BUS 109 Project

1. Business 109 Strategic Audit
July 28, 2014
Created for: Dr. Jasso and Peter Phung
Created by: Carolyn Bianco, Dan Gallagher,
Shagandeep Kaur, Myrian Lamas, Karla
Legorreta, Laurie Maemura, Shih-Chin Pan,
Kamile Petraityte, Diana Phan, and Pengyu Yue

2. 1
Wal-Mart Strategic Audit Team
Carolyn Bianco
3rd
Year
Marketing
Daniel Gallagher
4th
Year
Accounting
Shagandeep Kaur
4th
Year
General Management
Myrian Lamas
4th
Year
Marketing

3. 2
Karla Legorreta
4th
Year
Marketing
Laurie Maemura
4th
Year
Accounting
Shih-Chin Pan
3rd
Year
Marketing
Kamile Petraityte
4th
Year
Finance

4. 3
Diana Phan
4th
Year
Finance
Pengyu Yue
2nd
Year Transfer
Finance

5. 4
TABLE OF CONTENTS
I. Current Situation 8
1.1 History 8
1.2 Current Performance 9
1.2.1 Ratio Analysis 9
1.2.2 Competitors’ Comparison 10
1.2.3 Industry Comparison 13
1.3 Mission 13
1.4 Objectives 14
1.5 Strategic Posture 14
1.5.1 Corporate Strategy 14
1.5.2 Business Strategy 18
1.5.3 Functional Strategy 19
1.6 Policies 20
1.7 Alignment 25
II. Corporate Governance 26
2.1 Board of Directors 26
2.2 Top Management 30
III. External Environment: Opportunities and Threats (SWOT) 32
3.1 Natural Physical Environment: Sustainability Issues 32
3.2 Societal Environment 34
3.2.1 Economic 34
3.2.2 Technological 37

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3.2.3 Political-Legal 38
3.2.4 Socio-Cultural 39
3.3 Task Environment 39
3.3.1 Threat of New Entrants 39
3.3.2 Bargaining Power of Suppliers 40
3.3.3 Threat of Substitute 41
3.3.4 Bargaining Power of Buyers 42
3.3.5 Rivalry Among Existing Firms 42
3.3.6 The Sixth Force 43
3.4 EFAS Table 45
IV. Internal Environment: Strengths And Weaknesses (SWOT) 46
4.1 Core Competencies 46
4.2 VRIO Analysis 48
4.3 Business Model 50
4.4 Value Chain 51
4.5 Corporate Structure 52
4.6 Corporate Culture 52
4.7 Corporate Resource 54
4.7.1 Marketing 54
4.7.2 Finance 54
4.7.3 Research and Development 55
4.7.4 Operations and Logistics 57
4.7.5 Human Resources 58

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4.7.6 Information System 59
4.8 IFAS Table 60
V. Analysis of Strategic Factors (SWOT) 61
5.1 Situational Analysis 62
5.2 Review of Mission and Objectives 62
VI. Strategic Alternatives and Recommended Strategy 64
6.1 TOWS Matrix 64
6.2 Strategies Alternatives 65
6.2.1 Pros and Cons 65
6.3 Recommended Strategy 67
6.3.1 Corporate Strategy 68
6.3.2 Business Strategy 69
6.3.3 Functional Strategy 69
6.3.4 Policies 71
VII. Implementation 72
7.1 Implementation Program 72
7.2 What must be done 72
7.2.1 Programs Activities 72
7.2.2 Action Steps 72
7.2.3 Who Implements Strategy 72
7.2.4 Matrix of Change 80
7.3 Organizing for Action 81
7.3.1 Corporate Structure 81

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7.3.2 Job Creation 81
7.4 Action Plan 72
VIII. Evaluation and Control 82
8.1 Balanced Scorecard 83
8.1.1 Financial 83
8.1.2 Customer 83
8.1.3 Internal Business Process 85
8.1.4 Learning and Growth 88
IX. Appendix 92
X. Work Cited 99

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I. CURRENT SITUATION
1.1 - HISTORY
Wal-Mart was opened on July 2, 1962 in Rogers, Arkansas. Sam Walton, founder and
CEO at the time, envisioned providing customers the “Lowest Prices Anytime, Anywhere”. This
was an uncontested market at the time and gained ground quickly in the discount, variety store
industry. Within seven years of its creation, the company was incorporated in Delaware on
October 31, 1969 and a year after incorporation, Wal-Mart was put on the New York Stock
Exchange starting at $16.50 with 100 shares (Walmart, 2014).
By 1972, the company had 51 stores in operation and generated over $78 million in
revenues. This was miniscule by 1980 when the company had reached its first $1 billion dollar
sales year – faster than any other company in history. They had 276 stores opened and employed
21,000 workers across the Midwest (Flowing Data, 2014). Within the same decade, the company
began Sam’s Club. Sam’s Club is a warehouse that specializes in bulk sales and was started to
meet the growing needs of customers who wanted to buy bulk products. Shortly after opening
Sam’s Club, Wal-Mart Stores Incorporated installed the largest private satellite communications
system in the U.S. that connected the entire business electronically (Walmart, 2014).
In the 1990’s the company had expanded to 1,928 stores and clubs with over 371,000
employees (Flowing Data, 2014). The company also had begun international expansion and had
its first international store in China. During this time period, the company had its first $1 billion
sales week and first $100 billion sales year (Walmart, 2014). The company grew quickly and
spread all across the United States and continued expanding into countries such as Canada as
well as European countries.

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Since the turn of the century, Wal-Mart has topped the Fortune 500 list multiple times;
the first time it topped the list was in 2002. In 2007 the company introduced “site-to-store”
service from their website, walmart.com, that allowed customers to order products online and
have in-store pickup and delivery. 2009 was the first year the company exceeded $400 billion
annual sales and opened stores in India. Now, in 2014, the company has grown to over 11,000
stores in 27 countries worldwide and employs some 2.2 million people (Walmart, 2014).
1.2 - CURRENT PERFORMANCE
Financial reports can be found in the Appendix
1.2.1 - RATIO ANALYSIS
Analyzing the last five years of data will provide a good understanding of how Wal-Mart
has performed in the market place. Reviewing key financial ratios, the company’s strengths and
weakness will be made apparent. This analysis will also compare industry averages in order to
give a deeper understanding of what is expected from the company.
The Appendix includes Wal-Mart’s, Costco’s, Target’s balance sheet. There you can
compare between the three company’s biggest numbers. These numbers though do not represent
the actual performance of the companies since they do not include operating cash flows or
expenditures and capital investments.
Looking at Wal-Mart, the company’s gross profit margin is 24.81%, which is slightly
above the industry standard of 23.98% (Retail Owner, 2014). The gross profit margin indicates
the total profit margin available to cover other expenses that go beyond the cost of goods sold.
The reason for Wal-Mart’s 24.81% margin is that it specializes in selling extremely low priced
goods. Since the company’s profit margin for each dollar of sales is $0.033, it is operating on

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making very little profit for every sale, but the number of sales is what keeps the company’s
annual sales well above $400 billion. The company has been extremely profitable and its
shareholders have been reaping the benefits. In the last five years, the company’s dividend
payout has risen to $1.88 in 2014 compared to $1.09 back in 2010. Its earnings per share have
also raised up to $4.87 per common share (ignoring all dilutive securities) (Mergent Online,
2014).
1.2.2 – COMPETITOR’S COMPARISON
The Variety Stores Industry is becoming more competitive amongst the reigning big
companies. Wal-Mart’s biggest competition lies with Costco Wholesalers and Target. All three
companies have focused on discount product sales and therefore all three compete on price
comparison. In order to achieve this, each company’s business strategy is a Lower Cost strategy
that relies heavily on operational efficiency. However, each company makes its defining
difference through customer satisfaction, store environment and layout, bulk sales versus small
packaged items, and convenience through location, products and services provided and, once
again, price. Wal-Mart Stores, Inc. currently leads the industry in revenue boasting over $473
billion as of January 2014 (Mergent Online, 2014).

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2013 Revenue Comparisons
2013 Key Company Numbers
Wal-Mart’s Return on Equity ratio also leads the industry with 22.09% compared to the
industry average of 22.10% (Hoovers, 2013). Return on Equity measures the book value of the
shareholders’ total investment in the company and how much profit is generated with it. Return
on Assets measures the efficiency of managers at generating earnings from use of the company’s
assets. Wal-Mart’s ROA is 7.82% which is also above industry standard of 7.24% (Hoovers,
2013). Return on invested capital shows a company’s efficiency of allocating its capital to

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profitable investments. Wal-Mart also exceeds the industry standard of 10.69% by having a
13.6% RoIC.
2013 Company Profitability Comparison
Wal-Mart however has not been growing as fast as its competitors or even at the industry
standard. Even though the company’s revenues exceed all competition, its revenue growth of
1.52% is below each one of them. Furthermore, the company’s annual earnings per share growth
is below Costco’s 19% at -3.39%; this means it’s less profitable for its investors. However, the
flip side is that Wal-Mart’s annual dividend growth is more promising at 18.24% (Hoovers,
2013).
2013 Industry Growth Comparison

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1.2.3 – INDUSTRY COMPARISON
Previously, in the competitor comparison, charts also included the industry average for
aforementioned measures of Wal-Mart’s profitability, growth, and efficiency. Wal-Mart Stores,
Inc. is leading the industry in the following key financial distinctions: Revenue, Market Capital,
Gross Profit Margin, Net Profit Margin, Return on Equity, Return on Assets, and Return on
Invested Capital. Please reference the charts above for more detail.
Also within our competitor comparison, Wal-Mart showed areas in which it can improve
in comparison to its competitors and the industry average. These numbers do not in any way
reflect the company’s profitability or beneficial growth, but rather areas of opportunity for
improvement. The following comparison of income, earnings per share, and dividend growth can
also be found in the charts above for more detail: 12-Month and 36-Month Net Income Growth,
12-Month and 36-Month EPS Growth, 12-Month and 36-Month Revenue Growth, 12-Month and
36-Month Dividend Growth. Some of these comparisons do not include an industry standard.
Comparison between Wal-Mart’s competitors Costco and Target can be made and individual
interpretation of the data is necessary. Though Wal-Mart did not meet or exceed industry
expectations or competitor’s numbers, the company did not fall any lower than mid-range for our
comparisons (Hoovers, 2013).
1.3- MISSION
Wal-Mart’s mission statement is, “We save people money, so they can live better” (Wal-
Mart, 2014). With the focus on providing customers with the lowest possible prices, the
company aims to give people the opportunity to improve their quality of life. The company’s
business strategies are completely centered around this concept of increasing operational activity
to lower company costs and decreasing inefficiency to continue providing the customers with

