GROUP PROJECT COMPARISON BETWEEN WAL-MART AND CO. OP MART [pic] [pic] Group 9 Group members: Do Thanh Hung Pham Thanh Thuy Phan Viet Hoang Le Thanh Huong I/ Introduction2 II/ Comparisons:3 1/ Service Concept:3 Co. op Mart’s service concept4 Walmart’s service concept4 2/ SWOT analysis of Wal-mart and Co. op Mart:5 Co. op Mart:5 Wal-Mart:6 3/Supply chain management and supplier relationship8 Who are their suppliers? 8 What is their percentages of investment in supply chain management? 9 How their supply chain management aspects differ? 9 How they reduce supply chain risks? 10 What are some of their supply chain strategies? 11 How do their supply chain models differ? 12 What is their relationship with suppliers? 13 4/ Human resources strategy and Motivation14 Wal-Mart14 Co. op Mart15 5/ Ethical issuses16 Coopmart:16 Wal-Mart:16 III/ Conclusion17 I/ Introduction This project is all about Co-op Mart (one of the biggest retailers in Vietnam) and WalMart (the biggest retailer in the planet) . Coop mart is the biggest 100% Vietnamese retailer. Since the establishment of he first mart in 1989, Coop Mart has since opened 50 more marts in Vietnam and become the number 1 retailer of the country. | Vi? t Nam |2008 |2007 |2006 |2005 |2004 | |ranking | | | | | | |1 |Saigon Co. op(321) |SaigonCo. op(360) |Saigon Co. op (325) |Saigon Co. op (376) |Saigon Co. p (330) | |2 |SJC (349) |SJC (364) |SJC (329) |PNJ (431) |PNJ (337) | |3 |SG Nguyen Kim (402) |SG Nguyen Kim (422) |PNJ (407) |Cora (471) |LG Vina (#) | |4 |PNJ (481) |PNJ (487) |BigC (462) |Diamond Plaza |Cora (#) | |5 |G7 mart |G7mart |Diamond Plaza(500) |Satra |Shiseido (#) | |6 |BigC |BigC |Parkson |Saigon Tourist |Diamond Plaza | | | | | |Department Store | | |7 |Hapromart |Diamond Plaza |Fahasa |Fahasa |Kinh Do | |8 |Diamond Plaza |FPT |LG Vina |Nha Xinh (AA) |Satra | |9 |FPT |Viet Tien |Nha Xinh (AA) |Viet Tien |Saigon Tourist | | | | | | |Department Store | |10 |Fahasa |Parkson |Viet Tien |LG Vina |Fahasa | (Top 10 retailers in Vietnam from 2004 to 2008 – http://smtp. saigoncoopvn. com/index3. php? lang=0&option=news&id=76&l=4) Wal-Mart Stores, Inc. (branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores.
The company is the world’s 18th largest public corporation, according to the Forbes Global 2000 list, and the largest public corporation when ranked by revenue. These two are both magnificent retailers and have many interesting different characteristics. That’s why we decide to pick them up for comparison, in order to understand their operations’ management and to point out the similarity or differences between these two in how they manage their business. II/ Comparisons: First, we should clarify the different market for each retailer. The market for Wal-Mart is world wide international market while Coopmart’s market is only Vietnam. However, Walmart hasn’t jointed Vietnam market yet, so Walmart and Coopmart are not rivals.
Now, it’s time to make some comparisons about some important criteria’s. 1/ Service Concept: Service concept is the first step to establish a business. It establishes a certain expectation levels in the minds of customers and employees regarding a specific service. The direction of that business will go depends on how the firms determine it’s their service concept. Below are the service concepts of the 2 retailers Co. op Mart’s service concept 1. Co. op Mart Chain is a reliable shopping place and friend of all families with rich and high quality commodities, reasonable prices, warm service and always bring more and more add-on for customers. 2. roduct display is always easy to see, easy to get and easy to pick. Each product line is directed by the sign board, hence it is very easy to locate and pick the right products. 3. Saigon Co. op always chooses products from producers who have ISO-9000 or equivalent standards, or at least have Vietnam High Quality Product voted by consumers. 4. Saigon Co. op is a beloved family for the entire company staff. All Saigon Co. op activities always target the society. In reality, standing in a customer point of view, we think Sai gon Co. op is doing quite well in their service cocepts because most of their concepts meet the customer’s expectations.
