The Challenges of Entrepreneurial Growth
The second case study in the innovator’s notebook is appropriate for us, and that is why it is our best choice. “How Corporate entrepreneurship Differs” is the title of our case study, and there are numerous causes that brought about the decision to select it. This case makes our minds broaden in several areas on which the companies can work. Throughout the case study, knowledge of entrepreneurship strategy and business models is obtained.
An entrepreneurial skill is obtained by anyone. This is a perspective that observed all around the organization, in all profitable and non-profitable business enterprises (Kuratko, 2011). This case study discusses all this.
The Methodology of Research
The approach used to gather information on this case study is a review of secondary sources from e-library. No primary research conducted.
Walmart Business Model
Walmart is the largest public entity regarding revenue and also retail business that is the world’s biggest; this is as per the Fortune Global 500. Sam Walton started it in 1962; it is the best private store that employs many people and in grocery retailing, it is the largest in the United States. Sam’s Club retail warehouse is the property of Walmart. It is located in North America. For every employee of the company, it pays a value $933.6 million in bonuses. The addition of 401(k) contribution, employees’ purchase plan contribution, and many dollars in merchandise discounts and an additional $788.8 million in profit division were made (Jeffery, 2011).
Members and customers of Walmart’s 8,400 retail units in 53 banners in15 countries are served by it 200 million times per week. Worldwide, Walmart employs 2.1 million employees. In Fortune Magazine survey on Companies that are Most Admired in 2009, Walmart was ranked first among retailers. Growth is inevitable if annual revenue of a company hits $405. Walmart attained growth by diversifying. Its strategy of lower pricing made them reach their goals. In 2000 to 2004 a 50 million square feet for sale of food was added by the company, this led to food becoming fastest- growing sector and the largest. Due to this, Walmart is almost third at Sam’s Clubs and represents a quarter of its overall sales at super centers. Furthermore, it added complete home trends line of home décor, bedding, accessories, dining and furniture (Jeffery, 2011).
What motivates Walmart to sustain its Innovation?
Application of Walmart of mastering the supply chain by lowering pricing every day and sourcing strategy to items like accessories, design décor, and grocery. From 2000 to 2004, for sale of food, it added 50 million square feet of space. Recognizing the need for families in 2010, Walmart upgraded their homes in the offset of the hard economy by adding a complete home trends line to its products. Walmart is ranked first among retailers as it employs 2.1 million workers. Hence, that is how it sustains its innovation (Jeffery, 2011).
Establishment of the universal bar code made Walmart push the retail industry as it made other companies use same labeling. All kinds of information are allowed to be obtained by retailers using this bar by developing a change of power from producers to retailers. Walmart is the best in retrieving information behind the barcode and is seen as the first company to create this great idea for tracking its inventory and reducing straining in its chain of supply (Jeffery, 2011).
Walmart was the first major retailer recently to question producers us of radio frequency identification technology (RFID). For the transmission of data saved on sticker on individual products, radio frequencies are used by the technology. Barcodes hold notably fewer data than the RFID tags. An out of stock experience by Walmart during 2005’s first eight months dropped by 16 percent at its store equipped by RFID. This is as per the study at the University of Arkansas as Fortune Small Business magazine reports (Jeffery, 2011).
What motivates Best Buy to sustain its innovation?
More than $45 billion in yearly revenue is generated collectively by the best Buy community of partnerships and brands. Best Buy’s introduction of new brands and designs. These comprise Future Shop, Best Buy, Geek Squad, Napster, The Carphone Warehouse, Speakeasy, Audiovision, Pacific sales, The Phone House, Jiangsu Five Star and many others in an effort to win competition on Walmart and other retail companies. These brands are brought to customers through close to 155,000 employees at their Websites, its community’s activities and delivery of products, retail locations, and many call points. A major success has been heralded by setting up “ Geek Squad” that is a group of installation and repair technicians that makes new products for their customers.
In global food service industry, Sysco continues to be a leading company with record sales of $37.5 billion a 2009 sales record. Sysco experienced an increase of 7.1 percent and its net record earnings on $1.1 billion, an increase of $13.1 percent (FY08).
What motivates Sysco to sustain its innovation?
It uses its sales force which has 51,000 members to maintain its customers. It also create private-label foods by focusing on supply of food and similar services and products to hotels, restaurants, schools, sports parks, motels, nursing homes and many other places- Always as food is cooked outside home.
To allow its wide food products offerings, Sysco provides a full scope of equipment and delivery of food. For their functioning, customers can obtain all they need ranging from heavy-duty wares and sparkling front door services to supplies of behind the house and all in between.
What motivates Walgreens to sustain its innovation?
