Walmart Vs. Amazon.com

Walmart Vs. Amazon.com

What are the essential details of the event, and what do you see as the causes of the crisis

and/or negative impact to society?

Both Walmart and Amazon.com had risen to eminence in their distinct spheres. However, as they expanded into overlapping sectors, they started seeing each other as competitors. Walmart had specialized and mastered the retail business of brick and mortar characterized by a first and straightforward website that consisted of an electronic shopping cart and a list of product categories offered by the company. With little online presence, the company recognized the significance of developing a stronger online presence to combat the encroachment of Amazon.com in the retail sphere that Walmart had dominated for decades. Walmart saw online business as the expansion of its physical retail stores and dominating the market. Amazon, on the other hand, started an online business in 1995 and focused on providing its customers increased selection of novels at a smaller cost (Dyer, Godfrey, Jensen, & Bryce, 2017). At the time when Amazon.com was venturing on online business, Walmart’s only worry was that the sale of books on its physical stores would decline when Amazon’s popularity grew. Despite book sales in Walmart, representing a significant percentage in the company’s revenue stream, it was not the company’s core business. If only the company had realized the significance of online business at the time, it would have invested heavily in ensuring it remains competitive both in retail and online business.

In 1996, Walmart’s website was awkward since it featured only a digital version of Walmart store; hence, it drew ridicule from the tech community. As such, it was clear that the company’s expertise in retail stores did not translate into online success. Walmart’s online business fulfillment was so dysfunctional to the extent that in 1999, the management announced that it could not guarantee the provision of pre-Christmas delivery for products ordered online after 14^th December (Dyer, Godfrey, Jensen, & Bryce, 2017). Nonetheless, the executives of Walmart did not notice the company’s digital inefficiencies. With the construction and expansion of Walmart’s supercenter stores not only in the US but in the entire globe, the company’s executive directed their attention to blazing growth in other areas other than investing in online presence. Most executives seemed to regard web sales as unproven and futuristic business growth; hence, they appeared to steer a technology that they did not understand. Things started going astray when Amazon began to invest in brick and mortar retail stores. After years of gaining a share of online marketing in the book sales, Jeff Bezos, founder of Amazon, targeted brick and mortar as the next investment business sphere. Besides, it also expanded its business to the option of purchasing DVDs, food, CDs, and clothes. The company also recruited about 15 Walmart workers, including Walmart’s Chief Information Officer, to help with retail e-commerce expansion. As a result, Walmart noticed that Amazon was selling the same products online and filed a lawsuit, where it claimed that Amazon.com had recruited its former employee to steal its trade secrets. Even though Walmart and Amazon settled the issue out of court, the fierce competition between the two firms become public.

Where do you see failures in corporate governance?

Failures in corporate governance in Walmart took place with a clash of cultures between the store headquarter in Arkansas and e-Commerce leadership based in California. The company’s website engineers focused on increasing sales and generating revenues. On the other hand, company executives at the headquarters were looking at online business as a distinct business sphere. Walmart’s success for many years had been driven by unrelenting and intense focus on generating profits through increasing sales. For that reason, the firm’s stores were successful since Walmart’s founders drove or focused on huge cost reduction from the company’s suppliers because of increased demand for products. From 1960, most of Walmart’s business decisions were made with a single goal that was entrenched in the firm’s executive mind, which is reducing costs and driving profitability. In contrast, it should be understood that the majority of tech companies did operate in net losses for many years before they could eventually pick up.

In most cases, when an organization constructed a user base that delivered true value to its clients, it will, in the end, become profitable. Amazon.com operated for more than five years before they eventually made a profit. Walmart’s engineers who had been recruited from other tech companies expected the company to invest much to start a website to run smoothly. However, executives were unwilling to commit financial resources that the company engineers taught that it was essential for the website to get traction. Despite one of the executives stating that they will have an online investment plan of about five years, it never materialized since it was never executed by the management, with the management arguing that there was a lack of sales that could justify the investment. As such, the bottom line regarding Walmart’s slow growth was in part due to a lack of funding that is required from the company’s headquarters. Management at the company headquarter did give its online business sphere funding that the digital department in the firm had requested. For that reason, the two conflicting company viewpoints of cost-cutting headquarters, conservative, and spending big created a significant class that hampered the company’s efforts of creating and establishing an online presence.

What caused the failures in the ethical culture and climate of the company?

The company’s reorganization caused ethical culture and climate failure at Walmart. Traditionally, the firm’s e-commerce heads in every country were to report directly to Walmart’s CEO based in San Bruno, California. Nonetheless, in 2011, the company’s executive management announced a shuffle in Walmart’s reporting structure even in some of its most active markets (Dyer, Godfrey, Jensen, & Bryce, 2017). According to the reshuffle, e-commerce leaders in both the United Kingdom and Canada were required to directly report to the head of the corporation in the country’s business unit. Walmart hoped that the shuffle would create a better synergy between online and physical store sales. Nonetheless, the shuffle affected the firm’s ethical culture, where it required heads of Walmart in different countries to report to the company CEO based in California directly. With the change of management from Castro-Wright to Neil Ashe, there was a change of the company’s ethical culture from a focus on physical retail stores to online sales. Ashe believed in the significance of online growth and criticized Walmart’s lack of priority among the company’s executives because of the little efforts and support that they had towards online marketing. As such, Ashe had a plan of transforming the company into a fully integrated offline and online experience. With the new leadership, the company was determined to redefine its traditional approach for online delivery. For that reason, Walmart opted to seek further to boost its online units through a strategy called “ship from store” where when a customer places an order online, as a replacement for shipping the ordered product from the warehouse located in another state.

What ethical policy might prevent this scenario from occurring in the future?

The ethical policy that can help prevent the scenario from taking place in the future is to accept as a personal task the responsibility to always keep up to date with contemporary issues. Besides, employees should also conduct themselves with professional fairness, efficiency, effectiveness, and competence. With the changing business environment, as well as technology, company executives should have adopted the use of online marketing when Amazon.com ventured into the sphere back in 1995. Most people have adopted the use of technology, with the majority being social networking sites. For that reason, through investing in technology, the company would have increased its market niche by attracting new online clients while on the other hand retaining their existing loyal customers who buy from their physical stores. Another policy that can help prevent the scenario from taking place in the future is through respecting the responsibility and structure of the company’s board of directors, providing them with advice and facts on a daily basis regarding the decision-making process and how the board can implement any policies. Finally, communities should also be kept informed regarding business decisions that an organization makes or what affects them.

If you were a leader within this company, what choices would you have made differently to effect positive social change?

As a leader of Walmart Corporation, the choices that I would have made differently to effect positive change would have been retaining the company leadership, adopting online marketing for the firm, and ensuring that clash of culture is minimized by warrantying that e-commerce leadership in California and store headquarters in Arkansas are singing the same song. Through reorganizing the company’s leadership, Walmart was doomed to fail since the new management would come with new ideologies that may affect the ethical culture that was maintained by the replaced employees. Therefore, as a leader, I would have ensured that directors in different company branches are answerable to me instead of being answerable to company managers in those countries. Also, as a leader, I would ensure that the firm adopts online marketing and sales as a way of increasing sales and attracting new clients.

Reference

Dyer, J. H., Godfrey, P., Jensen, R., & Bryce, D. (2017). Strategic management: Concepts and cases. Wiley Global Education.