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what they want at the price points they expect. The company has also implemented a company
culture that is meant to keep employees and management focused on their mission. The company
culture consists of four divisions and under each division is a subheading to further breakdown
the importance each aspect holds. To name a few, the company likes to focus on serving,
supporting, communicating, innovating, and honesty. This extends from management to
employee to customer; each person in the Wal-Mart family is expect to live by these pillars of
excellence to keep the company alive and growing (Wal-Mart, 2014).
1.4 – OBJECTIVES
 Achieve internationalization and globalization
 Construct a more advanced information system
 Focus on innovation which attracts customers
 Integrate global logistics system.
 Have better employees to operate their online shopping
1.5 - STRATEGIC POSTURE
1.5.1 - CORPORATE STRATEGY
Throughout the years, Wal-Mart Stores, Inc. has been striving to better their company by
the use of corporate strategies. On April 22, 2013 the President and Chief Executive Officer
Mike Duke claims, “Walmart is only getting stronger as the world’s healthiest and best-
positioned global retailer. I’m pleased with our business and financial performance last year. But
what give me the most confidence is the changing landscape of retail around the world, and how
our people, our strategies and the customers we know and care about fit in” (Walmart Corporate

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2013). He strongly believes that the entire company is on the right path with its use of everyday
low prices and its shopping experience like no other. A great part of this role involves a great
talented team of associates that follow the model (Corporate 2013).
1.5.1.1 – DIRECTIONAL
Mike Duke’s focus on strategy regards to make sure that the company has the top retail
talent in every single level of the organization (Walmart Corporate 2013). To make sure that this
happens, he will develop, recruit, and maintain the best associates possible as an assurance.
There will also be a focus on delivering products that will enable Wal-Mart to operate fewer
hours in order for prices to go even lower for their customers (Walmart Corporate 2013). This is
also a promise that the company is making to make sure that they follow their mission statement
of saving people money so that they could live better. Another factor of corporate strategy is to
be more disciplined about operating expenses and capital spending (Walmart Corporate 2013).
This is a way of cutting cost for the company to not throw away their money on something that is
not worth the company to keep. Then there is the idea of “investing to serve more customers
globally and accelerating the vision of anytime, anywhere access by bringing together best-in-
class online, mobile and social capabilities and our more than 10,700 stores” (Walmart Corporate
2013). Growth has been one of the most active implementations of this company. Out of 10,700
retail operating stores there are still more yet to come. There are approximately 245 millions of
customers served weekly in the stores located in 27 different countries. This company truly cares
about its customers because it is offering them lower prices with the benefit of establishing their
stores in nearer locations for them. Lastly, Mike Duke states his mission of establishing a method
of benefiting from communities and having a world-class compliance organization (Walmart

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Corporate 2013). The Chairman of the board of directors, Rob Walton believes that there is a
strong commitment in Wal-Mart’s corporate governance principles and recognizes the service of
directors who are elected annually (Walmart Corporate 2013). Rob Walton states proudly, “We
are guided by strong governance principles in our service to shareholders, and in making
decisions that strengthen our ability to serve customers” (Walmart Corporate 2013).
1.5.1.2 – PORTFOLIO ANALYSIS
Wal-Mart portfolio includes many private brands in their stores with a variety of
categories. This includes groceries, personal care to home, and electronics (Brands 2013). Wal-
Mart reports concern the emergence of their marketplace and signs to promote upgraded brand
designs in the aisles. It is said “With this vitality, Marketplace is driving a lot of consumer appeal
in the produce section, and this provides unique flavors and products across dressings,
marinades, salsas and more” (Brands 2013). With Wal-Mart’s private brand portfolio, there is an
aim to target different customers at different tastes and life states (Brands 2013). “Each private
brand’s positioning and segmentation is a strategic choice designed to create a private brand
portfolio that engages Walmart customers, whoever they are” (Brands 2013). Its private brand
portfolio is sophisticated and credible onto a multi-billion dollar asset (Brands 2013). This
company creates differentiation and builds customer loyalty designing methods of being at the
top of competition (Brands 2013).
Walmart’s delivery of good financial performance has allowed them to increase their
earning per share to about 10.6 percent with an addition of $22 billion in net sales (Annual
Report 2013). This has allowed the company to become a $466 billion company. Wal-Mart’s
industry is confident in their strategies are truly competent in each operating segments (Annual

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Reports 2013). Their goal is to put as much effort possible to make sure that they are the best
retail company in every level of the organization (Annual Reports 2013). Wal-Mart has
successfully leveraged operating expenses in the last year and will continue to invest savings into
lower prices and improve returns (Annual Reports 2013). Wal-Mart reports state, “We can offer
customers a truly seamless experience that empowers them to shop in the way most convenient
for them—anytime and anywhere” (Annual reports 2013).
1.5.1.3—PARENTING STRATEGY
The company itself will also focus on a near-term execution to improves sales in the
United States, improve returns International and leverage expenses for a full year (Walmart
Corporate 2013). Doing so, this will also focus on progression on the areas of leverage
initiatives, capital discipline, e-commerce, compliances, and talent recruitment within the
corporate responsibility (Walmart Corporate 2013). Mike Duke understands that this is an
unpredictable global economy and that competition is fairly tough, but raising stakes can go
farther when serving customers (Walmart Corporate 2013). He started prioritizing competitive
sales at Wal-Mart stores in the United States because he guarantees that there will be new
“fantastic” merchandise and an increase in stock levels (Walmart Corporate 2013). He also
believes that there will be increased returns in International Wal-Mart stores because “These
actions, combined with capital disciplined and e-commerce investments, will deliver a solid
framework for future growth and improved returns” (Walmart Corporate 2013). Although it
seems that one should not worry about their business because they are already doing good, that is
not always the case. As a corporate strategist one must be aware of competition. Competitors can
always out stake one’s company with great strategy. The United States Wal-Mart Stores have

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successfully found a way of reducing shipping costs and increasing transportation efficiency in
order to save in labor productivity in China (Walmart Corporate 2013). Mike Duke states that
they are “driving costs out of our system so we can invest those savings into lower prices for
Walmart customers” (Walmart Corporate 2013). Their marketing strategies have done an
outstanding job because of their customer focus. Without customers, there are no revenues, and
without revenues, there is no business. Over the years of using the tactic of saving people money,
they have successfully made it to the top by focusing on their mission statement. Mike Duke also
states that compliance is the essential part of their growth strategy (Walmart 2013).
The strong belief that even if there is an unpredictable economy, there is strength in the
Wal-Mart business is outstanding. Mike Duke’s strong confidence is what makes the
corporation’s strategies work. He states that “We’re making substantial progress in areas that are
the foundation for long-term growth and shareholder returns. And whether I’m meeting with the
leadership team in the Home Office, or walking stores and clubs in any market, I see a team
that’s disciplined, focused and executing on the fundamentals. Walmart will win” (Walmart
Corporate 2013).
1.5.2 – BUSINESS STRATEGY
A new development in Walmart.com has been established upon their new search engine.
This search engine has improved so much that it is able to deliver more results to online shoppers
(Annual Reports 2013). This is an advantage for the company because it has increased sales
conversions. There is also a testing being conducted for great innovations such as same-day
delivery of purchases from the United States Website (Annual Reports 2013). There have also

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been more growth plans where the main goal is to build the next generation global technology
platform (Annual Reports 2013).
In order to keep operations at its best, there must be recruitments, development, and a retainment
of excellence in every level of the organization. “That means executives, managers and front-line
associates that traditionally make up the ranks of a major retailer. But we also need
entrepreneurs, technology specialists, data scientists and consumer Internet professionals”
(Annual Reports 2013). Every Wal-Mart associate must also imply integrity factors in their job
position. Mike Duke states, “Our standard is full compliance with all laws and regulations in the
markets where we operate” (Annual Reports 2013). This is extremely important because it is
how the company gains customers trust. The basic business model for Wal-Mart is to “Leverage
the winning formula” that is to comply with the promise of everyday low prices (Annual Reports
2013). This mission is the cornerstone of the company’s strategy. Mike Duke implies, “Our price
investments across a broad assortment allow us to deliver a lower-priced market basket” (Annual
Reports 2013).
1.5.3 – FUNCTIONAL STRATEGY
Over the last several years, Wal-Mart has managed to develop its company as a powerful
retailer with outstanding sales (Alliance 2014). A great part of their success has to do with their
effective management in its supply chain. The company developed ways of developing cost
structures that allowed them to offer low prices to their customers (Alliance 2014). The way they
succeeded this is by achieving to replenish inventory that relied on logistics method called
docking (Alliance 2014). This method allowed products that are sent out from suppliers are sent
to Wal-Mart warehouses and from there they are shipped to stores without waiting a long period

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in inventory. This Business strategy also successfully reduced Wal-Mart’s costs and allowed
them to save their customers money by their low pricing (Alliance 2014). The main structure of
the supply chain includes the purchasing of operations, distributing, and integration (Alliance
2014). It all begins with purchasing where the manager or buyer are responsible to determine
which products their company will sell (Alliance 2014). This operation is mainly focused on
“demand planning, forecasting, and inventory management. Forecasts estimate customer demand
for a particular product during a specific period or time based on historical data, external drivers
such as upcoming sales and promotions, and any changes in trends or competition” (Alliance
2014). The main function of a supply chain is the distribution function driven by customers that
makes the supply chain move the product from warehouses or manufacturing plants to the stores.
“Walmart’s supply chain begins with strategic sourcing to find products at the best price from
suppliers who are in a position to ensure they can meet demand. Walmart establishes strategic
partnerships with most of their vendors, offering them the potential for long-term and high
volume purchases in exchange for the lowest possible prices” (Alliance 2014).
1.6 - POLICIES
Wal-Mart follows different policies and guidelines to keep their company enact. These
policies show as follows: Ad Match Guarantee, Animal Welfare Policy-Fresh Pork, Conflict
Minerals Policy, Walmart Coupon Policy, Global Anti-Curruption Policy, Government Relations
Policy, Mobile Terms of Use, Photo and Video Use Policy, Privacy Policy, Return Policy, Social
Media Guidelines, and Walmart Statement of Ethics.
The Ad Match Guarantee is a matching price program that ensures that a customer gets
the lower advertised price on an identical product. This policy states that “tell us and we’ll match