Walgreen opening more than 715 appropriate care clinics is a major step as it has 6,700 retail stores in 48 states. It also has drive-through pharmacies that operate for 24 hours to increase the rate its customers relies on it for their all-time pharmaceutical needs which in return has made it gain customer's loyalty. The company grew its sales to a net of $63.3 billion; this came about by Walgreens choosing places that are strategic for new locations and looks forward to the development of a favorable shopping experience. It has discovered that with an organized care given to its customers to offering price differences, the solution for reducing growth is not price lowering but service improvement.
Entrepreneurial Frameworks Present in these Companies
The framework used by Wal-Mart is the sustainability. It really tries to sustain its entrepreneurship on a continuous basis. For example giving its workers bonuses, dividends and many other things will help the continuity of the company. On the other hand, Walgreens employs a domain framework. It looks into new business ventures and strives to change behaviors and business structures. An entrepreneurial process called strategic integration is utilized by the busy buy company. It uses technicians and media to operate. For example the use of installation repair specialists called "Geek squad" who develops new products for users and it had led to its big success. Last but not least is the Sysco Company whose business framework is same as the busy buy and Wal-Mart companies. It uses any Java EE framework to for human task implementation hence specialists utilized and also it tries its best to sustain its customers and that has made it the best and leader of food services industry.
Rules Used to Foster an Environment that is Innovative
The rule of a market for ideas is suitable with Walgreens Company. Many ventures and ideas of new markets are needed to spread a business and this is what Walgreen is all about. The companies like Sysco and Busy Buy need very talented employees who can implement systems and work properly. This is why a need is there to utilize the open market for capital creation and talent to be started a market rules are essential. Here ideas will come up and implemented by these professionals. With Wal-Mart which evidently values their employees, rules like experimentation of low risk and unreasonable expectation are perfect. The reason is with this trust to the employees is improved hence good results.
Types of Entrepreneurship Strategies Used
The companies like Sysco and Busy Buy uses technology so the strategies used must favor it. They therefore use acquisition, traditional R & D and outsourcing strategies where they let the technical team do a lot and after that they only make money. They also use other people’s technologies for example social media and Microsoft Java script. For Walgreen company which looks into new business ventures, it utilizes the teams of ad hoc ventures and new venture groups/ divisions where an ideas, budget and deadline is given to obtain its new experience. It will definitely grow its branches faster and new ventures implemented. The Wal-Mart company employs the mainstream and champions strategy. This is where it gives its employees a feeling of responsibility by making them feel entitled. For a business to operate well, hybrid forms strategy must be in place. All this companies utilizes this for operation and all strategies have to be used even if just a little bit.
Other firms believe that growth come about by buying other companies already in operation. They feel it is preferable to buy other businesses rather than starting from scratch. Even with this trend, other firms achieve their business growth organically “ building from scratch.” They develop products internally, and their workers get used to products and their mafacturing process. Companies understand the processes involved with new product that leads to the best invention even though there is an incurrence of R & D costs in future (Jeffery, 2011).
Walmart and Carrefour are types of companies that grew from small businesses to where they are. They have opened several retail stores and are large in operation. They are among the best stockiest of foodstuffs and have created many employment opportunities. The following part is going to expound on quantitative comparison of Walmart and its great competitor in UAE Carrefour, their innovative and entrepreneur decisions/ strategies inclusive (Jeffery, 2011).
According to the Fortune Global 500, Walmart is the discount department store that is largest in the world. Sam Walton founded Walmart in 1962, and it is the largest grocery store in the United States being the largest private employer. In North America, it owns and operates Sam’s Club retail warehouses. It has a great success in business and cares about employees by giving bonuses, contribution to their stock purchase and profit sharing. In the most recent fiscal year (2009) when the economy was not good, Walmart made great profits with $401.2 billion net sales.
In 1959, The French Fournier and Defforey families found Carrefour as a retailer supermarket. The group opened its first hyper supermarket in 1963 that led to its success. The company decided to open its first hypermarket in 1977 in Belgium in its pursuit to expand globally. It introduced unbranded products or @produits Libres@ as a replacement of common brands and were seen just as food. The company made its own brand in 1985 due to this pioneer that led to spread of its supermarkets and hypermarkets globally. Creating lower prices at the markets was its idea to buy out their chains and compete; they used the strategy of extremely low prices (Adam, 2010).
In terms of size, Carrefour is the largest hypermarket in the world and the second highest revenue in the industry of retail after Walmart. It has employed 495, 000 people around the world. It sales a variety of products with its own brand with the strongest brand in the retail industry world. In the UAE Carrefour have outlets all over big cities (Carrefour-UAE, 2010).
Comparisons of entrepreneur and innovative strategies/decisions for Walmart and Carrefour
Strategies and decisions
Walton founder of Walmart started its operation in small towns and later moved to bigger cities. This is termed circumventing strategy (Kaynak, et. Al., 2014).
It is slower internationalization. It has not spread well all over the world.
