Group Case 1Team MembersEtimad Uddin Khan Mohammed (98326)Ab.docx

Group Case 1
Team Members
Etimad Uddin Khan Mohammed (98326)
Abdul Moin Khan Lnu (199229)
Bose Babu Vanarasa (180721)
Shashank Vinala (188623)
· Give a brief history of Wal-Mart ?
Ans:-
A Brief History of Walmart
In the late 1940s, when Sam Walton was franchising a Ben
Franklin’s variety store in Newport, Ark., he had a simple but
momentous idea. Like any retailer, Walton was always looking
for deals from suppliers. Typically, though, a retailer who
managed to get a bargain from a wholesaler would leave his
store prices unchanged and pocket the extra money. Walton, by
contrast, realized he could do better by passing on the savings
to his customers and earning his profits through volume. This
insight would form a cornerstone of Walton’s business strategy
when he launched Wal-Mart in 1962.
The quest for low prices came naturally to Walton: He was
freakishly cheap. Although he was ranked as the richest man in

the United States by the 1980s, he continued, it is said, to have
his hair cut by the local barber, a $5 expense that he never
supplemented with a tip. (Perhaps he wasn’t satisfied.) Cost-
cutting was, as one might also expect, an obsession in the Wal-
Mart culture, and Walton was almost as chintzy with his
executives as he was with his cashiers. On business trips,
everyone, including the boss, flew coach, and hotel rooms were
always shared. Even a cup of coffee at the office required a 10-
cent contribution to the tin.
But coffee taxes only went so far. Walton understood that a
major requirement for keeping costs down was controlling the
payroll. As he would write in his 1992 autobiography, Made in
America, “No matter how you slice it in the retail business,
payroll is one of the most important parts of overhead, and
overhead is one of the most crucial things you have to fight to
maintain your profit margin.” Not only did Walton prefer to hire
as few people as possible, but he also dreaded paying them more
than he had to. Unions were particularly feared, and Walton did
everything he could to fight them, almost always successfully.
If such a regimen seems stifling, Walton’s employees
nevertheless accepted it. In part, it was because Walton framed
his cheapness as a crusade on behalf of the lowly consumer and
as a quest for a better life for all Americans. It was also because
he lived an outwardly modest life, driving an old truck with his
hunting dogs in the back. Mostly, it was because he had
charisma. Even when Wal-Mart grew outsized, Walton made a
point of keeping in touch with his employees on the ground or,
as he termed them, his “associates.” This would often involve
flying from store to store — Walton had a pilot’s license — for
impromptu visits.
But Walton’s ability to keep his staff happy also relied on a
sense of when to let penny-pinching take a backseat to other
priorities. In 1985, amid anxiety about trade deficits and the
loss of American manufacturing jobs, Walton launched a “Made
in America” campaign that committed Wal-Mart to buying
American-made products if suppliers could get within 5 per cent

of the price of a foreign competitor. This may have
compromised the bottom line in the short term, but Walton
understood the long-term benefit of convincing employees and
customers that the company had a conscience as well as a
calculator. He also made sure to give his staff a stake in the
company. In 1971, he introduced a profit-sharing plan that
allowed employees to put a certain percentage of their wages
towards the purchase of subsidized Wal-Mart stock. For
employees who stuck around, this could mean quite a bit of
money. According to a truck driver named Bob Clark, quoted in
Walton’s autobiography: “[Walton] said, ‘If you’ll just stay
with me for twenty years, I guarantee you’ll have $100,000 in
profit sharing’ … Well, last time I checked, I had $707,000 in
profit sharing, and I see no reason why it won’t go up again.”
Equally important was Walton’s ability to sell employees on the
notion that working at Wal-Mart meant limitless opportunity.
Here, from Fortune, is a portrait of Walton at a Saturday-
morning meeting in 1989:
[Walton] proposes that whenever customers approach, the
associates should look them in the eye, greet them, and ask to
help. Sam understands that some associates are shy, but if they
do what he suggests, “It would, I’m sure, help you become a
leader, it would help your personality develop, you would
become more outgoing, and in time you might become manager
of that store, you might become a department manager, you
might become a district manager, or whatever you choose to be
in the company…It will do wonders for you.” He guarantees it.
And things could get downright cultish:
Then, just to make sure, Sam asks the associates to raise their
right hands and execute a pledge, keeping in mind that “a
promise we make is a promise we keep.” The pledge: “From this
day forward, I solemnly promise and declare that every
customer that comes within ten feet of me, I will smile, look
them in the eye, and greet them, so help me Sam.”
Of course, Wal-Mart’s success relied on more than just
charisma and thrift. Technology, in particular, put the company

