Battle of the Discount Retailer: the Visionary's Secret Weapon

BATTLE OF THE DISCOUNT RETAILER: The Visionary's Secret Weapon

A Comparative Case Analysis

A Paper Presented in Partial Fulfillment

Of the Requirements of

Abstract

The recognized giants in today's discount retail market are Wal-Mart, Sears, Roebuck and Company, and Target, and this paper compares Wal-Mart and Target. As the competition stiffens to capture market niches, these two organizations are heading for a showdown. This work demonstrates distinctive differences in company culture, promotion within the organization, lofty goal setting, and leadership styles between these two organizations. Although this paper shows a definite competitive advantage for the Wal-Mart organization, it will also demonstrate that Target Corporation has taken some innovative steps to secure itself in the discount retail market.

Battle of the Discount Retailer: The Visionary's Secret Weapon

What makes a company great? This is one of those pithy questions--like "What is great art?" or "What is great leadership?" that defy a simple response. Are companies deemed great because they have made buckets of money, or because they have made their employees happy? Are companies great when they make an impact on Wall Street or when they make an impact on the world? As a general rule all-visionary companies jealously preserve strong, and sometimes fanatical, corporate cultures even as companies adapt to rapidly changing times. Visionary companies heavily promote executives from within, constantly set lofty goals, and surprisingly, CEO's are rarely charismatic. Moreover, visionary companies drive to make an impact on society, not just to make profits. This research project will serve two objectives: first to define what constitutes a visionary company, and then to show a comparison between a visionary company and a non-visionary company.

To demonstrate the above stated principles this researcher chose two companies. I chose Wal-Mart as my visionary company within the mass-market discount retailing industry. I chose Target Corporation as my comparison company since it serves the same market as Wal-Mart and has been doing business for a similarly long time. Based on the research presented, Wal-Mart has clearly out performed Target in all categories that lead an organization toward visionary status.

The Visionary Organization

Visionary companies are premier organizations within their industries, highly admired for their accomplishments and their ability to teach other organizations while giving back to their society in general (Lafemina, 1995). They are greater than any one man or idea; they are a living organization that adapts to change and emerges along with its environment. Visionary companies are the survivalists of the industry.

Little can be said about visionary companies without citing the works of James C. Collins and Jerry I. Porras. Collins and Porras dedicated six years to research in an attempt to define a visionary company. Their published work, Built to Last: Successful Habits of Visionary Companies (199?), blanketed the world of business with a new perspective. According to Brewer's (1995) interview, Collins defines a visionary company as follows:

It's one that has sustained performance over long periods of time, and is a premier institution in its industry. Any industry will have successful companies, but every once in a while, you'll find a company to which everybody will look and say, "That is a very special company." The visionary companies have had a significant impact on the world. For better or worse, they've affected our lives.

Considered one of the strongest findings by Collins and Porras'(1997), the premise that visionary organizations have very strong corporate cultures and that the core values are the backbone of the organization that is preserved over time, especially during change.

Now that we have defined the term visionary organization, let us compare and contrast certain key principles of the two comparison organizations.

Corporate Culture

The word culture encompasses the values, customs, heritage, legal codes, educational traditions, social attitudes, political institutions and processes, and economic systems. Corporate decision making must consider the cultural values of an environment as it makes decisions. Wal-Mart has done a wonderful job in managing the organizational culture when Sam Walton took his Wal-Mart stores into small American towns. He hired and trained managers from the local population to ensure a compatible work environment. Capital is relatively easy to obtain nowadays. Today's scarce, sought-after strategic resource is expertise, which comes in the form of employees (Brown, 1994). Although organizations have changed mightily from the days of hierarchical, top-down management, they still have a long way to go. Some intangible yet crucial changes must not only occur in senior managers' ways of thinking but also in the atmosphere and culture of the company (Johns-Treat, 1994).

One of the truly distinctive characteristics of the Wal-Mart Culture is its focus on individual development. The genesis of this belief is that the customer comes first (Qualls, Sheppard, and Walton, 1986). Wal-Mart managers believe that if associates are expected to treat their customers with attention and respect, associates should be treated in the same manner. Wal-Mart managers accomplish this in many forms. First, associates are solicited from within the departments on how processes can be improved. This simple form of empowerment can go a long way in making employees care about their jobs, and get a feeling that their managers care about them. Second, department managers and departmental associates enjoy a great deal of autonomy. Sam Walton demonstrates this principle with his concept of a "store within a store". Departmental managers are free to use their own creativity, judgment, and customer knowledge to set up their departments to best serves their customers (Walton, Huey, 1993). Further, lavish rewards are provided to the employee who finds a potential improvement. The idea or concept is then distributed throughout the Wal-Mart organization via an intranet, and TV network system. Wal-Mart aligns its core values with the premise that no single