Lower pricing daily practice which reduces searching costs significantly is the major success factor of Walmart.
To connect their worldwide stores with the headquarters, Walmart spends on information technology equipment’s more than half billion dollars. Walmart transfer’s swiftly information and saved three-quarters of stock-holding costs with the system in place
In 1959, the idea of hypermarket was initiated by Carrefour, which stressed discount on a daily basis, delivery costs that are low and mass sales.
It also started free packing, low pricing, one-stop shopping, self-service, and freshness.
It has stores in big cities and hence knows purchasing power there.
Carrefour has no complete system of storage management (Kaynak, et. Al., 2014).
They plan to invest an amount of one billion Euros in development of their internet business in three years’ time.
To serve different market sectors, differentiated business departments are built by Walmart (Xu, et. Al., 2014)
Customers comes first is the motto of Walmart. Server customer, search for perfection and respect everybody are the management philosophies followed even in Asia (Kaynak, et. Al., 2014).
Treating customers well, it does educate employees and reduce costs
In Asia, it met needs of locals and reduction of costs of delivery and lead-time by localizing their sourcing (Xu, et. Al., 2014)
NCR and Walmart’s cooperation develops a quick efficient/answers to response system to consumers (QR/ECR) in order to replenish each store and supply strengthening.
Walmart’s online shopping site called Walmart.com is developed in cooperation with IBM (Kaynak, et. Al., 2014).
Two-stage philosophy is adopted by Carrefour in Asia and France for stable growth achievement. 1st stage, it enables smooth operation of its branches as fast as possible and high turnover maintenance (Xu, et. Al., 2014)
In the second stage, it puts focus market channels, training personnel and customers (Xu, et. Al., 2014)
Competitiveness the commodities turnovers and sourcing is what is emphasized (Kaynak, et. Al., 2014).
Since their entry in 1995, in China 95% of Carrefour’s products has been locally sourced.
Hand down to corporate heritage is stressed in contrast to Makro’s strategy of localization.
Activities of physical education like protection of the environment and marathon are promoted by Carrefour, as for their social responsibility.
A global net exchange e-commerce system supply-chain was built jointly by Sears, Oracle, and Carrefour in 2000 (Xu, et. Al., 2014).
Walmart stores merged with Massmart in South Africa.
Walmart won the case after the union groups and the government appealed to the South African appeals court judge who upheld approval decision of Walmart Stores $2.4 billion to acquire Massmart holdings limited by the country’s competition authority.
The appeal court noted sufficient evidence that the merger will cause harm the interest of the public hence no reason to overturn the approval.
Carrefour and Piccadilly supermarket chains are to merge in Bulgaria; this leads to a chain that has 75 retail stores and more than 3,000 workers.
With this new joint venture, its capital will be seen increased by 23.5 million euro (46 million Bulgarian lev) in the following 2 years, though the approval is yet to be made by the anti-trust authority of Bulgaria.
Impact of Walmart and Carrefour in the United Arab Emirates
Walmart has no stores yet in the UAE hence does not have any impact there. On the other hand, Carrefour has stores in major cities of UAE namely; Dubai, Al Ain, Fujairah, Ras Al Khaimah, Ajman, Umm Al Quwain and many others.
Carrefour’s idea of hypermarkets was pioneered decades ago into the United Arab Emirates in 1995. It saw potentially in the Dubai Emirates after the success of its country to country expansion strategy on the emerging market. Dubai favored many companies consideration. Dubai benefited greatly as the joint venture between Majid Al Futtaim and Carrefour led to the development of shopping malls hence ease in shopping and other activities. Market has been developed in the UAE as the company uses a strategy to add or increase new markets hence good service (Sophia, 2014).
In a move to become in accordance to the UAE customers, Carrefour has researched and come out with the products that are needed by people of UAE. It now sells products like frozen food products, baby care, IT equipment, electronics, cleaning and detergent, cars and Automotive and many other products. This has made it easy for shopping in Dubai as everything is under one roof. For market penetration, it offers customers’ low prices making many of them afford their goods and services. Carrefour has made itself famous as it establishes itself to be the lowest in pricing in the entire UAE market. Carrefour also plans to diversify its services to remote areas as it only operates in big cities; this will make UAE grow all round (SIS International Research, 2009).
In conclusion, Walmart and Carrefour are very close competitors who are doing their best to win customers with their services. Walmart has big stores in America though it is not spread widely around the globe. Carrefour has stores in many parts of the world and having them in the big business place UAE makes it even more advanced. They bought has several strategies that are carried out in their unique way, this are; sourcing, services and marketing, human resource management, digitalization and physical distribution, production strategies and many others. Also, both of them have merged with other companies in parts of the world hence more customers and also provision of employment opportunities. They have gone through the challenges of business growth, but they are yet to make it.