As "the world's largest retailer and the world's largest company with more than $312 billion (USD) in sales annually," Wal-Mart is a force to be reckoned with in the retail world (Vargas, 2008). Not surprisingly, a company that large and profitable can attribute at least some of its success to strategic control mechanisms such as price, communication, power, and trust (Nevin, 2007, p. 3). Control mechanisms are "strategic variables for managing ongoing channel relationships" and "serve as 'key building blocks' for organizing exchanges between channel members" (Nevin, 2007, p. 4). As such, they are a vital component of Wal-Mart's internal relationships with its employees and its external relationships with its customers, as well as an indicator of the health of its supply chain and organizational culture. Therefore, the effectiveness of these control mechanisms is important, and the positive and negative reactions to the use of these controls are highly relevant. At a fundamental level, control mechanisms even impact the four functions of management.
The types of control mechanisms used at Wal-Mart include price, communication, power, and trust. Each of these in itself is a potent force for exerting control within the company, but a comparison and contrast among them shows that they have differing levels of influence and impact. Price is Wal-Mart's primary control mechanism for attracting customers and keeping its competitors at bay. Wal-Mart's "low price guarantee" is a promise to match lower prices of competitors, but it "shouldn't be dismissed as a marketing catchphrase" ("Low price guarantee," 2006; Vinjamuri, 2005). Wal-Mart's low price guarantee "can save a family over $2,000 a year compared to shopping at higher priced alternatives" ("Low price guarantee," 2006). Shopping at Wal-Mart gives shoppers a higher standard of living at the same level of income, an advantage that makes price an extremely effe...