Governance and Management of Distribution Strategy
INTRODUCTION
Nowadays, in today’s top performing business, distribution strategy is an essential factor to really reach the purpose of business operations and management and make the products and services known to the global market because of having effective distribution strategy. The fulfillment of the process can be linked towards such distribution channels and resources in order for organizations to truly actualize and execute proper governance and management of distribution strategies being used. The assessment then will be pointing towards certain issues of governance and management in the distribution strategy as well as distribution channels in support with comprehensive literature studies through such critical evaluation of the process involved. Thus, the business organization in focus then will be Wal-Mart, due to the fact that their business environment centers on the process of distribution and that such related governance and management of certain distribution approaches is relevant factor for operation effectiveness within markets. Then, analysis of information and content should be seen and applied for a complete understanding of the situational value that can be affected by the reality imposed by modern distribution structures in review to technology within the evolution of global market stance.
CRITICAL ASSESSMENT
Development of Effective Distribution
The development of effective distribution approach has affected the ways Wal-Mart distributes products and services in such collaboration to the suppliers as directly as possible helping in promote satisfaction of the consumers (Cited from, Carroll and Siguaw, 2003). Although there can be presence of price disparities among the distribution channels of Wal-Mart which shaped the perceptions of shoppers who are now shopping around for better deals through online process (Cited from, Murphy et al., 2006; Thompson and Failmezger, 2005). However, by setting consistent governance management across distribution channels, Wal-Mart can assure its customers of better distribution ways that provide such effective products in lieu to theoretical perspective of channel equality. The primary contribution allows accurate picture of such Wal-Mart distribution process that can be based on the issues of ample market distribution. Aside, there can be distribution strategies in the market in light of major strategic and legislative developments taking place. In order to explain the changes in distribution it is necessary to provide context, thereby demonstrating the central role which distribution strategy is playing in the marketing plans of Wal-Mart along with its indication of globalization, a touch of internationalization of market values from within.
Wal-Mart Distribution and Factors for Managing Distribution
Thus, for majority of Wal-Mart distribution has been and still is led by the requirements of the distributors or the strong product orientation of the providers. In context the customer has no role to play and will result in such disillusioned public which is skeptical in the business industry. Thus, on the other side distribution strategy can be influenced by disclosure as known as the significant amount of price and cost information within the business domain as such providers and channels will become a commonplace. The implications for distribution strategy are related to customer retention, the need to provide added value through the distribution process itself and the extension of the process to allow the customers’ time to take effective decisions. Direct sellers and tied agents will need to satisfy customers that the products and services from their company really are appropriate for the customer’s needs, while Wal-Mart management will need to capitalize on their unique proposition of being able to linked in the market strategically and provide bespoke solutions for individual shoppers, the customers.
Furthermore, key success factors for managing distribution can be as follows:
- control over the Wal-Mart sales teams in terms of time management and customer targeting
- Wal-Mart customer relations – the development of long term customer relationships like on single product sales
- improved productivity at Wal-Mart
Meanwhile, players in the market will need to maximize productivity from existing customers, particularly given the fact that the cost of acquiring new customers will be increasing. It is no longer appropriate for distribution to be treated as a short-term and tactical issue because it is inextricably linked with the longer-term customer retention policies. Wal-Mart networks are expected to change and the more successful will take a proper customer-oriented franchise approach. At present such networks have been constructed to provide shelter for unviable business partnerships which benefits from effective market positioning and complete consistency in operation. As Wal-Mart can comprise tailored one stop service, simple and complete product presentation and customer acceptance. They have set new standards in customer relationship building and servicing which are light years ahead of most existing banks and life companies. In their part of the market, which is likely to extend into more and complex products and advice as time passes, they will be formidable benchmark. The low cost base provides enormous scope to compete from business directions particularly price and the existing providers and advisers ignore the direct writers at their peril.
