Walmart

By Liza ormol

Contents

Overview

History

Operating division

SWOT analysis

External environmental factors

Wal-Mart strategies

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Overview

Name: Wal-Mart Stores Inc.

Headquarters: Bentonville, U.S.

Current CEO : Mike Duke

Revenue: $ 466.950 billion (2012)

Profit: $ 15.699 million (2012)

Employees: 2.2 million (2012)

Main competitors : Dollar General Corporation , Costco

Whole Sale Corporation ,Target Corporation

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Five years financial summary

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History

Walmart is an American multinational retail corporation

that operates chains of large discount department stores

and warehouse stores

Headquartered in Bentonville, Arkansas

The company was founded by Sam Walton in 1962 and

incorporated on octobar31,1969

It has over 11000 stores in 27 countries, under total of

55 different banners

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Consolidated Statement of income

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Cont’d…

Walmart is the world’s largest company by revenue ,

according to Fortune Global 500 list in 2014 and

maintaining it’s position from last year

It’s the biggest private employer in the world with over

two millions employees

And also it’s the biggest retailer in the world

Walmart is a family-owned business, as the company is

controlled by the walton family, who own over 50 percent

of walmart through their company holding

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Cont’d…

In 1945, a businessman and former J.C. Penney

employee, Sam Walton, purchased a branch of the Ben

Franklin Stores from the Butler Brothers

His focus was on selling products at low prices to get

higher-volume sales at a lower profit margin

He experience set backs, because of the lease price and

branch purchase were usually high

But he was able to find lower-cost suppliers then the

ones used by other stores

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Operating division

Walmart’s operations are organized into three divisions:

Walmart Stores U.S, Sam’s club , and Walmart

international

The company does business in nine different retail

formats:

supercenters, food and drugs , general merchandise

stores, bodegas(small markets), cash and carry stores ,

membership warehouse club , apparel stores, soft

discount stores and restaurants

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Walmart Growth( Net Sales )

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Walmart stores U.S.

Walmart Stores U.S. is the company’s largest division,

accounting for $258 billion(equivalent to $279 billion in

2014), or 63.8 percent of total sales for financial year

2010

It consist of three retail formats that have become

commonplace in United States: Discount stores,

Supercenters, and Walmart markets

the retail department stores sales non-grocery products,

but it’s supercenters sales grocery items

This division also includes Walmart's online retailer,

walmart.com

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Sam’s Club

Sam’s club is a chain of warehouse clubs that sell

groceries and general merchandise, which are often in

large amount

Sam’s club stores are “membership” stores and most

customers buy annual memberships

There are three types kinds of memberships of Sam’s

Club, Sam’s Plus, Sam’s Business and Sam’s Saving ,

that each types provide benefit and convenience to

customers

The first Sam’s club opened in 1983

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Walmart International

As of 2014, Walmart’s international operations comprise

6,337 stores and 800,000 workers in 26 countries

outside United states

There are wholly owned operations in Argentina, Brazil,

Canada and the UK. With 2.2 million employees

worldwide

The company is largest employer in U.S , Mexico and

Canada

Walmart’s international division sales were $108 billion in

2014, or 24.7 of total sales

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SWOT Analysis

Strengths: 1.International operations

2.Scale of operations

3. Competence in Information system

4. Wide range of products

5.cost leadership strategy

1.International operations :

Walmart does not rely on sales from US stores only as its competitors

do

It has earned $135 billion in sales in 2013 from its international

operations

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Strengths

1. scale of operations :

Walmart is the largest retailer in the world with more than $400

billion in revenue and 10,130 stores

Due to such large scale of operations, the corporate can exercise

strong buyer power on suppliers to reduce the price

It can also have high enemies of scale because of its high size that

results in lower prices that passed to consumers

2. Competence in information system :

The corporate achieve significant cost savings because of its

extensive information system that tracks orders, inventory levels,

sales and other information

All this information can accessed , analyzed and decision made at

each store15

Cont’d…

3. Wide range of products :

Walmart can offer wider range of products than any other retailer

It sales grocery , entertainment , health and home related products

among many other categories and offer both branded and own label

goods

Wide range of products attract more customers

4:Cost leadership strategy:

