Strategic Plan

Strategic ManagementMarch 31, 2011

Brandon Luong Blair Crawley

Whitney WashingtonTyler WeaverCarter Whitelow

Table of Contents

Executive Summary………………….........................................3

Opportunities and Threats………………………………….….4

Marketing …………………..……………………………..........5a. Revitalizing the Wall Drug Brandb. Target Market Analysisc. Increasing the Amount of Customer Touch Pointsd. Advertisinge. Sales Promotion Strategiesf. Brandingg. Social Media Campaignh. Measurement of Effectiveness of Different Social Media Vehiclesi. Key Partnerships/Community Involvementj. Marketing Overseas

Operations…………………..……………………………………15a. Activitiesb. Constructionc. Strategy

Finance…………………..……………………………………….22a. Revenue Growth over the Yearsb. Threats From Rising Commodities c. Taking Market Share From Deadwoodd. Western Art Gallery Expansione. Leveragingf. The Cost of Landg. Feasibility of the Marketing Planh. Balance Sheet Examinationi. Expansion

Human Resources…………………..……………………………32a. The Peopleb. Internal Alignmentc. The Managementd. Customer Loyaltye. Key Values of Wall Drug

Closing…………………..………………………………………..41

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Mission Statement

Wall Drug specializes in Western themed attractions and apparel and bringing fun,

educational, and “once in a lifetime” type of experiences to every member of the family. The

focus remains in bringing together the community of South Dakota, developing our youth, and

giving those interested in America’s Old West history an experience that they will never forget.

Vision

To become a part of the fabric of America’s history and becoming the ultimate “must-

see” tourist attraction.

Slogan

“The experience you have yet to experience.”

Executive Summary

Wall Drug, Inc. has been established since the 30’s, and has gone through major changes

throughout the course of history in order to stay in the market. It was first known as a

pharmaceutical store, and eventually branching into a small theme park beloved by the residents

of Wall, South Dakota. This report contains recommendations provided by the Wall Drug

Consulting Group in terms of the marketing, operational, financial, and human resource aspects

for the company to strive for in the long run in the United States as well as in its global

expansion into Germany. The marketing portion will discuss rebranding, target market analysis,

and other marketing techniques. Operations will deal with enhancing the experience at the park,

construction of new buildings, and reasons for the chosen strategy to enter the international

market. Finance will address the 3 year plan of allocating the money at home and in the

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international market. Finally, human resources will discuss on ways of restricting the

organization, detailed job descriptions, and investment in employees.

Key Opportunity and Threat

One key opportunity for Wall Drug would be to expand into an international market,

specifically Germany in order to extend their brand scope, increase brand awareness, and

increase net profits. The key threat that prevents Wall Drug from reaching its full potential as a

tourist destination site is its brand awareness. Although Wall Drug attracts over two million

visitors a year, the actual brand recognition and potential for growth could remain stagnant if

certain measures and precautions are made. In order to overcome this threat, Wall Drug needs to

position itself as a niche market and invest time in redoing its marketing and operations

activities, so as to set themselves apart from their competitors

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Revitalizing the Wall Drug Brand

This drugstore was not prosperous at all until the founder’s wife, Dorothy, came up with

the idea of putting signs along the interstate, instructing people to stop in for free ice water. The

next innovative advertising blitz came when South Dakota servicemen and other friends had the

idea to put up Wall Drug signs overseas. Eventually, Wall Drug signs were placed all over the

world. These signs led to news stories and publicity that further increased the store’s visibility.

Even though money has not really been spent on other forms of advertising, their original efforts

in creating awareness will serve as the backbone to this new advertising campaign which will

focus on increasing awareness of the Wall Drug brand, as Wall Drug is unknown to many due to

its geographic location as well as its lack of a web presence.

Current marketing and advertising efforts have been limited to mostly signage displays

placed in different geographic areas, billboards placed along Interstate Highway 90 in the city of

Wall, their company website, and word of mouth. Depending on these outlets alone will not

bring about more customers, will not help bolster Wall Drug’s competitive advantage against

other competitors, will not help in creating top of mind awareness, and will thus keep Wall Drug

the well-kept secret that it already is to most people. With this is mind, our marketing objectives

are to create a better web presence by increasing the amount of traffic accessing and viewing the

Wall Drug page and other related social media sites by 20%, to better search engine optimization

to establish key associations with tourism and Old-West related websites, to establish key

partnerships with cause-related programs and initiatives, to further develop an attractive student

Marketing

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recruiting marketing plan in order to increase the amount of student workers, and to expand into

a foreign market to extend the realm and scope of our brand presence by 2014.

Target Market Analysis

Wall Drug was founded as a “family institution,” with three generations of family

members involved in running and managing the

daily operations of the attraction site. With this

foundation of family being at the forefront, Bill

Hustead, the current CEO and President, would

like to create an experience that makes Wall

Drug a part of the “entertainment business,” in

which the attraction can cater to the entire

family, as well as adults who have a more refined taste for Western-themed art and memorabilia.

As seen above in Exhibit 1, according to a site traffic analysis conducted by Quantcast, the

visitors who visit the Wall Drug website are predominantly Caucasian, have a college education,

and range from the ages of 35-50+.1 Based on this information, Wall Drug’s target market as

defined by both the founder of the company as well as the actual visitors who are interested in

the attraction include families with either no kids or at least one child, adults aged from 30-50

years old who are traveling through the Badlands area, who are looking for new and exciting

experiences that are both educational and entertaining, and who are also interested in nostalgia,

history, and memorabilia pertaining to the Old West. This Old West segment of Wall Drug’s

clientele will be turned into a market niche, where those people interested in Western-American

Exhibit 1

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and Indian-American culture and art will serve as the prime target of who Wall Drug wants to

attract to the part of the company that sells Western clothing and art.

Increasing the Amount of Customer Touch Points

Our first plan of action is to focus on increasing awareness and reaching the target

audience that Wall Drug caters most of its attractions to. This will be done by first investing in

the research of the products and services that are offered and making sure that they are what our

customers want, are being updated to reflect current trends, and are consistent with the overall

image and style that Wall Drug wishes to portray. To find out what our customers are interested

in, we have to engage in social listening, where we can learn what our customers are saying

online about the company and the goods and services that are being offered. There are many

different blogs and Web pages pertaining to the Old West, traveling, and tourist destination

spots. One way to begin is by observing customer reviews and ratings. One particular blog, “The

New West Blog,” would be an ideal starting point to gather customer opinions, regarding trips

made to Wall Drugs and items purchased there. By engaging in conversation with the consumer

and encouraging responses and feedback on anything dealing with Wall Drug, Wall Drug will

continue to be talked about and that is what is to be desired. Investing into our social media

campaign will come afterwards, as we need to make sure that what our brand has to offer and

how it is being offered are up to customer standards and are the best allocations of money. In

order to make these changes, the most effective tool to use in this process would be to collect

customer information to form a database. Information will be taken from online store purchases,

the number of different coupons and promotions that are used, the frequency of their usage, the

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buying habits of customers during the peak season and off season, and how to tailor messages

and promotions to the specified target groups. Over 40% of the business conducted at Wall Drug

deals with repeat customers so by using this database, we will not only get a better look at the

target audience and better refine who we send our messages to, but will also help to stimulate

repeat purchases, create customer loyalty programs, and allow for cross-selling of numerous

items.

