The history and strategic analaysis of Walmart

1. Burcu Durmuşoğlu
Büşranur Akgül
Özgün Kuran
Bige Özcan

2. Brief Description
• Company Background
• Industry Analysis
• Competitive Advantages On Principal Functions And Activities
• Performance On Retailing Sector And Format Overseas Countries
• VRIO Analysis
• Recommendations

3. Sam Walton opened his first WalMart in 1962.
According to Sam Walton
“Our strategy was to put good-sized stores
into little one-horse towns
that everyone else
was ignoring. ”.

4. • In 1970, WalMart opened 30 discount stores in Arkansas, Oklahoma,
and Missouri.
• In 1974, WalMart was the first retailer to use computers for inventory
control.
• In 1977, WalMart initiated EDI (Electronic Data Interchange) with its
vendors.
• A few years later, WalMart introduced bar code scanning.
• In 1980, there were 330 stores in 11 states.

5. In mid-1980s Sam’s Clubs which is main
distribution center was opened.
What lies behind of opening Sam’s Club?
• To maximize economies in purchasing, minimize operating costs, and
pass the savings on to members through very low prices.
• To take advantage of having own distribution channel.
• To demonstrate its ability to transfer its retailing capabilities to a very
different distribution format.

6. Retailer
Discount
Store
US Retail
Format
Sam’s
Club
Super-
center

7. • In 1984, WalMart started using their own satellite.
• In 1990s, WalMart was pioneering the use of data-mining.
• Since 1992, WalMart started to internationalize.
• In 1995, WalMart was in all 50 states in the US.

8. In 2007, WalMart became the world’s biggest retailer.

9. QUESTION 1
To what extent is Wal-Mart’s performance attributable to industry
attractiveness and to what extent to competitive advantage?

10. Rivalry among Existing
Firms
Fierce Competition
Potential Entrants
Threat: Low
- High barriers of entry.
- Existing companies established
strong and stable supplier networks.
Substitutes
Threat: Low
- Low number of company that
can sell their products at lower
prices.
Buyers
Power: Modarate
- Buyers are price-sensitive.
- Rural domination of WalMart..
Suppliers
Power: Low
- Own distribution channel.
- Strong negotiation with
suppliers.

11. According to this analysis
• WalMart has competitive advantages in
• Suppliers
• New Threats
• Substitutes Products

12. QUESTION 2
In which of WalMart’s principal functions and activities (namely:
purchasing, distribution and warehousing, instore operations,
marketing, IT, HRM, and organization and management systems/style)
do WalMart’s main competitive advantages lie?
Identify the distinctive resources and capabilities in each of these
functions/activities?

13. • Commitment to “everyday low prices”
• Matchless responsiveness to customer needs
• Logistics supported by leading-edge IT
• Commitment to employees
• Unremitting cost cutting

14. Purchasing and
Vendor
Relationships
- Electronic Data
Interchange
- Real time store-
by-store
information
- Economies of
scale
Warehousing and
Distribution
- Cross-docking
- Direct import
- Hub and spoke
configuration
In-store Operations
- “Store of the
Community”
philosophy.
- Point-of sale data
- “Satisfaction
Guaranteed”
program.
Marketing
- “Everyday Low
Prices”
- Word-of-mouth
- Patriotism and
national causes
Information
Technology
- Bar code scanning
- Data-mining
- Radio-frequency
identification
Human Resource
Management
- Organization
culture:
- Respect
- High expectations
- Close
communication
Organization and
Management Style
- Flat organizational
structure
- Fast-response
management
system
- Internal
recruitment

15. QUESTION 3
To what extent has WM been able to transfer the competitive
advantage it established in discount retailing in the US to other
countries, to other retail sectors and formats? Why has WM’s overseas
performance to date been so patchy?

16. WalMart’s first format was discount store.
They changed their discount stores to supercenters
which are equal to
Discount stores + Grocery süpermarket.

17. • They transferred their competitive advantages into
• Distribution/Logistics sector
• Manufacturing sector
• Retailing sector
• Service sector

18. Success
Mexico
Joint Venture
Canada
Acquisition
Argentina
Green field
Brazil
Joint Venture
UK
Acquisition

19. Failure
Japan Germany
South
Korea
Indonesia China

20. Reasons for failure
• Stick so closely to the domestic culture
• Wrong market selection which is already dominated
• Less concentration on geographical differences
• Unable to respond customer needs and wants

21. QUESTION 4
To what extent is WM’s competitive advantage sustainable? Why have
other retailers had limited success in imitating WM’s strategy and
duplicating its competitive advantage?

22. Sustainable Competitive Advantages
Competency Valuable Rare Inimitable Organised Competitive
Impact
Information Systems Yes Yes Yes Yes Sustainable
Logistics System Yes Yes Yes Yes Sustainable
Culture Yes Yes Yes Yes Sustainable
Management Routines
and Practices
Yes Yes Yes Yes Sustainable

23. Why cannot be imitated?
Culture
Supply
Chain
Information
Technology

24. QUESTION 5
• Looking ahead, what measures does WM need to take to sustain its
recent performance and defend against competitive (and other)
threats?

25. • More advertisement and marketing activities
• More social responsibility activities
• More concentration on labor rights
• More focus on environmental issues
• More flexibility on culture
• Give importance on market research rather than start-ups

26. THANK YOU FOR YOUR
ATTENTION!
ANY QUESTION?