Case Study 3 :Walmart
1) How IT and IS may be used to help the company operate and achieve its objectives. (1 Mark)
2) Discuss the challenges faced by the CIO – which are the most important and why? (1 Mark)
3) What role does information technology play in the business? How is it helping Walmart refine its business strategies? (1 Mark)
4) Summarize the main purposes of information systems in organizations (1 Mark)
Case Study 4: Zappos
1) Define SCM and how it can benefit Zappos. (1 Mark)
2) Explain CRM and why Zappos would benefit from the implementation of a CRM system. (1 Mark)
3) Demonstrate why Zappos would need to implement SCM, CRM, and ERP for a connected corporation. (1 Mark)
4) Analyze the merger between Zappos and Amazon and assess potential issues for Zappos customers. (1 Mark)
5) Propose a plan for how Zappos can use Amazon’s supply chain to increase sales and customer satisfaction. (1 Mark)
Case Study 3 : Walmart
With the advent of science and technology, technological innovations have become a pre-requisite to achieve operational and strategic excellence. Organizations by using state-of-the-art systems, are striving for their best to achieve sustainable and long-term competitive advantage. It has become sine qua non to use modern tools for the effective achievement of goals and objectives. Its importance can also be observed from the increased spending on Research & Development in order to pace up with the todays dynamic business environment.
Wal-Mart, founded by Sam Walton in 1962, is the world’s largest retailer that employs about 2.1 million associates worldwide, in more than 8,400 stores, including 8, discount stores, 3,100 combination discount and grocery stores. Wal-Mart is serving its customers and members more than 200 million times per week at more than 8,613 retail units under 55 different banners in 15 countries. Wal-Mart has ranked first among retailers in Fortune Magazine’s 2010 Most Admired Companies survey with fiscal year 2010 sales of $405 billion. Sam Walton’s belief was to build an empire by providing value to its customers and empowering employees, also known as associates. The way the Wal-Mart operates is so fascinating and impressive that Jack Welch, CEO of General Electric once said: “Many of our management teams spent time there observing the speed, the bias for action, the utter customer fixation that drives Wal-Mart.”
The use of high-tech Information technology has always been an essential ingredient for Wal-Mart’s growth. Since its inception, it has used the IT systems well enough for the Inventory, administrative, customers and suppliers management.
Wal-Mart’s investment in technology started with the computerized accounting systems and since then the continuous adoption of latest technologies has made Wal-Mart a market leader in the whole retail industry.
Wal-Mart developed a well-equipped computerized Point of Sale (POS) system capable of identifying each unit sold, creation of accurate sales receipt and storing all the information item-by-item for sales analysis and inventory reordering purposes. It helped company to avoid overstocking of merchandize through effective information usage and also assisted them in investing in only those merchandize that were profitable. It has also helped them figure out best selling products and prospective products that customers want. Analysts say that it is Wal-Mart’s Point of Sale system that has helped them achieve the world’s largest market share and revenues in retail industry.
Wal-Mart, in 2004, was the first in retail industry to adopt electronic radio frequency identification (RFID) tags for inventory distribution management. RFID technology, which is still being used, helps them keep track of inventory movement across its supply chain. Wal-Mart was trailing K-Mart in 1980’s but with the adoption of latest technologies, it has now become the trend setter in retail industry all over the world.
Wal-Mart is currently working on a project to make best out of wireless technology. In near future, they have plans to develop a remote system that would allow customers to just walk into their store and use their own devices (Phones or PDA’s) to get whatever they want. i.e. they might go online to their website, while at the store, and find things for themselves or just compare the products’ prices etc.
Customer service, best shopping environment and experience, one-stop shopping, best value products, customer convenience of online shopping, good customer relations are the blessings that Wal-Mart provides using cutting-edge technology. Latest wireless system at their stores, online web-retailing, vast width and hierarchy of product items, and stores at multiple remote sites are the benefits customers of Wal-Mart cherish.
Wal-Mart is considered to be a trend setter in retail industry and it’s all due to its inclination towards achieving impossible through modern technology. For example, Wal-Mart once tried to develop three experimental stores in McKinney, Aurora and Las Vegas that were equipped with latest technologies or concepts like wind turbines, photovoltaic solar panels, bio-fuel-capable boilers and water-cooled refrigerators. Irrespective of the criticism it had on environmental issues, Wal-Mart’s initiative was considered to be a positive step towards change and innovation and it provided them with an opportunity to become the biggest seller of organic milk and the biggest buyer of organic cotton in the world, as well as reducing packaging and energy costs. It has been quoted in 2006’s annual report of Wal-Mart that in order to compete against upscale and appealing store, such as ‘Target’, they have launched a new Supercenter concept in Plano, Texas. The new store had wood floors, wider aisles, a sushi bar, a coffee shop with free Wi-Fi Internet access, and more expensive beers, wines and other electronics goods.
By using advance forecasting techniques and integrating different technologies, Wal-Mart is planning to deploy simulation software that would help them simulate business events that are yet to happen.
