Grantham University Harley Davidson Inc in May 2015 Case Analysis Case Analysis: Harley-Davidson Inc. in May 2015 Read the case, “Harley-Davidson Inc. in

Grantham University Harley Davidson Inc in May 2015 Case Analysis Case Analysis: Harley-Davidson Inc. in May 2015

Read the case, “Harley-Davidson Inc. in May 2015” on page 502-514. Use the case analysis format provided below to identify and address the problems and provide several suggested solutions that the Harley-Davidson Inc. executive team can review for possible implementation.
Be sure to “identify 2 to 3 problems” and “develop 2 to 3 possible solutions to the problems identified”, and use this as the focus for making your case in the case format.

Case Format

I. Write the Executive Summary

One to two paragraphs in length
On cover page of the report
Briefly identify the major problems facing the manager/key person
Summarize the recommended plan of action and include a brief justification of the recommended plan

II. Statement of the Problem

State the problems facing the manager/key person
Identify and link the symptoms and root causes of the problems
Differentiate short term from long term problems
Conclude with the decision facing the manager/key person

III. Causes of the Problem

Provide a detailed analysis of the problems; identify in the Statement of the Problem
In the analysis, apply theories and models from the text and/or readings
Support conclusions and /or assumptions with specific references to the case and/or the readings

IV. Decision Criteria and Alternative Solutions

Identify criteria against which you evaluate alternative solutions (i.e. time for implementation, tangible costs, acceptability to management)
Include two or three possible alternative solutions
Evaluate the pros and cons of each alternative against the criteria listed
Suggest additional pros/cons if appropriate

V. Recommended Solution, Implementation and Justification

Identify who, what, when, and how in your recommended plan of action
Solution and implementation should address the problems and causes identified in the previous section
The recommended plan should include a contingency plan(s) to back up the ‘ideal’ course of action
Using models and theories, identify why you chose the recommended plan of action – why it’s the best and why it would work

VI. External Sourcing

2 to 3 external sources (in addition to your textbook) should be referenced to back up your recommendations or to identify issues. This information would be ideally sourced in current journals, magazines and newspapers and should reflect current management thought or practice with respect to the issues Identify.

The requirements below must be met for your paper to be accepted and graded:

Write between 750 – 1,250 words (approximately 3 – 5 pages) using Microsoft Word in APA style, see example below.
Use font size 12 and 1” margins.
Include cover page and reference page.
At least 80% of your paper must be original content/writing.
No more than 20% of your content/information may come from references.
Use at least three references from outside the course material, one reference must be from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the three reference requirement.
Cite all reference material (data, dates, graphs, quotes, paraphrased words, values, etc.) in the paper and list on a reference page in APA style.