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it. Right at the Register” (Walmart Corporate 2014). Of course there are limits to this, and that is
as follows: We will match any local competitor’s advertised price, We do not require customers
to have the ad with them to honor a competitor’s ad, Items purchased must be identical to the ad
(size, quantity, brand, flavor, color, etc.) (Walmart Corporate 2014). There are certain items that
they do not honor and those are when the actual price for items cannot be determined, internet
pricing, misprinted ad prices of other retailers, ‘Going out of business’ sales or ‘closeout’ prices
(Walmart Corporate 2014).
The Policy on Animal Welfare in Fresh Pork Supply Chain is following Wal-Mart’s
commitment to providing customers with safe, affordable and sustainable food, also regarding
promoting humane treatment of animals (Walmart Corporate 2014). It states, “We seek
continuous improvement in animal welfare practices within our fresh pork supply chain. As a
result, in addition to our current programs, Wal-Mart is launching a new tracking and audit
program for our fresh pork supply” (Walmart Corporate 2014). In other words, every supplier
must meet required program requirements before any of the products enter their stores. This
procedure includes that each fresh pork supplier has a on-farm video monitoring for sow farms
and unannounced animal welfare video audits (Walmart Corporate 2014).There must also be an
internal annual welfare audit for all farms, and documentation and results of tracking the audit
program available to Walmart as requested (Walmart Corporate 2014). These procedures must
be done no less than twice annually.
The Wal-Mart Stores, Inc. Conflict Minerals Policy involves rules requiring public
trading companies to report all products that are manufactures that contain tin, tantalum, tungsten
or gold mined in the Democratic Republic and related countries that support human right
violations (Walmart Corporate 2014). Wal-Mart and its product suppliers actively support this

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policy. They follow these regulations by: “adopting responsible mineral sourcing policies in
dealing with their supply chains that are consistent with this policy and the OECD guidance,
supplying products to Walmart that do not contain 3TG minerals that have been sourced under
circumstances that contribute to or support human rights violations in the DRC, and providing
evidence to support their representations as to the conflicts minerals status of their products upon
request” (Walmart Corporate 2014).
The Walmart Coupon Policy are glad to accept any type of coupon that is valid upon
request. The following coupons are acceptable: “Print-at-home Internet coupons, Manufacturers’
coupons, Competitor’s coupon, Soft drink container caps, and Checkout coupons (“Catalinas”)
(Walmart Corporate 2014). The following are not accepted: “Checkout coupons, Print-at-home
Internet coupons that require no purchase, and Competitors’ coupons without specified price
(Walmart Corporate 2014). The guidelines for these coupons are that they must be for products
that arse sonld and must be presented at the time of purchase (Walmart Corporate 2014). There is
only one coupon per item and item must be identical to the coupon. There is no limit on the
number of coupons per transaction but must be redeemed prior to expiration date (Walmart
Corporate 2014).
Wal-Mart’s Global Anti-Corruption Policy involves a commitment to maintain the
highest ethical standards in the corporation and comply with all applicable laws (Walmart
Corporate 2014). Within the company’s operations, “Walmart seeks to avoid even the
appearance of impropriety with respect to the actions of any of its officers, directors, associates,
employees, agents or representatives” (Walmart Corporate 2014). No corrupt payments must be
done in any circumstances especially when dealing with government officials and private sector
(Walmart Corporate 2014). No paying bribes or giving money of any type to any any person

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including any Government Official (Walmart Corporate 2014). Any person who violates this
policy will be subject to disciplinary measures and include termination of case of the associate
and business relation of third party (Walmart Corporate 2014).
The Government Relations Policy applies to all associates in the Wal-Mart Stores, Inc.
This allows the Government Relations Department go coordinate any company interactions with
its officials and legislative bodies at any federal, and local level (Walmart Corporate 2014). It
states, “ To help ensure consistent management of these relationships, all conversations and
engagement with elected officials or government agencies should be done in coordination with
your Government Relations contact” (Walmart Corporate 2014). The rules will be applied even
if there are fundraising events, but officers may distribute political literature or solicitation
(Walmart Corporate 2014).
The Photo and Video Use Policy states that all photos and videos in the media library are
accredited news organizations (Walmart Corporate 2014). This company “grants its permission
for use of these items for the sole purpose of accompanying related news content in print,
broadcast and online channels by professional news organizations” (Walmart Corporate 2014).
Wal-Mart does not represent rights of publicity, copyright or any other rights with the images.
(Walmart Corporate 2014).
The Privacy Policy applies to the Wal-Mart Customers. Customer information will be
collected such as transactions, customer service operations, surveys, and website registrations
(Walmart Corporate 2014). Also information of other sources will be collected such as
information when a customer enters the Wal-Mart website and in stores such as via video camera
(Walmart Corporate 2014). The company will not sell or rent customers personal information
and this “will support core business functions such as service fulfillment, internal business

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processes, marketing, authentication, loss and fraud prevention, public safety and legal
functions” (Walmart Corporate 2014). The company will also disclose a customer’s personal
information within the corporate family, and third parties (Walmart Corporate 2014).
The Return Policy regards the goal to satisfy Wal-Mart customers by their choice to
exchange, refund, or repair. This policy states “As an added convenience for customers, Walmart
has adjusted its return policy for the holiday gift buying season for items that have a limited
return/exchange period (15 days, 30 days, etc.). For these items purchased between Nov. 1 and
Dec. 24, the limited return period will begin Dec. 26. This includes items such as TVs, cameras,
computers, DVD and music players that can have a 15-30 day return period” (Walmart
Corporate 2014). There are times where the stores accept returns without a receipt. This gives
customers the option of a cash refund or an exchange or a product (Walmart Corporate 2014).
This is a great advantage that other competitors do not have.
Wal-Mart’s Social Media Guidelines state that the company is engaged with customers
and stakeholders beyond the walls of stores. One can find the company on Facebook, Twitter,
YouTube, Flickr, and Foursquare (Walmart Corporate 2014). This allows better engagement
with customers over social media with guidelines of what o expects from them and where one
can find more information (Walmart Corporate 2014).
The Ethics and Integrity policy revolves around the Global Ethics Office where it is
responsible in promoting Wal-Mart’s culture of Integrity (Walmart Corporate 2014). This
definitely includes the development and upholding of Wal-Mart’s ethical behavior for all
stakeholders everywhere (Walmart Corporate 2014). The Global Ethics Office is essential for the
company because it serves as a guide for ethical decision-making provides a confidential and
anonymous reporting system, and it also leads ethical education and communication systems

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(Walmart Corporate 2014). Wal-Mart intends to act and promote integrity in everyday behaviors
and implement these actions toward associates and existing functional-area training (Walmart
Corporate 2014).
1.7 – ALIGNMENT
Wal-Mart’s operations consist of about 16,000 to 20,000 suppliers. Their joint business
planning process limits to about 300 suppliers due to the achievement in alignment on the broad
overarching strategies that guide the business (Troy 2013).The company is “expected to be active
in participants in joint business planning and focus on driving everyday low cost which
underpins Walmart’s everyday low price value proposition” (Troy 2013). Business planners must
also be involved leaders and for suppliers to invest in Walmart because it would bring trust
relationships on customers (Troy 2013). Wal-Mart Stores Inc. has found a way of aligning their
P&G strategy by delivering innovation and driving joint value creation (Troy 2013).

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II. CORPORATE GOVERNANCE
2.1 – BOARD OF DIRECTORS
S. Robson Walton
Walton is currently chairman of the Board of
Directors. Having been on the board since 1978, Rob
Walton, is the son of Wal-Mart’s founder Sam
Walton. His positions include senior vice president,
corporate secretary, general counsel and vice
chairman. He also worked with the law firm, Connor
& Winters. Besides spending his time with Wal-
Mart, he is also a chairman of the executive
committee of the Conservation International.
Aida M. Alavrez
Former Administrator of the U.S. Small Business
Administration, Alavrez is the founding director of the
Office of Federal Housing Enterprise Oversight for
four years, Alvarez was responsible for leading the
agency with financial oversight for the secondary
mortgage market and ensuring the capital adequacy
and safety of the FNDA and the FHLMC. She is chair
of the Latino Community Foundation of San
Francisco, and is also the director of UnionBalCal
Corporation and Union Bank.

28. 27
James I. Cash, Jr.
Currently holding the position as an Independent
Presiding Director, his profession as associate dean
and chairman of HBS Publishing provides his
research on strategic use of information technology,
and the development of performance measurement
systems. He has an accounting degree and has been
published extensively in journals. James has been
director for a number of public companies including
Phase Forward, The Chubb Corporation, GE, and
Microsoft Corporation.
Roger C. Corbett
Corbett is the retired CEO and Group Managing
Director of Woolsworth Limited in Australia. He
joined the board in 2006 as a member of the
strategic planning and finance. He is also a
director of the Reserve Bank of Australia and
Deputy chairman of PrimeAg Australia, and the
former chairman of CIES Food Business Forum of
France.

29. 28
Pamela J. Craig
Craig is the retired Chief Financial Officer of
Accenture PLC, a global management consulting,
technology services, and outsourcing company. She
recently joined the board in 2013 as a member of
the Audit committee.
Douglas N. Daft
As the retired chairman and CEO of the Coca-
Cola Company, a beverage manufacturer, he
joined the board in 2005 as part of the
compensation, nominating, and governance
committee.

30. 29
Michael T. Duke
Joined the board in 2008, Duke is the retired
President and CEO of Wal-Mart Stores, Inc. and
Chairman, Executive Committee of the Board of
Directors. He has served this position from
February 2009 to January 2014.
Timothy P. Flynn
Mr. Flynn is the retired Chairman of
KPMG International, a professional
services firm.
Marissa A. Mayer
Ms. Mayer is the CEO and President and Director
of Yahoo!, Inc., a digital media company.

31. 30
2.2-- TOP MANAGEMENT
Bill Simon: President and CEO, Walmart U.S.
Simon’s responsibility is to execute Walmart’s core business model by lowering costs in order to
offer customers lower prices and fulfill the company’s mission of saving people money so they
can live better. For three years, Simon worked to drive innovation and improvement. He also led
his team to create and launch a $4 prescription drug program. He was also the president of
Diageo Southeast and North America Ready to Drink where he held senior sales and marketing
roles with Cadbury-Schweppes, PepsiCo, and RJR-Nabisco. He attended the University of
Connecticut with a bachelor of arts in economics and an MBA in management.
David Cheesewright: President and CEO, Walmart International
As President and CEO, Walmart International, Cheesewright currently serves for more than
6,400 stores and more than 796,000 associates serving customers in 26 foreign countries. For
more than 25 years, his career was revolved around international retail and manufacturing
sectors. His positions were in operations, merchandising, logistics, strategy and format
development. His education is of first-class honors degree in sports science and mathematics
from Loughborough University, U.K.
Rosalind G. Brewer: President and CEO, Sam’s Club
Neil M. Ashe: President and CEO, Global eCommerce
John Aden: Executive Vice President, Sales Innovation, Walmart U.S.
Claire Babineaux-Fontenot: Executive Vice President and Treasurer
Andy Barron: Executive Vice President, Softlines, Walmart U.S.