By increasing the number of touch points where customers and non-customers receive

information and the ways in which customers receive information, Wall Drug will be able to

infiltrate their target market and tailor specific information to each segment with more relevant

content and will be able to understand their customer types. A mobile coupon strategy will be

implemented, where customers will be able to receive mobile coupons and information on events

and specials that Wall Drug may be hosting on either their cell phones or the website. An Itunes

application will also be created to further engage the customer or tourist who is looking for key

information regarding Wall Drug on the go. The application will include interesting facts,

regarding Old West history, a pharmacy section with a barcode reader for prescriptions, games,

and ringtones available for play and purchase.

Advertising

The company’s signage is a symbol of its traditional advertising efforts; it is

recommended that it be used on the Internet in the same form of display ads. Display ads are

advertisements consisting of mainly text, logos, photographs and maps. We could take

photographs of intriguing items in the store, and use them in display ads to attract customers.

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We could also display the map of our store to show that we have a complex offering of items.

Google, Yahoo, Shepler’s, and Cavender’s are a few websites that we would like to advertise on

to display our advertisements. Google and Yahoo are popular search engines actively used by

the Internet community. We think that these sites would be beneficial to advertise on because of

the heavy amount of internet traffic they possess. We would also use display ads to attract

people to Wall Drug as a tourist destination. We also believe that since search engines are the

most widely used internet tool among Internet users, both experienced and novice Internet users

will be targeted. Shepler’s and Cavender’s are two popular websites that sell western apparel.

Since the current theme of Wall Drug is primarily “Old Western,” we could attract families, kids,

and old-west enthusiasts to merchandise held within our store and online store as well as

attracting them to Wall Drug as a tourist destination.

Sales Promotion Strategies

Another recommendation is to offer on-line and traditional promotions, coupons, and

Groupons. Promotions could be geared toward tourists en route through South Dakota to Black

Hills-Mt. Rushmore, Badlands National Park, and Wind Cave National Park. Along rest stops

would be a prime area to utilize this marketing strategy. We could bring in clientele by offering

discounts on a variety of items that we sell in house and discounts at our restaurant in further

attempts to get people to stop at our attraction. Wall Drug needs to be looked at more as a tourist

attraction rather than a rest stop. On-line promotions through the use of display ads could

welcome tourists to stop at Wall Drug inform them that we are more than just a drug store and

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that we offer multiple selections to our company with an extensive assortment of wacky western

gear, an art gallery, guest house, museum, and more to keep our guests entertained. Groupons

could be used to increase traffic flow to Wall Drug by offering a discount incentive when a

minimum number of users is met to rent a room at our proposed franchised hotel, Best Western.

This would be geared toward groups traveling and looking for tourist destinations in the Mid-

West.

Wall Drug should also attempt to get an in-person radio interview or ad spot on a

culturally similar show such as the John Boy and Billy show. We should further attempt for the

show to be broadcasted in South Dakota. This would be a crucial opportunity for our company to

get the publicity it needs from stable radio-listeners. This would be a low cost method of

advertising with high appeal.

Branding

In order to effectively convey the image of Wall Drug while also maintaining the

humorous appeal that has been made known in so many of its billboards and signage displays,

Wall Drug should implement the help of a third party advertising agency to take on the creative

marketing responsibilities, as Wall Drug has not really invested in any other advertising efforts

other than the billboards and signage displays. “Gerardot & Co. is a boutique creative agency for

branding and marketing cities, hospitality and tourism destinations.”2 Their clients include

LynxAir International in Florida, Nature Vacations in Costa Rica, and the Indianapolis Zoo in

Indiana. This creative agency will provide professional help in creating a brand identity design

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(logo) and will help in creating an advertising campaign that will target Wall Drug’s specific

target market.

One of the other plans in branding is to use an individual to endorse the attraction. This

individual will be able to speak to the history and Old West attractions while consistently

maintaining the entertaining aspect of the Wall Drug brand. Bob Barker was born in South

Dakota and “has also had the second-longest run as the host of a single broadcast show, as well

as the oldest man ever to host a television game show, and the oldest man ever to host a weekday

television program since the inception of American network television.” Mr. Barker is able to be

booked for this type of endorsement deal. This individual will also serve as the association

between the brand of Wall Drug and the tourists that visit Wall Drug. This individual will be

used on the Facebook page, the Wall Drug website, and the Itunes application so that every

single aspect of the marketing campaign will remain integrated and consistent. There are also

plans to create a new and improved logo, where the customer will be able to see and experience a

new physical difference that they can associate with the attraction site. This new logo, in

conjunction with the improved website that has increased functionality, physical appeal, and an

interactive user interface will give website visitors ease of use in accessing the website and

graphic appeal that will keep visitors engaged and interested.

Social Media Campaign

Before Wall Drug begins their social media campaign, every effort has to be made to

ensure that whatever is being offered as far as food, products for sale, and attractions are up to

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customer standards; if not, the social media campaign will be ineffective in communicating the

value of our attraction’s experience over other competitors’ experiences. After all of this

information has been compiled, then we can proceed with the social media aspect and further

engage our audience through a variety of different marketing tools. The original intent of the

advertising efforts was to remain light-hearted and comical in its delivery. With the use of an

individual to endorse the brand to recreate the humor that Wall Drug boasted of in its prime, we

hope to create a viral campaign that will spurn excitement and interest in what Wall Drug has to

offer. Wall Drug currently has a Facebook page but does not have any features that aggregate

information together to make it easier for the visitor to access, such as family history or what

attractions are available. Adding information about the family history and employees would be

beneficial so that people visiting their Facebook page would be informed that the business has

been family owned and operated since 1931.

Measuring the Effectiveness of Different Social Media Vehicles

On-line advertising on news/informational/ media sites and search engines such as

Google or Yahoo using display or banner ads will be used with multiple ad formats. The

effectiveness of these ads could be measured with pay-per-click (PPC) or through search engine

optimization (SEO). Our advertising agency will be focusing on helping us with search engine

optimization, as the words that are most associated with finding out about Wall Drug need to be

used in such a manner to optimize our search results. There are a number of different search

queries that are used quite often that automatically are associated with Wall Drug, with “cowboy

boot spurs” having the biggest QCI (Query Competitive Index) out of these relevant search

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terms, which shows the number of

advertisements that are typically displayed

when this search term is entered into a search

engine, with higher numbers meaning more

competition for advertisements, as seen in

Exhibit 2 to the right, 4 In using this

information alone, Wall Drug needs to position their brand to the search terms that are entered in

most often as well as advertise where the most people will see their brand.

One of the internet advertising models we would like to use is a flat-rate pay per click

model. This allows our company to advertise on various websites while only paying the host

company a flat-rate when a Wall Drug ad is clicked on. This efficient way of advertising will

allow a cost to be incurred for our company only for interested customers and clientele.

In advertising with Facebook, “if you choose a CPM model, you will bid on how much

you are willing to pay for every thousand impressions (views) of your ad. In both cases,

Facebook will display your ad in the right-hand Ad Space. The amount you are charged will

never exceed your daily budget.” In order to effectively reach our target market, we will use a

cost per thousand model. “CPM advertising is usually more effective for advertisers who want to

raise awareness of their brand or company,” 5 with a budget set at $10/day with $1.20 USD CPM

for Facebook ads. We will continue to monitor changing bid prices, so that the advertisements

will be able to reach and capture our specified target audience on an ongoing basis.