References must come from sources such as, scholarly journals found in EBSCOhost, CNN, online newspapers such as, The Wall Street Journal, government websites, etc. Sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. are not acceptable for academic writing. ambassadored.vitalsource.com
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Case 6 Wal-Mart Stores, Inc., June 2015
If you don’t want to work weekends, you shouldn’t be in retail.
-SAM WALTON (EXPLAINING THE SATURDAY CORPORATE MEETING)
In 2015, Wal-Mart Stores, Inc. was the world’s biggest company in terms of revenue-a position it had first attained in 2000 and had held for most of the intervening years.
Since going public in 1972, Walmart’s record of growth and profitability was remarkable. It had increased in revenue in every single year and its return on equity had never fallen below 19%
-despite the turmoil of economic recessions, war, and political crises, and the rise of e-commerce.
External circumstances had created challenges of each of Walmart’s CEOs. For Doug McMillon, Walmart’s fourth CEO since founder Sam Walton stepped down in 1988, the key challenges
of his first year as CEO included the growing competition from online retailers-Amazon in particular-and the growing criticism that Walmart’s success was built upon the efforts of
underpaid employees. McMillon, at 48 the youngest CEO since Walton, had responded resolutely to both challenges. He increased investment in Walmart’s Silicon Valley e-commerce
development centers and, in February 2015, announced that Walmart’s minimum starting pay would rise to $9 an hour $1.75 above the federal minimum wage 1
Yet, sustaining Walmart’s phenomenal record of growth and profitability would be an ever more daunting challenge. As Walmart continued to expand its range of goods and services-into
groceries, fashion clothing, music downloads, online prescription drugs, financial services, and health clinics-it was forced to compete on a broader front. While Walmart could seldom be
beaten on price, it faced competitors that were more stylish (T.J.Maxx), more quality-focused (Wholefoods), more service-oriented (Lowe’s, Best Buy), and more focused in terms of product
range. In its traditional area of discount retailing, Target was proving an increasingly formidable competitor, while in warehouse clubs, its Sam’s Clubs ran a poor second to Costco.
Increasing its size boosted Walmart’s buying power but also brought problems. Walmart’s success had rested heavily upon its ability to combine huge size with speed and responsiveness.
Critical to Walmart’s agility was its short chain of command and close relationship between the top management team and individual store managers. A key component in this linkage had
been Walmart’s Saturday morning meeting at its Bentonville HQ. In January 2008, the growing size of the meeting and increasing difficulty of getting all Walmart executives back to
Bentonville resulted in the company changing these meetings, which the company had described as “the pulse of our culture,” from weekly to monthly. In 2014, McMillon made attendance
voluntary 3
Increased size also made Walmart a bigger target for opponents. For years Walmart had been under attack by organized labor seeking to unionize Walmart’s two million employees. More
recently, “The Beast of Bentonville” had attracted the ire of environmentalists, anti-globalization activists, women’s and children’s rights advocates, small-business representatives, and a
growing number of legislators of varying political hues. In response, Walmart had become increasingly image-conscious and was a late, but enthusiastic, convert to social and environmental
responsibility. The result was a series of senior appointments to new executive positions-a head of global ethics and a new executive vice president of government relations-plus more top
management time spent in Washington and with the media.
Walmart’s expanding global reach also raised complex strategic and organizational issues. Unlike other successful global retailers (such as IKEA and H&M), Walmart did not have a
consistent approach to different national markets: it had different strategies and operated under different names in different countries. Its performance, too, varied greatly from country to
country. Although its international operations delivered most of Walmart’s growth, their profitability was inferior to that of the US business. Underlying these contrasts was the incongruity
that the world’s biggest company had its roots in Bentonville, Arkansas-a town which, when Walmart became a public company, had a mere 5,508 inhabitants.
Given these challenges, how could Walmart possibly sustain its remarkable performance in the brutally competitive, fast-paced world of discount retailing?
History of Walmart
Discount stores-large retail outlets offering a broad range of products-began appearing in the US after World War II. Conventional wisdom held that cities with at least 100,000
inhabitants were needed to support a discount store. Sam Walton-an operator of Ben Franklin variety stores in Arkansas-believed that, with low prices, discount stores could be viable in
smaller communities: “Our strategy was to put good-sized stores into little one-horse towns that everyone else was ignoring.”4 His first Walmart opened in 1962; by 1970, there were 30 Wal-
Mart Stores in small and medium-sized towns in Arkansas, Oklahoma, and Missouri.
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History of Walmart
Discount stores-large retail outlets offering a broad range of products-began appearing in the US after World War II. Conventional wisdom held that cities with at least 100,000
inhabitants were needed to support a discount store. Sam Walton-an operator of Ben Franklin variety stores in Arkansas-believed that, with low prices, discount stores could be viable in
smaller communities: “Our strategy was to put good-sized stores into little one-horse towns that everyone else was ignoring.”4. His first Walmart opened in 1962; by 1970, there were 30 Wal-
Mart Stores in small and medium-sized towns in Arkansas, Oklahoma, and Missouri.
Distribution was a problem for Walmart:
Here we were in the boondocks, so we didn’t have distributors falling over themselves to serve us like our competitors in larger towns. Our only alternative was to build our own
distribution centers so that we could buy in volume at attractive prices and store the merchandise.5