32. 31
Dan Bartlett: Executive Vice President, Corporate Affairs
Michael J. Bender: President, Walmart West, Walmart U.S.
Brett Biggs: Executive Vice President and Chief Financial Officer, Walmart International
Steve Bratspies: Executive Vice President, General Merchandise, Walmart U.S.
Shelley Broader: President and Chief Executive Officer, Walmart EMEA
M. Susan Chambers: Executive Vice President, Global People Division
Michael Dastugue: Executive Vice President and Chief Financial Officer, Sam's Club
Cindy Davis: Executive Vice President, Global Customer Insights and Analytics
Jeff Davis: Executive Vice President and Chief Financial Officer, Walmart U.S.
Greg Foran: President and CEO, Walmart Asia
Rollin L. Ford: Executive Vice President, Chief Administrative Officer
Don Frieson: Executive Vice President, Operations, Sam's Club

33. 32
III. EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT)
3.1 – NATURAL PHYSICAL ENVIRONMENT: SUSTAINABILITY ISSUES
Since Wal-Mart Stores Inc. is such a massive company that has the ability to impact the
natural environment of wherever its nearly 11,000 stores are located around the world, the
company is currently focused on three goals that
revolve around environmental sustainability: energy,
waste and product sustainability. These goals are
implemented throughout all of Wal-Mart’s stores
worldwide and they were chosen to help further
support the company’s famous mission statement of
helping people so that they can live better. When
more sustainability initiatives and programs are
being implemented throughout the corporation, the logic is that operational costs will be cheaper,
which will then translates into lower prices on products for consumers. Not only do cleaner
forms of energy help Wal-Mart save money in its manufacturing and store operations, the
company also believes that it is doing a greater good by helping out people and the environment
so that everyone is living better.
In terms of energy, Wal-Mart is considered a global renewable energy leader and one of
the largest onsite renewable energy consumers (Walmart Corporate, 2014).i
The company’s
ultimate goal is to be powered by 100% renewable energy sources. This goal was established in
2005 and since then, Wal-Mart has been leveraging its huge size and scale to develop, test and
utilize new and different forms of renewable energy like fuel cells, solar energy, LED lighting
and wind turbines to power its retail stores and distribution centers according to a 2013 video on

34. 33
the company’s corporate YouTube channel. Since the end of 2013, 24.2% of Wal-Mart’s global
energy needs are being met by renewable sources (Walmart Corporate). By the end of 2020,
Wal-Mart wants to generate a total of 7 billion kilowatt-hour (kWH) of renewable energy to
power its stores, reduce its energy per square foot intensity required to power its stores by 20%
based off of its baseline in 2010ii
and equip
1,000 of its U.S. stores with solar panels
(Ibid).
In regards to waste, Wal-Mart is
aiming to create zero waste across its global
operations by the year 2020 as well
(Walmart Corporate, 2014). In fact, two of
Walmart U.S.’s international segments,
Seiyu in Japan and Asda in the United
Kingdom, have reduced their waste by 80%
through recycling, donating usable food to charities and reusing leftover foods for animal feed
and compost (MMR, 2014) using a Zero-Waste-to-Landfill program illustrated in the next page.
The company’s purpose behind this program is to reduce the amount of waste that ends up going
to landfills, which then results in less energy used to dispose of this waste, fewer emissions
emitted in that process, and a lesser impact on the environment as a whole. Wal-Mart has also
taken other initiatives to achieve its zero-waste goal by reducing its plastic bag waste,
negotiating with its suppliers to reduce product packaging waste, and implementing an
electronics recycling program for smartphones where consumers trade in their various mobile

35. 34
devices for store credit towards a cheaper smartphone, which thus eliminates the amount of
electronic waste in landfills (Ibid).
For more product sustainability, Wal-Mart has created a Sustainability Index with the
help of The Sustainability Consortium (TSC). This organization develops transparent
methodologies, tools and strategies in order to drive a new generation of products and supply
networks that address environmental, social, and economic imperatives ("The Sustainability
Consortium"). This index measures and
reports to Wal-Mart about the
sustainability so that Wal-Mart is able to
talk to its suppliers about these findings in
order for products to be more sustainable
and provide more efficiency (“Transparent
Supply Chain is Goal”). This index also
integrates sustainability into the business
of buying and selling merchandise and it
helps customers’ trust in the products that
Wal-Mart carries (Walmart Corporate, 2014).
3.2 – SOCIETAL ENVIRONMENT
3.2.1 – ECONOMIC
S&P Capital IQ’s industry survey on supermarkets and drugstores reports that the
“wealth effect,” or peoples’ feeling of being wealthier, in the United States increased in 2013
because of moderate inflation on food prices and lower gasoline prices softened the effect of the

36. 35
January 2013 expiration of a 2% Social Security payroll tax cut (“Wal-Mart Stores, Inc. SWOT
Analyis). Also, housing prices rose along with stock market values during this year, which
further increased the “wealth effect.” The survey also reports that the national unemployment
rate for the United States went down to 7.4% in 2013 compared to an 8.1% rate from 2012.
Even though the U.S. economy experienced favorable conditions for consumer spending,
retail supercenter giants like Wal-Mart Stores, Inc., Costco Wholesale Corp., and WholeFoods,
faced increasing competition among each other because low-income households were not
shopping as often because of the previously mention payroll tax cut and an feeling of job
insecurity (Ibid). In order to differentiate from the competition, these big retailers started
targeting middle to high-income families by providing higher quality products in their stores.
However, for the case of Wal-Mart Stores, Inc. the company was able to still target low-
income households, along with discount dollar stores, and it actually also increased its market
share during this period. Despite this, Wal-Mart is facing increasing competition from dollar
stores that offer a few popular brand name products in its store with almost the same
convenience but with a smaller sales floor space as Walmart stores. The good news for Wal-Mart
is that these dollar stores are only popular if the economy is not doing well. Once the economy
starts improving, then more people will be able to retain their jobs and earn more disposable
income to then spend.
Recently in China, second quarter reports show that the country’s real GDP growth has
increased 7.5% compared to 7.4% from January to March 2014. This growth in the second
quarter is a result of China’s industrial production increasing to 9.4% in June 2014 versus only
an 8.8% growth in May. There is a decrease in investment growth in property development,
however, government-backed spending on the country’s infrastructure helped make up for this

37. 36
loss. Nominal retail sales growth has been steady at 12.2% year on year including in June and
consumption in China accounted for about 55% of the real GDP growth for the first half of 2014
(Economist Intelligence Unit, 2014).
So what does this information mean? China’s economy is still growing and the second
quarter summary on provided from The Economist details that the most growth has happened so
far. The decline of investment in property by local business could open doors for Wal-Mart
Stores, Inc. to open more of its stores in the country and an increase in infrastructure investment
will literally pave opportunities for Wal-Mart to reach more rural areas in China. After all,
consumer consumption makes up nearly half of real GDP growth, which means people are
willing to spend their money on goods and services.
Earlier this month the nations that make up BRICS (Brazil, Russia, India, China, and
South America) agreed to establish a new types of banks that each country has access to and can
use in times of financial crisis. One new bank is called the New Development Bank (NBD) that
will be headquartered in Shanghai and that will have a capital of $100 billion U.S. dollars. Each
country will realistically contribute about $2 billion U.S. dollars to this bank, but this agreement
is still in talks and will consequently need to be ratified. It supposedly will take about two years
for this back to start operating and its exact functions remain unknown as of now. A contingency
reserve agreement (CRA) will also be established that each country will again contribute to, but
this in this instance, each contribution is relative to the size of each country’s GDP. The CRA
will not be a physical bank, but instead it will be based on guarantees that any one of the five
countries can use if a financial crisis arises (Economist Intelligence Unit, 2014).

38. 37
3.2.2 – TECHNOLOGICAL
A technology that was once reserved for the military is now being utilized for different
means thanks to advancements in technology that make it more affordable to own. According to
the MIT Technology Review, farmers are utilizing drones for agricultural purposes (Anderson,
2014). These drones are completely automated to operate without a pilot controlling it from the
ground, which frees up a busy farmers time. These agricultural drones are specially equipped
with features like a camera and GPS navigation and can be
flown below the clouds to give farmers a new perspective on
the health of their crops. The information comes largely from
photos taken by the drones that can show farmers any irrigation
problems, pest and fungal infestations, or soil variations that
could be overlooked. Infrared photos, like the one seen on
above that shows the chlorophyll levels of crops, can also
distinguish healthy crops from unhealthy crops that the human
eye cannot pick up. Lastly, the drones can be operated over
various periods of time to survey crops and picture together a
timeline of a certain crop’s health. This new technology is
looking to be a huge aid in agriculture where expansive fields of crops may be too difficult to
survey from a human, ground perspective. For Wal-Mart, this new technology will provide a
more efficient method for its suppliers to monitor their crops and keep them healthy.
The use of drones is also being tested by one of Wal-Mart’s competitors, Amazon.com to
increase productivity when issuing deliveries to peoples’ doorsteps. The technology is not quite

39. 38
developed as Amazon.com CEO Jeff Bezos says, but the service, Prime Air, could be up and
running in as little as four years. However, there are some FAA obstacles that stand in the way of
this service, so Amazon.com is working on ways to prove to the FAA that its drones will serve a
true delivery purpose (Barr, 2013).
Another new technology that the MIT Technology Review reports on is a more accurate
forecasting system that cuts cost on backup plants that power wind turbines in the event of there
being no wind (Bullis, 2014). The backup plants are actually costly to run and use fossil fuels to
operate, which then pollutes the environment. The National Center of Atmospheric Research first
introduced its forecasting system back in 2009, but last year the technology made a breakthrough
this past year where its data allows power plant dispatchers to turn off the its idling backup
plants, thus saving money for an energy company. This new, smarter forecasting can be applied
to Wal-Mart’s own renewable energy sources so that they are being utilized more efficiently all
the while saving the company money.
3.2.3 – POLITICAL-LEGAL
Back in 2012, a New York Times article made accusations of foreign bribery situation in
Mexico that occurred in 2005, which involved Mexican officials who were supposedly bribed by
Wal-Mart executives with money in order to obtain construction permits for a Wal-Mart store
(Barstow, 2012). Following this article, Wal-Mart sent out a team to investigate these claims and
now the company could still face the threat of a class-action lawsuit for its actions in this scandal
after its request to have the suit dismissed were denied by a judge (Investor’s Business, 2014). A
lawsuit of this proportion could tarnish Wal-Mart’s brand image, being that the company is such
a prominent force in the retail industry.

