Building & Maintaining Customer Relationships Essay

Company Overview Wal-Mart is the world’s largest retailer company, which has operated on the market since 1962. The existence of such type of stores on the market becomes urgent.   This phenomenon can be easily explained by the lowering standards of living and economic slowdowns. The company was found in 1962 in Rogers, Arkansas (Wal-Mart, 2005). Its founder, Sam Walton opened the first distribution center in 1970, which was a starting point for further expansion, and in two years it was included in the list on the New York Stock Exchange. Today, none of the discount retailers is more popular than Wal-Mart. Wal-Mart merchandises a wide range of goods from tables to combs. Wal-Mart is the leader of the full-line discounters, with many stores cov ­ering 120,000 square feet (or more) of floor space; food accounts for about a third of floor space and sales (Wal-Mart Home Page, 2006). Acquisition Strategy Wal-Mart uses acquisition strategy as the main tool to access and penetrate new markets around the globe and expend nationally. The first wave of acquisitions took place at the end of 1970s when Wal-Mart acquired 16 Mohr-Value stores in Michigan and Illinois (1977), Hutcheson Shoe Company (1978), Woolco stores (1983), Grand Central Stores (1985), Supersaver (1988). Acquisition policy has been undoubtedly the most radical growth strategy open to management in that it represents a deliberate attempt to change the nature of the business (Is Wal-Mart Good for America, 2004). Executives at Wal-Mart spent most of 1990 trying to expand the brand’s customer base, and results have been promising. With hindsight, however, it is clear that Wal-Mart paid too much for the acquisitions. As noted previously, Wal-Mart is currently in the midst of its own financial retrenchment. Acquisition policy occurs when the new business is related in some way to the old one. The opening up of the market and the resultant increased competition has widened the perspective of the planning framework with profound implications for Wal-Mart. During this period of time, Wal-Mart acquired Western Merchandisers, Inc and McLane Company of Temple (1990),   28 units from The Wholesale Club, Inc (1991). During 1990s, Wal-Mart has used acquisition strategy to expand internationally and acquired 122 Woolco stores in Canada (1994), opened new stores in Puerto-Rico (1992) and penetrates Korean and Chinese markets through joint venture strategy, and entered German market in acquiring Wertkauf (1998) and Interspar (1999). For instance, acquisition with Woolco stores allowed Wal-Mart to subject to a complex regulate framework whereas others are less so (Watch Out Europe: Here Comes Wal-Mart, 1999). Still, even if it is possible to predict the needs of customer there are some threats and new opportunities, which should be taken into consideration (Oliva, n.d.). There are no specific regulations governing the goals and structures of the industry, there is no constitutional restrictions or legislative mandate that restricts acquisition (Bianco, Zellner, 2003). In October 09 2006.Black Agenda Radio reported that Wal-Mart was going to enter Australian market making its first acquisition in Australia this year. They announced that Wal-Mart made investments in Brazilian retail chain Sonae and Central American Retail Holding Company (CARHCO). Also, â€Å"On 28 July 2006, Wal-Mart announced it will exit the German retail market by selling its 85 â€Å"Supercenters† to retailer Metro AG on the back of pre-tax losses of approximately U.S. $1 billion on its German operations† (Wal-Mart’s Germany Exit, 2006). So, acquisition strategy employed by Wal-Mart provides the buyer with quick growth as well as access to existing brand suppliers, distributors, and goods. Retention Strategy Unlike the transactional, functionally-orientated approach, relationship marketing in food retailing industry is a cross-functional process concerned with balancing marketing efforts among key markets. To create a winning customer retention strategy, Wal-Mart expends its product lines and improves its customer services. For instance, Wal-Mart implemented RFDI solutions and handheld computers linked to in-store computers which helped to transform its business worldwide (RFID to Transform, 2004). The strength of retention strategy is that it is on average as dependent on reliable information technology as any other businesses. They care more about reliable service and confidence than about the lowest price. The company implemented IT supply chain solutions and Internet facilities in order to meet customers’ needs and requirements. A critical issue within the customer market domain in the USA is to ensure that customer retention as well as customer acqui ­sition is emphasized. Recognition of the significant link between customer retention and profitability is leading to new and better strategies for strengthening customer satisfaction and loyalty (RFID to Transform Real-Time, 2004). Branding, advertising, promotion, and additional services to customers and product innovation strengthen the company’s image (Sell Your Product, †¦ 2004). In-Store Checkout TV Channels are introduced in different locations around the country aimed improve customer service and engage customers in buying process. This strategy decreases time and efforts that customers must expend to learn about the products. Wal-Mart reduces prices seasonally in order to attract new customers and benefit existing buyers. Wal-Mart’s customers evaluate an item of a given specification in terms of its total expected costs, i.e. acquisition price plus any necessary additional expenses associated with an item: it can be installation, running and maintenance costs, all discounted to the present time in order to take account of cash flows over a period of time. In the same way the cost of a transport movement or service may be expressed in terms of the original price of acquisition plus any additional and necessary costs or expenses (Brown Quintin, 2000). It