In 1970, Walton built his first distribution center, which was financed by taking the company public. Replicating this structure of large distribution hubs serving up to 100 discount stores
formed the basis of Walmart’s expansion strategy. Entering a new area, Walmart built a few stores that were served initially from a nearby distribution center. Once a critical mass of stores
had been established, Walmart would build a new distribution center. By 1995, Walmart was in all 50 states.
Inevitably, this expansion took Walmart from small and medium-sized towns to major conurbations, where it met stronger competition from other discount chains.
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Different Store Formats
Sam Walton experimented continually with alternative retail formats—this continued under Walmart’s subsequent CEOs:
• Sam’s warehouse clubs were wholesale outlets which required membership: they offered products in multipacks and catering-size packs with minimal customer service.
• Supercenters were large-format stores (averaging a floor space of 178,000 square feet, compared with 105,000 square feet for a Walmart discount store and 129,000 square feet for a
Sam’s Club). They combined a discount store with a grocery supermarket, plus other specialty units such as an eyeglass store, hair salon, dry cleaners, and photo lab. They were open 24
hours a day, seven days a week.
• Neighborhood Markets were supermarkets with an average floor space of 42,000 square feet.
• Walmart Express convenience stores of about 12,000 square feet were launched in 2013.
• Walmart also built a substantial online business through its websites www.walmart.com and www.samsclub.com. Its online presence was extended through its online pharmacy and
music download service. A key feature of Walmart’s online strategy was its integration of web-based transactions with its physical presence allowing online customers to pick up at their
local Walmart store-with same-day pickup for items that were in stock.
International Expansion
Walmart’s international expansion began in 1991 with a joint venture with Mexico’s largest retailer, Cifra SA, to open discount stores and Sam’s Clubs in several Mexican cities. By 2000,
Walmart had entered six overseas countries. Table 1 summarizes Walmart’s international development.
TABLE 1 Walmart stores by country, January 2015
Country
Stores Notes
US
5,163 Included 3,407 Supercenters, 470 discount stores, 647 Sam’s Clubs, 639 Neighborhood Markets, and other small formats
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TABLE 1 Walmart stores by country, January 2015
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Country
Stores Notes
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US 5,163 Included 3,407 Supercenters, 470 discount stores, 647 Sam’s Clubs, 639 Neighborhood Markets, and other small formats
Mexico 2,290 In 1991 formed JV with Cifra. Chains include Walmart, Bodegas, Suburbia, VIPS, and Mercamas. In 2000, Walmart acquired 51% of Cifra and took control of the JV.
By 2003, Walmart Mexico was the country’s biggest retailer
Canada 394 Entered in 1994 by acquiring 120 Woolco stores from Woolworth and converting them to Walmart discount stores
Argentina 105 Entered 1995: greenfield venture
Brazil
557 Entered 1995: JV with Lojas Americana, includes Todo Dia, Bompreço, and Sonae stores
China 411 In 1996, built a Supercenter and Sam’s Club in Shenzhen. Continued to grow organically, then in 2006 acquired Trust-Mart with its 102 stores
UK
592 Entered 1999 by acquiring Asda. Operates Walmart superstores, and Asda supermarkets and discount stores
Japan 431 Entered 2002: acquired 38% of Seiyu; 2008, Seiyu became a wholly owned subsidiary of Walmart. Mainly small stores, some superstores
Central 690 Acquired CARHCO, a subsidiary of Royal Ahold in 2005 with stores throughout Central America
America
Chile
404 Entered January 2009 by acquiring Distribución y Servicio SA
India
20 Entered May 2009; JV with Bharti Enterprises
Africa
396 Entered 2011, acquiring 51% of Massmart Holdings Ltd; 305 stores in South Africa, also stores in Botswana, Ghana, Lesotho, Malawi, Mozambique, Namibia, Nigeria,
Swaziland, Tanzania, Uganda, and Zambia
Total
11,453
Note:
a JV = joint venture.
Source: www.walmartstores.com.
Walmart’s overseas expansion followed no standard pattern: sometimes it entered through greenfield entry, sometimes through joint venture, and in some countries it acquired an existing
retailer. Its overseas operations have met with varying degrees of success. In the adjacent countries of Mexico and Canada, Walmart was highly successful. In Germany, Walmart sold its 85
stores to Metro after eight years of losses. Walmart also withdrew from South Korea in 2006. In Japan, its Seiyu chain has found profitability elusive. In October 2014, Walmart announced
the closure of 30 of its Japanese stores.Z
China presented Walmart with its biggest opportunity and greatest challenge. The perils of China’s highly politicized market became apparent to Walmart in 2011 when the now-deposed
regional leader, Bo Xilai, closed 13 Wal-Mart Stores in Chongqing for alleged mislabeling of meat. Despite ambitious growth plans-in April 2015 CEO Doug McMillon announced plans to
open 115 more Walmart’s in China by 2017-finding sites for new Wal-Mart Stores was an ongoing problem. Walmart’s China strategy also involved integrating its growing network of stores
with its online presence through its 51% stake in online retailer Yihaodianh.8
In every country Walmart entered, it was forced to adapt its retailing system to the specific circumstances of each country’s consumer habits and preferences, infrastructure, competitive
situation, and the political and regulatory environment.
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Sam Walton and His Legacy
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Sam Walton and His Legacy
Walmart’s strategy and management style was inseparable from the philosophy and values of its founder. Until his death in 1992, Sam Walton was the embodiment of Walmart’s unique
approach to retailing. After his death, Sam Walton’s beliefs and business principles continued to guide Walmart’s identity and its development.
For Walton, thrift and value for money were a religion. Undercutting competitors’ prices was an obsession that drove his unending quest for cost economies. Walton established a culture in
which every item of expenditure was questioned. Was it necessary? Could it be done cheaper? He set an example that few of his senior colleagues could match: he walked rather than took