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Key Partnerships/Community Involvement

Recruiting students has presented itself as a difficult task, as students are not familiar

with the existing area surrounding Wall Drug. Wall Drug’s foundation lies in its family roots and

heritage. This company prides themselves on the people that work behind the scenes in order to

keep providing the experience of both educating while also entertaining. With the clear focus

being on the people that are employed and the people that are being served, Wall Drug needs to

continue that lasting impression of family and values by stressing the importance of youth. The

Boys and Girls Club of America strives to develop youth into productive adults by focusing on

providing the following: “A safe place to learn and grow...Ongoing relationships with caring,

adult professionals... [and] Life-enhancing programs and character development experiences...”

Hope and opportunity.6 With over fifteen Boys and Girls clubs in South Dakota, Wall Drug can

become a part of the cause by starting out with market promotions, by making certain events

youth-related and slowly working their way up to becoming a strategic partner with the Boys and

Girls clubs. In doing this, Wall Drug will be able to show to the surrounding areas as well as to

the general public their interest in further developing and helping the youth who come to work at

Wall Drug. Another key partnership that would be beneficial to the growth of Wall Drug would

be the Expedia Affiliate Partner Program. Expedia.com is rated as the top online travel agency

and when compared to other major travel destination planning websites, such as Orbitz,

Travelocity, Hotwire, and Priceline on Alexa.com, a web information company that supplies

facts, statistics, and rankings on different web sites ranks Expedia as number one in both the

number of page views on a daily basis, the amount of people that are reached, and the amount of

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daily traffic to the website.7 Partnership is free of charge; links, banner ads, etc are sent via email

and commissions are received on a monthly basis based on the amount of actual transactions

made.8 By partnering with Expedia, Wall Drug will be able to offer a coordinated solution for

the traveling consumer that will be made available on the website, making Wall Drug the one-

stop shop for all of its traveling consumers’ needs. This opportunity will also create more word

associations between Expedia and Wall Drug, thus increasing the amount of people that may be

exposed to Wall Drug’s website and any another related sites. Along with the proposed

partnership with Expedia, Wall Drug should be able to offer lodging arrangements and this will

be done through a franchising opportunity through Best Western hotel, based off of their

demographics and price ranges. This will also be offered on Wall Drug’s websites to customers

who wish to make travel arrangements online.

Marketing Wall Drug Overseas

The second key opportunity that Wall Drug should take advantage of is in entering a

foreign market. Wall Drug has been witnessing increased sales but in order to gain increased

profits, Wall Drug needs to establish themselves in another country to gain both national and

international interest in the brand and fulfill the need for an attraction of this kind “…From 2009

to 2010, spending on personal travel & tourism is expected to have recovered somewhat, with an

increase of 1.6 percent. This increase still, however, lags significantly behind global GDP

recovery which is 4.7 percent, according to the International Monetary Fund (IMF) October

2010 World Economic Outlook.” 9 With the tourism industry rebounding back with increasing

numbers in spending, Wall Drug should take advantage of this key opportunity and expand to

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further legitimize their brand in the eyes of America as well as internationally. Another key trend

that characterizes the tourism industry is that there is “no growth in western hemisphere markets:

Western Europe and North America represented 70 percent of total global personal spending on

Travel & Tourism in 2000, but this share decreased to 62 percent by 2010, an average annual

decline of 1 percent (North America) and 0.7 percent (Western Europe) based on real terms. This

trend has been accelerated by the greater price sensitivity of travelers who get used to seeking the

best bargain when it comes to private consumption of any kind.” 10According to the Travel and

Tourism Competitiveness Index Report, the two highest ranked countries in the tourism industry

are Switzerland and Germany. Between the two countries, Germany exhibits the best potential

for international expansion, due to the nature of both its infrastructure and interests in World

Cultural sites, specifically Old West history. “The country is characterized by abundant cultural

resources, ranked 6th worldwide for its 32 World Heritage cultural sites, 2nd for the number of

international fairs and exhibitions held in the country, and 3rd for its creative industries. The

country’s infrastructure is among the best in the world, ranked 3rd for the quality of its ground

transport infrastructure and 7th for its air transport infrastructure.” 11 With over fifty theme parks

located in Germany alone, it can be deduced that Germany is among one of the top tourist

destinations that prides itself on remaining innovative with the number and type of attractions

that are offered in its country.

Germany’s history also serves as the qualifying factor in why Wall Drug chooses to

expand there. “Germans were among the largest ethnic groups to migrate to Texas in the 1800s,

and their influence remains pervasive in places such as Fredericksburg. Each fall, the town of

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New Braunfels hosts Wurstfest, a tamer and scaled-down version of Oktoberfest… Karl May, an

author little-known in the U.S. but famous in Germany for a series of Westerns he wrote in the

1800s, also deserves some credit. Though he never visited the U.S., his books sold millions and

created perceptions that persist today.”12 Michael Kimmelman of the New York Times stated the

following as it pertains to Germany and its interest in the Old West:

There are clubs, magazines, trading cards, school curriculums, stupendously popular

German-made Wild West films and outdoor theaters, including one high in the sandstone

cliffs above the tiny medieval fortress town of Rathen, in Saxony, where cowboys fight

Indians on horseback. A fake Wild West village, Eldorado, recently shot up on the

outskirts of Templin, the city where Angela Merkel, the chancellor, grew up. 13

As far as our advertising campaign is concerned, it will be adjusted accordingly, as it pertains to

Germanic tastes and cultural preferences. Wall Drugs wishes to maintain its original appeal, so

the signage displays that displayed “____miles from Wall Drug” will be implemented in

advertising. The Itunes Application will be modified to include more languages and more

activities that are culturally specific to the people who reside there. Strategic alliances and the

feasibility of this international expansion will be later explained in the financial portion.

Operations Overview

Operations

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Pushing the envelope is one of the founding principles Americans have always preached.

To take Wall Drug to the next level, it must continue to evolve its operations, better its

organizational structure, re-analyze its financial track, and improve its advertisement techniques.

In this particular section, the main focus will be on how Wall Drug can enhance its activities

with the construction of new buildings and ways to cut its costs in the manufacturing of its

products.

Activities

One highly effective strategy for driving traffic to theme parks is special celebrations

centered on holidays. For example, when amusement parks either market their Halloween theme

specials, announce the Oktoberfest, or advertise about St Patrick’s Day, people from all over the

states travel to their destinations in order to take part in the festivities. If Wall Drug wants to lure

in more tourists, then celebrating holidays and holding festivals will be a good step in acquiring

more revenue.

An example of how Wall Drug could accomplish this is if the company celebrated

Halloween by redecorating the entire park. The park would be decorated with cobwebs, jack-o-

lanterns, roads filled with blood and scary paintings throughout the streets. Another attraction

that is entertaining for both customers and employees would be if employees dressed up as

ghouls, monsters and demons, and scare the unsuspected pedestrians while hiding in hidden

areas. Mazes could also be constructed to attract the audience, and the employees could repeat

the mayhem as they did outside. The stores will be filled with special Halloween goods, like

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gummy eyeballs, chocolate newts, witches broom, and masks, and special theme cuisines in the

restaurants.

People love the holidays, so planning special events for those days would be prosperous

to Wall Drug if it capitalized on the holidays with extended time frames. Halloween could last

for a month while St. Patrick’s Day would last for a week, and high-profile events like the Super

Bowl could last for two weeks in Wall Drug. The theme park could hold a special festival

celebrating its anniversary hiring a vendor for carnival rides, serving special foods, and hosting

reenactments of key events in Old West American history.

Holding festivals and celebrating holidays would entice consumers to come and

experience the creativity of how Wall Drug can be diverse and offer a array of entertainment and

goods. The target market would flock to Wall Drug, not only during normal operations, but for

the exciting holiday attractions. Conducting festivals draws in a big crowd, which could lead to

customer loyalty since the consumers would want to come back throughout the year to witness

more festivals.

