2. INTRODUCTION
• Sam Walton the richest person in the
United States. With his four children, he owned
stock worth $2.8 billion. That put him $1 billion ahead of
the next person on the list, H. Ross Perot. By the end of
April 1986, Walton's net worth had
swelled by another $1.6 billion.
• Walmart Inc. is a multinational retail corporation that
operates a chain of hypermarkets, discount department
stores, and grocery stores from the United States,
headquartered in Bentonville, Arkansas.
• Our case focuses on discount stores and wholesale clubs.
• Major competitors : K-mart, Target, Venture, Caldor
3. FRAMING
Key Questions
Q1. What, historically, has been Wal-
Mart’s key sources of Competitive
advantage in discount retailing?
Q2. How sustainable is Wal-Mart’s
Competitive Advantage in discount
retailing in 1986?
Q3. Will Sam’s Wholesale Clubs prove as
big a success for Wal-Mart as its discount
stores?
01
Beginning of
the case
Background of Wal-Mart
Discount Stores
03
End of the Case
Wal-Mart's future prospects.
Success of Sam's warehouse
club
04
Flipping & Skimming
12 page case with 7 exhibits.
Organization of the case-
Introduction to discount retailing
In-depth analysis
of business functions of Wal-Mart
Competitor analysis
Different business prospects.
02
4. LABELLING
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03
• Price driven industry
• Inventory management
Industry
04
Weakness
05
• UPC Coded
• Supply chain management
• HR management policies
Strengths
02
Extensive competition in different geogr
aphies, price points and business models
.
Competition
01
• The customer became aware and price sensitive
• Technological advancements through central co
mputerised system and satellite network, UPC sc
anning
General Environment
•Diversification
•Low price
•Variety
•Promotion
•Pilferage and shoplifting
•Self Cannibalism
6. PORTER'S
5 FORCES
Competition: The competition was HIGH as there were
several players in the same segment.
Supplier's Bargaining Power: LOW
No vendor accounted for a hefty share in the company's
purchasing.
Substitutes: MODERATE level of substitutes
that majorly constituted of different retail setups.
Customers Bargaining Power: LOW because lowest market
prices of Wal-Mart
Barriers to entry: HIGH Capital intensive and to survive in
this industry a company needs to be operationally
excellent.
8. QUESTION 1
What, historically, has been
Wal-Mart’s key sources of
Competitive advantage in
discount retailing?
Question 1. Strategically expansive locations.
2. Technologically ahead of the curve.
3. Well managed supply chain. Advertising.
4. Bulk newspaper ads and Spot TV.
5. Regular meetings.
Answer
Supply chain
management, ROI,
Explanation
9. QUESTION 2
How sustainable is Wal-Mart’s
Competitive Advantage in discount
retailing in 1986?
Question
Yes it is sustainable
Answer
EPS growth, Sales growth
and return on equity
Explanation
10. QUESTION 3
Will Sam’s Wholesale Clubs
prove as big a success for Wal-
Mart as its discount stores?
Question
Yes it will be success
Answer Less price then other stores, Sales expected to increase
$20 billion by 1990's, low cost due to leasing of
warehouse about $4 million, Broder national then any
competitors, projected location expand to 100, revenue
to $6.5 billion, pretax income to $260 million
Explanation
11.
12.
13. • Wal-Mart should
expand to
densely populated
states, e.g. New
York, Washington etc.
RECOMMENDATION
•Total no. Of discount
stores were only 18%
•The map suggested the
fact that their presence
was limited to
central America and
expansion towards the
east and the west coast
could prove to be
an important location to
expand
KEY SUPPORTING
FACTORS
•Political Environment
•Competitive threat
•No prior experience in
densely
populated market.
•Capital intensive
RISK
•Surveys to
acquire customer tastes
and preferences
•Increasing
distribution centres.
•Implementing UPC syst
ems in the existing as
well as the
newly expanded stores.
•Training systems.
IMPLEMENTATION
CONCLUDING
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