One of the most successful discount department
stores in America is known as Wal-Mart stores
and is named after its founder Sam 'Walton,
Because of the phenomenal success of these stores,
Sam Walton became the richest man in America.
Also because of his leadership, the stores have
enjoyed continuous growth and expansion, so that
by mid 1980s the chain had over 700 stores and
increasing at the rate of an additional 100 stores
per year. Its sales increased annually by over 35%
per year and the profits have soared close to 40%
per year every year since 1975.
Sam Walton, until he died in 1992, took personal
interest in his employees. His managerial
philosophy was to get the right people in the right
places and then give them the freedom to be
innovative to accomplish their tasks. His
managerial philosophy was to get the right people
in the right place and then given them the
freedom to be innovative to accomplish their tasks.
He called his employees as associates and treated
them as associates. As per company policy, all
associates are eligible profit sharing plans
which motivate the employees further. The
managers
of the stores
required and
encouraged to meet with their employees in a
social setting to discuss their concerns as well as
issues of organizational interest, and this make
the employees feel that their input is taken
seriously by the management.
Sam Walton himself led a simple life, he did not
exhibit any
aura about himself, giving the
employees a feeling that he was one of them. Her
and his executives regularly travelled in the
company owned planes to visit Wal-Mart stores
situated at various sites across the country. He
met with sales clerks, stock boys and sales
managers to find out what items were popular. He
knew most of them by their first names and
addressed them so. He Initiated "employee of the
month" in all categories requiring extra effort to
improve sales and services. This policy gained
high respect for him as a leader.
The administration of the organization is
very cost conscious. It only spends about 2%
of sales for general administrative expenses.
It shops for suppliers at bargain prices all
around the world and has build gaint
warehouses around the country in such a
manner so that most stores are within six
hours of driving distance from a warehouse.
This helps in better delivery system and
reduced inventories at retail stores. Each
store prepares a monthly financial report
which can be studies line by line to look for
ways to reduce costs further. These costs
savings are passed on to the customers and
this in turn generate.
Question :
Discuss the issues of the case.
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