Walmart’s service concept To Walmart, their service concept is to sell with the lowest price possible to customers. There are is nearly everything in WalMart, from luxury products to the cheapest goods. And customers can always ensure that there would be nowhere else selling goods cheaper than Walmart. In reality, of course, there are some products that Walmart can’t sell at the cheapest price in the world. However, their service concept, operation management and marketing are so good that they make customers think they sell goods with the cheapest price and reasonable quality. We can recognize that Co. op Mart service concept is very different from Wal-Mart’s.
Therefore, Customer’s expectation of the 2 suppliers is totally different. This leads to many kinds of different criteria that we can see below. 2/ SWOT analysis of Wal-mart and Co. op Mart: Co. op Mart: Strengths (S) 1. A lot of opportunity to cooperate and build a long term relationship with many potential firms. 2. Good Human Resources. 3. Customer’s trust. 4. Centralized purchasing. 5. Good Marketing quality of services. 6. Increasing market share. 7. Leading supermarket chain in Hochiminh city. 8. Many helps from outside. Weeknesses (W) 1. Not reaching an agreement on price. 2. Bad network management. 3. Not very good business strategies. 4. Doesn’t make much difference. 5. Doesn’t have plenty of fresh meat. . Price is not low. 7. Lack of good managers when opening new branches. Opportunities (O) 1. Increase competitive advantage by increase volume. 2. May create pressures on suppliers. 3. Potential to develop in many provinces in Vietnam. 4. More consumed by stimulating demand. 5. Learn from outside 7. Discount price by suppliers. 8. Open more branches. Threats (T) 1. Compete with big rivals. 2. Not enough internal strengths to compete. 3. The consequences of natural disasters. 4. Many types of alternative. 5. Rivals cooperate with each other. 6. Decreasing demand. Wal-Mart: Strengths (S) • It is the world largest company in term of revenues. It is well known for lowest cost products. • Wal-mart has the largest employee base. • The company covered most of the US market and having a huge market share. • Walmart offers variety of products in their stores. • Walmart is operating in 14 countries with 2,980 stores. • It sells 40% of private brands which are produced through contracts with manufacturers. • High customer satisfaction. • The SAMs Club customers are able to buy the products in bulk quantity and getting the advantage of low prices. • A Wal-Mart super store offers non stop shopping for their customers. • Satisfaction guaranteed programs promoting customer goodwill Buy from local merchants when possible • Stock ownership and profit-sharing with employees Weeknesses (W) • The Corporation is huge but still has presence in 14 countries. • Customers sometimes are curious about the quality of products. • Keep poor performance employees on hand. • The market share is low outside the US market. • Supplier profit margin is very low. Opportunities (O) • Most of the International Market are untapped specially the Asian Countries. • Joint ventures to increase market share in international market. • The inflation in US market diverts the customer from buying expensive products towards cheap products. A lot of retail organizations are leaving out of business due to the drop in disposable incomes. This can help Wal-mart by growing its customer base due to the bargains that it can provide its customers. • Due to the cheap rate that the organization is able to buy its products from suppliers, it is able to provide customers with even better bargains to give confidence them to shop at Wal-mart. Threats (T) • Regulation of Wal-Mart pharmacies • Small towns do not want entry of Wal-Mart • Bad media exposure for Kathie Lee Brand • Variety of competition nationally, regionally and locally • Substitute products more easily because of intense competition Wal-Mart is criticized several times by community groups. • The competitors are gaining control over International Market. • Being a worldwide retailer means that you are uncovered to political troubles in the countries that you operate in. Coop Mart and Wal-Mart have very different strengths and weaknesses. Therefore, their opportunities and threats are also different. 3/Supply chain management One of the most important aspects of every retailers is their supply chain management. How they choose their suppliers, how they use supplier strategies, how they manage the supply chain, etc greatly affect their success. Sometimes, it’s the most important thing to consider.
