Wal-Mart is a great example of a company that is transforming from originally having best in class alignment between its business and operating model towards having a significant friction between the two.<\/p>\n
Sam Walton first founded Wal-Mart in 1962, as a discount retailer. Walton built his business based on the notion that passing costs to customers generates higher sales. This have lead the company today to operate more than 8,500 stores, employee more than 2 million employees, and serve more than 200 Million customers around the world.<\/p>\n
Thus, Wal-Mart\u2019s every day low prices business model and establishing itself as cost leader in the retail industry have been a strong source of growth for the company in the past. In order for Wal-Mart to be able to provide low prices for its customers, it had to be very conscious about keeping costs low and charging slim margins at the same. The premise of this business model is through keeping both costs and prices low, the business will capture value through much higher sales volume and profits, as a result.<\/p>\n
Wal-Mart\u2019s operating models and processes that enables it to achieve its strategic objective is based on the bellow:<\/p>\n
Thus, it is evident that in the past Wal-Mart\u2019s strategy and business model perfectly aligned with its processes and operating model. This alignment has translated into a competitive advantage that yielded tremendous growth of its sales and profits.<\/p>\n
However, in recent times the alignment between Wal-Mart\u2019s business model of keeping costs and prices low and its operating process have been shifting away from each other. This has been mainly due to the evolution of technology and social websites. As social websites have been used by employee\u2019s to voice their opinions and concerns of Wal-Mart\u2019s low wage and requiring better wages and benefits. This have resulted in elevating pressure on Wal-Mart to raise its larges cost \u2013 payroll. Lately, Wal-Mart has announced that they will be increasing their hourly wages for there employees.<\/p>\n
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Moreover, Amazon\u2019s e-commerce expansion into the retail industry has been gaining momentum over Wal-Mart, lately. This particularly driven by Amazon\u2019s free same time delivery e-commerce that has gaining market share relative to Wal-Mart. This have lead Amazon to have a higher market value today than Wal-Mart. This is clear evidence that the strong handshake between Wal-Mart\u2019s business and operating model have been weakening, lately. Thus, Wal-Mart is a great example of a company that went from having a strong alignment between its businesses and operating model to a company that has a conflict between them, mainly due to innovative disruption by social websites and e-commerce business.<\/p>\n
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Wal-Mart is a great example of a company that is transforming from originally having best in class alignment between its business and operating model towards having a significant friction between the two. Sam Walton first founded Wal-Mart in 1962, as […]<\/p>\n","protected":false},"author":1243,"featured_media":3610,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-3609","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\n