Wal-Mart has got a strategic plan of introducing a concept of self-service. Self-service technology, aimed at eliminating paper and paper forms, will be provided to their associates, prospective associates, customers and members. It was said by Kevin Turner, CEO of Wal-Mart’s subsidiary corporation, in his interview with ‘CIO’ personnel that “having an associate portal and devices on our sales floors will let customers and members get product information, and let us do computer-assisted selling“.
For evaluating new technologies, they are always plugged into research and development labs of their key suppliers like Cisco, IBM, NCR, AT&T or HP in order to get current with latest technologies and drive the future for themselves.
Wal-Mart has been outstanding in its investments in Information technology from all prospects. IT systems at Wal-Mart allow them to reduce transactional as well as operational costs at their distribution centers and it has also helped them to support Wal-Mart’s long-term strategy of owning the distribution centers and maintaining long-term relationships with their suppliers. Also, improvement in productivity due to IT systems is dramatic at Wal-Mart. It has helped them offer products at such a nominal cost that a small town merchant is unable to provide and this is remarkable achievement of Wal-Mart. It has become a sustainable competitive advantage for them over their competitors and a reason of their growth and profitability. We are aware of a fact that every benefit is accompanied with some problem but Wal-Mart has successfully defied its weaknesses and have used its strength well to take advantage from the prospective opportunities and avoiding possible threats.
Case Study 4: Zappos
Tony Hsieh’s first entrepreneurial effort began at the age of 12 when he started his own custom button business. Realizing the importance of advertising, Hsieh began marketing his business to other kids through directories, and soon his profits soared to a few hundred dollars a month. Throughout his adolescence, Hsieh started several businesses, and by the time he was in college he was making money selling pizzas out of his Harvard dorm room. Another entrepreneurial student, Alfred Lin,bought pizzas from Hsieh and resold them by the slice, making a nice profit. Hsieh and Lin quickly became friends. After Harvard, Hsieh founded Link Exchange in 1996, a company that helped small businesses exchange banner ads. A mere two years later, Hsieh sold Link Exchange to Microsoft for $265 million. Using the profits from the sale, Hsieh and Lin formed a venture capital company that invested in start-up businesses. One investment that caught their attention was Zappos, an online retailer of shoes. Both entrepreneurs viewed the $40 billion shoe market as an opportunity they could not miss, and in 2000 Hsieh took over as Zappos’ CEO with Lin as his chief financial officer.
Today, Zappos is leading its market and offering an enormous selection of more than 90,000 styles of handbags, clothing, and accessories for more than 500 brands. One reason for Zappos’ incredible success was Hsieh’s decision to use the advertising and marketing budget for customer service, a tactic that would not have worked before the Internet. Zappos’ passionate customer service strategy encourages customers to order as many sizes and styles of products as they want, ships them for free, and offers free return shipping. Zappos encourages customer communication, and its call center receives more than 5,000 calls a day with the longest call to date lasting more than four hours. Zappos’ extensive inventory is stored in a warehouse in Kentucky right next to a UPS shipping center. Only available stock is listed on the website, and orders as late as 11 p.m. are still guaranteed next-day delivery. To facilitate supplier and partner relationships, Zappos built an extranet that provides its vendors with all kinds of product information, such as items sold, times sold, price, customer, and so on. Armed with these kinds of details, suppliers can quickly change manufacturing schedules to meet demand.
Along with valuing its partners and suppliers, Zappos also places a great deal of value on its employee relationships. Zappos employees have fun, and walking through the offices you will see all kinds of things not normally seen in business environments—bottle-cap pyramids, cotton-candy machines, and bouncing balls. Building loyal employee relationships is a critical success factor at Zappos, and to facilitate this relationship the corporate headquarters are located in the same building as the call center (where most employees work) in Las Vegas. All employees receive 100 percent company-paid health insurance along with a daily free lunch.
Of course, the Zappos culture does not work for everyone, and the company pays to find the right employees through “The Offer,” which extends to new employees the option of quitting and receiving payment for time worked plus an additional $1,000 bonus. Why the $1,000 bonus for quitting? Zappos management believes that is a small price to pay to find those employees who do not have the sense of commitment Zappos requires. Less than 10 percent of new hires take The Offer.
Zappos’ unique culture stresses the following:
1. Delivering WOW through service
2. Embracing and driving change
3. Creating fun and a little weirdness
4. Being adventurous, creative, and open-minded
5. Pursuing growth and learning
6. Building open and honest relationships with communication
7. Building a positive team and family spirit
8. Doing more with less
9. Being passionate and determined
10. Being humble
Zappos’ Sale to Amazon
Amazon.com purchased Zappos for $880 million. Zappos employees shared $40 million in cash and stock, and the Zappos management team remained in place. Having access to Amazon’s world-class warehouses and supply chain is sure to catapult Zappos’ revenues, though many wonder whether the Zappos culture will remain. It’ll be interesting to watch!19
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