We will clarify some significant supply chain aspects of the 2 retailers by answering these questions. Who are their suppliers? Coopmart: many of their suppliers are Vietnamese manufacturers. They have over 1000 suppliers. Their suppliers must have ISO 9000 or similar certificates. Some of their important suppliers include: Bibica, Vissan, Pepsi Co, D? u Tu? ng An, D? H? p H? Long,etc [pic][pic][pic][pic][pic][pic] Walmart: their suppliers all over the world with wide varieties of products. However, they preferer local and regional suppliers. Some of their big suppliers include: Alberto-Culver Company, B Foods In, Cal-Maine Foods, In Central Garden & Pet Co, Church & Dwight Co. , Inc, Cott Corporation (USA), etc [pic]
What is their percentages of investment in supply chain management? The revenue of Walmart was 600 billion dollars, they invest 7% of that money to supply chain and the revenue of Coopmart was 450 million dollars with 0. 4% investment on supply chain. We can see Walmart invest a lot on their supply chain management and that is one of the important factor contribute to their success. On the other hand, the development of supply chain in most Vietnamese retailers is in the early stage. They often lack efficiency, cost quite a lot of time to operate. Coopmart is in the same situation. However, Coop Mart’s supply chain quality is improving. How their supply chain management aspects differ? : aspects |Wal-mart |Coop-Mart | | | | | high quality with reasonable price | | | |Supply demand at lowest possible cost |suppliers | | | | | | | |Supplier’s goal |Respond quickly to changing requirements and |good long term relationship and | | | |demand. |sustainability. | | | | | |suppliers | | | | | | |Select suppliers primary for cost |Vietnamese manufacturers are priority | | | | | | | |Primary suppliers selection |Local suppliers are preferred. |High quality and trusted suppliers | | |criteria | | | |Size of their showroom |Large size |Medium size | | |Customers mainly buy because of the cheap |Customers find convenience, good-quality | | |prices. goods, not the cheapest prices | | | | | | | | | | | | | |Characteristics of customers | | | | |Customers not in rush.
They often have time |Customers often in rush, they choose the | | |to choose the cheapest goods. |nearest stores which have wide variety of | | | |goods, especially food products. | | |Customers find the cheapest deal. |Customers are ready to pay for convenience | | | |and good quality products. | How they reduce supply chain risks? Wal-Mart: They have suppliers all over the world.
Though Wal-Mart may have been the top customer for consumer product manufacturers, it deliberately ensured it did not become too dependent on any one supplier; no single vendor constituted more than 4 percent of its overall purchase volume. By having many suppliers, they reduce the risks of lacking goods and also provide a wide variety of products. They prefer to use local and regional suppliers. By that, they reduce the tariff cost and transportation cost. It also reduce the risk of delaying, embargo, broken products during transportation, etc. Coop Mart: They have over 1000 suppliers. However, they always guarantee their suppliers are always trusted suppliers.
By that, they reduce the risks of lacking goods and also provide a wide variety of products. Moreover, they have some of their own supply sources. For example: they have some farms to supply agricultural products for them and even some manufacturers which have Coopmart as their brand-name. By doing that, they can ensure the quality and quantity of some essential goods sources and eliminate the risk of lacking their essential goods from suppliers. What are some of their supply chain strategies? Coopmart: They have many suppliers (over 1000 suppliers). However, they divide suppliers into strategic suppliers- which have close relationship with them and Frequently used suppliers.
These firms must surpass a strict quality check to become Coopmart’s suppliers. Their Strategic suppliers include: Bibica, Vissan, Pepsi Co, D? u Tu? ng An, D? H? p H? Long,… They are all famous brands in Vietnam and Coopmart create a long term relationship with them. Coopmart aslo have some of their own supply sources. Walmart: They have many suppliers. They use their power of purchasing and other means to make sure their suppliers sell goods for them with the lowest price possible. Wal-Mart emphasized the need to reduce purchasing costs and offer the best price to the customer. The company directly procured from manufacturers, by passing all intermediaries.