Construction

To continue on with the improvements in entertainment for Wall Drug, Inc., the

construction of several buildings would help obtain this goal. These new buildings will assist in

the tremendous task of gathering the entire family by making specific areas more attractive and

diverse for all the ages to enjoy.

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1) Stage

Wall Drug, Inc. would benefit from the construction of a stage that would serve two

purposes: special staged shows and for private rentals. One of the many things that attract people

to theme parks are when parks hold shows, such as SeaWorld, Universal Studios, King’s

Dominion, and Disney World. Since Wall Drug has a western, cowboy theme atmosphere, the

plays can be based on various ideas: cowboys versus samurais, cowboys against Native

Americans, old shootouts and even newer concepts of cowboys and aliens. The entertainment

value of this structure would entice the audience to come and watch the spectacular

performances produced by the entertainment department. The added bonus to having the stage

would be if people would like to hold a particular festival or fundraiser, they would have the

eligibility of renting out the stage and employees for the setup. When organizations look for a

new venue to hold fundraisers or a different idea to collect money, Wall Drug would be at the

forefront of their minds. There are many ways for Wall Drug to assist, such as allowing

organizations to conduct an event on stage or hold their own show. Also, there could be other

holidays Wall Drug are not familiar with, missed on the calendar, or conflicts with another

holiday, and that is when the organization can rent the stage and other parts of the park for their

festivities. For instance, let’s assume Wall Drug does not celebrate Lunar New Year due to lack

of information and conflicting with Valentine’s Day. That then that gives the opportunity for the

Chinese community to rent the space and hold the festival. It is even possible for us to market

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this event as to attract more people, and would assist in helping to rebrand Wall Drug and

allowing the customers to see that Wall Drug is culturally sensitive.

2) Casino

Another entertainment value to add on the long list of activities would be to construct a

casino and attract any person between the young adults and the elderly. Sticking with the Wild

West theme, it would be most fitting to have the casino’s appearance to be a saloon with old

style craps table, western theme slot machines, and old roulette tables. There will be different

slots machines and tables aimed towards people who want to spend different amounts of money.

Casinos are unique businesses that draw in various ages to participate in the fun, and for the

chance to win a large sum of money.

3) Bars

Whether it is after a person lost his life savings or while the person is rolling for the lucky

seven, a drink comes to many people’s mind in order to loosen up or a getaway. Casinos and

bars are excellent complements because they complete one another and cannot have a full

experience with only one of the asset. To complement the Wild West style, the bar will have

wooden tables, countertops, chairs and swinging gates.

4) Hotel

As Wall Drug expands into new areas with more amusement and attractions, it will get to

the point where people will need to spend a night at the hotel so they can spend more time at the

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park. Since there is a bar and casino at the park, the hotel would be a nice addition to the place

for those people who need a place to lay their head after a thrilling night at the tables and saloon.

The hotel will be part of the Best Western franchise due to the fact it has a well developed name

brand ensuring patrons the quality of Holiday Inn.

5) Pool

When staying at the hotel, a pool is always one of the perks tourists love when on

vacation especially during those hot summer days. Imagine a large pool where one can swim up

to a side bar and order whatever adult drink they desire, kids making cannonballs, and parents

relaxing with their favorite book. This small construction would simply give more style to Wall

Drug.

6) Laser Quest

With the old west theme as our delivery attraction, having a laser quest at the park would

be a necessity for the consumers to feel they are in the old west with laser guns. Not only would

the people be wearing the laser suits, but they will have the option to wear cowboy hats, boots

and chaps if desired. Laser Quest by itself is extremely fun for all ages, and adding that into the

activities can increase the excitement of attending the one-of-a-kind Wall Drug.

With all these added activities and events, Wall Drug will be made into a successful park

attracting people of multiple ages. Creating a magical place where anyone can have fun is a

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challenge, but it is worthwhile to bring in the smiling faces. These buildings will bring on a new

side of fun Wall, South Dakota that has never been seen before.

International Expansion

As discussed in the marketing portion of the paper, Wall Drug, Inc. will be expanding

into Germany as part of gaining a new source of revenue, and expanding the name abroad. This

section will discuss the strategy Wall Drug will implement when conducting overseas business

through strategic alliances and a transnational program.

Strategy

The safest international expansion strategy for Wall Drug based on their financial

position and brand reputation would be a strategic alliance with a host country in Germany.

There are many advantages for choosing this over creating a wholly subsidiary, franchising,

exporting and acquisition. Alliances are a great way to enter another country without going in

head first or placing all the capital into an unknown foreign investment. The alliance with

another country would enable Wall Drug to understand the target market better without having to

conduct a mass research, similar to how an acquisition or new wholly subsidiary would need.

Another added bonus would be that Wall Drug and the German company can split the resources

needed to establish the new park, and split the work equally so that both groups place in the same

amount of work. It also lessens the amount of expatriates needed compared to the green field

factories or mergers, and would not require extensive interviews to find many appropriate PCNs.

Even though integration of PCNs and HCNs along with USA mentality will be difficult, having a

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solid plan and strong negotiation skills will assist the company to push further with American

ideals at little resistance from the partner or its workers. Lastly, the partner company should have

an understanding of the general market better than Wall Drug since they are headquartered there.

The host country would know if there are permits and documents needed, and be able to receive

the permits more easily than the parent country. There would be no need of translation or

miscommunication between Wall Drug’s employees and the government officials since the

German partner will be the ones conducting this matter.

The way Wall Drug will operate its new park is by using a transnational strategy rather

than multi-domestic or global strategy. One reason for not choosing a global strategy would be

that those companies would be ethnocentric and would want every company to operate exactly

how it does in its own country. The problem with applying this to Wall Drug is that the service

and attraction might not be too attractive in the eyes of the Germans, and would only appeal to a

very low number. Being centralized and using the current theme in Germany would be asking for

failure and waste of resources. Next, multi-domestic would be too broad in terms of how the

subsidiary would operate, and decentralized to where Wall Drug, Inc. would not be able to

control it. This leads the company to use a transnational approach since it is a mixture of both,

bringing in the good parts of each. A trans-national strategy has all of the elements necessary for

the new park to succeed while giving headquarters the same power and position it experiences in

the USA. For one, the approach allows Wall Drug to use the same job description,

organizational structure, and other aspects of human resources to ensure the same career path as

24

its sister park. Although holidays are different in Germany, the operations and activities in its

core would still be the same, but with a twist to cater to the Germany population. For example,

the Germany park would support popular holidays, create festivals for the occasions, do the

same kind of work as if they were in South Dakota and operate according to the standards set by

Wall Drug. One perk of this strategy is this would allow the Germans to decorate the park to

appeal to the overseas market, use their German philosophy to influence the target audience and

set their own standards while abiding to our international rules and regulations. The standards

will be specific, but allow enough “wiggle room” for the partner to conduct business efficiently.

Examples of how these two ideas are implemented are as follows:

The new park will greet the visitors the same way one would expect when entering its

sister park in South Dakota, yet the scenery would be catered to the taste of the Germans

according to what the partner sees fit. The restaurants, activities and shops would still follow the

same format it would in USA, but be specific to what Germans would tend to purchase, its tax

system, and the style of the building. The organizational chart would be the same as in America,

but the marketing would mostly likely be altered to German appeal while reducing any

translation problems.

