3. CHRONOLOGY
1960s Retail Revolution
Sam Walton's strategy was built on an
unshakeable foundation: The Lowest
Prices Anytime, Anywhere.
1970s Walmart Goes National
In the 1970s, a decade of incredible growth, "Mr.
Sam" began to take Walmart national, proving his
vision's widespread appeal.
1980s Decade of Firsts
In the 1980s, the first Sam's Club opened,
serving small businesses and individuals, and
the first Walmart Supercenter opened,
combining a supermarket with general
merchandise.
4. CHRONOLOGY
1990´s
America’s Top Retailer
By 1990, Walmart was the nation's
number-one retailer. As the Walmart
Supercenter redefined convenience and
one-stop shopping, Every Day Low Prices
went international.
2000s
New Millennium
Walmart entered the new millennium
dedicated to offering customers a
seamless shopping experience, whether
they are online, in a store or on a mobile
device. H. Lee Scott, Jr. succeeded David
Glass as CEO.
5. VISION
⦿ Be the retailer of
choice for
consumers
MISION
⦿ We save people
money so they can
live better
6. KEY QUESTION
What should Lee Scott do as Wal-Mart’s new CEO to keep Wal-
Mart as the world’s biggest retailer and keep increasing sales and
profits into the future?
FRAMING
FLIPPING AND SKIMMING
Wal-Mart Stores Inc. Strategies for Dominance in the New Millennium
Autor: James W. Camerius, Northern Michigan University.
Number of Pages: 18
Case’s Content:
The Sam Walton Spirit
Marketing concepts
The external environment
Domestic Corporate Strategies
Decisionmaking in a Market Oriented Firm
The Growth challenge
3 Exhibit
4 Appendix
7. FRAMING
BEGINNING OF THE CASE
At the beginning of 1991, the firm had 1573
Wal-Mart stores in thirty-five states, with
expansion planned for adjacent states.
ENDING OF THE CASE
In 2000, Wal- Mart Store, Inc, Bentonville,
Arkansas, operated mass merchandising
retail stores under various names and retail
formats including Wal-Mart discount
department stores.
8. LABELING
GENERAL ENVIRONMENT
-Wal-Mart the largest wholesaler in the world minority.
-Opened its first headquarters and distribution center in Bentonville.
-Soon be joining the New York Stock Exchange.
-Outside the United States, the company operates in 14 countries.
INDUSTRY
- Retail
-Walton argues that the essence of successful discount retailer to reduce the price of
an item where possible, reducing the profit margin, and profit on increased sales
volume.
-Currently the company employs more than 1.3 million employees, a million in the
U.S. alone
-The Company owns more than 4,000 stores worldwide.
-The company serves over 100 million customers a week.
10. LABELING
ECONOMICAL
-The chambers of commerce supported Wal-Mart because they believed that the
company helps the local economy.
-The retail sector has become highly competitive
-While the economy weakened by inflation.
-Wal-Mart's strategy was to compete with rivals and reduce overhead.
LEGAL
-U.S. based multinational company.
-Had to withdraw from Germany and South Korea for failing to adapt to the tastes of
these markets.
TECHNOLOGY
Smart labels or "tags" (a sticker with an embedded microchip) is the technology
used and to store information about each product, but large-scale, large suppliers
benefit take full advantage to maintain a more thorough inspection of the
merchandise produced, shipped and sold.
11. SYNTHESIZING
⦿ Wal-Mart is a strong company that has grown
using aggressive strategies with great stability in
the market because of its competitive advantages.
The directors of Wal-Mart have achieved a really
good economic environment and have managed
to gain acceptance from consumers, government
and suppliers. The inventory control systems,
concern for customer satisfaction, concern for the
community and increasing demand have been
part of their success.
12. PORTER ANALYSIS
⦿ LOW
Forging relationships with suppliers is essential to Wal-Mart’s
business. Without timely inventory deliveries, Wal-Mart could
not maintain its full shelves and would lose customers. For this
reason, the company engages in contractual agreements with
its suppliers. This arrangement is beneficial for both parties, as
the supplier makes sure it will have constant access to•
retailers with large market share. This way, suppliers have a
guaranteed buyer for the supplies and can arrange specific
prices. Wal-Mart benefits by guaranteeing the cost of their
merchandise and the timely deliveries, which will ultimately
benefit consumers. Consumers will receive lower prices and an
assortment of products.
Bargaining
power
of
Suppliers:
13.
14. PORTER ANALYSIS
⦿ LOW
Consumers today are searching for the best deals
possible. They are waiting for discounts and sales to
bulk up on products. Discount retailers like Wal-Mart
are creating huge supercenter stores because they
want their stores to become a one-stop trip. This
was most beneficial in 2007 as the high oil prices led
consumers to shop less frequently to save gas.
