Wal-Mart

Wal-Mart

Introduction• Started by Sam Walton in 1962.

• Wal-Mart is one of the American’s largest company with revenues last fiscal year of $217.8 billion and profits more than $6.6 billion.

• Wal-Mart serves more than 200 million times per week customers and members at more than 8,159 retail units operating under 55 different banners in 15 countries.

Wal-Mart Stores in US

The Evolution

Sam’s Club• Starting operations in 1983.

• Whole sale retailing unit.

• Membership stores with annual membership.

Mission Statement

“Saving People’s Money so they can live Better”

Environment and Corporate Culture

Grass Root Process: “Listen to your associates. They’re the best idea generators.”

• Sundown Rule:

• Team Work:

• Open Door Policy:

• The 10 Foot Rule

PEST Analysis

1. Political:Wal-Mart was at a time subject of the largest class action lawsuit. Was for gender

discrimination.

2. Economic:"The decision is related to Wal-Mart's recently announced plans to moderate

growth of U.S. super centers as part of leveraging capital resources through a strategy designed to improve returns and sales within U.S. stores."

Cont..

3. Social Analysis:• People looking for ONE STOP service come to Wal-Mart s a

first choice in US.

• Wal-Mart and China.

4. Technological Analysis:Wal-Mart incorporates the latest MIS systems to vertically

integrate with suppliers and customers.

M I S• Wal-Mart operates terabytes of data.

• Radiofrequency identification readers.

• Contracts with technology vendor Teradata an NCR Corp. subsidiary.

Low cost leadership

• Distribution centers- strategically placed so

that it could reach all stores within a day

• Inventory system-products are recorded as purchased

• Size

SWOT Analysis

SWOT

Strengths Distribution, information and inventory control

system. Economies of scale because of its large buying

power.

One stop super centers.

SWOT

Weaknesses Lack of facilities for manufacturing.

Weak in some areas due to huge span of control.

Little flexibility in some of more focused strategies.

SWOT

SWOT

Opportunities Options open for take over, merger or strategic

alliance.

Tremendous opportunity for future business expansion such as in India and China.

Exploit market development through new locations and store types.

SWOT

SWOT

Threats International expansion barriers.

Lawsuits by employees and other parties.

Government regulations and political conditions.

SWOT

Value Chain

Cont…

Inbound

Logistics> Operations >

Outbound

Logistics>

Marketing

& Sales> Service

Inbound Logistics:a. SuppliersMore than 60 thousand suppliers.

70% imports from China.

b. Electronic Data Interchange (EDI) – for real time delivery

c. Lead Time - ranging from a short lead-time of about 60 days to commitments made a year in advance.

d. Quality Assurance and Testing – on receiving docks.

Cont…

Operations:Operations organized into three divisions.a. Wal-Mart Discount storesb. Wal-Mart Super centersc. Wal-Mart Internationald. Sam’s Club

Outbound Logistics:- Owns a fleet of 3000 trucks and 12000 trailers.- Relying more than 85% on its own resources for distribution to its

retail outlets.

Cont…

Cont…

Marketing and Sales:- EDLP strategy “no or low promotional

budget”

- Building values with image.e.g. Social contributions: Thurgood Marshall College Fund

(TMCF), Feeding America etc.

Organizational Values: Sam’s Ten foot rule, Associates not employees! Etc.

Cont…

Ratio Analysis

Problems & Issues

Issues

- Gender Discrimination.

- No Unions!

- No Health coverage of employees.

- Wages below average.

- Wal-Mart trade with China – more than 70% imports.

Conclusion• Wal-mart is more oriented towards making profits by cutting

down costs

• Has little concern about its employees

• One stop shop, low priced and diverse services makes wal-mart a tough competitor

• Has slowed down its growth.

Recommendations• Introducing higher and equal incentives for both

genders.

• Continue trade with china to reduce cost.

• Discovering new geographical opportunities.

• Being more concerned about employees.