25

Financial Overview

Currently Wall Drug, located in Wall, South Dakota, has an interesting financial plan.

Their original revenue draw was free ice water and 5 cent coffee. Although it was feasible in

1936, their current strategy is to attract tourists heading to Mount Rushmore and the black hills

in the spring. Revenues have increased steadily in the small town establishment, growing from

$350 in the first month of business to a multi million-dollar firm by the 1970’s.

Revenue Growth over the Years

The revenue growth in Wall Drug over the years is partially due to their cost leadership

and their niche product line. However, the Hustead’s rely on superior marketing tactics to attract

tourists. Their first foray into signage came in the summer of 1936, and a trend was established.

The opportunistic signage drew tourists heading to Rushmore, as well as those heading for the

Black Hills. Signs were also posted in several unique locations around the world hoping to

branch the brand out in an international way. Although markups and margins were miniscule,

Wall Drug has seen a steady increase in revenue since this period. Free publicity in publications

such as Time and Village Voice made Wall Drug a household name and tourist Mecca. Their

ingenious marketing strategy took a hit when the Highway Beautification Act of 1965 was

passed, and their Income Statement took a minor hit. The signs that they were famous for had to

be moved back 660 feet from the highway. Although the Hustead’s won a major victory in

Federal court, signage that was removed during the initial stages of the law being passed had to

be reinstalled. By 1990, only 300 Wall Drug signs were still standing, most of them located in

Finance

26

South Dakota. This sign decrease seemed to not hurt sales much, as profits have still increased

since the legislation was passed.

Threats From Rising Commodities

Although the Highway Beautification Act did not affect the revenue to a great degree, the

Gas Shortage of 1979 did. The price of oil doubled, leaving Wall Drug’s tourists at home. Wall

drugs revenue decreased by 13% during this period. This is a very troubling sign for a ‘Rest

Stop’ business model. There is no way to predict a doubling in gas prices, so hedging was not an

option at that point. They were forced to incur a decrease in revenue. These factors lead us to

believe that Wall Drug needs to become more of a tourist attraction in and of itself, not just an

attractive rest stop.

Before the gas shortage, in 1971, Ted and Bill borrowed 250,000 over ten years in an

attempt to leverage for the first time. The project was the Wall Drug Mall, which resembled old

Western living. This was their first foray into the amusement business model. Capitalizing on

their Western niche and devotees to the culture, Wall Drug created a town that could draw

potentially more customers than ever before. However, the added debt cut into profits during the

down years of Wall Drug. This is one of the fears that come with leveraging; when times are

hard, you still have to pay the interest payments. This strategy of leverage worked well for the

firm until 1979, when Wall drug saw a decrease in Net Income of a shocking 83%. This could

have crippled more cash strapped firms, however Wall Drug was still able to survive. Our

recommendations entail Wall Drug maintain a constant cash balance of at least $100,000. This

27

would allow Wall Drug enough liquid assets to maintain their business without collapsing due to

interest expense.

Taking Market Share From Deadwood

When looking at the competitors and analyzing the dining and lodging establishments,

Wall Drug has a potential opportunity to capitalize on the tourists going to Deadwood.

According to the map of South Dakota, most of the traffic heading west to Mount Rushmore

must pass the Wall Drug location. Eating and lodging revenues are much higher in Deadwood.

This may be due to the limited betting casino that is located in Deadwood. During the winter

months, Deadwood is able to attract 10 times the revenue for lodging and two times the revenue

for eating. This is a disparaging number, especially since tourists must pass through Wall to get

to Deadwood from the east. During the winter months, Wall Drug must utilize their Christmas

in the West paintings to draw more tourists to the site during the winter months. The plan that

the Hustead’s have for the expansion, including the mansion, is well conceived. The cornerstone

of their financial stability for the first five years will depend on the success or failure of the

Christmas Art Gallery. Wall Drug must spend advertising dollars in travel magazines to alert the

public to the new Christmas attraction.

Western Art Gallery Expansion

Wall Drug is the quintessential year round destination for those looking for a Western

destination. The notoriety of the store reaches across the world, however their profits need to

reflect this. Our first key to stability is the construction of the Wall Drug Western Art Gallery

and guesthouse. This is going to be a plantation style three-story mansion draped in the

28

Hustead’s art collection. Not only is the art collection good for business in the winter months,

but it could also serve as a source of capital if there are problems with expansion costs. There

are several threats that come with investing in art, however. Artwork is not very liquid, which

could present a problem if immediate funds are needed to support expansion. Although pieces

can range in the tens of thousands of dollars, the beauty is subjective. It is very hard to

adequately value artwork. On the balance sheet, how is art appreciated and depreciated. Since

the proceeds from the mansion are proposed to go directly to the purchase of new art, Wall Drug

must devise a plan to always have 35 to 40 pieces of art.

According to Bill’s assessment, 40% of the business (approx.) is from repeat customers.

The repeat customers will not want to see the same pieces displayed year after year. I believe

that the artwork should be retained for a year, maximum two years, and rotated out. Market

research will be done to observe which works resonate with the consumer, and those pieces

should be retained. With the daily traffic in November through March averaging 2359, we

should assume conservatively that 1100 people could stop through the Art gallery during these

months. If Wall Drug charges $10 per person to enter the Art Gallery and take a guided tour of

the facility, they could generate an average of $11000 a month just from the tour alone. This is

an assessment just from traffic alone, so once more people know about the luxurious art in South

Dakota, the more revenue that could be generated. Some Western Fine Art has been known to

fetch as much as $120,000 at the Dallas Fine Arts auction. Wall Drug must use some pieces that

may become outdated, and auction them in Fine Art Auctions. They can also go to these

29

auctions and purchases pieces, with the assistance of a curator. The collection could not only

become the tourist destination for the winter, but also a valuable asset financially.

Western Art Gallery Expansion

One suggestion that our team would raise is to capitalize on the tourists going to the

Mount and the Badlands by offering lodging to the guests. Whether we want to build upon the

mansion style Art gallery that has guest rooms, or franchise the hotel is a key concern of the

team. Exhibit 3 shows a list of probable franchise opportunities and their costs.

Exhibit 3:

Economy

Total Initial

Cost

Total Royalty Cost

Total Reservation

Cost

Total Marketing Cost

Total Frequent Traveler Cost

Total 10-Yr Cost

% of Total

Room Revenue

Budget Host

US$5,000US$7

1,250US$12,000 --- ---

US$9

3,1500.6 %

Best Value Inn

5,000 93,000 --- 36,000 --- 136,400 0.9

Select Inn 10,000 383,086 17,053 153,234 7,994 721,752 4.7

Super 8 25,000 766,172 229,852 229,852 61,294 1,568,268 10.2

Travelodge

36,000 689,555 315,594 315,594 61,294 1,625,390 10.6

Days Inn 36,000 766,172 291,145 291,145 61,294 1,688,985 11.0

30

Mid-Rate Brands

Best Western

$61,000 $545,680 $292,000--- --- $

1,388,3332.8 %

ClubHouse Inn

 30,000 1,961,401 164,666 --- 69,943 2,226,010 4.5

Master Host Inns

6,000 1,961,401 --- 1,225,876 - 3,213,027 6.6

Baymont 50,000 2,189,056 980,701 1,225,876 196,140 5,199,436 10.6

Hampton Inn

95,000 2,451,752 --- 1,961,401 196,140 5,213,485 10.6

Comfort Inn

100,000 2,574,339 858,113 1,029,736 196,140 5,252,313 10.7

First-Class Brands

Omni $50,000$

3,034,043$1,152,936

$

1,152,936

$

1,152,936

$

7,065,8517.0 %

Luxury Collection

120,000 4,045,390 954,931 1,011,348 404,539 7,232,252 7.2

Woodfin Suites

120,000 5,056,738 --- 2,528,369 90,000 7,795,107 7.7

Radisson 150,000 6,068,085 2,022,695 2,022,695 454,3061

0,957,58710.8

Hilton 92,500 5,056,738 2,022,695 2,022,695 1,376,6811

1,192,68111.1

Marriott 90,000 7,888,511 648,320 1,011,348 1,010,3291

1,231,04311.1

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Since one of Wall Drug’s new markets will include catering to the Sturgis Biker Market,