Wal-Mart Global Business
Today’s changing global business requires Wal-Mart to develop better approach to global manufacturing operations and of its particular importance is the interaction between logistics and manufacturing activities. As Wal-Mart business continues to globalize, effective governance of distribution is essential to the long-term success of Wal-Mart Company in the area of constant business innovation. Moreover, the process that embraces the effectiveness of the global distribution caters to ample potentials of such global companies within its desirable and better valued logistics programs and business putting such significant competitive advantage over other sectors involved in the process of distribution success (Cited from, Richardson, 1995). Thus, there indicates that certain global distribution perspectives as well as logistics participation can be deemed essential in carrying useful strategic weight that are nice execution of the logistics power by stable companies. Meanwhile, by means of upright logistics mechanisms in believing that improved strategic vision will be handled suitably to clearly define such roles and objectives of global logistics utility as being contributed directly to economic profitability and strong performance in the global market sense (Cited from, Bowersox et al., 1990).
Governance and Management of Distribution at Wal-Mart
In addition, distribution strategies must reflect that Wal-Mart is just simply good in operations with increased customer satisfaction within physical distribution of products from within. Although costs and customer satisfaction may be measurable across industries, the concerns, problems and challenges of international distribution are often unique to Wal-Mart industry as noted cited (Cited from, Christopher, 1993, p. 260; Wood, 1993 p. 56). Wal-Mart distribution is regarded as one of the most critical determinants of business success within unbalanced economic development reflecting visible factors of fragmented distribution with presence of management value and ways of getting more sales. Therefore, beyond situations, Wal-Mart will have to face bureaucratic restrictions that prohibit them from legally importing, selling, and servicing products in straightforward manner. There have been strong demands of distribution and logistics services should lure greater investments into the distribution and logistics sector.
Managing the process of distributive governance lies at the core of business in practice of global relations. (See, Hedley) There agree that the problems associated with distribution issues are growing in scope and often appear inadequate to manage Wal-Mart as distributive governance and management does not replace business authority to develop sanctions for governance and to condition management expectations of appropriate marketing conduct. (Cited in Krasner, International Regimes, p. 1) To begin, Wal-Mart networks contribute to establishing international policy agenda and offer mechanisms for developing global business policy. Second, the Wal-Mart networks facilitate the process in negotiating and setting global standards in specific issue areas. A third key role global networks play is in the development and dissemination of market knowledge that is crucial to addressing business challenges. They also contribute to the creation, deepening, and effective regulation of global markets and to the provision of innovative mechanisms for implementing global agreements in specific issue areas. Finally, Wal-Mart networks try to address the participatory gap that afflicts current international institutions by creating inclusive processes that build trust and social capital through effective distribution interaction. Wal-Mart adaptability allows them to influence the international distribution process as new management issues does emerge. With little institutional legacy to overcome, such distribution channel at Wal-Mart can influence global business governance efforts as new operation issues for instance do become part of the international business agenda of Wal-Mart, particularly related to Wal-Mart corporate governance as focus on economic effects of Wal-Mart system in impact to domestic policies of involved country for business.
There normally combine strong measure of protection for shareholder interest while balancing management interests regulating Wal-Mart’s exposure to financial and other risks and ensuring that stringent procedures for internal and external auditing and fiscal transparency are in place. From Wal-Mart’s perspective, the emerging consensus is that corporate governance is about maximizing value subject to meeting the corporation’s financial and other legal and contractual obligations. This inclusive definition stresses the need for boards of directors to balance the interests of shareholders with the employees, customers, investors, and communities upon achieving a sustained value for distribution systems.
The construction of distribution standards is aided by the guidance given by broadly based private and public international organizations. Although not exercising the legal authority of national governments, such institutions are not burdened by the controversies associated with existing national patterns of corporate governance and provide national regulators with sufficient flexibility to maintain their policy autonomy. In certain respect, the business contribute to distributive governance framework for the particular issue area of corporate governance that buttresses domestic governance, in so doing complementing, rather than replacing, the state. There include an emphasis on a consistent accountability to shareholders, the ability of Wal-Mart board to review distribution management activity and the ongoing commitment to provide enhanced transparency in financial dealings. More significantly, much of the text within these codes indicates that their primary purpose is to guide, rather than replace, national patterns of corporate governance regulation. For example, Wal-Mart statement of corporate governance principles argues that its purpose is “to serve as a reference point. They can be used by policy makers as they examine and develop their legal and regulatory frameworks for corporate governance that reflect their own economic circumstances and by market participants as Wal-Mart develop their own practices.
