There have been many attempts to define what it is that an entrepreneur does and their significance in the success of existing businesses or businesses that will be in the future. Sullivan and Sheffrin give an interesting and summative definition of an entrepreneur, as “ a person who has possession of a new enterprise, venture or idea and assumes significant accountability for the inherent risks and the outcome.”. Entrepreneurial activity demands support, motivation, credit, gratitude and synchronization to thrive and grow. The punch line, “Save money, live better,” is very striking and captivating to the everyday average person fighting to make ends meet and trying to find the balance between paying for the mortgage, putting food on the table and still having enough to supply the finer things. It is also appealing to the small business owner, trying to do more than just break-even. The slogan, “Low prices, everyday, on everything,” challenges other mega stores by ensuring that all consumers know that they can always get the lowest prices in this store than anywhere else. And to better things, there is a promise to “match the price” of any commodity to a lower price on the same from any other company. Without going into much detail, one can already see that when it comes to innovation and creativity in maintaining a steady clientele, Wal-Mart has an edge. This is why it is a large oligopoly in the USA, and has also managed to go global. One would even venture to argue that regarding Entrepreneurialism, Wal-Mart may well be considered the “poster child”, in a matter of speaking, because of its major success as a global entrepreneur.
According to their website, Wal-Mart serves consumers, both regular clientele and members, in excess of 200 million times each week , in retail outlets, online and on mobile devices. Wal-Mart has also been innovative enough to create online shopping and shipping options for its consumers, meaning they are also Wal-Mart operates under 69 different banners in 27 countries. For the fiscal year 2012, sales were approximately $444 billion and Wal-Mart’s employees and associates numbered 2.2 million globally. The first Wal-Mart store opened in 1962 in Arkansas, and Sam Walton was the man behind its founding with a simple but historic vision, low prices everyday. Constantly on the lookout for bargains from contractors and having the knowledge that characteristically, a merchant who succeeded in getting a good deal from a broker could leave his store prices unaffected and pocket the additional money, Walton, by distinction, realized the opportunity to do exceedingly better by giving out the savings to his patrons and making his profits through selling larger quantities. This was the keystone of Walton’s business approach when Wal-Mart was launched in 1962.
Walton’s quest for cutting cost was not only a business strategy. It spilled over into or perhaps more correctly form his lifestyle. Apparently, even though he had been ranked one of the richest man in the United States in the 1980s, it is said he continued to be thrifty, having his hair cut by a local barber, at only a $5 cost that was by no means complemented with a tip. By 1967, the Walton family owned 24 stores, ringing up $12.7 million in sales, and by 1969, they were officially registered as Wal-Mart Inc. In 1979 and 1980, concurrently, the Wal-Mart Foundation and the first Sam’s Club were opened. By 1990, Wal-Mart was the nation’s number-one retailer and in 1994 their expansion into Canada was official with the purchase of 122 Woolco stores. That was the beginning of its globalisation, followed closely by the opening of its first store in China in 1996. The Millennium has seen Wal-Mart expanding its efforts with the humanitarian help in the 2005 hurricane disasters, with a contribution of “ … $18 million and 2,450 truckloads of supplies to victims of hurricanes Katrina and Rita.” ( Frank, 2006). Wal-Mart made a chief pledge to support ecological sustainability. They announced the target to generate zero waste, and to only employ the use of renewable energy and sell products that maintain people without harming the environment,( Frank, 2006), a commitment which put them in favour with environmentalists. In 2007, Walmart.com launched an online shopping service, to make it possible for customers to make a purchase online and pick up their goods in stores. In 2009, Wal-Mart increased production and sales and set up shop in Chile, with the attainment of a bulk of the stake in D S.A. The year 2010 saw Wal-Mart in a joint venture to open the first store in India. That same year, they committed to devote $2 billion up until the end of 2015 to help combat food shortage in the United States and they also initiated a worldwide dedication to sustainable agriculture, with the aim of strengthening local farmers and markets, while providing customers access to inexpensive, high-quality food. In 2011, Wal-Mart acquired Massmart in South Africa, and exceeded 10,000 retail stores in countries in different parts of the globe. They also established Wal-Mart-labs online to ensure that consumers had social platforms to voice their opinions. This year, 2012, Wal-Mart commemorated its 50th anniversary of serving people, and enabling them to ‘save money so they can live better.’ The company to date, employs 2.2 million associates worldwide, serving 200 million customers each week at over 10,000 store locations in 27 countries around the world.
