How Wal-Mart Won Chicago

Answer

How Wal-Mart Won Chicago

Wal-Mart is a U.S based multinational retail company that runs a chain of discount department stores, hypermarkets, and grocery stores. The company has its headquarters at Bentonville, Arkansas, U.S. Wal-Mart was established in 1962 and incorporated in 1969 (Brotspies & Sellani, 2012). While executing its business activities in Austin, Chicago, Wal-Mart was faced by tough economic and political situations that could have led to the termination of its operations in this region. The company operates in a region whose unemployment rate stands at 40%, implying that most consumers in this area poor. While executing its activities in Chicago, the company and other big box businesses were required to pay/disburse at least $10 per hour, with other benefits. As such, this policy threatened the organization’s revenue generation, creating a tussle between it and the labor union. Considering this situation, Wal-Mart’s management focused on the aspect of demographics as approach of addressing the tough political and economic circumstance that had faced the company. This undertaking enable the organization to handle the situation in an effective manner, as discussed in this paper.

Brotspies & Sellani (2012) assert that demographic is an essential component of Wal-Mart’s approach to executing its business operations. Demographic segmentation refers to the division of the market according to gender, race, family size, income, religion, age, and education.  Abhishek (2014) points out that demographics can be segmented into various markets to assist a company target its customers in a more accurate and precise way. With this form of segmentation, a firm can manage to categorize the interests/needs of buyers. One of the principal benefits of demographic segmentation is that the information required by the company is made available. In this, manner, the company can manage to pull data on census to establish how, who, and where the firm wants to market its products. For instance, a retail company such as Wal-Mart can market its products such as clothes to different genders, income levels, and groups. organizations can also employ bilingual employees in operating with their consumers as a means of enhancing the effectiveness of the demographics strategy. Ghazzawi et al (2014) argue that demographic strategy promotes consumer loyalty and retention. When a company invests adequate time addressing the needs and wants of its consumers, many of buyers are often attracted to such a business. For example, in a retail industry, buyers will recommend their friends and family to seek the services or products of such an organization. On the contrary, demographic strategy can make a business vulnerable to rivalry/competition, especially when the organization’s rivals decide to employ the similar approaches that the company employs in conducting its business operations. Nevertheless, the benefits associated with approach still outweigh its disadvantages.

Demographics contributed significantly to Wal-Mart’s success in Chicago, even amidst tough political and economic circumstances. A small percentage of the company’s stores are situated within big cities, while majority of the stores are situated in the suburb region, which are associate with cheaper costs of land. As such, unions have limited authority in these regions and many individuals are in search of employment. Since the company focused its marketing approach on demographics, it managed to engage in effective targeting of its consumers based on the statistical data on the poor and rich individuals. The organization’s management ensured that statistical data on the income status of its consumers were driven into action in all regions in which the company executed its business operations.

When Wal-Mart was launched in Austin, Chicago, where 40% of the consumers were unemployed, the organization was perceived to be a “slum dunk” aimed at providing job opportunities to this community. However, this perception did not influence the union’s and organizations’ decision to urge the city council to implement the policy that required Wal-Mart to pay its workers at least $10 in very hour with the inclusion of benefits.      

The demographics strategy also proved effective in the execution of the company’s operations in the suburb regions where rich individuals and communities resided. The organization never experienced or witnessed the ordinance because business such as Wal-Mart dominated all spheres of suburbs. As such, adoption of the demographic approach was considered a win-lose for the company, whether it shoes to execute its activities within an affluent society, which could have assisted the company financially, or in a poor region that could have hurt the organization financially.

Wal-Mart’s management was also effective in addressing the political issues that faced the company. According to Koslow & Tellis (2012), political matters can greatly hinder efficient execution of business operations, particularly stringent government policies that govern issues such as employee wages. One of the major political factor that subjected Wal-Mart’s business operations difficulties was the perception of the unions and other businesses similar to the company that they could not manage to match Wal-Mart’s growth and sales.  As such, they implemented the ordinance requiring the company to pays its workers a minimum of $10 as wage with the inclusion of benefits, as a means of liming the company’s growth and sales volume. Apart from battling with political forces, Wal-Mart has also been struggling to overcome the economic warfare between it and the labor force. It is fortunate that the occurrence of the recession compelled the labor force and Wal-Mart to reconsider their plans for the future.  To stay afloat, Wal-Mart was forced to re-think its future approaches. In relation to this, the company focused on increasing spending in the community and maintaining store within the metropolitan region of Chicago. Such an undertaking was aimed at winning over this entire region.

The powerful union, lobbyists, and elected officials acted as significant barriers to Wal-Mart’s progress. On the contrary, the emergence of recession offered an opportunity for Wal-Mart to capitalize on the opportunities existing in Chicago. High levels of unemployment in Austin, Chicago triggered high levels of poverty. The labor union was ready to negotiate since it had members who required work. On the other hand, politicians expressed their desire to negotiate since the unemployed individuals experienced more difficulties due to poverty. Consequently, Wal-Mart was ready to negotiate, as it desired a place, where it could exploit a greater market potential. Despite succeeding with these approaches, Wal-Mart could have been more successful had it approached stakeholders having the ultimate incentive package, as well as wages higher than the minimum wage.

In conclusion, embracing the approach of demographics enabled Wal-Mart to overcome the political and social situations that the company faced. This strategy enabled the organization to target its consumers in an effective manner using statistical data on poverty and affluence levels. In this manner, the company managed to take over Chicago by meeting the needs and wants of all various consumers in this region.

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