Chapter 11: Strategic Leadership

Walmart empowers their employees through the top-down perspective.  It starts at the top with corporate management specifying specific guidelines and roles.  They delegate responsibility and hold people accountable for the results.  They do not allow their employees to self-manage as all Walmart stores need to be managed the same way.

Walmart has developed specific policies to fulfill it's mission.

• 3 Basic Beliefs - (1) Respect the individual, (2) Service the customer, and (3) Strive for Excellence.
• Open Door Policy - A managers' door must be open to employees at all levels.
• Sundown Rule - Employees must answer customer, supplier, and employee questions on the same day it is received.
• Grass Roots Process - Executives must ask for ideas from sale employees and other low-level employees.
• 10-Foot Rule - Employees must make eye contact, greet, and offer help to any customer that comes within 10 feet of them. 
• Servant Leadership - Leaders must be able to provide service to the needs of their team (About.com, 2013).

 Walmart has developed principles to guide their employees ethical decision making.

• Always act with integrity.
• Lead with integrity, and expect others to work with integrity.
• Follow the law at all times.
• Be honest and fair.
• Reveal and report all information truthfully, without manipulation or misrepresentation.
• Work, actions, and relationships outside of your position with the company should be free of any conflicts of interest (discussed later in this guide).
• Respect and encourage diversity, and never discriminate against anyone.
• Ask your manager or the Global Ethics Office for help if you have questions about this Statement of Ethics, or if you face an ethical problem.
• Promptly report suspected violations of the Statement of Ethics.
• Cooperate with and maintain the private nature of any investigation of a possible ethics violation.
• When involved in an ethics investigation, you should reveal and report all information truthfully. You should present all the facts you are aware of without personal opinion, bias, or judgment (Walmart Ethics, 2013).

Walmart's Statement of Ethics includes:

• Workplace Integrity Issues - alcohol & drug abuse, harassment, inappropriate conduct, non-retaliation, non-discrimination, wage & hour, and conflicts of interests.
• Marketplace Integrity Issues - fair competition, intentional dishonesty, financial integrity, insider trading, and restrictive trade practices.
• Community Integrity Issues - anti-corruption, anti-money laundering, authority to work, environmental responsibility, health & safety, and protecting personal & business information (Walmart Statement of Ethics, 2013).

About.com, 2013.  Retrieved from http://www.retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Wal-Mart-Mission-Statement.htm

Walmart Ethics, 2013.  Retrieved from http://ethics.walmartstores.com/StatementOfEthics/BasicBeliefs.aspx

Walmart Statement of Ethics, 2013. Retrieved from http://az301759.vo.msecnd.net/statementofethics/pdf/U.S_SOE.pdf

Chapter 10: Creating Effective Organizational Designs

Walmart is a divisional organizational structure.  The 3 divisions are (1) Walmart U.S., (2) Sam's Club U.S., and (3) Walmart International.  The divisional structure allows Walmart to have increased strategic and operational control.  It allows them to focus on products and markets.  The divisional structure allows Walmart to give a quick response to environmental changes.  

Besides having a president for each division, Walmart has 3 presidents for Walmart U.S. (East, West, and Central).  They also have  a president for each region they are in (Latin America and Asia).  Below is the organizational structure under each president (Wikipedia Walmart Organizational Structure, 2013).

 

Walmart has developed effective relationships with other companies.  Walmart is part of the Business Roundtable which is a business group that promotes pro-business public policy.  It is made up of executives from 97 U.S. companies.  Theses companies share their ideas on how to become more sustainable due to effects of climate change.  The companies are committed to increasing energy efficiency and reducing carbon emissions (Dess, Lumpkin, Eisner, McNamara, 2012).

Dess, Lumpkin, Eisner, McNamara, 2012. Strategic Management. 6th Edition. 2012.

Wikipedia Walmart Organizational Structure, 2013.  Retrieved from http://upload.wikimedia.org/wikipedia/en/d/d3/Walmart%27s_Organizational_Structure_Chart.png

Chapter 9: Strategic Control and Corporate Governance

Walmart's board of directors has 17 members.  Rob Walton, who is the son of Walmart founder Sam Walton, is the chairman of the board.  Having the son of the founder as chairman of the board raises ethical questions.  There are 6 committees and each committee has at least 3 board members on it.  The 6 committees are (1) audit, (2) compensation, nominating, and governance, (3) executive, (4) global compensation, (5) strategic planning and finance, and (6) technology and e-commerce (Walmart Board of Directors, 2013). 

Walmart has bylaws that state the shareholder voting and proxy rights.  Each shareholder has one vote for each share they own.  It gives specific guidelines that explain how a shareholder can force a proxy vote.  The bylaws specifically state how the board of directors operates and how they get elected (Walmart Bylaws, 2013).