Wal-Mart has a long history of establishing rapport with consumers and being innovative in finding ways to continually offer lower prices to their clientele. To begin with, Wal-Mart stores provide a wide variety of services, form pharmaceuticals to clothing to food to beauty products, to home and gardening products. It is a corporation with a diverse provision base. To begin with, the founder, Sam Walton was both a critical and creative visionary. His ability to assess the needs of the society in his time enabled him to begin a chain of stores able to cater for those needs on a long time basis while still allowing his company to make profits. One of the main needs of any society, local or global, is employment. Wal-Mart has been able to employ, according to statistics, 200 million people worldwide, thus fulfilling the vision to provide a livelihood for people. They exploited a simple fact in business that without income, it is impossible to possess purchasing power. Wal-Mart’s employees also get a 10 % discount, and in that way, are able to inspire their employees to work hard by providing such benefit, and at the same time, they maintain their employees as clients too by ensuring they can purchase any product at an even lower price. This promotes employee loyalty which in turn creates a steadier organization.
“Low Prices, everyday, everywhere” is a slogan that is appealing and invites the consumer to partner, subconsciously, with Wal-Mart in their ventures. Their offer of lowest prices in the nation ensures brand loyalty and thus proves them an effective entrepreneur. Wal-Mart makes for an interesting study because of their long term business venture and success which also seem to be growing still, year after year, owing to their adaptability and innovation. Hence the choice to evaluate them with regards to entrepreneurialism.
To evaluate this company, one must also consider how Wal-Mart can be classified with regard to: Disposition and Orientation, Leadership, Risk Management, Innovation and Growth, Cultural context and relevance. The MIT Sloan Management Review suggests that there are four models for entrepreneurship strategy that can be applied to businesses, namely, “The Enabler Model, The Opportunistic Model, The Producer and The Advocate Models,”
Result of investigation
According to MIT Sloan Management Review, 2007, “Evolving from the opportunist model to any of the more deliberate forms of corporate entrepreneurship typically begins with a mandate for growth and a broad, clearly communicated vision.”. On examining the entrepreneurialism of Wal-Mart, it is obvious that Wal-Mart has grown from the Opportunistic Model, a strategic model with which every company begins, to a Producer Model strategy, in which there is pursuit of corporate entrepreneurship through dedication of precise finances to the establishment and support of formal organizations while also aiming to protect emerging ventures from competition.
Looking at the facts and the timeline of their business venture, Wal-Mart cannot be placed into just a single category. They could be classified as a Growth, Income, Independence and Expansion oriented company. Wal-Mart has expanded from being a company with a single outlet in Arkansas in 1962, to being a national household name for low prices. Their internet ventures also display innovation in that they are able to supply for the customers who cannot literally make their way to a physical outlet. They have expanded to become a global/ an international company, with many joint ventures in Africa, Canada, South America and Asia. Their support for sustainable agriculture is another venture that has double edged benefits in that it supplied the consumers with quality food at affordable prices and the farmers with strengthening support enabling them to produce enough to reach yet another Wal-Mart goal, to eradicate hunger by 2015 in USA. Wal-Mart alone employs well over 200 million people globally which ensures that over 200 million people have a source of income, and thus independence from welfare or government help.
