Similarly, one of my brothers works in the back office operation of a large financial services company. Over the years, offshoring and cutbacks in personnel have led to a gradual deterioration in the quality of customer service.
As with Wal-Mart, the de facto management strategy my brother sees with his employer is to cut and pare away personnel and costs until service begins to break down, then add back enough to remedy the breakdown.
Such an approach though risks long-term damage to a company's reputation and can cause workforce quality issues. When a wave of new people have to be hired on a rush basis, employee standards tend to be relaxed, leading to new employees who are slow to learn and adapt and troublesome in their conduct.
In addition, management that is mostly intent on cost-cutting tends to miss both new opportunities for growth and the rise of competitive dangers. Moreover, the potential for useful managerial innovations is often missed in the constant scramble for squeezing every possible nickel and dime of costs out of operations.
In effect, the constant corporate struggle to run more cheaply sabotages the prospects for growth through new markets and improvements in operations and service to customers. When stock analysts and investors realize that has occurred, they tend to back away from such a company, realizing that it has abandoned the effort to excel in favor of cost-cutting. Hence Wal-Mart's stock price tumble.
You wrote it more elegantly than I did, but I agree that many of US companies are going through this. Wal-Mart has been doing this for years and even my wife, who used to go there every week (usually more than once a week), now goes there less and less.
I may stop in Wal-Mart 3 times a year. Saving one dollar is not worth 30 or more minutes of my time. They CAN and COULD have afford to pay for the extra help and probably would have made more money, but they willingly choose a different path. Their cheapness is now starting to cost them and it will be much more expensive for them to reverse the trend now that the damage is done.
McDonalds is another example of crating their standards to make a buck. Almost any other chain with their troubles would have gone bankrupt by now. They are coasting downward of the past reputation.
McDonalds needs to do three things to reverse the trend.
1. Eatable food - Sad that they can’t figure this one out.
2. Service - It sucks and gets worse every year
3. Kill off hald the bloated menu and go back to selling what you are. You are a burger joint-not a health food store.