The majority of Walmart's board of directors are independent, which is required by the New York Stock Exchange.  Each board member has to have meaningful ownership in the company.  Within 5 years of joining the board, each new director must own 5 times the annual cash retainer offered to each director at the time they joined the board.  Every year the board has to go over the CEO's compensation and the succession plan for the CEO.  The board must perform annual evaluations of the committees to make sure they are functioning properly (Walmart Corporate Governance, 2013).

Walmart's statement of ethics gives their anti-corruption and anti-money laundering policies.  It also states the ethical responsibilities for all of their employees.  The statement explains conflicts of interest through gifts, financial investments, and personal relationships with suppliers or other associates.  It also tells employees how to raise ethical concerns to the company (Walmart Statement of Ethics, 2013).

Walmart's culture is founded on their 3 basic beliefs (1) service to their customers, (2) respect for the individual, and (3) striving for excellence.  Walmart has kept the same culture that their founder Sam Walton started decades ago.  Sam Walton said "Our people make the difference."  Walmart tries to build an culture that exhibits integrity, respect, innovation, and open communication (Walmart Culture, 2013).

Walmart Board of Directors.  Retrieved from:  http://www.stock.walmart.com/corporate-governance  

Walmart Bylaws. Retrieved from: http://www.media.corporate-ir.net/media_files/irol/11/112761/cg/bylaws.pdf

Walmart Corporate Governance.  Retrieved from:  http://www.media.corporate-ir.net/media_files/irol/11/112761/cg/CorporateGovernanceGuidelines.pdf

Walmart Culture.  Retrieved from: http//www.corporate.walmart.com/our-story/working-at-walmart/culture 

Walmart Statement of Ethics.  Retrieved from: http://www.cdn.walmartstores.com/statementofethics/pdf/U.S_SOE.pdf

Chapter 7: International Strategy

Walmart uses a transnational strategy.  This is because of the high pressure to lower costs and the high pressure to sell foods and other products that will adapt to local needs.  Walmart has expanded both regionally and globally as they have expanded in North America, Europe, and Asia.  Walmart has 4,122 stores outside the U.S. that are 100% owned by Walmart.  These stores bring in $100 billion in sales and $5 billion in operation income.  Walmart takes advantage of arbitrage opportunities.  They bought $26.7 billion worth of goods directly form China in 2006.  This saved Walmart between $16 billion to $23 billion (Dess, Lumpkin, Eisner, McNamara, 2012).

Walmart's international revenues are 28% of their total revenues.  Their international revenue has increased 29% from 2010 through 2012.  Walmart is planning to add 73 stores in Canada in 2013.  They also plan to slow down their store expansions in Brazil and China in 2013 because they want to increase sales growth with their current stores (Forbes, 2012).
        
Walmart has used acquisitions for international expansion.  They acquired Yihaodian Ltd. in February 2012.  Yihaodian is a Chinese online shopping website.  Walmart hopes to use it to gain market share in China's growing economy (Alcara Store, 2012).  Walmart acquired Kosmix in April 2011.  Kosmix is a social media company focused on e-commerce.  Walmart bought Kosmix because it wanted to interact with their customers better around the world.  Walmart plans to use Kosmix to offer store deals to their customers (Minyanville, 2011).

 Walmart has used joint ventures for international expansion.  They have a joint venture with Bharti Enterprises.  The joint venture is for cash-and-carry supply chain management operations in India.  It is a  50/50 partnership and they opened their first cash-and-carry facility in India in 2009 (Walmart, 2009).  Most Walmart joint ventures have been with overseas companies because Walmart already has a strong U.S. presence.  Walmart had a merger with Cifra in Mexico.  Cifra is the largest retailer in Mexico.  The merger consolidated Walmart stores with Cifra stores (Business Week, 1997).

Alcara Store, 2012. Retrieved from http://www.alcarastore.com/deal-snapshot/Wal_Mart_Stores_Inc_acquires_Yihaodian_Co_Ltd-682601

Business Week, 1997.  Retrieved from http://www.businessweek.com/bwdaily/dnflash/june/nf70603.htm

Dess, Lumpkin, Eisner, McNamara. Strategic Management.  6th edition. 2012. 

Forbes, 2012. Retrieved from http://www.forbes.com/sites/greatspeculations/2012/11/14/wal-marts-earnings-international-will-drive-growth-amid-sluggish-u-s-sales/

Minyanville, 2011. Retrieved from http://www.minyanville.com/businessmarkets/articles/ebay-merger-amazon-internet-stocks-mergers/4/25/2011/id/34136

Walmart, 2009. Retrieved from http://www.walmartstores.com/pressroom/news/6638.aspx