I would suggest franchising instead of having mass lodging for consumers in the pristine art

mansion. The Husteads should look into acquiring new land near the Wall Drug compound and

develop a franchise with a mid sized brand such as Best Western. Although rather cliché, a Best

Western in Wall would allow for the Husteads to form a new capital stream and capitalize on the

familiar name. They could also create a specialized Best Western complete with Wild West

themes. Best Western appeals to both the motorcycle crowd that they so desperately need to

attract in August, as well as the families coming to see the Christmas decorations and Art in the

winter. Best Western’s don’t elicit a ‘low-budget’-type response to the ritzy customer base. It

also doesn’t scare away some bikers who may think that an Omni, for example, is too high

priced for them. From a cost standpoint the Best Western makes the most sense. The 10-year

total cost of the project is only 1,388,333, which is only 138,000 USD a year. This project

will cost less than the proposed plan to build the new stores or the upgrade and repairs to the

existing building. The notoriety from a Best Western in a plain state, could draw well more

than $138,000 in sales. The breakeven point for customers to stay for $100 a night is 13,800

guests per year. This is absolutely attainable considering the average traffic in one year is

42758. If half of the traffic stays in the Best Western (21379), the Wall Drug can generate

$2,137,900 in revenue per year. This equals a net profit of $1999900. This would be a boom

and an increase in revenue 11 fold per year from lodging. You could essentially payback the

ten-year costs in one year.

Leveraging

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Although the revenue exceeds the cost tremendously, I would still suggest Wall Drug

take out a loan for USD 1,000,000 for 10 years starting next fiscal year (1991). This initial

capital will help pay for the cost of any restoration or upgrades to any existing buildings on the

property. Assuming a cost of capital at 8 percent, Wall drug would have to pay $80,000 a year in

interest payments, a very achievable number. I strongly encourage the Husteads to take out a

loan with a favorable bank in the area to get an even better interest rate. The goodwill built up

over the years with their local bank should give them leeway.

The Cost of Land

Since the backyard area will be removed once new construction is made and some of the

Hustead’s property will be used for this project, cost of land will not be an issue. Since Bill

Hustead is acting as a general contractor, we will not have to hire outside contractors. Day

laborers are usually very cheap, sometimes only $50, per worker per day. This can cut down on

costs tremendously, and cut into some of the unskilled workers that have been attracted to

Deadwood, instead of the unskilled workers being paid in checks from Deadwood. This only

leaves the costs of raw materials to be dealt with. We suggest that Wall Drug invest in futures to

hedge their risk on the rise in metal and gas prices.

Feasibility of the Marketing Plan

The proposed marketing plans are all extremely low cost solutions to our marketing

problems. The first suggestion was a customer relationship database. This is completely feasible

and would also increase our revenue by keying on the most likely visitors to Wall Drug. This

will analyze the key consumer base, and help cut down on excess inventory by being able to

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discard waste and unsuccessful products. Another suggestion that has worked wonders is

acquiring an ITunes Application. This would allow consumers one button access to all of the

wonders of Wall Drug. The average web application costs $5,000, so the upside to developing a

web application is limitless. Mobile alerts/Groupon coupons are the wave of the future, so we

know that many consumers don’t have time to look through a catalog to find bargains. Offering

trip packages to Wall including a stay at the hotel and deals on the attractions will bring in

clientele that Wall Drug never knew they had. Also, Expedia.com’s affiliate program will be

free, but will charge a commission based on how many click throughs there are to the website.

This is the most cost effective and revenue-generating marketing plans that we have developed.

With no surcharges, we only have costs if we incur revenues. Expedia’s commissions are much

less than Hotwire.com, which charges an initial fee to post rooms and trips on the site. The

most exciting but most costly venture in the marketing aspect will be hiring Bob Barker from

Price is Right. The iconic figure could help drive our older segment to South Dakota, and he’s a

local celebrity. This may cost us in the $100,000 range, but this is a liberal and negotiable

figure. Partnering with the Boys and Girls club will be inexpensive, but allow us a more stable

root in the local and international community. One of the most valuable things in a firm is

goodwill, and we will establish that in the community at little to no cost. Stressing family values

can also attract families from all over the country. We plan on funding the marketing aspect of

the plan by using the funds generated from the Best Western, as well as dabbling in some asset

management with our new marketable securities if we need extra funding.

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Balance Sheet Examination

When examining the balance sheet, the rapid increase in Cash was first noticed. Although

cash holdings are always positive for the liquidity of a firm, too much cash can hinder growth.

Knowing that the construction of a Best Western in Wall will be a boom for the firm, the Cash

can be converted to cash equivalents, such as Marketable securities, short-term bonds,

commercial paper, and treasury bills. These liquid assets can also accumulate interest and can

be traded very easily. Wall Drug should have a healthy balance and mixture between asset

classes. Wall Drug should convert at least 100K of cash into current marketable securities. That

would leave them with 167,000 in liquid cash and 100 in marketable securities. The large

merchandise inventory intimidates me, but according to the case, peak inventory levels have

reached 2.5 million. Currently, there have been no ways of decreasing the inventory levels other

than to decrease growth. Once the international business comes to fruition, we will then see a

stabilization in inventory levels relative to sales.

Expansion

Our final and most bold plan of all is our expansion into a foreign market. Germany was

ranked 2nd in travel and tourism, and also has a Wild West interest. Germany is one of the most

financially stable countries in Europe, and we would not have to spend a lot of money bringing

in culture consultants. We considered other countries (Japan, China, France, etc.) but there was

a larger cultural gap in these countries. Wall Drug’s original business model would have been

compromised. However, there is a tremendous opportunity for franchising/strategic partnership

35

with a preexisting Wild West theme park called Silver Lake City. Located in eastern Germany,

Silver Lake City follows the same business model that Wall Drug does. A Wild West museum

was also opened. The close proximity to Berlin (60 miles) makes this an ideal candidate for a

strategic alliance or expansion. From a cost perspective, waiting two years to pay off some of

the new interest payments before expanding would be best. There also needs to be revenue

generated from the new Best Western before another expansion is made. Right now, the charge

for the Wild West is EUR8 for children and EUR 15 for adults. This is extremely encouraging

from a financial standpoint, because the consumer is willing to pay more in Germany for the

same attraction in America. The Husteads could charge initial admission into Wall Drug, and

also capitalize on revenue from the stores inside the German Wall Drug. The notoriety in the

U.S. would be gained from international expansion. The Husteads should examine their

expansion into a stable foreign market if it wants to increase its financial growth and health.