40. 39
Wal-Mart Stores, Inc. is also indirectly linked to a trial involving a fatal accident where a
Wal-Mart truck driver crashed into the back of a vehicle that left one person dead and severely
injured actor Tracy Morgan in New Jersey. Although Wal-Mart says its trucks are equipped with
technology including forward-looking radar with interactive cruise control, designed to slow
down the vehicles in heavy traffic (Bashan, 2014) this poses lawsuit also threatens the brand
image of Wal-Mart Stores, Inc.
3.2.4 – SOCIO-CULTURE
As previously noted, there is a huge trend towards online retailing. In fact U.S. sales
through online retailers has increased from $142.6 billion in 2009 to $224.4 billion in 2012.
(Wal-Mart Stores, Inc. SWOT Analysis, 2014). Wal-Mart’s website was actually the number
two, most-visited website on Black Friday in 2013.
Another trend gaining steam, is that consumers are more willing to accept private label brands as
substitutes to more expensive, nationally-known products. This not only applies to Wal-Mart, but
across all retailers in the U.S., since 2009 private brand sales have grown at an average of about
5% annually compared to only 2% sales growth for more recognizable, national brands.
3.3—TASK ENVIRONMENT
3.3.1 – THREAT OF NEW ENTRANTS
The threat of potential entrants mainly refers to the new entrants into the kind of retail
business in the retail industry to bring new production capacity, new resources, the desire to win
some of the companies carved up in existing markets , thereby and competition among existing
enterprises , resulting in decreased prices of similar products , in addition, it is possible to
compete with the original product 's market share with existing retail, and existing retail

41. 40
businesses competing for limited resources, lead to increased costs for the industry , the
formation of the overall decline in the profitability of the retail industry , the worst case there
may be a crisis of these enterprises to survive. Wal-Mart as a very significant economies of scale
supermarket chains, as Wal-Mart have appeared throughout the entire average cost supermarket
gradually diminishing, the general potential new entrants have such a difficult moment between
economic strength, to Wal-Mart scale supermarket chains, Wal-Mart, so relative terms, the
average cost is higher than the potential entrants such a purchase at most supermarket chains, in
the future it will be in a passive position among the competition. Therefore, from economies of
scale in terms of new entrants Wal-Mart has a great advantage.
3.3.2 – BARGAINING POWER OF SUPPLIERS
Wal-Mart's supplier bargaining power is very strong, mainly Wal-Mart's supply channels
and more hesitant, its retail system and procurement system are two separate parts procurement
is lower prices to each other through suppliers, who pay a bottom who possibility to get big
orders, while Wal-Mart mainly by taking direct orders from the factory, uniform ordering and
supporting suppliers to reduce costs equal to reduce purchase costs. Many of the customer
demand in the number of goods for Wal-Mart is so large retail supermarkets, they are consumers
to obtain goods direct channels, followed by most of the products they sell to customers who are
necessities, furthermore transformed other supply customers cost providers who purchase higher
than Wal-Mart, and Wal-Mart to get good service attitude very high customer satisfaction in the
retail industry in. In fact, Wal-Mart adopt measures to harmonize the procurement of Wal-Mart,
which are generally one-time order, the headquarters of a unified contract , arranged the
purchase, due to the large number of contracts signed one-time , thus forming the advantage on

42. 41
the purchase price obtained is much higher than counterparts. Wal-Mart in their own
development , but also actively help its suppliers to help them improve their management level,
improve product quality , reduce labor costs , reduce costs by helping providers to improve their
efficiency, and therefore , Wal-Mart and similar industries compared with a strong ability to
control suppliers.
3.3.3 – THREAT OF SUBSTITUTE PRODUCTS OR SERVICES
Originally retailing for Wal-Mart , because many types of products , there is no fixed
main product, due to the intrusion of alternative producers , making Wal-Mart must improve
product quality, reduce costs or by reducing prices, or make their products more features
otherwise, Wal-Mart sales volume and profit growth target is likely to be limited. For example,
Wal-Mart's main threat comes from the network. With the development of the network, the rise
of online shopping, people increasingly fast pace of life, more and more people, especially
people do not want to spend time at the mall shopping, especially some of the female consumers
prefer online spending, spend time on the network, you can not go out and buy but also to enjoy
a wide variety of merchandise. And online goods are generally lower than a physical store, and
those merchandises can be delivered to your door so there is a serious threat in this regard for
Wal-Mart. There is still some threat of substitutes for Wal-Mart such as development of hotels
and other related services Because most hotels in addition to providing catering and
accommodation services residues outside , while also providing consumer -related necessities of
daily life , such as cigarettes, drinks , snacks , socks, underwear and some other items. Although
these items at hotel have higher price than Wal-Mart, but because these items more convenient,
the customer will usually accept these products. There are also a number of food and beverage

43. 42
industry issues , along with the rapid development of the economic level , the rhythm of
improving people's lives , more and more consumers, especially office workers, due to the busy
work , they are more interested in spending on food and beverage industries such as restaurant.
While Wal-Mart everyday low prices, but a huge number of consumers, for those who do not
want to buy food in the supermarket, the restaurant industry is the first choice, so in this respect
constitutes a threat to Wal-Mart.
3.3.4 – BARGAINING POWER OF BUYERS
Buyers, mainly through lower prices and the ability to request a higher quality of service
or product to existing retail businesses affected profitability. For Wal-Mart, its sales of products
are mostly relatively low price elasticity of the necessities of life, consumption is relatively fixed
and stable, and so consumers this problem does not exist in the bargaining actual purchase
process. But Wal-Mart to " everyday low prices , always " as the slogan for everyday low prices
for their own purposes, to reduce its own costs through vendor supply prices down , allowing
consumers to enjoy low-cost deals.
3.3.5 – RIVALRY AMONG EXISTING FIRMS
Most industry competitors , mutual interests are closely linked , as each part of their
overall business strategy of simple competition, competition among existing enterprises are often
reflected in the price , advertising , products, sale services and so on. Because Wal-Mart retail
enterprises to provide the degree of product differentiation is very small, the number of similar
retail business and very much, for example, Target, Costco, etc. So the competition between
them is fierce

44. 43
3.3.6 – THE 6TH FORCE
Since Wal-Mart will spread its tentacles into the world, so far, Wal-Mart has opened
4,058 stores in the United States. For Americans, now every hour, it spent $ 35 million in Wal-
Mart; 90 percent of Americans will be able to find out within 15 miles of a Wal-Mart; 70% of
U.S. retail new jobs come from Wal-Mart...... "Everyday low prices" Wal-Mart is an
unprecedented way to re- shape the business principles, consumer habits and lives of American
workers, and even throughout the United States and the world economy. In fact, the 6th
force of
Wal-Mart is the relative power of other stakeholders from Wheelen and Hunger. As a retail
business , Wal-Mart from the purchase , distribution to sales, from daily operations to occur
contact the social welfare activities, and many different interest groups , these interest groups
including customers, managers, employees, shareholders, creditors , government, suppliers , etc.
First, the customer , because the customer is a source of wealth , has a good customer resources
is a prerequisite for corporate financial goals to achieve, on the other hand , Wal-Mart also
always meet customer needs as the primary principle. It is mainly to meet customer needs
approach: everyday low. Followed by management, management is the company’s leadership
core and backbone of whether they can effectively is an important condition for the development
of enterprises can. Wal-Mart in addition to strengthening communication with managers' ideas,
to make them fully aware of the importance they attached to the enterprise, the very early use of
allotted shares ways to reward managers. The third is the workers to ensure that the interests of
employees, effective incentives are an important factor in the success of Wal-Mart. Because
Wal-Mart employees respect and trust, improve incentives to encourage employees to actively
work played a role. Fourth, shareholders, owners of the enterprise, the enterprise must go
through a major financial decision to vote in general meeting or the board of directors, the

45. 44
shareholders have a significant impact on the company's financial administrator. Wal-Mart's
operating performance and return on investment so that shareholders are very satisfied. They
have more confidence to continue investing Wal-Mart. Finally, the government, as a national
authority in the formulation of economic macro-control policies, provides public services, have a
direct or indirect impact on production and operation. In fact, for such a multinational Wal-Mart,
where the national government can establish a good relationship will affect their further
development , expansion and achieve financial goals. So Wal-Mart strategy through a number of
columns, to establish a good relationship with the local government, For example, to achieve "
localization strategy , " the management team of localization , localization procurement , etc., to
promote the country of employment , increasing the national income.