Instead of traveling from store to store in search for
a variety of products, consumers can find them all in
one location. Customers know what they want and
how far they are willing to search for the item.
Retailers must maintain high inventory levels to
retain customers and their market share.
Bargaining
power
of
Buyers:
15.
16. PORTER ANALYSIS
⦿ LOW
Being that the retail industry is a
highly saturated market, new entrants
would face difficulty succeeding in this
industry. In fact, it is highly difficult for
discount retailers to penetrate other
markets as Wal-Mart tried to enter
Germany and South Korea. The
company was unsuccessful and had
to pull out because of its unprofitability
Threats
of
New
Entrants:
17.
18. PORTER ANALYSIS
⦿ MEDIUM
Substitute products are products that can be used as
replacements for other products to satisfy the same
necessity. Wal-Mart benefits from this idea as discounters
have lower prices than department stores and consumers go
for higher quality product with the lowest prices. Macys and
Wal-Mart may both sell apparel and bedding products but
there is a major price difference between the two. When
consumers are trying to save, they will substitute pricier
Macy’s items with lower priced Wal-Mart items. In making
substitutions, consumers may have to forgot certain features
such as the quality of the product, brand or even the service
the store provides.
Wal-Mart is working on providing the best customer service
possible but as a high-traffic store, it is generally impossible
to provide one-on-one service.
THREAT
OF
SUBSTITUTE
PRODUCTS:
19. PORTER ANALYSIS
⦿ HIGH
The retail business is a highly competitive industry. Wal-Mart
faces a number of competitors in all segments of their
business. After being the first in the industry to build the first
supercenter, Kmart and Target built supercenters as well.
Discount stores were generally thought of as shopping centers
for low-income consumers but this idea has changed. As
retailers expanded their product lines, they included products
for different customer incomes. Target, in particular, has
generally been thought of as an upscale discount store as the
company tends to target medium income consumers but their
prices are usually higher than Wal-Mart’s.
Rivalry:
20.
21. • Customers loyalty
• High Brand value
• Good inventory control System
• Good reputation on Quality and low price
• Emphasis in Human Resource management and development
• Much of the same merchandise
• Low reaction to changes in market
• Insistence on doing things “the Wal-mart way”
• Low current ratio
• Low market research in foreign countries
• Strategic Alliances and merger
• Increase Demand
• Technological developments
• New retail formats
• Customers concern about environment
• Cultural differences in new markets
• Countries economic problems
• Local regulations
• Antitrust issues
• Intense competitive conditions
S
W
O
T
28. SUMARY
TOWS IFE-EFE
SPACE
MATRIX
Invest on marketing and publicity
Increase the satisfaction to get
mouth advertisement
Sell innovative merchandise
Improve investment on research
and development in foreign
markets
The Internal – External Matrix
shows that Wal-Mart is a strong
company in the retail industry
and the analysis recommended
that Wal-Mart should pursue
the strategy of grow and build
to reach the gold of increase
sales and profits.
Wal-Mart should pursue an
aggressive strategy. The
company needs to use its
strengths and opportunities to
increase their sales, keep their
brand value and get a
successful penetration in
foreign markets.
29. ALTERNATIVE 1
•Increase the investment on research and development to
understand the foreign markets before enter to them.
PROS CONS
Reduce the effect of the
cultural differences
Increase sales and profits
Perfect penetration in new
markets
High cost of R & D
30. ALTERNATIVE 2
•Increase the satisfaction of customers and give to
them more benefits like promotions and gift to
maintain the loyalty and increase the mouth
advertising.
PROS CONS
Increase sales and profits High cost of investment
Costumers loyalty High cost of R & D
Increase the mouth advertising.
Increase brand value
Increase top of mind on
consumers
31. ALTERNATIVE 3
Make alliances with successful companies that have
experiences on the new markets and do the things “on
their successful way” in that market.
PROS CONS
Avoid the reject of potential
customers to the brand
Increase sales on foreign markets
Learn new retail models
Increase the brand value
Increase sales and profits
High investment
Risk of merger
Lose a little of the “Wal-Mart Way”
32. RECOMENDATION
⦿ Lee Scott, new Wal-Mart’s CEO should pursue
the third alternative to keep Wal-Mart as the
world’s biggest retailer and keep increasing
sales and profits into the future. It means that
Lee Scott should look for successful
companies around the world that can bring
benefits and which working’s philosophy
resembles Wal-Mart philosophy. This
alternative has several cons but its pros are
better and reach the gold. Wal-Mart has to
keep growing and increase their investment on
marketing to raise its top of mind and keep it
above the competitors.
