Leadership 7th Edition by Andrew DuBrin, Ann Fisher, Andrew DuBrin

Exercise 9

Wal-Mart Stores, Inc., (or Walmart) is regarded as the world's biggest business enterprise, with about $425 billion in annual sales, and 8,500 stores worldwide. More than 200 million customers and members are served each week in 15 countries. President and CEO Mike Duke is the number one leader of this giant enterprise, and only the fourth such executive in the company's history-not including founder Sam Walton. Before becoming CEO in 2009, Duke had been the highly successful chairman of the company's international division.
Among Duke's job experiences prior to the international assignment were logistics work early in his career, and the director of U.S. sales. Lee Scott, the previous Wal-Mart CEO said Duke is a better manager than he is: "I think it's his ability to deal with data, his ability to set a schedule and follow that schedule, and to get all of the things done that he needs to get done. Mike is disciplined …" PepsiCo CEO Indra Nooyi describes Duke as a person "who's very unassuming, a very, very global thinker, and a very worldly person."
Duke's concerns as chief executive include merchandising and store displays. Shortly after becoming CEO, he studied the effects of a company program called Project Impact that freshened up stores, giving them a cleaner, less cluttered look. Customers liked the new look, but because less merchandise was stocked, sales suffered. Duke jumped in to increase the number of product offerings to the days before project impact. When Duke visits stores he makes observations such as whether bananas are priced competitively and enough underwear is on the shelves. (Underwear is one of Wal-Mart's bestselling items.)
During 2010-2011, Wal-Mart was coping with seven consecutive quarters of sales declines in stores. Duke expressed concern that partly attributable to increases in gas and food prices, many Wal-Mart customers were running out of money before the end of the month. A large proportion of Wal-Mart customers live paycheck to paycheck, so they shop in bulk at the beginning of the month and decrease purchases when their funds diminish. Because of rising good prices, Duke said that Wal-Mart was charging more for some fresh groceries and reducing prices on many non-food items such as electronics.
Duke embraces the Wal-Mart mission statement, "Saving people money so they can live better." He believes that technology will continue to have a major impact on shopping because prices are more transparent through such means as social media. Duke said to his managers, "And what kind of retailer wins in a time of price transparency? You got it, the price leader. We need to really churn the productivity loop and deliver on our Every Day Low Price business model everywhere. We will win on price leadership, and we will win big."
To enable customers to save and have a better life, Duke announced at a shareholder meeting that four strategies are necessary for building the Next Generation Wal-Mart:
1. Become a truly global company.
2. Understand the business challenges that retailers will face and solve them.
3. Play an even bigger leadership role on social issues that matter to our customers.
4. Keep our culture strong everywhere.
To what extent should the president and CEO of the world's largest company be concerned about merchandising details such as whether enough underwear is on the shelf?