It seems apparent from the facts in the introductory case that Wal-Mart’s managers must focus heavily on planning in order for the company’s low-price strategy to be successful. Such a process should help determine issues such as what inventory must be purchased to meet demand without waste, when orders should be placed, where merchandise should be stored to promptly meet demand, and how employees can efficiently move inventory onto the shelves as customers buy the items. This process should also focus on how to maintain the quality of Wal-Mart’s service.

Because of the many related benefits of planning, Wal-Mart’s managers should make certain that the planning process is thorough and comprehensive, one particularly notable benefit of which is the probability of increased profits. To gain the benefits of planning, however, Wal-Mart’s managers must be careful that the planning function is well executed and not overemphasized.

Wal-Mart management should also keep in mind that planning is the primary management function. Thus managers should not begin to organize, influence, or control a system until planning for the system is completed. Planning is the foundation on which all other management functions at Wal-Mart should be based.

Managers like those at Wal-Mart should use their planning process to produce a practical plan for their activities. The process of developing this plan should consist of six steps, beginning with a statement of an organizational objective to successfully design the plan and ending with guidelines for putting the new plan into action. In this case, the ultimate organizational objective involves refocusing the company to build on its historical strengths.

Planning at Wal-Mart, as at any other company, begins with a statement of organizational objectives, the targets toward which the overall organization is aiming. These targets should be consistent with the purpose of Wal-Mart, the reason the company exists. Objectives for a company such as Wal-Mart normally include profit targets, service quality targets, and social responsibility targets. Other organizational objectives would normally focus on market standing, innovation, productivity, and worker performance and attitude. Overall objectives for a company such as Wal-Mart should be of three basic types: short-term objectives to be achieved in a year or less; intermediate objectives to be achieved in one to five years; and long-term objectives to be achieved in five to seven years. Additionally, Wal-Mart and similar companies would normally develop a hierarchy of objectives so that individuals at different levels of the organization know what they must do to help reach organizational targets.

Planning for Wal-Mart’s activities such as Black Friday promotions and logistics efficiency should emphasize how to implement activities to help reach various organizational targets. Overall, Wal-Mart’s planning, as it pertains to these and other business activities, should focus on enhancing the accomplishment of its short-term, intermediate-term, and long-term objectives that exist throughout the company’s hierarchy of objectives.

Planning activities at a company such as Wal-Mart tend to be more valuable the greater the quality of the organizational objectives. To increase the quality of objectives at Wal-Mart, managers can take steps that allow people responsible for attaining objectives to have a voice in setting them, that state objectives as clearly and simply as possible, and that pinpoint the results expected when the objectives are achieved.

Management at Wal-Mart might be so committed to managing via organizational targets that MBO becomes the primary management approach within the company. Such an approach would involve Wal-Mart’s management monitoring the progress workers are making in reaching established objectives and using rewards and punishments to hold workers accountable for actually reaching the objectives. An MBO program might be advantageous to Wal-Mart because it would continually emphasize what needs to be accomplished to reach organizational targets. On the other hand, an MBO program might be disadvantageous to Wal-Mart because the process itself can be time-consuming.

One of the planning tools available to Wal-Mart management is forecasting, which involves predicting future environmental events that could influence the operation of the company. Although various types of forecasting—such as economic, technological, and social trends forecasting—are available, Wal-Mart’s managers would especially focus on sales forecasting, because it predicts how high or low sales will be during the time period managers are considering.

To forecast sales, Wal-Mart’s management could also ask its store managers for opinions on predicted sales. Although the opinions of such individuals may not be completely reliable, these people are closest to the market and ultimately make the sales. Wal-Mart might also use the jury of executive opinion method by having its executives discuss their opinions of future sales. This method would be quick and easy to use and, assuming that Wal-Mart executives have a good feel for product demand, might be as valid as any other method the company might use.

Finally, Wal-Mart’s management could use the regression analysis method to analyze the relationship between sales and time. Although this method takes into account the cyclical patterns and history of sales, it also assumes the continuation of these patterns into the future without considering outside influences such as economic downturns, which could cause the patterns to change.

Because each sales forecasting method has advantages and disadvantages, managers at Wal-Mart should carefully analyze each method before deciding which method or combination of methods should be used.

Scheduling is another planning tool available to Wal-Mart management. It involves the detailed listing of activities that must be accomplished to reach an objective. For example, Wal-Mart uses schedules to plan how many employees will be needed to work in each store during specific time periods. When employees arrive at work, schedules tell individual workers which checkout line to work in or what items to restock. Sophisticated scheduling software also helps Wal-Mart plan the timing of deliveries to each of its warehouses and stores, with the goal of keeping items in stock at the lowest possible cost.