Business and Its Enviornment

Wal-Mart and Its Urban Expansion Strategy

Abstract

As one of the largest corporations in the world, Wal-Mart was leading the supermarket industry of many aspects. Except for the traditional merchandise, the company also expanded to market pharmaceuticals and groceries. However, Wal-Mart’s marketing strategy was mostly focusing on small cities and suburban areas. In the year of 2004, the company decided to apply its urban expansion strategy into the city of Chicago. The plan was not processing well. It was resisted strongly and radical by Chicago Workers’ Rights Board, Chicago Federation of Labor, and others. Eventually, the city council of Chicago postponed the vote.

Issues

• The Company Lack of thorough research about the city of Chicago

Wal-Mart failed to carefully analysis the actual nonmarket environment in Chicago. The company failed to predict the potential resistance from the NGOs. Wal-Mart didn’t build strong coalitions with the local government. Moreover, the company didn’t get any unionization to back it up.

Meanwhile, Wal-Mart failed in carefully considering about the market environment in the city. It ignored the consequences of its low price strategy and full-service groceries to the competitors and customers.

• Violating workers’ rights

Wal-Mart was criticized by the public of violating workers’ rights, including the low wage strategy, poor health benefits, forced employees to work over time, night shift was not allowed to use the emergency exits, and the job discrimination for women. Basically, Wal-Mart was labeled low pay, predatory practices and poor benefits.

Solutions

• The Company Lack of thorough research about the city of Chicago

Wal-Mart needs to communicate and negotiate with opposed NGOs in Chicago. Wal-Mart needs to use whatever it has to lobby the members in city council in order to gain more votes. Also the company can use social media to spread its advantages to the residents in Chicago and get supports from the public. Lastly, Wal-Mart can build alliance within the industry.

In addition, Wal-Mart needs to do better research on its current and potential competitors in Chicago in order to carefully distinguish itself with the competitors. It can help Wal-Mart come out with strategies to reduce the effects of low-price and full-service groceries.

• Violating workers’ rights

The company should try to increase the wages for Chicago’s employees. Wal-Mart also needs to establish supervising mechanism. Moreover, the company can assign nighttime managers and carefully watching the proportion between male and female employees.