Also to encourage employee loyalty, in 1971, he introduced a profit-sharing plan that allowed employees to put a certain percentage of their wages towards the purchase of subsidized Wal-Mart stock. Management skill and strong team building abilities are often perceived as essential leadership attributes for successful entrepreneurs. Ensuring that all his employees could have shares in his company was a team building effort. If employees feel they own part of the business, they are more likely to put in a 100 % effort in their work because it would be as if they are investing in their own company, hence he called them associates instead of employees. Walton encouraged his employees to look their customers in the eye, as he believed it would “help them become leaders.” The founder established Wal-Mart as a sovereign enterprise and understood the importance of surrounding himself with the people of the same mindset, with gigantic ideas and who weren’t afraid to take risks and bring those ideas to life. One of the many risks Walton took was that he launched a “Made in America” movement that committed Wal-Mart to buying American-made products if suppliers ‘could get within 5 percent of the price of a foreign competitor’. This was highly risky in the short term in that it compromised the end result, be it profits or growth, but Walton perceived the benefits that would come in the long run from convincing employees and customers that the company was caring as well as profit driven. Wal-Mart’s leadership have the same risk-taking attitude, creative and innovative, without forsaking the critical aspect. For example, Wal-Mart has become a worldwide phenomenon. Venturing into global expansion requires a high degree of risk, from culture differences; no one can predict how local people in different part of the world will respond to products being offered. The ability of the leadership to take on risks strategically has enabled them to become global, while maintaining profits of over a billion dollars a year. Leadership strategy philosophy is passed down from generation to generation and in the case of Wal-Mart, the vision of the founding father to provide lowest prices for all consumers everywhere is the same vision that has seen his empire continue to grow long after his death.
Wal-Mart’s ability to attract other companies into joint ventures (for example Massmart in South Africa) has enabled them to diversify their exploits while still remaining true to the central values of the organization. According to Bridge and O’Neal, “Entrepreneurialism is concerned with spotting and realising opportunities … especially those that offer economies of scale.”. Their global expansion proves their ability to recognize these opportunities that small businesses cannot venture into due to lack of resources, and their ability to take risks in pursuing such ventures. A cultural assessment of the local demand is necessary before a business is established. Even in Arab countries where many organizations fear to venture, Wal-Mart can be found stocking shop shelves with local favourites, as well as products that would attract Americans away from home. An example would be the Wal-Mart shops in Egypt. A local newspaper read, “Wal-Mart stocks falafel, olives and Islamic greeting cards to attract Dearborn’s ethnic shoppers,” a testament to the adaptability of this mega company to the needs of its local clientele and to their ability to provide culturally relevant products as well.
Wal-Mart has had major success and seen tremendous growth since 1962. While it is true that they offer some benefits for their associates, the majority of workers on the ground at Wal-Mart only make minimum wage, a fair concept when one considers the qualification differences. However, if employees feel like they are part of something, they are more likely to work harder to ensure the growth of that business. Hence the first things that would improve Wal-Mart’s entrepreneurialism would be an improvement of employee benefits even and especially to the associates who deal directly with consumers. The entire success of a business is dependent on the satisfaction of its consumers with client services and supply of products.
Having established a rapport with people through humanitarian efforts has increased people’s trust in Wal-Mart that it is a company not only interested in profits, but also which has a conscience. This is important, and it may be necessary that they increase the number and scope of humanitarian help they give besides their commitment to combat US hunger by 2015. Contribution towards research for cure of major illnesses prominent in the USA such as cancers would be a welcome and worthwhile investment and a display of commitment to the people. To appeal to third world population, perhaps a contribution to researching the cure for HIV and AIDS would also be a sign of goodwill, so that the people can know that the company is about more than just profits and exploitation of resources and labour, but is indeed a company that will give back to the communities in which it sets up shop.
Entrepreneurship education would be beneficial for all employees / associates at all levels in the hierarchy of the business. This would ensure that new ideas would continue to come in from all levels of the business. Associates who are in constant contact with the customers have the most idea about what the consumer wants and how best to serve them. If they could be allowed a part in the planning of business simply by being trained and given a platform to voice what they have seen is more appealing to consumers, there could be room for more novella ideas to be put to use, leading to an endless supply of growth ideas. This would require a break in the bureaucratic chain of command where all decision making is left to the executives.
Sam Walton’s vision was a simple but historic one, “Low prices every day, everywhere”. Thus far, Wal-Mart has partially satisfied this vision. On considering their location map, it is clear that there are many blank spaces where the potential for business has not been taken advantage of. This is particularly true in the Middle Eastern countries and the central countries of Africa. Resources in these places are far cheaper than they are in the western countries, as would be the cost of labour and licensing permits. Wal-Mart should venture to establish new stores in these areas. They would be more welcome if they were to establish themselves in a joint venture with local businesses, which would make the local governments more accepting of their presence in these countries.
