate quality in several areas of Wal-
Mart (Harsoor, & Patil, 2015).
Process Layout
At Wal-Mart, process layout includes facility configuration, in which the processes and
operations of same function are collected together. For its process layout, the company has
created a strategy, under which, it uses behavior of shoppers for making layout decision at its
stores. It is very much flexible in the utilization and allocation of personnel and resources.
Below-given diagram shows the process mapping at Wal-Mart;

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Capacity and process design
Wal-Mart emphasizes on this area of operations management by developing behavioral analysis,
monitoring and forecasting. Behavioral evaluation of the employees and customers in the stores
serves as the foundation for the process and capacity design at Wal-Mart. It is also assisting the
capacity design of capacity personnel and processes at stores. Moreover, forecasting is working
as a basis for changing capacity designing for the firm’s human resources (Heizer & Render,
2014). The capacity design and human resource process develops with the growth of business.
Furthermore, to satisfy the related concerns in this area, this organization practices continuous
evaluation and monitoring process. Under its production process, Wal-Mart is using mass
production. The company has its own brands, Like; Sam’s Choice and Great Value. It is
manufacturing the products in large quantity and using assembly line technology. This process
assists the organization in developing large number of similar products and services efficiently.
Wal-Mart is implementing the production process in a way that it is very easy to produce in
mass. In its brands, it also focuses on the minimal production costs. It offers variety of products
with the standardized quality.
This process assists the organization’s managers in informing about the sustaining or changing
the current designs. The process flow at Wal-Mart is given below;

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Location Strategy
Wal-Mart develops the decisions regarding location of its business and stores by conducting the
market and industry analysis. This process of operations management focuses on human
resources, effective movement of raw materials and information about business across the
company. In this context, location strategy of Wal-Mart consists of stores, which are situated
near city centers. The major objective of company is to increase its market approach. The
products and materials are easily available to its target customers via different warehouse
locations. To analyze the business information area of operations management, the company is
effectively using internet and its applications (Jacobs and Chase, 2013). Wal-Mart has a set of
information systems for the monitoring and real time transactions. In this way, the major concern
of Wal-Mart is on strategic location of retail stores and associated shopping facilities.
Supply Chain Management
Supply chain management is very important and effective process for the successful business
operations at Wal-Mart. The company is using a significant supply chain management to deliver
its products to targeted customers. This system of the company includes various inflows, like;
information flow, cash flow, product and material flow etc. The process of supply chain is going
through these different flows. Utilization of technology and bargaining power of suppliers refers
to this aspect of operations management. The supply chain of this company is broadly integrated
with the modern and advanced technology. The information systems in supply chain are directly

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connected with the ability of firm to reduce the costs of operations (Kampf, 2007). This system
makes the vendors and managers able to interact in making decision that when they will move
amounts of merchandize over the supply chain. The operations management of Wal-Mart
methods includes exercising the strong bargaining power of organization. As it is one of the
biggest retailers in the world, the company impacts its suppliers and vendors to collaborate on
utilizing these frameworks and systems.
With the implementation of these operational processes, Wal-Mart transforms its objectives and
goals into tangible results. These strategic decisions assist the company in handling the business
operations in an effective and successful manner.
Apart from these practices, there are some other processes at Wal-Mart, in which it is
exceptional and unique from its competitors in retail sector. These processes will direct the
company in reaching to its mission and vision. This effective operations management will make
the organization able in attaining the positive results (Ketchen and Hult, 2007). There are some
elements, which are assesses while Wal-Mart executes its operation management process. The
below-mentioned are some of the components, which states that company is using exceptional
processes and they assist them in deliver on its strategies.
Expansion Strategy
In today’s competitive business world, every organization initiates its business operation for
making and enhancing the profits. After establishing business operations in its home country, the
company makes efforts to expand the business in other countries. Wal-Mart has adopted this
operation strategy by selecting a strategic location, where it can carry out its business operations.
Under this process, the company ensures that company creates an effective decision to make sure
that it makes the investment for long-term financial advantages (Mohan, 2015). When the
company plans to expand its business globally, then it focuses on considering different variables,
like; social factors, political challenges, competition, currency risks, legislation in that region.
The expansion strategy of Wal-Mart is named as multi-domestic expansion strategy. Although,
the company has already expanded its business in emerging markets, further it should expand the
business in more developed countries.

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Inventory Management
This is one of the most important areas of operations management. In addition to effective supply
chain management, Wal-Mart is adopting an efficient inventory management system. This
process at Wal-Mart includes the just-in-time cross docking and inventory model, managed by
vendors and suppliers. Under just-in-time process, the organization minimizes the inventory size,
thus also aiding the company in minimizing the costs (Myerson, 2012). On the other side, in
inventory model i.e. managed by vendors, the vendors use the information systems of company
to make decisions regarding when it will deliver the products on the basis of real-time
information on stock levels. By doing so, it is avoiding the situations of stock-out. Both of these
processes of operation management are exceptional at Wal-Mart. These processes support the
performance of company in other aspects of operations management.
Determination of productivity
Wal-Mart is adopting this operation management process with the goal of maximizing the
productivity of organization to aid the reduction of costs under its cost leadership strategy. This
is very unique and exclusive in operation management of Wal-Mart. It is executing different
qualitative and quantitative measures of productivity, which are related to its internal business
operations and personnel. There are some measures, which are used by the organization to
determine its productivity. These measures are stated below;
 Rate of stock-out
 Revenues per sales
 Order filling duration
The stock-out rate is the occurrence of stock-out at the retail stores that is the situations, where
stock for some goods and items are inadequate or empty. By effective operation management,
the company is emphasizing on avoiding the conditions of stock out. Moreover, the revenue per
sales defines the sales revenue for a single store, sales revenue for each sales team and average
sales revenues for each store (Rizvi, 2015). Wal-Mart is totally dedicated in increasing its
revenues. In this year, the global net sales of the company is around 481.31 US$ billion. This
figure has increased significantly over previous years and enhanced about 0.8% in 2017. At the
store of Wal-Mart, the number of customers per week is 10 crore that is continuously increasing.
At the end, it is determining the productivity by considering the order filling duration. It is the