Public Opinion on Company's Outcome
This paper analyses how a long-term strategic decision can lead to negative effect on corporate performance. In order to avoid consequences in long-term, it is important to focus on long-term objectives as well as prepare alternative strategies. Below is the case study of Walmart’s cost savings policy.
Walmart’s cost saving and efficiency wage policy
For long time, Wall-Mart’s strategy was cost-cutting to the extent possible. The low-wage policy, as a part of Wall-Mart’s business strategy for 45 years, turned out to damage not only the company’s reputation but also its revenue.
This policy helped company to reduce the cost of operation. Due to low operating cost, Wall-Mart was able to sell products in lower price than its competitors, thus attract more customers. As a result, the company got both more profits and more money from investors. However, low-wage policy lead to poor quality service, which brought negative consequence, cost savings resulted only 16 percent of stores were meeting the company’s customer service goals. In 2015, the company’s revenue fell for the first time since its foundation, shoppers were fed up with Walmart.
Under the pressure from investors to improve business performance and from labor group Our Walmart to raise starting wage, the executive initiated a new strategy, which was efficiency wage. This strategy resulted employees become more engaged to their job. Service rating had immediately rebounded up to 75 percent. Experienced employees were also attracted to Walmart and they show desire to work there in long-term, customer feedback became more and more positive, sales figure was very promising.
Walmart is a typical case about a company suffering serious consequences due to a long-term strategic decision. Nevertheless, the company revised their strategy before too late, and it can be a precious lesson for many other companies: establishing long-term objectives, generating alternative strategies, and selecting strategies to pursue.
Works Cited
Article in a Newspaper
Neil Irwin. " How Did Walmart Get Cleaner Stores and Higher Sales? It Paid Its People More." Title of Periodical, 15 October …