Entrepreneurs are able to pursue prospects for business in whichever mercantile trade at any time. For instance, some entrepreneurs construct flourishing novel companies through contribution to new industry founding and establishment. Robert Swanson is one such man who did this in biotechnology. Most entrepreneurs put together novel companies in mature and established commercial industries. This was the case with Sam Walton in retailing, food and groceries and home and gardening. This is still the main entrepreneurial strategy Wal-Mart implements, the generation of new companies in already existing, mature industries. When evaluated according to aggregate statistics, it is obvious that the common groups of business prospects to which Sam Walton and Bob Swanson responded were not equivalent. Standard value of new businesses created in the retail industry is comparatively lesser than the average worth of new businesses created in biotechnology. Therefore since human inspiration is probably widely dispersed from corner to corner in different industry groups at the collective plane, statistically noteworthy discrepancies in the average value of businesses created in dissimilar industry groups imply that the worth of opportunities fluctuates across industry.
The implication here is not that entrepreneurs would ultimately fail in any attempt to pursue opportunities in low opportunity industries. What is does mean is that the opportunities in these low opportunity industries are plainly not as much attractive to the regular person. Opportunities identified and pursued by entrepreneurs are different in economic worth; hence one can say that the entrepreneurial behaviour is influenced by the opportunities themselves. It is essential for entrepreneurship researchers who are behaviourally oriented to think about and gauge the economic value of opportunities in research for Wal-Mart stores so that they may more accurately guide or direct the drive of their entrepreneurs.
Wal-Mart has been in existence since the 1960s, the brain child of an entrepreneur with a simple vision to provide low prices to all people at all time. Sam Walton built his business by introducing new companies into already existing and mature industries, such as retail. Wal-Mart makes for an interesting study also because of their long term business venture and success which also seem to be growing still, year after year, owing to their adaptability and innovation. Hence the choice to evaluate them with regards to entrepreneurialism.
To evaluate this company, one must consider how Wal-Mart can be classified with regard to:
Disposition and Orientation
Innovation and Growth
Cultural context and relevance
The MIT Sloan Management Review suggestsmfour models for entrepreneurship strategy that can be applied to businesses, and which are useful in the evaluation of the entrepreneurialism of Wal-Mart. These are; The Enabler Model, The Opportunistic Model, The Producer and The Advocate Models.
To begin with, the founder, Sam Walton was both a critical and creative visionary. His ability to assess the needs of the society in his time enabled him to begin a chain of stores able to cater for those needs on a long time basis while still allowing his company to make profits. One of the main needs of any society, local or global, is employment. Wal-Mart has been able to employ, according to statistics, 200 million people worldwide, thus fulfilling the vision to provide a livelihood for people.
According to MIT Sloan Management Review, 2007, “Evolving from the opportunist model to any of the more deliberate forms of corporate entrepreneurship typically begins with a mandate for growth and a broad, clearly communicated vision.” (p. 76). On examining the entrepreneurialism of Wal-Mart, it is obvious that Wal-Mart has grown from the Opportunistic Model, a strategic model with which every company begins, to a Producer Model strategy, in which they pursue corporate entrepreneurship by dedicating specific funds to the establishment and support of formal organizations while also aiming to protect emerging ventures from competition.
There are not many recommendations for the improvement of Wal-Mart’s entrepreneurialism, except that entrepreneurship education would be beneficial for all employees / associates at all levels in the hierarchy of the business. This would ensure that new ideas would continue to come in from all levels of the business. Secondly, when one considers their location map, it is clear that there are many blank spaces where the potential for business has not been taken advantage of. This is particularly true in the Middle Eastern countries and the central countries of Africa. Since resources are available in those places and cheaper, Wal-Mart should embark on more business ventures in those places. Also, another thing that would improve Wal-Mart’s entrepreneurialism would be an improvement of employee benefits as incentives even and especially to the associates who deal directly with consumers. The entire success of a business is dependent on the satisfaction of its consumers with client services and supply of products. And finally, it may be necessary that they increase the number and scope of humanitarian help they give besides their commitment to combat US hunger by 2015. Contribution towards research for cure of major illnesses prominent in the USA such as cancers would be a welcome and worthwhile investment and a display of commitment to the people. These would be the recommendations that may improve Wal-Mart’s entrepreneurialism.