The political implications of distributive corporate governance are several as the distributive governance framework helps overcome the noted difficulties associated with the unilateral extension of national law by providing a more inclusive and flexible forum for debate, dialogue, and standards formation. In this respect, distributive governance contributes to the phenomenon of soft law by helping to overcome the specific difficulties associated with creating and enforcing international law in general. The concept of distributive governance presents a daunting challenge to some traditional axioms of international relations research. The purpose of maintaining islands of theory and of limiting the application of those theories to specific issue areas is to provide analytic clarity from which testable hypotheses can be made and observed findings reported. Yet the phenomenon of globalization has made that process increasingly difficult; what is gained in clarity may engender a cost in relevance.
Nevertheless, the established lexicon of international relations scholarship continues to provide some helpful concepts in understanding the process of governance in diffuse issue areas. Consequently, Wal-Mart distribution of power and legitimate authority between participating actors is clear as the distributive governance involves examining traditional international relations problems in new ways. It also provides a measure of freedom to turn the lens of international relations analysis in new directions, to examine issues that were once thought outside the field’s purview and to incorporate extant literatures from adjacent fields that may bear weight on Wal-Mart’s distribution strategy system.
Wal-Mart Distribution Image
For Wal-Mart to sustain its double digit growth rates, it needs to develop non-US markets. In this context, Europe is a logical target market for Wal-Mart. It comprises highly industrialized, developed nations with relatively familiar religious, government and economic institutions. Wal-Mart is not conventional retailer and acts proactively. There works, in addition to Treadgold’s attempts in the late 1980s/early 1990s to provide taxonomy of retail international development strategies (Cited from, Treadgold, 1990), provide partial explanation of the motives for internationalization and face difficult challenge when they attempt to transfer format and brand images want to develop global brand image that encompasses all of its products. Where the distribution chain is stretched, it is common to gain market share through acquisition of Wal-Mart into their target market. Wal-Mart is the exemplar of the low cost strategy and it has fine-tuned the low margin, high inventory turnover, volume selling practice (Cited from, Walton with Huey, 1993; Wagner, 1998). Volume buying in turn enables lower costs of goods. Furthermore, Wal-Mart demands vendors forgo all other amenities and quote the lowest price. In some circumstances, Wal-Mart buyers go to vendor premises to work on cost reduction. In addition to becoming supplier for the world’s largest retailer, a successful vendor may also become category manager (Cited from, Berry, 1998). Then, each department effectively becomes an individual shop proprietor with all the attendant feelings of ownership. Wal-Mart executives are not reliant only on computer-generated information.
Wal-Mart premises the retail proposition on four determinants of store choice: low prices, wide assortment, friendly service and community support. Low prices are derivative of a margin schedule that in the US averages 27.5 percent over various product categories (Cited from, Redman, 1998). The margin also varies by international market according to the inherent competitive forces. Wal-Mart is the ultimate exemplar for it wants customers everywhere to recognise its retail brand as standing for “low cost, best value, greatest selection of quality merchandise and highest standards of customer service” (Cited from, Smiddy, 1998, citing Bob Martin, head of Wal-Mart International Division).
Complexity Stance
Notwithstanding the complexity of Wal-Mart issues confronted by global marketers, legal ways on product distribution has been uncharacteristically limited in scope and vision as most of the literature has been devoted to describing the distribution contract and the laws of various countries relating to Wal-Mart product distribution including and multidimensional strategies at work in global product distribution. There implicitly suggests that the multidisciplinary issues of product distribution strategy are more appropriate for managers than for lawyers. Indeed, some attorneys may even take the position that the proper role of the lawyer in any global product distribution is merely to implement marketing and distribution strategies developed by management.
Consistent with market perspective, some managers may view some lawyers doing anything more than drafting the distribution contract as interfering with the client’s operations. While there is some merit to these concerns, the current and evolving global business environment demands reassessment of the proper role for lawyers. In order to establish the most effective marketing and distribution systems, global enterprises need rationally driven array of strategic options that take into account all the important variables. The matrix of strategic choices will improve if the impact of specific legal requirements is included in the analysis of options from the outset. For this effective strategic planning to occur, the collaboration between lawyers and the global marketers must precede contract formation. Deliberate use of the law to develop and select the distribution method within broader Wal-Mart business approach will tend to protect the global enterprise in the long run. For instance, some managed distribution strategies may be feasible only because of some facilitating or permissive laws. Others may be effectively crafted in spite of the law as with the help of lawyers, managers may come to view the law as an instrument for, rather than an impediment to, achieving corporate objectives.