46. 45
EFAS TABLE
External Factors Weight Rating Weighted
Score
Comments
Opportunities
 Continuous economic
development of China
.15 4.0 .60 Wal-Mart wants to keep growing as a
company and remain a top player in
its industry.
 Agricultural drones .10 2.5 .25 Can increase Wal-Mart’s productivity
in its grocery department
 Acceptance of private-
label brands
.10 3.5 .35 People are willing to substitute brand
image with price
 Growing online
retailing
.20 4.0 .80 Wal-Mart was the #2 most visited
website on Black Friday in 2013.
Threats
 Popularity of dollar
stores
.05 3.5 .18 Dollar stores are only popular when
the economy is bad.
 Foreign bribery and
legal troubles
.05 3.0 .15 This tarnishes Wal-Mart’s brand
image.
 Rising healthcare costs
for employees
.15 3.0 .45 Labor relations affect store operations.
 Competitive pressures
from different channels
.20 3.5 .70 Wal-Mart needs to be more innovative
to say ahead of the game of
competitors like Amazon.com
TOTAL SCORES 1.00 3.48

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IV. Internal Environment: Strengths and Weaknesses (SWOT)
4.1—CORE COMPETENCIES
Wal-Mart can successfully implement their international business is because it formed its
own core competencies. This company has continuously improved its management and corporate
culture since the beginning. Wal-Mart has truly achieved modern management, and reached a
very high standard because of its business philosophy and techniques constantly innovate. Back
in 1962, when Wal-Mart was first founded, Sam Walton began to use innovative business ideas,
changing the model of traditional business of retail and wholesale, emphasizing the accumulation
of operational knowledge, and then made those rules gradually embedded it in the company,
which formed the Wal-Mart chain management model. In 1970, Wal-Mart established the first
distribution center. In that year, computer was not even popular, and Sam Started using computer
to manage inventories. Operate traditional enterprises with high-tech equipment, Sam first
brought out this whole new concept. Advanced management concept and high level technology
greatly enhanced the core competencies of Wal-Mart (Schrage, 2013).
For all these years, Wal-Mart has always maintained one strategy which is small profit
and quick return. The reason it can be able to do “everyday low prices” is the low cost compare
to the competitors. Flexible and efficient logistics system is the core factors that Wal-Mart can
reach the maximum sales with the lowest cost. There are eighty-five percentages of total sales of
the products are supplied by these distribution centers, however, their competitors like Kmart,
are about only fifty to sixty-five percentages. Viewing the whole industry chain of Wal-Mart, its
logistics and distribution is the most advanced retail network in the world. The massive data even
made Wal-Mart rented a satellite. It cost four hundred million to launch a business satellite,
which helps Wal-Mart achieved a global network. Wal-Mart is able to record all products

48. 47
inventory, shelves and sales within one hour in more than four thousand store all over the world.
It can also inform truck drivers, update traffic information, and adjust the best line for all the
vehicles. Wal-Mart can be so ahead of all the competitors is because it has been investing on the
retail information system (Schrage, 2013).
Under the information technology support, Wal-Mart is able to operate the company
globally by the lowest cost, highest quality service, and the fastest response in management.
Although the information technology is not a sufficient element for the success of Wal-Mart, it is
a necessary condition for the success. These investments have made Wal-Mart can significantly
reduce costs and improve the productivity of capital and labor. Wal-Mart also uses a more
advanced system instead the procurement directives, which truly implements the automatic
ordering. This system uses bar code scanning and satellite communications to exchange daily
sales, transportation and ordering information with suppliers. With the advanced electronic
information tools, Wal-Mart stores sales can keep pace with the distribution centers, and also the
distribution centers with the suppliers, which definitely improve efficiency and reduce costs.
This information system have brought tremendous benefits for both Wal-Mart and suppliers.
Wal-Mart does the survey on customer expectations and reflections every week. Managers
gather information based on computer information, as well as through the directly surveys to
collect customer expectations, which can make them update product portfolio, organize
procurement, improve merchandising display, and create a comfortable shopping environment.
This strategy became one of the core competency of Wal-Mart (Schrage, 2013).
Wal-Mart has always attached great importance to the corporate culture which provides a
wealth content, scientific management ides, open management style and flexible management
methods for the modern business management theory. The three basic tenets that developed by

49. 48
Sam Walton for Wal-Mart’s corporate culture are “customer is God,” “respect for employees,”
and “Strive for excellence” (Schrage, 2013).
4.2-- VRIO ANALYSIS
The VRIO framework stands for value, rarity, inimitability and organization. This is the
in-depth research and analysis of the internal environment based on SWOT model.
Through these four points there can be evaluation of the Wal-Mart’s advantages and
disadvantages.
First question is “does it provide customer value and competitive advantage?” The
answer to this question is definitely a yes. Consumer response is one of the most important factor
for Wal-Mart. Customer value is seen as a fundamental task, rather than create profits. Wal-Mart
advocates positive, aggressive and never be satisfied. The leaders in Wal-Mart have to be more
diligent than their opponents, and more sensitive to provide better quality products. No matter
how busy these managers are, they must take time to go visit other stores around to make sure
that they have the lowest prices on their product, and also see and learn the strengths that their
opponents have. Loss is the enemy and threat of the retail industry. The strategy that Wal-Mart
uses to reduce the loss is they sharing the profits which is obtained from reducing losses with
their employees. If a store’s loss is in the company’s control, the store will receive bonus for
each employee. Continue to adhere new business ideas and creativity; constantly developing new
technologies for their own services; thereby creating best service and performance. This is why
Wal-Mart has the capabilities to neutralize the external threats (Jurevicius, 2013).
Second question is “do no other competitors possess it?” Wal-Mart is the largest retailer
in the world. Their opponents are no longer those supermarkets due to their unrivaled prices, but

50. 49
it could be Amazon. Now, under the Amazon’s threat, Wal-Mart is actively trying to explore
new market through learning the technology business. This is including the creation of Internet
Shopping Headquarters, WalmartLabs. Wal-Mart is the leader of the physical store, and Amazon
is the leader in the online shopping world. Those two largest retail companies are competing for
the most talented engineers. They are doing the online shopping price war, and trying to take the
lead. They both want to control not just online shopping, but all the shopping activities. While
Wal-Mart is working on the online shopping, Amazon is opening physical stores and distribution
centers. They both understand that the future is not just physical store or online store, is the
combination (Jurevicius, 2013).
Third question is “is it costly for others to imitate?” Wal-Mart’s annual sales is the
second largest retailer which is four times of Carrefour. There’s no doubt that Wal-Mart is more
successful than Carrefour, however, for them in China it’s just a beginning. This place is full of
unknowns, and also has great consumer ability. On the other hand, it also has a considerable
crisis. If Wal-Mart really wants to create a new empire in China, then, they need to understand
the crisis, and make them as turning points. China is very special, which all the successful
strategies might not work here, moreover, knowing how to make changes is also important. As
everyone knows, Wal-Mart is a very powerful company. They don’t usually make changes, but
they make people change. If Wal-Mart wants to defeat Carrefour, it’s all depending on their new
strategies
(Jurevicius, 2013).
Forth question is “Is the firm organized to exploit the resource?” I would say, Wal-Mart
is organized and ready to exploit the resource. Wal-Mart is a very different enterprise compare to
others. We all surprised that it makes success so quickly, and make people discuss and learn the

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strategies. Behind its success, Wal-Mart brought very amazing effect to the world. When Wal-
Mart enters a new area, they provide really low price for customers, at the same time, they
pressure the price of the industry down through competitions (Jurevicius, 2013). When the price
drops, it’s definitely benefit the customers. There will be more and more customers want to shop
at Wal-Mart, therefore, they have more and more power from customers.
4.3-- BUSINESS MODEL
Wal-Mart’s business model is make their customers save money, and provide them with
the cheapest goods. Wal-Mart engaged in traditional retail, and there’s nothing special about the
format of the transaction. However, Wal-Mart can have business all over the world by just doing
the traditional retailing, and became the richest family in the world is because their successful
business model. Wal-Mart carefully planning everything to improve the quality of products, but
they can maintain “everyday low prices” at the same time. They use every possible way to drive
down the costs, for example, bulk purchases; minimize logistics costs through the information
technology and logistics optimization. All files are used on both sides of paper, and office is also
the warehouse so sometimes managers need to stand in the meeting, therefore, same products,
but Wal-Mart’s prices are cheaper (Johnson, 2006). Customers are willing to go there and shop
there due to their cheapest products, therefore, Wal-Mart can purchase products with large
quantities with cheaper prices.
Wal-Mart’s founder Sam Walton has been the soul of the company. His innovative
thinking let him established the first discount store in a small town which had less than one
hundred people. This action created him local advantages. He purchased large quantities of
products directly from the manufacturers, and provided low prices products to attract customers.

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After the success in the township, he actively developed toward the metropolitan area. So far, the
main business model are Walmart Discount Stores, Walmart Supercenters, Sam’s Club and
Walmart Neighborhood Markets. This four kings of stores have nearly one hundred million
customers weekly, their staff have more than two point two million in ten thousand and seven
hundred stores in the America, Europe and Asia, which form a “Wal-Mart effect” in global
economy (Johnson, 2006). “Save money, live better” is Wal-Mart’s main mission statement.
They try to help each customer to save money, and provide them inexpensive goods. Walton
said, “When we save customer money, we can get their trust.” Therefore, it’s necessary to
implement Wal-Mart’s “everyday low price” strategy. If customers are not satisfied with their
products, they can return or have a full refund.
4.4-- VALUE CHAIN
From the Wal-Mart’s management strategies, we can clearly understand that the
development of a business to be successful is to create the maximum value. Wal-Mart uses the
strategy that sell more with low profit to save larger amount of customer money, which is a value
creation. In addition, Wal-Mart used to open the stores at rural and urban areas, which brought
the local residents convenient. This is also a part of value creation. Therefore, Wal-Mart can
maximize profits and value.
Wal-Mart’s value chain mainly divided into two partS, supporting activities and main
activities. The supporting activities includes the basic structure of operations, human resources,
skill development study and procurement. The main activities progress start with purchase
products by using Wal-Mart’s logistics system. Second, store all the products in warehouses.
Wal-Mart is able to inventory with high level of information technology system. Third, send all

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the products to all different stores. Forth stage is display all the products in the store. After go
though the better customer service, eventually, they sold their products, which the last stage
(Traub, 2012). All these activities can help Wal-Mart maximize the profits. This is how Wal-
Mart’s value chain works, which is an implement of Wal-Mart’s management strategies.
4.5-- CORPORATE STRUCTURE
The first Walmart was inaugurated in 1962 in Arkansas by Sam Walton whose strategy
was to bring “The Lowest prices Anytime, Anywhere” (Walmart Corporate, 2014). Now there
are 2.2 million employees where more than 11,000 stores are located in 27 countries.
4.6-- CORPORATE CULTURE
“A sophisticated understanding of the past is one of the most powerful tools they have for
shaping the future” (Seaman Jr., 2012).
Walmart hopes to enrich their associates with the same passion and “strong conviction... toward
helping... people save money and live better” (Seaman Jr., 2012) by openly displaying and
communicating the values that guide every decision or initiative that strengthen and complement
their corporate and business strategy.
Wal-Mart makes it priority to let associates, customers and everyone invested in
Walmart, that they act according to their beliefs which make up their corporate culture; “service
to our customers, respect for the individual, striving for excellence and acting with
integrity”(Seaman Jr., 2012). Walmart believes their associates live and breathe the company
culture and demonstrate the same passion in upholding those beliefs in all Walmart stores around
the world.