How do their supply chain models differ? Coopmart This model below show how Coopmart responds to buying goods requests and returning goods requests from customers: [pic] Wal-Mart Walmart responds to demand by these steps: 1. Demand of product X raise 2. Each box of X has an RFID tag. Self mounted scanners alert the stockroom of urgent need for restock 3. Walmart’s inventory management system tracks and links its in store stock and its warehouse stock, prompting quicker replenishment and providing accurate real time data 4. Walmart’s systems are linked to the X supply chain management system. Demand reported by RFID tags are visible thru the supply chain 5.
X logistics software tracks its trucks with GPS locators, and tracks their contents with RFID tag readers. 6. X suppliers also use RFID tags and readers on their raw materials to accurately forecast demand and production. (source: Operation Management by Jay Heizer) We can clearly see Wal-Mart use an advanced technology system with Radio Frequency ID tags (RFID) and most of the job is done by computer. Therefore, their efficiency is high. In Coopmart model, we see that most of the work is done by human. As a result, their efficiency is lower than Wal-Mart. Moreover, this process makes forecasting future demand harder. What is their relationship with suppliers?
Relationships Coopmart to suppliers: Win-Win relationships. Coopmart tend to create a long- term relationship with their strategic suppliers and create mutual benefit between them. Walmart to suppliers: Win-Win relationship with big suppliers. However, in many case, Wal-Mart use their purchasing power to make some suppliers sell products for them with very low price. Thus, they harm these suppliers. Their relationship turns to Win-Lose with these suppliers. Information Walmart share information about POS, forecasting, inventory to their supplier to improve efficiency. Coopmart shares this information only limitedly to their supplier. Intemediaries
Both of them buy goods directly from suppliers. No intermediaries involve. For example, the source of supply the Co. op Mart Chain carefully chooses to sell to its customers is directly purchased from Phan Thiet fish fresh market, Dalat safe and clean vegetables, vegetables from Dinh hamlet of Cu Chi district, Hung Phat vegetables, Sao Viet vegetables, etc 4/ Human resources strategy and Motivation Wal-Mart One of the basic activities that lead Wal-Mart to successfully manage its people is motivation. Wal-Mart takes all of its effort to make employees feel like they are part of the company because they are sources of new idea for Wal-Mart to grow.
This company motivates employees in many different ways in order to prove that the company is not only care about profit they can gain from employees but also employees’ crises. Below are some of their motivation strategies: Wal-mart uses the term “associate” instead of “employee” because it can make them feel more engagement with the company. Employees from all levels are called by their first name. Their first name is displayed on the ID badge so that manager can call them by their first name. It creates a family-oriented business instead of boss-oriented one. Wal-Mart also encourages people through health care benefit and financial benefit. All associations at Wal-Mart and their immediate family can get a health insurance at a very low price which includes primary doctor, pharmacies, vision, and dental
Wal-Mart has policies to share profit for their associations (employees), selling stocks for them at discounted price. They also have a cash incentive plans for employees. As a result from all of these motivations, Wal-Mart has created an exciting environment workplace with respect, prospective, and value. Beside emotional motivation, Wal-Mart also provides educational motivation via many training programs such as technology, leadership, and management to all of it associates. We can recognize that Wal-Mart successfully satisfies most of the Hygiene factors and motivation factors in Herzberg theory. Thus, we can say that they are using their Human Resources strategy effectively. Co. op Mart
It can be said that the success of Saigon Co-op is to appreciate the power of the collaboration. Currently, the total workforce of Saigon Co-op is about 7,000 people. In particular, young labor force directly accounted for more than 80%. Labor productivity in 2008 of the City Trade Cooperative Union (Saigon Co-op) increased 17. 8% over the same period last year, salary, bonuses of the employees here are always concerned to ensure that the average income increased from 15% to 20% per year. That fact show that Co. op Mart’s human resources quality is increasing. Below are some human resources strategies that Coop Mart use to make that happen. The work of the personnel and policies for employees every year has a lot of positive changes.