is possible to distinguish two aspects of costs: price and expenses. Trying to provide customer service an organization considers these two measurements. In evaluating an organization, customers consider or respond to these two measurements. Mobile computing and increased staffing for weekends help to overcome retention and improve customer service (The Big Secret Is Continue†¦ 2006). Strengths and Weaknesses of Wal-Mart’s Acquisition and Retention The main strength of Wal-Mart acquisition and retention strategies is that they improve company’s position on the market; they are customer-oriented and help Wal-Mart to expend internationally. Also, the management team of Wal-Mart takes into consideration that direct Investment involves sev ­eral distinct forms. Ranging from a sales/marketing subsidiary through to a fully operational manufacturing unit producing the same products as the domestic plant, investment includes product specific manufacturing units, plants producing components and facilities which simply assemble products in the end-user market (Davison, Smith, 2005). At the very beginning the strengths included high potential to growth and profitability of the company, and professional management team, customer loyalty and excellent service. It is targeted at the customers, which buy discounted and unpackaged goods from manufactures at extremely low prices (The Ever-Expanding Empire, 2004). For Wal-Mart, acquisition and retention strategies help to save millions of dollars on advertising and market penetration. Wal-Mart plans on a combination of forecasting and budgeting systems can only work if the future is going to be the same as the present or the past. Wal-Mart will succeed in redu ­cing costs in the next few years of the decade by international acquisition strategies. The main weaknesses include negative attitude of foreign competitors and strict government regulations restricted foreign ownership in some countries. For instance, in 2002 Wal-Mart’s attempts to buy Supermercados Amigo in Puerto Rico were blocked in order to prevent anti-competition policies and foreign dominance of Wal-Mart. Also, Wal-Mart has made attempts to acquire Ahold’s operations in Argentina, Brazil and Peru. Another weakness of Wal-Mart is comparatively low wages which increase dissatisfaction with its policies (Is Wal-Mart Good for America, 2004). This situation negatively affects company’s image and causes critics in press. Changes in legislation and international regulations can weaken Wal-Mart’s global presence and limits its acquisition plans. For instance, the end of 1990s was marked by the changes on the European market which altered many of the parameters of competition and thus enforced a period of reassessment and adaptation (Person of the Week, 2006). Recommendations Taking into account current acquisition and retention strategies and activities, the best collusions for Wal-Mart are planning for com ­petitiveness and are actively involved in re-investing profits in new critical assets. Wal-Mart may choose to concentrate on its core strengths and rationalize its portfolio, focus its activities on a particular geographic area or centre on a particular user segment. Wal-Mart, as a result of being able to adapt to changing competitive demands, is likely to survive in the long term. The changes can be incremental or major in their nature, but each type provides specific advantages to deliver customer satisfaction. It is possible to conclude that effective international and national marketing depends upon effective marketing system employed by a company. The company needs better management facilities outside the USA to control and monitor performance around the world. For Wal-Mart acquisition should be key market-entry strategy that entails purchasing multiple existing outlets in a foreign and domestic market. CRM (customer relationship management) can be seen as one of the main tool to improve current service and attract potential target audience. Maintenance of high standards is a key factor to improve customer service. References Bianco, A., Zellner, W. â€Å"Is Wal-Mart too powerful?† Business Week, October 6, 2003, p.5. The Big Secret Is Continue to Do What You Do Best. Daily Herald (Arlington Heights, IL), November 28, 2005, p. 3. Black Agenda Radio. Wal-Mart’s siege in Chicago. KPFK, October 09, 2006. Brown, R., St Quintin, R.E. Distribution Sector Faces Major Impact. The Birmingham Post (England), February 17, 2000, p. 41. Davison, J., Smith, S.E. (2005). â€Å"Wal-Mart Finds Dominance Harder to Achieve in Europe†. 2 Sept. Gartner Research. Available at: gartner.com/resources/ 130800/130826/walmart_finds_d.pdf The Ever-Expanding Empire; after Wal-Mart Chief Talks to Key Men in Europe He Has a Big Message for His Shareholders. The Evening Standard (London, England), May 27, 2004, p. 40. Is Wal-Mart Good for America? TV program Online Nov 16, 2004. Available at: http://www.pbs.org/wgbh/pages/frontline/shows/walmart/ 8.  Ã‚  Ã‚  Ã‚  Ã‚   Oliva, S.M. Price Check on Antitrust: WalMart’s Acquisition of Britain’s Safeway PLC. Capitalism Magazine. Available at: http://www.capmag.com/article.asp?ID=2394 Person of the Week. Braun and Dolores Hummel. ABC’s World News Tonight. Monday, October 09, 2006. RFID to Transform Real-Time Business across Industries; SAP Exec Says Technology Has a Big Future Business Impact. Manila Bulletin August 30, 2004, p. 4 Sell Your Product the Wal-Mart Way. Daily Herald (Arlington Heights, IL), September 13, 2004, p. 3. Wal Mart. 2005. May, 21. Available at: http://www.datamonitor.com/~e923bef8274740fc8a14e76a70d51687~/companies/company/?pid=8046847E-B325-4AF0-BC79-48100850E764 Watch Out Europe: Here Comes Wal-Mart. Business Week Online. June 28, 1999. Available at: http://www.businessweek.com/1999/99_26/b3635129.htm Wal-Mart Home Page. 2006. Available at: http://www.walmartstores.com/wmstore/wmstores/HomePage.jsp Wal-Mart’s Germany Exit Reflects on Its Market Entry Strategy. 2006. Gartner. Available at: http://www.gartner.com/DisplayDocument?doc_cd=142370