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Walmart’s Beliefs
 “Service to our customers” (Walmart Corporate, 2014) - All associates are reminded that
customer is Walmart’s reason for existing.
 Prioritize customer
 (Walmart) Be a source of strength for associates so they can perform better and transfer that
helpfulness to customers
 Bond with local community to have closer customer relationships
 “Respect for the individual” (Walmart Corporate, 2014) - All associates, customers and
anyone who interacts with Walmart, deserve respect.
 Acknowledge every associate’s efforts and merits
 Emphasis responsibility and leadership
 Promote transparency and listen to associate’s suggestions
 “Strive for excellence” (Walmart Corporate, 2014) - Treating every situation as a learning
experience and to assume leadership without restrictions.
 Developing new methods to enhance business activities
 Uphold a system that thrives on positive examples
 Encouraging and guiding one another
 “Act with integrity” (Walmart Corporate, 2014) - Maintain an infrastructure filled with
transparency, trustworthiness, and justice
 Responsibility and ownership for actions
 Unbiased behavior and transparency with everyone involved with company
 Following ethical and legal guidelines while making focused Walmart-oriented decisions
that most benefit them

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4.7-- CORPORATE RESOURCE
4.7.1-- MARKETING
Walmart’s endeavors in marketing have consisted of 2.3 billion in 2013 in promoting
Walmart in “print, television and online ads (Neff, 2014)
 Local television ads that show actual customer receipts at local Walmart locations and
compare Walmart’s lower prices to local competitor’s
 As of 2013 their price-comparison ads range over 60 markets and have created 1,500
TV ads (Neff, 2014)
 Using “real-time marketing” (Neff, 2014) approach
 Exploiting competitor prices with Price Match Guarantee
 Price Match Guarantee uses third-party tracking to search local competitor prices and
give Walmart’s consumers a refund if lower prices are found through a Walmart gift
card
 Airing both national and local TV ads in order to speak with local consumers
The objectives for their marketing efforts is to emphasis their ad-match guarantee and
research consumer brand or product preferences. Walmart tries to think “in terms of 5 P’s- the
traditional four P’s of price, product, place and promotion plus people” (Springer, 2014) and
acknowledge that consumers rather shop locally then consider traveling further to a Walmart
store so Walmart tries to relate and communicate with to local consumers (Neff, 2013).
4.7.2-- FINANCE
Walmart’s financial health has been shaken in the past fiscal year and is currently exhibiting
quarterly earnings growth of -5% (Income Statement, 2014) Their debt to equity ratio is

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177.40% meaning they are highly leveraged with debt to finance its investments. Walmart has
stated that the unusual drop in sales was the harsh winter that burdened Walmart’s operating
expenses and deterred customers from shopping (Rayman, 2014). However prior to this year,
there has been steady growth of 2-5% in sales.
 Debt to Equity ratio : $129,658,000 / 73,088,000 = 1.7739 or 177.40%
Revenue vs. Net Income [Chart] (2014)
4.7.3-- RESEARCH AND DEVELOPMENT
Wal-Mart have introduced their development plans and intentions at Walmart’s annual
shareholder’s meeting that includes several initiatives; “new store formats, innovations and
capabilities” (Walmart's Global E-commerce Top Of Mind For Future, 2012).

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 Wal-Mart Express stores that look like a convenience store but have same capacity as
regular Walmart stores “with the help of technology” (Walmart's Global E-commerce
Top Of Mind For Future, 2012) but “designed to capitalize on distinct trip missions”
(Walmart's Global E-commerce Top Of Mind For Future, 2012).
 Savings Catcher app that incorporates electronic receipts to capture consumer’s data
and shopping behavior (Return to Merchandising Roots Revitalizes Walmart, 2013)
 Introducing the concept of grocery pickup centers that transfer online orders to
physical store drive-thru locations.
 In-store care clinics starting in Texas locations
 Adding more services; auto insurance, money transfers and in-store 3D printing
 Along with introducing their “Four-Point Global strategy” (Walmart's Global E-
commerce Top Of Mind For Future, 2012) that allows Walmart to:
1. “Know customer - by name- to create personalized commerce” (Springer,
2014)
2. Offer more than 1 million products online
3. “Be the ecommerce market share king in key international markets across all
formats; sites, apps, stores and clubs” (Walmart's Global E-commerce Top Of
Mind For Future, 2012)
4. Using technology as competitive advantage in “monitoring pricing across the
Internet and using crowdsourcing to broaden product appeal” (Walmart's
Global E-commerce Top Of Mind For Future, 2012)
In order to strengthen Wal-Mart’s e-commerce strategy, Wal-Mart intends to use data
analytics to “personalize the shopping experience; build out a network of small-format stores;

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and meld its digital and physical initiatives to create a customer-centric ecosystem for the 21st
century” (Wolf, 2014).
4.7.4-- OPERATIONS AND LOGISTICS
Specializing in general merchandise and food retailing, Wal-Mart has branched out to
form Supercenters, Neighborhood Markets, Discount stores and Express stores. These “flagship
stores” (Springer, 2014) are not just store location but are used as distribution points for online
orders.
Their current merchandising strategy is made up of the following parts (Neff, 2014):
1. Secure that all product categories are represented in inventory
2. Offer different price and quality range products and have opportunity to carry new
items
3. Localized brand inventory
4. Price leadership across all product markets
Wal-Mart’s Supercenters were introduced in 1988, employ around 300 associates, and
measure 182,000 square feet. Supercenters strive to offer product categories that range from
“electronics, apparel, toys and home furnishings and the convenience of a grocery store with
fresh produce, bakery, deli and meat and dairy products”(Walmart Corporate, 2014). Most
Supercenters are aligned with regular Walmart store hours and are also open 24 hours but offer a
different range of services and “specialty shops such as pharmacies, banks, hair and nail salons,
name-brand restaurants, vision centers or health clinics” (Walmart Corporate, 2014).
Now dwindling, Wal-Mart Discount Stores were established in 1962 and scattered around
the U.S, discount stores measure around 106,000 square feet and employ around 200 associates.

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These stores offer fewer products, mainly “electronics, apparel, toys, home furnishings, health
and beauty aids, hardware (Walmart Corporate, 2014).
Wal-Mart Neighborhood Market was introduced in 1998, measure around 38,000 square
feet and employ around 95 associates. These stores were meant to help out consumers who
needed a pharmacy, and would purchase available groceries and products. Currently,
Neighborhood markets have a pharmacy, carry produce, bakery, deli items and household,
health, and beauty supplies.
Wal-Mart Express was introduced in 2011 and measure 15,000 square feet. The smallest
in their chain stores, they wanted to an “ideal format for urban and rural areas that lack access to
larger stores” (Walmart Corporate, 2014) with all the amenities of their regular Wal-Mart stores.
4.7.5-- HUMAN RESOURCES
Sam Walton used to refer to Human Resources as “The People Division” because he
knew how vital his employees were to be able to deliver their “seven overriding strategies (price,
operations, culture, key items/products, expenses, talent and service)” (Bergdahl, 2010)

“Focus walmart employees to do everything they possibly can to hold down costs”
(Bergdahl, 2010)
 “How does HR focus people to insure operational success?” (Bergdahl, 2010)
 Through “continuous learning, improvement, empowerment and teamwork” (Bergdahl,
2010)
 “How does HR foster a culture committed to business success?” (Bergdahl, 2010)
 Management attends cultural training
 “How does HR connect Wal-Mart’s people to products?” (Bergdahl, 2010)

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 “Deciding on behalf of customers” (Bergdahl, 2010)
 “How does HR focus employees to reduce expenses?” (Bergdahl, 2010)
 “Expense control - as sales go up expenses as a percentage of sales must also go down”
(Bergdahl, 2010)
 “How does HR’s talent strategy drive results at Wal-Mart?” (Bergdahl, 2010)
 Aggressively hiring college graduates and providing great training
 “How does HR align every functional area with service?” (Bergdahl, 2010)
 “Crediting their employees around the world who support Walmart” (Bergdahl, 2010)
4.7.6-- INFORMATION SYSTEMS
Wal-Mart “pioneered the use of barcode scanners, slick supply chains and inventory
management tweaked to local purchasing preferences...the next step are RFID chips” (Karlgaard,
2005).
With $6 billion of Wal-Mart’s capital going into a food inventory, Wal-Mart knows when,
where, and how much it needs at every Walmart location (Springer, 2014).
Incorporating the OSA 2.0 (On Shelf Availability) system knows how much inventory is being
purchased at every store and signals when sales are slowing down which means inventory is out
of stock (Springer, 2014).
In addition, Wal-Mart has begun building strong supplier relationships by including
suppliers in Wal-Mart’s “regular joint planning sessions” (Springer, 2014) and started using
point-of-sale data to follow and enhance Walmart’s operational performance.

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IFAS Table
Internal Factors Weight Rating Weighted
Score
Comments
Strengths
Financial support .10 4.0 .40 Economies of scale and
$473 billion annual
profits
Industry positioning .10 3.5 .40 Strong industry
leadership
Technological advancements in
supply chain management
.15 3.0 .50 OSA 2.0
and RFID inventory
tracking
Marketing strategy .10 3.5 .40 Targeting local
competitors
Weaknesses
Pressure to sustain price
leadership position
.10 4.0 .40 Significant investment in
supply chain efficiency
Customer service .10 3.5 .30 Not focused in forming
customer relationships
E-commerce .10 3.0 .20 Slow adoption and no
targets
Controversial labor practices .10 2.5 .30 Standardize quality HR
Consumer trends that conflict
with Walmart’s corporate
strategy
.05 1.5 .30 99 Cents Only stores
Total Scores 1.00 3.20

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V. ANALYSIS OF STRATEGIC FACTORS (SWOT)
5.1—SITUATIONAL ANALYSIS
SWOT ANALYSIS
Strengths:
 Efficient supply chain management
 Market leader in the industry
 Unprecedented global presence
 Low cost leadership enables
company to offer low price points
 Small-store formats increase
competitiveness
Weaknesses:
 Litigations regarding labor relations
 Allegations and controversies related
to violation of anti-corruption laws
 Limited amount of resources
Opportunities:
 Growth in e-commerce and internet
retailing
 Increasing acceptance of private
label merchandise
 Outperformance of retail sectors in
market
 Low prices appeal to struggling
economy
Threats:
 Increase in employees increase
exposure to higher wage and healthcare
costs
 Increasing competitive pressures from
different channels such as Target and
Costco