taxis, shared rooms at budget motels while on business trips, and avoided any corporate trappings or manifestations of opulence or success. For Walton, wealth was a threat and an
embarrassment rather than a reward and a privilege. His own lifestyle gave little indication that he was America’s richest person (before being eclipsed by Bill Gates). He was equally
disdainful of the display of wealth by colleagues: “We’ve had lots of millionaires in our ranks. And it drives me crazy when they flaunt it … I don’t think that big mansions and flashy cars is
what the Walmart culture is supposed to be about.”9
His attention to detail was legendary. As chairman and CEO, his priorities lay with his employees (“associates”), customers, and the operational details through which the former created
value for the latter. He shunned offices in favor of spending time in his stores. Much of his life was spent on the road (or in the air, piloting his own plane) making impromptu visits to stores
and distribution centers. He collected information on which products were selling well in Tuscaloosa, why margins were down in Santa Maria, how a new display system for children’s
clothing in Carbondale had boosted sales by 15%. His passion for detail extended to competitors’ stores: as well as visiting their stores, he was known to count cars in their parking lots.
Central to his leadership role was his relationship with his employees, the Walmart associates. In an industry known for low pay and tough working conditions, Walton created a unique
spirit of motivation and involvement. He believed fervently in giving people responsibility, trusting them, but also continually monitoring their performance.
After his death in 1992, Sam Walton’s habits and utterances became enshrined in Walmart’s operating principles. The “10-foot attitude” pledge reflected Sam Walton’s request to an
employee that: “I want you to promise that whenever you come within 10 feet of a customer, you will look him in the eye, greet him and ask if you can help him.”10 The “Sundown Rule”-
that every request, no matter how big or small, gets same-day service-become the basis for Walmart’s fast-response management system. “Three Basic Beliefs” became the foundation for
Walmart’s corporate culture:
• Service to our customers: “Every associate-from our CEO to our hourly associates in local stores—is reminded daily that our customers are why we’re here. We do our best every day to
provide the greatest possible level of service to everyone we come in contact with.”
Respect
for the individual: Walmart’s emphasis on “respect for every associate, every customer, and every member of the community” involves valuing and recognizing the contributions
of every associate, owning “what we do with a sense of urgency” and empowering each other to do the same,” and “listening to all associates and sharing ideas and information.”
• Striving for excellence: this comprised innovating by continuous improvement and trying new ways of doing things, pursuing high expectations, and working as a team by “helping each
other and asking for help.”11
Sam Walton’s iconic status owed much to his ability to generate excitement and fun within the seemingly sterile world of discount retailing. Walmart’s replacement of its mission slogan
-“Everyday Low Prices” by “Save Money, Live Better”-was intended to reflect Walton’s insistence that Walmart play a vital role in the happiness and well-being of ordinary people.
Walmart in 2015
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The Business
Walmart described its business as follows:
Wal-Mart Stores, Inc. … helps people around the world save money and live better-anytime and anywhere-in retail stores or through our e-commerce and mobile capabilities. Through
innovation, we are striving to create a customer-centric experience that seamlessly integrates digital and physical shopping. Physical retail encompasses our brick and mortar presence
in each market where we operate. Digital retail is comprised of our e-commerce websites and mobile commerce applications. Each week, we serve nearly 260 million customers who visit
our over 11,000 stores under 72 banners in 27 countries and e-commerce websites in 11 countries.
Our strategy is to lead on price, invest to differentiate on access, be competitive on assortment and deliver a great experience. Leading on price is designed to earn the trust of our
customers
every day by providing a broad assortment of quality merchandise and services at everyday low prices (“EDLP”), while fostering a culture that rewards and embraces mutual
respect, integrity and diversity. EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent
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Sam Walton and His Legacy
Walmart’s strategy and management style was inseparable from the philosophy and values of its founder. Until his death in 1992, Sam Walton was the embodiment of Walmart’s unique
approach to retailing. After his death, Sam Walton’s beliefs and business principles continued to guide Walmart’s identity and its development.
For Walton, thrift and value for money were a religion. Undercutting competitors’ prices was an obsession that drove his unending quest for cost economies. Walton established a culture in
which every item of expenditure was questioned. Was it necessary? Could it be done cheaper? He set an example that few of his senior colleagues could match: he walked rather than took
taxis, shared rooms at budget motels while on business trips, and avoided any corporate trappings or manifestations of opulence or success. For Walton, wealth was a threat and an
embarrassment rather than a reward and a privilege. His own lifestyle gave little indication that he was America’s richest person (before being eclipsed by Bill Gates). He was equally
disdainful of the display of wealth by colleagues: “We’ve had lots of millionaires in our ranks. And it drives me crazy when they flaunt it … I don’t think that big mansions and flashy cars is
what the Walmart culture is supposed to be about.”9
His attention to detail was legendary. As chairman and CEO, his priorities lay with his employees (“associates”), customers, and the operational details through which the former created
value for the latter. He shunned offices in favor of spending time in his stores. Much of his life was spent on the road (or in the air, piloting his own plane) making impromptu visits…
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