• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
wal mart case study
 

wal mart case study

on

  • 120,629 views

value chain, five forces analysis , SWOT, wal mart case involves strategic fit at our global industry analysis course

value chain, five forces analysis , SWOT, wal mart case involves strategic fit at our global industry analysis course

Statistics

Views

Total Views
120,629
Views on SlideShare
120,123
Embed Views
506

Actions

Likes
39
Downloads
8,330
Comments
21

7 Embeds 506

http://www.slideshare.net 460
http://www.e-presentations.us 27
http://translate.googleusercontent.com 10
http://us-w1.rockmelt.com 4
https://twitter.com 3
http://static.slidesharecdn.com 1
http://www.casequiz.com 1
More...

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

110 of 21 previous next Post a comment

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…

110 of 21 previous next

Post Comment
Edit your comment

wal mart case study wal mart case study Presentation Transcript

  • Sam’s Clubs GLOBAL INDUSTRY ANALYSIS - CASE STUDY Wal*Mart Stores, Inc. a presentation Anthony, Crystal, Sandy From YZU university
  • WAL  MART Background
    • Sam Walton
    • Founder of Wal*Mart Stores, Inc.
    • Performance of Wal*Mart
    • 20-year average return on equity of 33%
    • Compound average sales growth of 35%
    • Market value = $57.5 billion
    Wal*Mart Industry average Sales per square foot $300
      • $210
  • WAL  MART Background
    • Year 1988
    • CEO: David Glass
    • COO: Don Soderquist
    • How to sustain the company’s phenomenal performance?
    1987 1993 Net sales 15,959 67,345 Net Income 628 2,333 Number Of Stores Discount Stores 1,114 1,953 Sam’s Wholesale Clubs 84 419 Supercenters N.A. 68
  • WAL  MART Background Number of Stores (1994)
  • WAL  MART Discount Retailing
    • Where
    • Emerged in the U.S.
    • When
    • Mid-1950s
    • Top 10 discounters in 1962
    • Wal*Mart remained only
    • The industry became more concentrated
    • Discount store companies operated 5 or more stores accounted for 62%
  • WAL  MART Discount Retailing
  • WAL  MART Discount Retailing Comparative Pricing Study, 1993
  • WAL  MART Discount Retailing Overall Performance of Discounters
  • WAL  MART Wal*Mart’s Discount Stores and History of Growth
    • Year 1945
    • Ben Franklin franchise store
    • In 1950s
    • 15 stores
    • Year 1962
    • Wal*Mart Discount City store
    • Year 1969
    • 18 Wal*Mart stores
    • 15 Ben Franklin franchise stores
  • WAL  MART Wal*Mart’s Discount Stores and History of Growth
    • Year 1970
    • 30 discount stores in rural states
      • South and Midwest
      • Cost of good sold
      • Build its own warehouse
        • Buy in volume at attractive prices
        • Store the merchandise
    • Year 1972
    • Took the company public
    • Raised $3.3 million
  • WAL  MART Wal*Mart’s Discount Stores and History of Growth
    • Year 1993
    • West coast and northeastern states
    • Year 1994
    • Operated in 47 states
  •  
  • WAL  MART Wal*Mart’s Discount Stores and History of Growth
    • Key strategies for growing
      • Locate store in isolated rural areas and small towns (population 5000~25000)
      • Pattern of expansion
        • Always push from inside out
    • Mid-1980s
    • One third were located in areas that were not served by any of its competitors
  • WAL  MART Wal*Mart’s Discount Stores and History of Growth
    • Year 1993
      • Wal*Mart faced 55% (Kmart), 23% (Target)
      • Kmart 82%, Target 85% from Wal*Mart
  • WAL  MART Wal*Mart’s Discount Stores and Sam’s Legacy
    • Philosophy
      • Keep prices below everybody else
      • Trip expenses can’t exceed 1% of the purchases
    • Spent lots of time in his own store and observe competitors
    • Culture
    • Do not show off buying luxury goods
    • Success
    • The way it treated its associates
  • WAL  MART Wal*Mart’s Discount Stores and Sam’s Legacy
    • Management style
      • Maintain an open-door policy
      • Empowering associates
      • Maintain technology superiority
      • Build loyalty among associates, customers, and suppliers
  •  
  • WAL  MART Wal*Mart’s Discount Stores and Merchandising
    • Tailor to individual market or individual store
    • Information system
    • A process which indexed product movements in the store to over a thousand store and market traits
    • Using inventory and sales data
  •  
  • WAL  MART Wal*Mart’s Discount Stores and Merchandising
    • Promotional strategy
