Reference no: EM133113317
Case Study: What happens when a company reaches a mid-life crisis?
People often hear about the problems of a mid-life crisis - declining health, too much stress, a changing physical appearance, or withdrawal from social relationships. As you probably know, an entire industry has emerged to help people through their mid-life crises. But what about companies? Do they experience mid-life crises also? The answer is yes, and researchers have begun to analyze the mid-life doldrums that many of America's top companies are experiencing. Of particular interest is how mid-life companies deal with disappointing growth.
Wal-Mart experienced exceptional growth during the last three decades. Over the past two years, however, Wal-Mart's performance has started to show signs of stress and fatigue. Growth averaging only 2% does not send out positive signals to the people who watch this retailing giant. This small growth percentage is especially troubling since major competitors, such as Costco, Target, Kroger, CVS, and Best Buy, have enjoyed increases averaging five times Wal-Mart's meager rate.
The economic and competitive environment Wal-Mart faces has become increasingly difficult. Also, mismanagement, increasing inventories, loss of market share, and distribution difficulties have all begun to plague the industry's cost and price leader. New turnaround strategies that management will try include increased advertising, a more holistic approach to marketing strategies, a specific focus on upscale and affluent consumers, store refurbishment and redesign, a renewed commitment to "everyday low pricing" and cost control, and an aggressive global expansion strategy. A mid-life crisis can be a difficult challenge. It will be interesting to see how Wal-Mart ages and how the company handles the difficulties that may come with its increased years.
Adapted from "Wal-Mart's Midlife Crisis," by Anthony Bianco, Business Week, April 30, 2007, pp. 46-56.
Case study developed by Dr. John R. Brooks, Jr., Houston Baptist University.
Questions:
1. Why should Wal-Mart be worried about a mid-life crisis?
2. How might Wal-Mart use holistic marketing to address its mid-life crisis?