Wal-Mart Integration
Wal-Mart is beginning to integrate ASDA suppliers into their Retail Link intranet system and initiatives have been undertaken to apply best practice principles to both chains. ASDA store managers have been “twinned” with their US counterparts to share ideas. Despite all the operational improvements that will occur to the ASDA chain in the next year or so, the main profitability enhancements are likely to be achieved in the non-food areas. Remember that Wal-Mart’s move into super centers was to entice food shoppers to spend more on higher margin home and apparel lines. Thus Wal-Mart’s global buying power may be used to source health and beauty products and electrical appliances to challenge established chains in their core product categories. Boots’ share price is low despite a solid financial performance and this has been attributed to the Wal-Mart effect.
CONCLUSION
In conclusion, with significant process of distribution systems Wal-Mart, as global enterprises are inevitably pushed towards the development of coherent and counteractive global product distribution strategies. Then, to certain degree, Wal-Mart strategic behavior is inherent in the nature of the global enterprise as the product distribution goals may only be achievable if other antecedent and complicated investment, product design strategies are implemented. While product distribution in Wal-Mart global operations could simply entail appointing foreign distributor, each specific management and laws for the distribution relationship may implement part of complex and efficient overall corporate approach of Wal-Mart to the global market.
Therefore, in developing an appreciation for the business and strategic considerations of the future, there are several relevant factors to consider. First, the nature of the current and emerging global business environment provides the background necessary to understand the different distribution channels adopted by global enterprises. Second, in order to provide appropriate legal protection, attorneys, like global managers, must fully understand the reasons for various channels of distribution. Third, transnational practitioners must become more aware of product characteristics. If corporate counsel fully appreciate the differences among the types of products industrial, standardized, customized, specialty, or consumer, they can more easily develop an effective legal structure. Product differences have business significance in determining the appropriate channels of distribution and may also make a difference in the type of legal structure or contract form used in the transaction. Fourth, consideration of the preceding factors will enable lawyers more easily to understand the strategy behind the choice of one channel of growing linkage among the world’s economies has been described as the globalization of business.
REFERENCE
Berry, B (1998), “Wal-Mart expectation of suppliers”, London
Bowersox, D.J., Daugherty, P.J., Droge, C.L., Rogers, D.S., Wardlow, D.L. (1990), Leading Edge Logistics Competitive Positioning for the 1990s, Council of Logistics Management
Carroll, B., Siguaw, J. (2003), “The future of electronic distribution: effects on hotels and intermediaries”, Cornell Hotel and Restaurant Administration Quarterly, Vol. 44 No.6, pp.38-50
Christopher, M. “Logistics and Competitive Strategy,” European Management Journal, 11(2), 1993, 258-261
Murphy, J., Schegg, R., Qiu, M. (2006), “An investigation of consistent rates across Swiss hotels’ direct channels”, Information Technology and Tourism, Vol. 8 No.2, pp.105-19
Redman, M (1998), “Wal-Mart Image”, QEII Conference Centre, London
Richardson, H.L. (1995), Logistics help for the challenged, Transportation & Distribution, Vol. 36 No.1, pp.60-4
Smiddy, P (1998), “What does all of this mean for UK retailing”, QEII Conference Centre, London
Thompson, G., Failmezger, A. (2005), “Why customers shop around: a comparison of hotel room rates and availability across booking channels”, Cornell University; CHR Reports, Vol. 5 No.2, pp.12.
Treadgold, A (1990), “The developing internationalization of retailing”, International Journal of Retail & Distribution Management, Vol. 18 No.2, pp.4-11
Wagner, D (1998), “Wal-Mart merchandising”, QEII Conference Centre, London
Walton, S, Huey, J Sam Walton: Made in America – My Story, Bantam, New York, NY
Wal-Mart (1999), http:/www.wal-mart.com/newsroom/4thqtr99.html
Wood ,A.L. “Develop an Agile Approach to Change,” Transportation and Distribution, 34(11), 1993, 56
Other sources:
Hedley Bull, The Anarchical Society (New York: Columbia University Press, 1977).
Stephen Krasner, “Structural Causes and Regime Consequences: Regimes as Intervening Variables,” in Krasner, International Regimes, p. 1. 16
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