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Human Resource Overview

Within the Human resource department, Wall Drug’s three year plan will consist of

reconstructing the Internal Alignment of Wall Drug. This entails creating an effective and highly

organized management team that will properly lead the company in carrying out tasks and

responsibilities. There are three areas that Wall Drug will primarily focus on. We want not only

the managers, but the employees as well to know that the people of Wall Drug are our core

focus. The employer and employees are the most important people of the company and making

these people feel valued, respected and highly appreciated is key. The second area we will focus

on is the transition of Wall Drug, from an Egalitarian structure to more of a Hierarchical

Structure. As Wall Drug is being divided into clear cut divisions, It is essential that we make

sure each division is being led by a well-experienced and personable manager who will

effectively train and manage their team within that division. Organization is necessary. The third

area we will focus on is increasing customer loyalty. In doing this we have to make sure the

entire Wall Drug staff is well-educated on how to provide excellent and extraordinary customer

Human Resources

37

service. We strongly feel that if we can significantly improve in these three key areas; Wall Drug

will be the number one place to go for years to come.

The People

Before Wall Drug can make any internal changes to its management team and staff, we

would like to take time to recognize them for their dedication, hard work and passion in building

Wall Drug Store from the bottom up. Wall Drug has reached great success from where it used to

be years ago, and it would not have been possible without these employers and employees. We

would like to make it very clear, that the people who work here are highly appreciated and

valued for their services and everything they bring to the table. The employees, including

managers, supervisors and staff, are the most important part of the business. The employers and

employees are the heart of Wall Drug, and it is in their hands to assist in contributing to the

company’s growth and success for many years to come. It is up to them as Wall Drug’s

backbone to provide an extraordinary experience to customers, and maintain a positive,

respectful and attractive image for Wall Drug Company as a whole.

Effective communication is the one of the few ways in making Wall Drug’s staff feel

special and appreciated. The managers of Wall drug will work toward building strong

interpersonal relationships with employees so that a level of trust and reliance is created among

employers and staff. As Wall Drug expands and makes internal changes within this three year

plan, it is important that employees feel confident and comfortable in being able to turn to their

managers for anything regarding their work schedule or the environment they work in. Effective

38

communication will have a positive impact on the organization as a whole, and lead to

improvement within the environment while carrying out tasks and duties.

Employers and staff will also be acknowledged through rewards and incentives which

will be directly related to job performance of the individual and change each pay period.

Certificates recognizing improvement and hard work will be given out monthly, along with

exciting coupons and treats. This will encourage employees to stay motivated in performing to

the best of their abilities on a consistent basis. A small level of competition will create

excitement and power among the staff and actually have them wanting to come into work.

Internal Alignment

Before any services or production of Wall Drug can be improved, we need to focus on

the internal alignment of the company itself. As of now, Wall drug is more so made up of an

Egalitarian Structure, where teamwork is highly valued and tasks are carried out in groups rather

than individually. The organization has a great deal of leeway and flexibility when it comes to

the jobs that are performed on a daily basis. This is not a bad thing, however employees are

unable to really focus on being detailed in effectively carrying out essential responsibilities

because they are too busy multitasking. This can lead to a negative impact on providing

customer service in not being able to really provide that extraordinary experience. This also

leaves the employee with a disadvantage of not having the opportunity to fully-educate

themselves on proper guidelines in performing their job. To eliminate this, Wall Drug will be

transitioning into a Hierarchical Structure, where individual performance is better acknowledged

39

and a variety of jobs exist. Duties and responsibilities will be based on job description, and

employees will be paid based on individual performance, experience, skills and ability. Pay

differentials will be larger, simply because each division will entail different jobs and the level of

experience needed and possessed will vary depending on the job.

The Management Team

After analyzing the case we came to the conclusion that when looking at the management

of the staff and store itself, illustrating an organization chart will be the best way to physically

show who possesses what position, and what essential responsibilities that position entails. Each

manager will be in charge of their own division of the store. This means that within each

division, there will be different but similar duties for both the manager and employees working

in that division.

Ted Hustead, owner of Wall Drug Store since 1931 with his wife Dorothy, bought the

drugstore in Wall, South Dakota for $2500. Retired at the delicate age of 82, Ted has decided to

pass down the prosperous and successful business to his only son Bill and his wife Marjorie,

who have brought great contribution to the store as well. Dorothy Hustead, wife of Ted, was in

Ted’s eyes the backbone of Wall Drug Store. Wall Drug store would not have evolved in to the

well-known loved store if it weren’t for Dorothy’s dedication and aspiration for the business.

40

Dorothy’s creative idea to set up signs along the highway has led Wall Drug to much great

success, and has opened many doors. Retired at age 81, Dorothy too has decided to pass down

her position to Bill’s wife Marjorie who has already embraced the title as her own.

Bill Hustead, CEO and president of Wall Drug, has spent most of his life working with

his parents to build and expand Wall drug from the bottom up. He is Responsible for the success

or failure of Wall Drug. He will ensure that Wall Drug is operating in a positive environment and

that employees are providing the best customer service to clients and customers, will oversee all

Departments of Wall Drug Store including Operations, marketing, strategic planning, financing,

the company’s culture and makes sure the store is in compliance with safety regulations, sales

and public relations. Bill also makes sure revenues are in coordination with Wall Drug’s balance

sheets and income statements, enforces the rules and regulations which are in compliance with

those of the state and federal laws and also makes sure managers, supervisors and employees are

carrying out their duties effectively and efficiently within their own departments.

Marjorie Hustead, Wife of Bill Hustead and Vice President of Production will be in

charge of estimating costs for merchandise and needed products. More specifically she will be in

charge of Wall Drug’s jewelry store. Marjorie will manage production processes and is in charge

of purchasing cost-effective equipment and products, will work with other managers in enforcing

important laws including OSHA, HIPPA and COBRA among entire staff, enforces the “5 key

Behaviors” and the core values so that employees are consistently providing excellent customer

service in all departments and directs supervisor of the jewelry store as well

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Rick Hustead, son of Bill and Marjorie and Vice President of Sales, In charge of new

hires and firing for all departments of Wall Drug, with the exception of the restaurant which will

run by Mike. He also makes sure employee schedules are up-to-date and in conjunction with

entire staff’s work schedules and Plans and develops and implements successful strategies for

increasing revenues

Karen Hustead, wife of Teddy and Vice President of Marketing, is In charge of tourism

related business with Badlands and Black Hills Association, Manages public relations and

government issues, coordinates with global countries in advertising Wall Drug worldwide,

Works very close with Wall Drug’s Marketing Team and Makes sure signs are properly and

evenly distributed along the highway.

Karen Poppe serves as the corporation’s accountant. She Directs all accounting functions

of the store so that adequate financial records and fiscal controls are maintained, makes sure

financial operations are in compliance with state and federal laws and regulations and makes sure

financial matters are properly coordinated with state and federal agencies pertaining to policies,

procedures and programs within Wall Drug’s financial department

Kathy Hustead, wife of Rick and Wall Drug’s Pharmacist manages the store’s

prescription drug business, organizes prescriptions according to date and time they are ordered,

makes sure shelves are properly stocked with the right labels and prescription and manages

inventory and orders related to pharmaceutical department

42

Mike Hustead is a loyal and good friend to the company. As restaurant Manager, Mike is

in charge of employee schedules within the restaurants, manages day-to-day operations within

the restaurant and café, ensures that chefs and employees are following rules and regulations in

correspondence with state and federal laws and regulations, enforces safety guidelines and

procedures and makes sure all staff including servers, hosts, supervisors and chefs are well-

trained and knowledgeable on menu selections and Business code of conduct.

