Unit 9 – Learning Activity 2

My work is in the graphic arts industry, so I am knowledgeable about both the Canadian and American postal systems.  The US system loses large amounts of money each year. Yes, I will acknowledge that both systems generate the bulk of their revenue from parcel delivery but it was largely handed to them. You could argue they took on the new revenue stream out of desperation. In Canada, you will notice that the union is not at the present time engaging in a regular strike; but rather rotating strikes. The answer to this is their largest parcel customer has stated that if there is a national strike, “the customer” will find other carriers to deliver their parcels permanently! Obviously, the postal service (and I) believe the customer. By any standard, having “too many eggs in a basket at the same time,” is a very bad business strategy.  I feel that both postal services, for different reasons have done a poor job of using technology for communication and transacting business. My suggestions for the postal services are:

1. aggressively seek new sources of revenue.
2. Reduce a preponderance of technical rules required of products to be mailed. Because of these rules many products are not mailed.
3. Reduce through negotiations with the unions, the complexity of rules which have resulted in a bloated, salaried overhead.
4. privatize the postal service.

Walmart, on the other hand, is different. One of the reasons they can so progressively increase their reliance on technology, especially for communication and transacting business is the fact that have historically appreciated the benefits of being probable the world’s largest non-union company in the world. Walmart is now the second largest online shopping company in America behind Amazon, and the gap is narrowing. Walmart has a history of success. At one time Walmart did not sell groceries. Within two years, they were the biggest seller of groceries in America! Groceries now account for 56% of their sales. They have Americas’ largest satellite monitored truck fleet in America. Through technology, one computer can tell how many “toothbrushes” are in each of nearly 5,000 stores – by colour, brand and price! Technology allows them on average to load every truck, on average, to 96% of the cubic feet of each truck. Because of technology, they are able to have a much higher “warehouse turns” than, for instance, Target. From the time a supplier delivers their product to Walmart’s warehouse, until the product is sold, the timeframe is much shorter than all other major retailers.

“Truly great companies of the last hundred years-from Walmart to Walgreens-trace their roots back through generations of technology change” (Collins, 2001, p. 147). Wal-Mart’s stranglehold over the distribution of traditional toys and games, which has resulted in the bankruptcy of fabled F.A.O. Schwartz” (Taylor, 2006, p. 49). Subsequently the bankruptcy of Toys “R” Us happened recently. Walmart’s size is a major reason for their endurance.

Jim Collins, in his influential book, Good To Great, reveals an important concept of core values, “is that there are no specific ‘right’ core values for becoming an enduring great company. A company need not have a passion for its customers (Sony didn’t), or respect the individual (Disney didn’t), or quality (Walmart didn’t), or social responsibility (Ford didn’t) in order to become enduring and great” (Collins, 2001, p. 195). I found Collin’s insight to be profound.  According to Collin’s argument, customer focus isn’t necessarily a requirement for success.

Walmart has greatly influenced corporations of all sizes. The CEO of Proctor & Gamble “unleashed a ‘major discontinuities’ in how P&G does business –from globalizing its product introduction strategies in the 1980’s to reckon with the ‘shopper revolution’ at Walmart” (Taylor, 2006, p. 92).

Something that should be said is that Amazon has yet to make a profit. The stock market is betting on the future. The extent of this betting on the future has never occurred, even remotely, in the history of the stock market. I’ll be watching with interest to see Walmart’s attempt of late to have many of their 1.5 million employees deliver packages to customers on their way home from work and get paid for the deliveries. If the strategy works, it is something that Amazon cannot do.

I have two recommendations for Walmart. One is to accelerate their use of technology in processes of moving inventory, merchandise stocking, inner store and corporate communications and check-out. Second would be to continue their continue price strategy. “I cannot debate that dropping the price is not a perfectly legitimate way of driving business; the challenge is staying profitable. Walmart seems to be the exception to the rule. They have built a phenomenally successful business playing the price game” (Sinek, 2009, p. 18).

References

Collins, J. (2001). Good to Great. New York: Harper Collins Publishing.

Sinek, S. (2009). Start with Why. New York: NY: Penguin Group.

Taylor, T. (2006). Mavericks at Work. New York: NY: Harper Collins Publishers.