The training, recruitment and staffing is increasingly focused on quality. In Co. opMart in local areas, except from the key staffs increasingly appointed by the Saigon Co-op, the other staffs and professors are all fixed employees. The development of the system Co. opMart not only solves the jobs issues for workers but also helps the seasonal labor force whom mainly are students to gain much knowledge, experience, additional learning from practice. To maintain their position and develop, the Board and General Director of Saigon Co-op boards focus on treatment policies to attract and retain a number of their workforce with higher qualifications. With the guidelines bove, major labor force of Saigon Co-op is gathered from many different sources of training. To improve the skills of professional staff and employees, recently, Saigon Co-op has established Training Center for further professional training for employees. In addition to raise the professional level, workers are encouraged, supported a lot from their units, such as arranging reasonable working hours, financial supports (for high school students: 100% tuition assistance; for college students: 50% support) because 80% of their labor force is young workers. Board of Directors of Saigon Co-op mainly focuses on improving quality and strengthening the management team.
Staff – employees have a university degree will be one extra 100,000 VND / month. Each manager is encouraged to participate in professional training programs in order to improve the professional skills, especially foreign language (the staff will be funded 100% when being sent to study culture, foreign language, business in domestic and foreign). Coop Mart has a very good human resources strategy that focus on training and supporting worker’ lives. It’s much like WalMart human resources strategy but it’s conducted in different ways because the culture and condition of 2 firms in 2 countries are different. 5/ Ethical issuses Coopmart: Coopmart is a Vietnamese firm.
The goal of this firm is not only make profit, but also contribute to Vietnam development. Coopmart has done many good things to Vietnam economy. They cooperate with government to follow the movement “Vietnamese use Vietnamese’s goods” very actively. Their suppliers are mainly Vietnamese firms. It encourages the development of Vietnamese economy. They also help Vietnamese agriculture develop by building effective farms and hiring farmers. Their products are high standard because they choose suppliers carefully. Therefore, customers can ensure their product is good for health. Wal-Mart: Walmart can do everything to reduce cost and sell products at cheapest price. To do so, they cause a lot of ethical issues to consider.
Firstly, they conduct a policy of buying more and more of a supplier’s output. Thus, their purchasing power to that supplier increases. Therefore, they can manipulate their supplier’s price of goods. They make some manufacturers go bankrupt because of that policy. Vlasic is an example. Secondly, a lot of researchers show that Wal-Mart are using high labor exploitation to reduce prices, especially in Asia. Wal-Mart makes other suppliers reduce their prices to the lowest possible by many harsh methods: low payment for workers, hiring children to work for them, etc.. For example, in Chong-Won- a Korea supplier of Wal-Mart, a workers may need 40 years to raise their salary by 1 dollars per day! III/ Conclusion
Coop mart and Walmart have many differences in these criteria we’ve discussed. Each firm has their own strengths and weaknesses. However, both firms have something to improve. Supply chain management is one of the weaknesses of Co. op Mart, as well as other Vietnamese retailers. They should learn something from how Wal-Mart operates their Supply chain- which is the best supply chain in the world. In turn, Wal-Mart is meeting some ethical issues which may affect the company’s image and may affect the company in long-run. They should consider these isusses to avoid these problems. In the perspective of Vietnamese people, Our group hopes that Co. p Mart will improve and become an international-standard retailer in the future. Group 9, This is a very good project and you have addressed the questions very well. I liked the good research you did to cover the various questions. Good work by all. Well done, Noel A- N. B. All red text is to be changed and all shaded text is to be deleted. References: Operation Management book by Jay Heizer www. saigonco-op. com http://idgcentral. vn http://vietbao. vn/Kinh-te/Wal-Mart-dem-lai-dieu-gi-tot-cho-chau-A/30209809/87/ http://walmart-thekeytosuccess. blogspot. com/2007/11/strategy-for-managing-people-resources. html http://www. mba-tutorials. com/marketing/277-wal-mart-swot-analysis. html