Teddy Hustead, husband of Kathy and wall Drug Manager, is In charge of all shops

within the Mall, Oversees all managers and employees in each shop, making sure they are

carrying out duties prompt and efficiently, Enforces that extraordinary customer service is being

delivered on a consistent basis. Teddy will make sure all shops are in compliance with state and

federal rules and regulations and is In charge of custodians and janitors as well in making sure

Wall Drug Mall is properly cleaned and organized on a daily basis.

The positions listed above are just the main positions of upper management that will be

assigned. Wall Drug will also be undergoing extensive recruiting because it is clear that as we

separate into sections Wall Drug will need more employees within each section. More

specifically we will be focusing on student recruitment. We strongly feel that having student

employees will bring a nice college crowd to Wall Drug Stores, and eventually parents will have

to stop by as well.

Customer Loyalty

43

The company’s updated and more extensive training package will cover many areas

including health and safety, job tasks and responsibilities pertaining to each job description, and

a key area called building customer loyalty. Organizing and improving the company’s internal

alignment is important just as much as providing excellent customer service to our Wall Drug’s

customers. It does not matter how much experience or skills our employees have, regardless of

their work history they must be full-educated on how to greet a customer and make them feel

like they are in a home away from home. Outstanding customer service will bring a sense of trust

and loyalty to our customers and will have them wanting to come back again and again. A

customer will not remember what they ate or bought, but they will always remember how they

were greeted and treated. With this in mind, Wall drug’s training package will address what is

known at the “5 key Behaviors” that will promote positive and effective customer service. These

key behaviors include (1)Greeting Customer with a warm smile while exchanging names,

(2)Giving customer your undivided attention, (3) Having a positive attitude, (4)Using the

customer’s name and (5) Giving a friendly Goodbye with a warm smile. Employees will also be

prompted to undergo role playing and taking turns participating in realistic scenarios that will

better assist them in learning how to deal with different kinds of customers whether it is the irate,

happy, confused or sad customer. Each section will carry out these five key behaviors.

Employees will be trained to use winning phrases such as “Welcome to Wall Drug,” “Yes!” “I

Can Help You with that,” “It Would Be My Pleasure” and “thank You.” A few more but

important things that will be included in the training package include knowledge on HIPPA,

COBRA, OSHA and confidentiality of Wall Drug.

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HIPPA

It is essential that employees are aware of their rights if they do choose to leave Wall

Drug for any reason. The Health Insurance Portability and Accountability Act (HIPAA) forbids

insurers from imposing preexisting-condition exclusions when an eligible individual transfers

from one plan to another. After you have been covered in a health plan for twelve months,

preexisting-condition exclusions are no longer in effect. Prior coverage would not qualify if there

is a break in health insurance coverage for more than sixty-three days.

Cobra

The Consolidated Omnibus Budget Reconciliation Act (COBRA) extends coverage for

18-36 months. The employer does not have to pay the premium, and the premium may be

increased to a maximum of 102% of the group rate. The employee may elect COBRA within

sixty days of the qualifying event.

COBRA does not protect an employee who is fired for cause.

OSHA

Employees need to be aware of the environment and the surroundings they work in. The

Occupational Health and Safety Act is a Federal law which enforces occupational health and

safety. It is up to the employers to enforce the rules and regulations regarding the safety, health

and welfare not only of themselves but their employees and everyone engaged in the work

45

environment. Key issues such as hazards, health and safety risks, suitable safety controls, and

recommendations on avoiding accidents to management and employees in an organization.

Expats

Expats will be trained not only on Wall Drug’s updated training package discussed

above, but also on the customs, rules and regulations of Germany. It is important that expats

understand the norms and customs of Germany when it comes to little things such as shaking a

business man’s hand, or how to speak when carrying on a conversation. We need to make sure

we maintain a positive and attractive reputation if we are going to be doing business in Germany

and other international countries.

German Customs

The way you greet a person in Germany is important. A simple “guten tag”, meaning

“good day,” is greatly respected. When you enter a small place of business it is important to say

they, regardless if the business person is busy or not. This also is the same case for say goodbye,

or “Auf Wiedersehen.” When you first meet or are introduced to someone, just like in the U.S.

it is essential to shake their right hand with your right. If the German person is a young person, it

is proper to greet them with a nice personal “Du.” The older they look, you change your greeting

to a formal “Sie.” Meeting Germans might come off as challenge, but it is recommended to take

a basic German course at the education center. Also if you are inviting a German coworker or

friend out, you should make it clear that you are treating them. Expats will also have to be

educated on the importance of Sundays and Holidays. Germans take these days very seriously.

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No one is seen outside washing their cars or doing laundry, it is a day where no noise is made.

All of these are just a few little but important things expats have to be educated on.

Key Values of Wall Drug

Whether it is in South Dakota or Germany, with these improvement and expansion plans

in mind, we expect that wall Drug’s core values will be carried out effectively and efficiently by

both the employers and employees. These values include supporting an environment that

encourages advancement and retention of employers and staff through effective training and

development, collaborating with all departments of Wall Drug to support each other’s successes

in achieving the division’s goals and objectives and creating a positive atmosphere that respects

diversity, trust, confidentiality and encourages professional interpersonal relationships among

employers and employees.

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We estimate that all of these improvements, transitions and expansion ideas will develop

and go into effect within the next three years. Wall Drug company has come a long way from

selling free water to setting up signs along the highway with hopes of increasing clientele. We

are proud to say that the company has developed into a prosperous and booming organization.

However, that is not where it stops. Wall Drug’s three year plan consist of working day and

night toward these goals in better organizing the management of the company and strengthening

its internal alignment so that we can make all of these adjustments even possible. Yes, Wall

Drug was prosperous when everyone worked together in making sure tasks and responsibilities

were carried out. However, as our society continues to prosper and as technology continues to

advance, it is essential that we are taking advantages of these opportunities that are being

presented to us. Expanding globally will also push Wall Drug into a direction we are unsure of,

but willing to take that risk if it means having the opportunity to expand internationally and

compete with existing companies within the market. No, this will not be easy, but we have faith

and strong belief that Wall Drug has the power to make this happen. Ted and Dorothy are the

reason Wall Drug even exists, so it is up to the people of Wall Drug to maintain an attractive

reputation consistent production and loyal customers to keep the booming business on its feet.

Closing Remarks

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Sources

1 http://www.quantcast.com/www.walldrug.com

2 http://www.gerardotandco.com/about-gerardot-and-co/areas-of-specialty/place-branding-destinations/

3 http://athletes-celebrities.tseworld.com/entertainment/hosts/bob-barker.php

5 http://www.facebook.com/help/?page=864

6 http://www.bgca.org/whatwedo/Pages/WhatWeDo.aspx

7 http://www.alexa.com/siteinfo/expedia.com

8 http://www.expedia.com/daily/associates/affiliates.asp

9 The Travel and Tourism Competitiveness Report 2011: Beyond the Downturn pg. 35

10 The Travel and Tourism Competitiveness Report 2011: Beyond the Downturn pg. 37http://www.weforum.org/issues/travel-and-tourism-competitiveness/

11 http://www.weforum.org/issues/travel-and-tourism-competitiveness/ pgs. Xiv, xvi

12 Mendoza, Moises. “Germans' love of the wild west is bigger than Texas.” The Houston Chronicle. 16 November 2009 http://www.usatoday.com/travel/destinations/2009-11-16-germany-texas-influence_N.htm

13 Kimmelman, Michael. “In Germany, Wild for Winnetou.” The New York Times. 12 September 2007 http://www.nytimes.com/2007/09/12/arts/design/12karl.html

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