    • Everyday-low-prices
    • Few promotions
    • 13 major circulars per year
    • 1993
    • Satisfaction guaranteed policy
  • WAL  MART Wal*Mart’s Discount Stores and Merchandising
    • Marketing slogan
    • Lower price
    • Store managers set up prices
    • 2-4% pricing differential between Wal*Mart and its best competitors in most markets in early 1990s
    • Transportation cost 圖
  • WAL  MART Wal*Mart’s Discount Stores and Merchandising
    • National brand strategy
    • Private label apparel
    • 25% of apparel sales
    • Other private label
    • 26% price advantage
    • Also sold in Sam’s Clubs and supercenters
    • “ Buy American” program
  • WAL  MART Wal*Mart’s Discount Stores and SWOT Analysis Strength Weakness
    • Cost advantage
    • Low price & customer-oriented
    • Strong supply chain
    • People are key to success
    • Ignore store decoration
    • Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
    Opportunity Threat
    • Build its own brand
    • Put efforts on social welfare  better image
    • New locations and store types
    • Overseas markets
    • Other competitors
    • Intense price competition
  • WAL  MART Wal*Mart’s Discount Stores and Store Operation
  • WAL  MART Wal*Mart’s Discount Stores and Store Operation
  • WAL  MART Wal*Mart’s Discount Stores and Store Operation
    • Electronic scanning of uniform product code (UPC) at the POS
    • Ensure accurate pricing
    • Improve efficiency
    • Reduce Shrinkage
    • Improve communications
  • WAL  MART Wal*Mart’s Discount Stores and Store Operation
    • Satellite system
    • Data collected and analyzed
    • Observing Merchandise flow, overstock, discount
    • Video transmissions, credit card authorizations, and inventory control
  • WAL  MART Wal*Mart’s Discount Stores and Distribution
    • Phenomenal distribution network
    • Two step hub-and-spoke
  • WAL  MART Wal*Mart’s Discount Stores and Distribution
    • Phenomenal distribution network
    • Cross-docking technique
  • WAL  MART Wal*Mart’s Discount Stores and Distribution
    • Phenomenal distribution network
    • Distribution center
    • Cost advantage
    • Stable price
  • WAL  MART Wal*Mart’s Discount Stores and Distribution
    • Phenomenal distribution network
    • Computerized pick to light system
  • WAL  MART Wal*Mart’s Discount Stores and Distribution
  • WAL  MART Wal*Mart’s Discount Stores and Vendor Relationships
    • Backward integration
    • No nonsense negotiator
    • Economies of scale
    • Maintain long term relationship with supplier, as powerful partner (RSP)
  • WAL  MART Wal*Mart’s Discount Stores and Vendor Relationships
  • WAL  MART Wal*Mart’s Discount Stores and Vendor Relationships
    • Backward integration
    • Electronic data interchange (EDI)
    • CPFR
      • Forecasting
      • Planning
      • Replenishing
      • Shipping applications
  • The CPFR Process Buyer Seller FRONT END AGREEMENT JOINT BUSINESS PLAN Collaborative Planning CREATE SALES FORECAST IDENTIFY EXCEPTIONS RESOLVE EXCEPTIONS Collaborative Forecasting CREATE ORDER FORECAST IDENTIFY EXCEPTIONS RESOLVE EXCEPTIONS Collaborative Replenishment GENERATE ORDER
  • WAL  MART Wal*Mart’s Discount Stores and Vendor Relationships
    • Backward integration
    • Vendor-managed inventory (VMI) system
      • Wrangler
      • GE
  • WAL  MART Wal*Mart’s Discount Stores and Vendor Relationships
    • Backward integration
    • From EDI to Retail link
  • WAL  MART Wal*Mart’s Discount Stores and Vendor Relationships
    • Whole Supply chain
    • Economies of scale
    • Cost leadership competitive advantage
      • JIT inventor
      • POS and retail link
      • CRS & VMI
      • EDI
      • CPFR
  •  
  • WAL  MART Wal*Mart’s Discount Stores and Human Resource Management
    • Non-unionized
    • Decentralized: full autonomy
    • Profit sharing program
    • Yes we can Sam
    • Store within store
    • Shrink incentive
    • Stock sharing
    • Administrative style
    • Frugality
    • No hierarchy in organization
  • WAL  MART Wal*Mart’s Discount Stores and Value Chain Non-unionized, Full autonomy to associates, Decentralized, profit sharing program, Job rotation, Stock purchase plan UPC at POS, EDI, Information system, VMI ,Cross ducking , Satellite system, CPFR Maintain long-term relationship, No single supplier accounting for more than 2.4%, Selective suppliers ( P&G & GE), NO nonsense policy Inferior fixtures standardization, Trucks, Average store size 84,000 square feat
