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What are the HR Strategies that management must undertake and support to create a successful global presence to insure the success of an organization in meeting its goals and mission?
The first Wal-Mart store opened in July of 1962 in Rogers, Arkansas by Sam Walton who believed that the future of retailing was in discounting and to avoid competing with established giants like Sears and Woolworth, Wal-Mart’s stated out of the large cities in the beginning and this strategy help avoid competition, while in rural areas Wal-Mart began growing their customer base by offering ways to save money and shorter travel distance, Sam Walton felt the best way to make customers happy was to provide the low prices every day (Farhoomand, 2006). The company needed to continually find ways to control the operating costs so the savings would then be passed on to Wal-Mart customers in the form of lower prices than the competitors. Walton was opposed to having any kind of employee unions for its company and saw them as a disruption and an inconvenience (Farhoomand, 2006). The continued search for lower prices made him aware of business related travel cost, Wal-Mart executives stayed in low cost hotels when they traveled and the cost related to the services provided by suppliers, Wal-Mart helped suppliers improve operations and efficiency to produce lower cost. Walton wanted the suppliers to correct any nonessential or insufficiencies existing in their business structures as a way of gaining lower prices and higher value products for its Wal-Mart stores. To further push savings Wal-Mart forced cost down by eliminating the middleman and buying directly from the manufacturers. This cost saving also applied to executive salaries Walton felt providing employees with stock options, training opportunities, and allow employees to grow and develop would be a better way to engage and involve them in his vision (Farhoomand, 2006).
The most significant component of Wal-Mart’s success was the way it treated its employees or as they are known as in Wal-Mart “associates”, the beliefs or rules of the Wal-Mart culture makes associates want to provide excellent service to its customers. During visits Walton encouraged associates to pledge to greet customers and ask if they assist them or walking into a Wal-Mart store customers are met by a greeter, an associate who welcomed them and handed out shopping carts (Farhoomand, 2006).
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Going Outside the US
Wal-Mart’s success has led the organization to pursue an international development of its business model that has work very well in its home country. With the belief that their business strategy of providing lower operating cost to lower prices, quality products, and excellent customer service would be a great fit for all markets (Farhoomand, 2006). In 1991 Wal-Mart open a store in Mexico, by 2005 the company had store in nine counties and the business model seem to be doing very well in Mexico, Canada, and Britain but not doing well in Japan and Kore, while a huge disaster in Germany due to many union rules and labor cost (Farhoomand, 2006).
During their analysis for possible areas for expansion China stroke the organization as the most fitting market to translate the success experienced in the U.S. being that most of the good sold by it are actually made in this country, which was perceived as another opportunity to lower their costs by the organization (Farhoomand, 2006). Unfortunately, after 9 years of existence in China Wal-Mart found itself struggling in its attempts to repeat such success (Farhoomand, 2006). The struggles faced emerged due to the lack of support of the local consumers over other competitors and the presence of significant financial losses for the organization. These factors have forced the organization to rethink their business strategies and the business model utilized (Farhoomand, 2006). Wal-Mart’s failure in China showed that to be successful in a global market an organization must first have a clear human resources management strategy that is appropriately aligned with the business strategies (Mello, 2011).
Wal-Mart has been able to secure a good and effective position within Canadian, Mexican, and Britain markets with their current business model that was very successful in the US (Farhoomand, 2006). Nevertheless, this success could not be repeated in other global markets like Japan, Germany, and China (Farhoomand, 2006). Wal-Mart struggled to stay competitive and build a strong hold with the customers. Of the influences that may have contributed to the failing of Wal-Mart in these countries, especially China and Germany was the presence of unions, existing strong competitors, higher wage scales, and local labor laws have severely affected the ability of the organization to accomplish the level of success in the United States and other similar markets (Mello, 2011; Truss & Gratton, 1994).
I feel Wal-Mart should re-evaluate these locations and not try to use the same business model that worked in the US. Developing a business in foreign countries is a very difficult since the cultures are different and what works in one country may not work in others. It requires abundantly large amounts of research and understanding of the local laws. Wal-Mart should continue to look for areas around the world that their current model will work and other areas where an adjustment to fit will need to be made. The current model considers employee wage to keep cost to the customer low, so a human resource management plan should identify areas where unions will drive up wages and where the labor laws will cause cost over runs.
Farhoomand, A. F., Wang, I. (September, 2008). Wal-Mart stores: Everyday Low Prices in China (Case Study). Retrieved from https://cb.hbsp.harvard.edu/cbmp/content/26286371
Mello, J. (2011). Strategic human resource management. (3rd ed.). Mason: South-Western Cengage Learning.
Truss, C., & Gratton, L. (1994). Strategic human resource management: a conceptual approach. International Journal of Human Resource Management, 5:3, 663-686. Retrieved April 27, 2014 from http://eds.b.ebscohost.com.lib.kaplan.edu/eds/pdfviewer/pdfviewer?sid=e7bacb27-2cff-462e-91cd-297c7a8148c2%40sessionmgr113&vid=7&hid=115