This strategy helped walmart to become low cost leader

It sells products at much lower prices than competitors do , builds

warehouse style superstores that contain extensive range of

products but doesn’t offer much additional benefits or services

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Weaknesses

1. Labor related lawsuits

2. High employee turnover

3. Little differentiation

4. Negative publicity

1. Labor related lawsuits :

Walmart face this situation every year , which cost millions of dollars

It is criticized for poor work conditions , low wages , unpaid overtime

work and females discrimination

In addition corporates reputation has been damaged and fewer

skilled workers are working for it

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Cont’d…

2. High employee turnover :

The firm suffers from high employee turnover that increase firm’s

costs, as it has to train new employees

The main reason is low skilled, poorly paid jobs

3. Little differentiation :

Walmart has no differentiation compared to its competitors

Which might hurt the company in future if commodity prices or

average income would increase

4. Negative publicity :

The company often criticized for its questionable practices such as

bribery of authorities or poor work conditions

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Opportunities

1. Retail market growth in emerging markets

2. Rising acceptance of own label products

3. Trend toward healthy eating

4. Online shopping growth

1. Retail market growth in emerging markets :

Retail markets grew by at least 5% on average in emerging market

last year

The business is currently operates in Brazil, Mexico, China and

India markets

Walmart should increase its presence in these markets to sustain

future growth

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Cont’d…

2. Rising acceptance of own label products :

The sales of private label products increased by more than 40%

over last 10 years and it shows consumer acceptance of

supermarket chain products

It is having an opportunity to increase the number of private label

products sold at its stores

3. Trend toward healthy eating :

The current trend of eating healthier food has resulted in higher

demand for grocery products that make an opportunity for walmart

to expand its grocery stores

4. Online shoping growth :

Walmart being the biggest offline retailer has huge opportunities to

expand its presence in online retail market20

Threats

1. Increasing competition from brick and mortar online competitors

2. Increasing resistance from local communities

3. Rising commodity product prices

1. Increasing competion from brick and morter online compitotors :

Competitors like Target, Costco, Amazon and Tesco ( in UK) are

putting huge efforts to eliminate price differences that walmart

enjoys

Walmart doesn’t differs from other low cost retailers and will

experience increased competition from them in the future

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Cont’d…

2.Increasing resistance from local communities :

Walmart superstores have a negative impact on local retailers and

communities

Some of the local retailers are usually forced to closed off when

walmart superstore opens in the area and this effect not only

retailers but their community as a whole

3.Rising commodity product prices :

As price go up, the cost differences between the retailers decreases

and competition shifts from price to product and service

differentiation

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External environmental factors

1. Political/Legal

2. Sociocultural

3. Technological

4. Economic

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1.Political/Legal

Wal-Mart faced multiple accusations, charges , many resulting in

fines, including environmental violations, child labor law violations,

use of illegal immigrants by sub-contractors, and allegedly poor

working condition for association

Wal-Mart has become a “poster company” on political issues related

to trade , health care , the environment, discrimination , worker pay

and general anti corporate sentiment

Wall-Mart is alleged to have ‘engaged in a pattern and practice of

discriminating against women in promotions , pay , training and job

assignments

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2.Sociocultural

Eco-friendly practices. Wal-Mart launched its global environment

sustainability initiative in 2004 and has since taken action toward

several sustainability goals:

Sell 100 million compact fluorescent bulbs by 2008; reduced

packaging by 5% by 2013; buy fish from certified fisheries; sell

“more organic and environmental friendly products

Customers are more particular about purchases(people are getting

more knowledgeable and broad minded)

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3:Technological

Wal-Mart’s legendary inventory management capability is driven by

its advanced Texlon barcode system which could track sales price,

inventory levels of each product , keep a history of quantities sold ,

record trends and predict future needs

All Wal-Mart suppliers must participate in Retail link, a computerized

system in which they plan , execute and analyze their business

Wall-Mart’s technological supply-chain sophisticated is intended to

provide “value for customers, associates and shareholders.”

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4:Economic

Increase in wall-Mart net income. (over the past decade,

Wal-Mart doubled its store count, tripled its revenue, and

nearly quartered its net income)

Customers are price sensitive. ( Shoppers likely have

lower price elasticity , a relatively lower switching cost,

but a higher sensitivity to brand reputation. )

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Wal-Mart strategies

Business level strategy :

Low cost strategy:

It offers a wide variety of good quality merchandise , the lowest

possible price , guaranteed satisfaction, free parking

Technology :

RFID enables to track inventory locations , warehouses , shelves

online service :

The Wal-Mart logistic team uses an internal-based Transportation

link system to help them to move goods

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International Strategies

Wal-Mart international includes “Wholly owned operations in

Argentina, Brazil , Canada , and UK; the operation of joint venture in

china

Wal-Mart seeks markets where it feels that there is potential for it to

become a top three retailer, an opportunity that did not exist for it in

Germany or south Korea

Wal-Mart is pursuing strategies which include sustainability efforts

and localized charitable giving to help poverty

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References

http://www.ukessays.com/essays/management/general-

environmental-factors-affecting-wal-mart-management-essay.php

http://www.strategicmanagementinsight.com/swot-analyses/walmart-

swot-analysis.html

http://en.wikipedia.org/wiki/Walmart

http://cdn.corporate.walmart.com/66/e5/9ff9a87445949173fde56316

ac5f/2014-annual-report.pdf

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