    • Everyday low price
    • Always low price, always
    • Self service
    • Cash and carry
    • Save money, live better
    • credit card,
    • Layaway plan
    Outbound Logistics Marketing & Sales After Sales Service Inbound Logistics Primary Activities Firm Infrastructure Human Resource Management Technology Development Procurement
    • VMI system
    • Retail link
    • EDI
    • CPFR
    • Six days a week(9~21) Monday (12:30~17:30)
    • Two step hub and spoke distributing system
    • ECR
    • Satisfaction guarantee policy
    • Quick response (QR)
    Operations Margin
  • WAL  MART Diversification
    • Historical Time Series
    • Wal*Mart opened the first three Sam’s clubs in 1983
    • Sam’s sales surpassed Price Club’s, making it the largest wholesale club in 1987
    • In 1987, Wal*Mart introduced its first supercenter
    • In 1991, Wal*Mart acquired “The Wholesale Club” with 28 outlets in the Midwest
  • WAL  MART Diversification
    • In 1993, Sales at Sam’s Club rose 19.5% as the highest in national warehouse club chains, which Sam’s was nearly twice the size of Price Club
    • Sam’s Club acquired 99 of Kmart’s 113 “Pace club” in 1993
  • WAL  MART Diversification Comparison
  • WAL  MART Diversification
    • Backward Integration
    • Acquire “McLane Company”
    • Texas retail grocery supplier
    • To service both Sam’s Clubs and supercenters
  • WAL  MART Diversification and Sam’s Clubs Warehouse clubs
    • Operating philosophy
    • To offer a limited number of SKUs in pallet-size quantities in a no-frills, warehouse-type building
    • Location
    • Often locate next to a Wal*Mart
    • Sam’s chose to cannibalize its own sales rather than give competitors any openings
    WAL  MART Diversification and Sam’s Clubs
  • WAL  MART Diversification and Sam’s Clubs
    • Payment
    • Discover card
    • Cash- and-carry
    • Membership Free
    • $25 annually
    • Business Hour
    • Seven days a week
    • Supply
    • Direct shipment from supplier - 70%
    • Company’s distribution centers - 30%
  • WAL  MART Diversification and Sam’s Clubs Top Warehouse Clubs by 1993
  • WAL  MART Diversification and Supercenters Motivation
    • Operating margins within the industry were extremely low- a typical supermarkets was lucky to squeeze out a 2 % profit margin.
    • Industry trend
  • WAL  MART Diversification and Supercenters Definition
    • A supercenter is a combination supermarket and discount store averaging 120,000 to 130,000 square feet in size
    • It contains bakeries, delis and convenience shops
  • WAL  MART Diversification and Supercenters
    • Familiarity
    • Low-price image
    Operating Philosophy
  • WAL  MART Diversification and Supercenters Layout
  • WAL  MART Diversification and Supercenters Staff
    • 450 associates
    • Full-time - 70%
    • Part-time - 30%
  • WAL  MART Diversification and Supercenters
    • 24 hours
    • Seven days a week
  • WAL  MART Diversification and Supercenters
    • 1994, March
    • Acquire 122 Woolco stores
    • Woolworth Corp.
    WAL  MART Diversification and International Expansion
    • Year 1992
    • Joint venture
    • Cifra S.A. (Mexico’s largest retailer)
    • 63 stores (22 Sam’s Clubs, 11 Wal*Mart supercenters)
    WAL  MART Diversification and International Expansion
    • South America
    • Plan to enter in 1995
    • Brazil & Argentina
    WAL  MART Diversification and International Expansion
  • WAL  MART Diversification and Five Force Analysis
    • Discount Store
    • Kmart
    • Target
    • Caldor
    • Warehouse Clubs
    • Price Club
    • Costco
    • Pace
    • Supercenter
    • Meijer
    • Fred Meyer
    • Competitors
    • High degree of concentration
    • High industry growth
    • Have excess capacity
    • Cost structure of firms: sensitive to cost
    • Buyer’s switching cost is low
    • Firm can adjust prices quickly
    • Price elasticity of demand
  • WAL  MART Diversification and Five Force Analysis
    • Supermarket
    • Kroger
    • Safeway Stores
    • Potential Entrant
    • They have distribution channels
    • Access to raw materials
    • Allocate favorable locations
  • WAL  MART Diversification and Five Force Analysis
    • Key players
    • Procter & Gamble
    • GE
    • Wrangler
    • Suppliers
    • Industry is concentrated
    • Many suppliers
    • No-nonsense
  • WAL  MART Diversification and Five Force Analysis
    • Target Market
    • ??????
    • Customers
    • Low switching cost
    • Transportation cost