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SFAS TABLE
Strategic Factors Weight Rating Weighted
Score
S I L Comments
Technological
advancements in
supply chain
management (S)
.15 3.5 .525 X OSA 2.0
and RFID inventory
tracking
Industry position (S) .15 4.5 .675 X X X Market leader in
industry
Customer service (W) .10 3.0 .30 X Poor customer service
Allegations and
controversies of labor
practices (W)
.10 4.0 .40 X Controversies have
adverse effect on
consumers
Growing online
retailing (O)
.15 4.0 .60 X Wal-Mart was the #2
most visited website on
Black Friday in 2013.
Continuous economic
development of China
(O)
.10 4.0 .40 X Continuous global
expansion
Competitive pressures
from different
channels (T)
.15 3.5 .525 X Wal-Mart needs to be
more innovative to say
ahead of the game of
competitors like
Amazon.com
Rising healthcare
costs for employees
(T)
.10 3.0 .3 X Labor relations affect
store operations
Total Scores 1.00 3.725
5.2-- REVIEW OF MISSIONS AND OBJECTIVES
The retail business in 21st
century is like the patterns of information, services and global
supply connecting to each other. Customers want their order to have quick response and just-in
time services. Speed will be the key to become success, therefore, global logistics management is
very important. Wal-Mart responses to the globalization with the high degree of the coordination

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of the international operational processes. Wal-Mart connects their goods, information, financial
and operational performance, and operate smoothly with each other.
Wal-Mart’s missions and objectives are includes get into the internationalization and
globalization of the industry environment; construct a no cultural differences, no time difference,
internal and external information system; promote the innovation movement which is based on
customers; integrate the global logistics systems, as well as operate the virtual teams on the
internet (Farfan).
In order to accelerate the establishment of competitive advantages and have the ability to
become global organization, Wal-Mart needs to maintain their missions and objectives. In the
implementation of global logistics, it often needs to face those uncontrollable variables, which
influence its performance. For those uncontrollable factors are including geographical, social,
cultural factors, legal, economic, and competitors, Wal-Mart need to seek other methods. Those
controllable factors are customer service, warehouse, inventories, transportation, packing, etc.
(Farfan). Therefore, Wal-Mart must use associated strategies and information technology to
manage. Wal-Mart will be able to continue to develop, expand, and also become the benchmark
for other companies.

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VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY
6.1- TOWS MATRIX
Internal Factors (Row)—
External Factors (Column)
Strengths
 Market leader with
unrivaled scale and
wide product
variations
 Low cost leadership
allows products to be
placed at low prices
 Internationalization
strategy enables strong
foundation for growth
 Increase in
competitiveness with
small-store formats in
urban environments
Weaknesses
 Lawsuits affect
labor relations
adversely
 Allegations related
to violation of anti-
corruption laws
(SWOT)
Opportunities
 Outperformance of
retail sectors in
emerging markets
 Growth in e-
commerce to serve
larger market
 Low prices appeal to
struggling economy
 Expansion to
developing countries
desiring low products
SO Strategy
 Implement
internationalization
strategy (S) to e-
commerce (O)
 Emerging small-stores
(S) to increase market
share in urban areas and
developing countries (O)
WO Strategy
 Settle allegations (W)
and use scrutiny to
appeal to public eye
in order to clear
reputation serve a
larger, more receptive
market (O)
 Labor relations can
be enhanced (W)
through expansion of
e-commerce and
hiring new employees
in the expansion (O)
Threats
 Rising number of
employees increase
exposure to higher
wages and healthcare
costs
ST Strategy
 Strong foundation for
growth (S) increases
revenue to cover rising
employee costs (T)
 Small-store formats (S)
WT Strategy
 Fairly compensate
employees (W) to
avoid revenue leaking
in lawsuits (T)
 Avoid violating anti-

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 Increasing
competition from
different channels
combat intensifying
competitive pressures
(T)
corruption laws (W)
to reduce tarnished
brand name in order
to successfully
compete with
competition from
different channels (T)
6.2—STRATEGIC ALTERNATIVES
6.2.1—PROS AND CONS
SO Strategy:
Wal-Mart’s effective internationalization strategy (S) should be implemented into its emerging
internet retail (O)
 Pro: Continuous growth is Wal-Mart’s strategy to ensure their unprecedented position
in the market. The opportunity to both grow in physical environments as well as e-
commerce will ensure that position.
 Con: Not all environments, such as developing countries, will be receptive to e-
commerce.
The emergence of small-store formats (S) will allow growth in urban areas (O)
 Pro: Wal-Mart can increase market share by creating stores in areas where the usual
size format would not normally fit.
 Con: New small-store formats could cause complications in supply chain
management

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WO Strategy:
With allegations causing Wal-Mart to be under scrutiny by the public eye (W), the company
must settle allegations in order to clear its reputation in order to serve a larger, more receptive
market (O)
 Pro: Wal-Mart can use the public’s attention to its advantage by proving its
philanthropic qualities in order to appeal to more customers.
 Con: If Wal-Mart continues to be under scrutiny in a bad light, the brand reputation
will be tarnished and further expenses to settle litigations will drain revenue.
Through the expansion of e-commerce and small-store formats (O), Wal-Mart can use the new
inflow of employees to enhance labor relations (W)
 Pro: Wal-Mart can renew brand image with the opportunity of its new emerging
stores.
 Con: If Wal-Mart does not revise its labor relations with the inflow of new
employees, the company will continue to have a poor image.
ST Strategy:
Wal-Mart’s strong foundation for growth (S) will allow for increasing revenue, covering rising
employee wages and healthcare costs (T)
 Pro: Rising employee wages can take a toll on the company, but that toll can be
combatted by Wal-Mart’s growth capabilities.
 Con: If Wal-Mart’s growth does not expand at the same rate as employee costs, the
company will run into discrepancies.

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The introduction of small-store formats (S) will contend with increasing competitive pressures
from different channels (T)
 Pro: Wal-Mart’s strategy to minimize stores in order to fit smaller areas will allow
consumers to choose between rivaling companies such as Target or Costco.
 Con: Urban areas may not be the demographic that chooses Wal-Mart as a retail
store.
WT Strategy:
Wal-Mart can avoid lawsuits that result in leaking revenue (T) by fairly compensating employees
(W) in order to enhance labor relations
 Pro: Lawsuits that claim unfair treatment and pay from employees results in diverting
large amounts of money towards counterproductive activity. By fairly compensating
employees in the first place, Wal-Mart will be able to avoid such litigations.
 Pro: Fair labor practices will result in more skilled and qualified employees.
 Con: Compensating employees may create a higher demand, even if Wal-Mart abides
by labor practice laws.
Wal-Mart can avoid violating anti-corruption laws (W) to reduce the tarnished brand name (T)
 Pro: Violating anti-corruption laws has halted the expansion of business in
developing countries such as India. By abiding by these laws, Wal-Mart will be able
to reinforce the company’s reputation and allow further growth opportunities.
 Con: Wal-Mart can ultimately miss out on major profits if it continues to violate anti-
corruption laws.

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6.3—RECOMMENDED STRATEGY
The recommended strategy to use for Wal-Mart is the growth strategy of implementation
of both e-commerce and small-store fronts in order to appeal to a larger demographic. Wal-
Mart’s effective internationalization strategy (S) will enable it to expand to both internet retailing
and urban and developing areas (O).
6.3.1—CORPORATE STRATEGY
In Strategic Management and Business Policy, corporate strategy is defined as “the
choice of direction for a firm as a whole and the management of its business or product
portfolio” (Wheelen and Hunger, 2012, p. 206). In other words, corporate strategy defines a
company’s overall direction in terms of growth and management of its various business product
lines.
Wal-Mart’s current strategy is to maintain its global position as well as expanding into
more international markets and e-commerce while keeping in line with its mission of low prices.
In order for Wal-Mart to achieve this, the company will have to use growth and stability
strategies.
Wal-Mart’s overall direction is to maintain the position of a leading global entity as well
as growing as much as possible within the industry. Currently Wal-Mart operates over 11,000
retail unites in 27 countries such as Brazil, China, Japan, South Africa, and the United Kingdom
(Walmart.com). Wal-Mart has current objectives to expand in India and other developing
countries.

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In addition, Wal-Mart wants to have the same global presence in internet retailing and is
consistently using technology as a means to advance e-commerce transactions. Competitors such
as Amazon, are increasing in market share, putting Wal-Mart at a disadvantage. Wal-Mart’s
efforts at e-commerce include delivery from its website as well as mobile applications for easy
access for users. In order to Wal-Mart to enhance its technological presence and capabilities,
Wal-Mart must advance its delivery options that are up to par with its competitors as well as
website use for every country that has Wal-Mart stores.
6.3.2—BUSINESS STRATEGY
Business strategy, according to Wheelen and Hunger, is the strategy that “emphasizes
improvement of the competitive position of a corporation’s products or services in the specific
industry or market segment served by that business unit” (Wheelen and Hunger, 2012, p. 19). In
other words, it poses the question of “how will we compete in the marketplace?” Wal-Mart’s
mission is to save money so that people can live better. Its current business strategy is price
differentiation, which in Wal-Mart’s case is offering the lowest prices possible.
In order to keep in line with Wal-Mart’s business strategy, the company must maintain its
efficiency in operations. However, with the growth strategy and its overwhelming presence in
the market place, Wal-Mart must also take other measures to ensure its position. Wal-Mart has
been under scrutiny by its labor practices and controversies surrounding the company such as
violating anti-corruption laws. These allegations affect the revenue of the company, allocating
millions to otherwise counterproductive situations. This leaking revenue has an adverse effect on
the mission and vision of keeping prices low.

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In order to sustain this business strategy of low prices, Wal-Mart must make an effort to
deal with external situations that have an adverse effect on the company. It needs to make
changes in its reputation as well as its alignment with the law.
6.3.3—FUNCTIONAL STRATEGY
In Wheelen and Hunger’s Strategic Management and Business Policy, functional strategy
is “the approach taken by a functional area to achieve corporate and business unit objectives and
strategies by maximizing resource productivity” (Wheelen and Hunger, 2012, p. 20). It is
concerned with developing coherent processes that provide a company with a competitive
advantage.
Wal-Mart’s functional strategy will have to revise if the business and corporate growth
strategies change. Wal-Mart should focus on the functions of marketing and operating strategies
to ensure stability and growth within the company. Under operations, Wal-Mart can make
changes to the already efficient supply chain management in order to appeal to a larger customer
base.
Operations strategy involves the relationships with suppliers, how and where products
and services are produced, the use of physical resources, and the level of integration within the
production process. The area that Wal-Mart must make improvements on is the relationship with
suppliers. An issue within customer demand is that at the cost of low prices, Wal-Mart does not
supply what consumers want. In order to alleviate this issue, Wal-Mart must find relations with
suppliers willing to supply what consumers want. This shift in supply chain management may
increase costs, but at the result of the expansion of customers and their satisfaction.