What you knew about Wal-Mart

- The largest retail store in the world

- The most profitable company in the world

- Famous for its Everyday Low Price strategy

- Sam Walton was the original owner of the store

Group 3 Presentation

Wal-Mart Stores, Inc. : Strategies for dominance in

the New Millennium

MORE RECENT FACTS

-For FYE 2005, Wal-Mart reported net income of $10.3 billion on $ 285 billion sales revenue (3.6% profit margin)

-Largest employer in the United States, Mexico and Canada

-Holds 8.9% retail store market share

-Can be associated with several products’ price decline and job creation during 1985- 2004 (Global Inside study)

WAL-MART

BUSINESSES WAL-MART

Discount stores-Average 9,290

square meters

-Sell general merchandise such as apparel, household products and etc.

WAL-MART

BUSINESSES WAL-MART

Supercenter-Average 17,400 square meters

-Discount stores + fast food restaurants, car care shop, hair salons, video stores, and etc.

WAL-MART

BUSINESSES WAL-MARTNeighborhood market-Average 4,000 square meters

-Grocery, pharmacy, limited general merchandise

WAL-MART

BUSINESSESSam’s Club

-Average 11,891 square meters

-Membership-only wholesale warehouse aimed at small business-owned customers

WAL-MART

BUSINESSESwalmart.com

-Online shopping site

-Also offers digital music download and online photo processing

WAL-MART

BUSINESSES Wal-Mart International

-Operates various formats internationally including SAM’S CLUB, Discount stores, Supercenters, and restaurants.

WAL-MART

STRATEGIES

RESPECT FOR THE INDIVIDUAL

SERVICE TO THE CUSTOMER

STRIVE FOR EXELLENCE

WAL-MART

STRATEGIES RESPECT FOR THE INDIVIDUAL

-“ASSOCIATE”- Letter to the president program- “The Wal-Mart way”- Wal-Mart cheers

WAL-MART

STRATEGIES

SERVICE TO THE CUSTOMER

- Less-crowded area selection - Everyday low prices- “People Greeter”

WAL-MART

STRATEGIESSTRIVE FOR EXELLENCE

- Cost Leadership

- “Buy American” campaign

- Green Marketing

- Inventory control

- Global expansion

QUESTIONS

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ANSWERS

1. Identify and evaluate the strategies that Wal-1. Identify and evaluate the strategies that Wal-Mart pursued to maintain its costs leadership Mart pursued to maintain its costs leadership position?position?

- Efficient supply chain

- Distribution Centers’ locations

- Inventory control system by using

information technology and Internet

- Sales Promotion

2. Evaluate Wal-Mart’s competitive environment

External Environment

- Economics: change in customer’s purchasing power

- Rival firms: change in marketing strategies

- Technology: innovation of new technologies

- Trade Area: change in international policies

Internal Environment

- House-brand strategies

- Cost leadership

- Improved service qualities

- Sources of fund

3. Discuss the importance of changes in the external environment to an organization like Wal-Mart

Economic

- GDP trends

- Interest rates

- Money supply

- Inflation rates

- Wage/ Price control

- Energy availability and cost

Social-Cultural

- Lifestyle changes

- Attitudes

- Consumer activism

- Culture and tradition

- Life expectancies

- Birth rates

Technological

- Total government &industry spending for R&D

- Focus of technological efforts

- New products

- New developments in technology

Political-Legal

- Anti-trust regulation

-Environmental protection laws

- Tax laws

- Foreign trade regulations

- Attitudes toward foreign companies

- Stability of government

4. What conclusions can be drawn from a review of Wal-Mart’s financial performance over the decade of the 1980 ? From this review , what can you conclude about the finance future of the firms ?

Income Statement

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

2000 2001 2002 2003 2004 2005

Year

$(Million)

Net Sales

Cost of sales

Net income

13%

16%

13%

12%

11%

12%

13%16%

17% 6% 21% 14%

DPS 0.20 0.24 0.28 0.30 0.36 0.52 USD/share

ROE 22.9 21.3 19.4 20.9 21.3 22.1

5. Speculate an how much impact the “absence” of Sam Walton had on the forward momentum of the organization. What steps have been or should have been taken by management to continue Sam Walton’s formulas for success?

Wal-Mart has been able to continue its success even after Sam Walton passed away by following his 3 main corporate policies

RESPECT FOR THE INDIVIDUAL

SERVICE TO THE CUSTOMER

STRIVE FOR EXELLENCE

6. Is Wal-Mart competitive advantage imitable?

Wal-Mart competitive advantage is inimitable due to

- Its management efficiencies

- Its strongly supportive human resources

- Its emphasis on giving the best to customers

- Its privileges as the world’s biggest retailer

7.What are the challenges facing Wal-Mart in the new Millennium?

- Maintain its position in terms of market leader & market share- International economic fluctuations, trade laws, culture, etc. - Advancement of technologies

8.What recommendations do you have for CEO Lee Scott ?

- Maintain Wal-Mart’s Core Competence- Search for new market opportunities- Better the existing strengths- Improve detected weaknesses and minimize threats

9.What would we do if we were the CEO of Wal-Mart?

-Pass on corporate value- Improve benefits of Wal-Mart’s associates-Engage in international non-profit activities for global corporate image- Use only environmental-friendly products for building outlets- Strengthen e-commerce operations- Establish sales & service call center- Establish worldwide presence of Wal-Mart

The End

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Discussion