ahead of its competitors. Already by the 1970s, Wal-Mart was
using computers to link its stores and warehouses. Sales data
allowed Wal-Mart to keep track of specific items and reduce
inventory miscalculations. Only years later would Kmart realize
how far it had fallen behind. Throughout Walton’s career, a
focus on innovation of this sort would make Wal-Mart a
consistent leader in efficiency.
When Walton died in 1992, the adjustment to a post-Sam
environment proved difficult. Although Wal-Mart executives
had emphasized for years that their company depended on a set
of principles and habits more than it did on any one person,
Walton’s death wound up marking a fateful shift in how the
company was perceived.
The first blow fell only months later when “Dateline NBC”
produced an exposé on the company’s sourcing practices.
Although Wal-Mart’s “Made in America” campaign was still
nominally in effect, “Dateline” showed that store-level
associates had posted “Made in America” signs over
merchandise actually produced in far away sweatshops. This
sort of exposure was new to a company that had been a press
darling for many years, and Wal-Mart’s stock immediately
declined by 3 per cent. While the “Dateline” flap was short-
lived, Wall Street soon found other reasons to lose faith in the
company. Profit margins were declining, yet David Glass, who
was Wal-Mart’s CEO at the time, chose to make ambitious
investments in distribution, technology, and construction. Such
risk-taking, while smart, scared off investors at the time, and,
by 1996, Fortune was even mocking the company’s “everyday
low stock prices.” It was no longer the feisty little chain out of
Bentonville.
But it wasn’t just Wal-Mart’s image that began to change after
Walton’s death. It was also the way the company did business.
Wal-Mart’s new leaders took to heart one element of the
founder’s business philosophy — the importance of reducing
costs — but they didn’t show his intuition about the importance
of making employees feel as though they had a stake in the

company. They were already at a disadvantage as it was. Wal-
Mart’s rate of growth was impressive but slower than in its
early years — the inevitable result of becoming so big — and
this weakened the appeal of such incentives as stock ownership.
But character also played a role. The company’s focus on saving
money was leading it to make unrealistic demands of local
managers, particularly with regard to payroll, and this pressure
would eventually lead to serious trouble.
For a while, though, it worked. Between 1997 and 2001, the
company’s stock value increased by over 500 per cent, rising by
70 per cent in 1997 alone. This undoubtedly helped to mollify
employees who’d been unhappy with the slump earlier in the
decade. Between 1996 and 1999, sales increased by 78 per cent
while inventory rose only 24 per cent, a feat Fortune lauded as
“mind-bending.” Today, with $288 billion in annual revenues
(more than Switzerland’s GDP) and over $10 billion in profits,
Wal-Mart is the world’s largest corporation, according to 2005
Fortune 500 list. It operates over 5,000 stores worldwide and
employs over 1.6 million people — 1.3 million in the United
States alone.
That growth has been accompanied by two distinct kinds of
perceptions among the public. On the one hand, Wal-Mart has
been celebrated for its business innovations, which have set a
new global standard for efficiency. On the other, it has been
condemned for its hard-charging business practices. One of the
most prominent attacks came last November, when filmmaker
Robert Greenwald released Wal-Mart: The High Cost of Low
Price, a documentary that excoriated the company for its
approach to unions, independent retailers, outsourcing, and
wages and benefits.
Washington, too, has gotten involved. In 2003, in the run up to
the primaries, Democrats began to make an issue of Wal-Mart’s
wages and benefits. In 2004, Rep. George Miller of California
released a report called “Everyday Low Wages: The Hidden
Price We All Pay for Wal-Mart.” And last year, organized
labour put together two Washington-based groups: Wake Up

Wal-Mart, backed by the United Food and Commercial Workers
(UFCW), and Wal-Mart Watch, supported by the Service
Employees International Union (SEIU). Staffed by prominent
veterans from the campaigns of Howard Dean and Wesley
Clark, both groups are devoted to keeping the world, and
Washington, informed of Wal-Mart’s alleged misdeeds. For
many progressives, the fight to change Wal-Mart represents a
central organizing challenge for the 21st century.
There’s evidence that the bad press has taken a toll on the
company. A 2004 report prepared for Wal-Mart by McKinsey
and Co. found that up to 8 per cent of Wal-Mart customers no
longer shop there because of “negative press they have heard.”
For the last two Christmas shopping seasons, the company has
reported lower-than-expected sales. And in January, Maryland
gave final approval to a “Wal-Mart bill,” requiring large
employers to spend at least 8 per cent of their payroll on health
benefits. Thirty other states are now considering similar bills.
Developments of this sort have led the company to form a war
room of political PR experts from both parties — including
Ronald Reagan’s image-meister Michael Deaver, and Leslie
Dach, a media consultant to Bill Clinton — to generate more
positive media coverage.
Wal-Mart’s defenders argue that the chain saves lower-income
workers billions through its low prices. This is undeniably true,
but it’s not a virtue unique to Wal-Mart. The entire sector of
discount retailers — from Target to Costco to Best Buy to Home
Depot — does much the same thing. Meanwhile, Wal-Mart’s
critics tend to focus on the company’s low wages and paltry
benefits, or its effect on small towns, or its reliance on
outsourcing. But these, too, are by and large sins of the entire
discount retail sector. So why pick on Wal-Mart?
The answer is that Wal-Mart really is different. In terms of
annual revenue, Wal-Mart is nearly four times the size of The
Home Depot, the country’s second largest retailer, and almost
twice the size of Target, Costco, and Sears (which includes
Kmart) combined. That means the company exerts pressure on

the entire sector to imitate its methods — including its
treatment of workers. That would be less worrisome if Wal-
Mart’s record didn’t stand out within the sector. But there are
strong indications that, when it comes to how it treats its
employees, Wal-Mart really is worse than the rest. The company
finds itself in trouble because, since the death of Sam Walton
14 years ago, something ugly has happened to the way it does
business.
Work off the clock:-
In a comparison of Wal-Mart with its peers, the obvious place
to start would be wages and benefits. But neither Wal-Mart,
Target, nor Costco make public their median wage, which many
economists argue is the most accurate measure of how a
company pays its employees. A 2005 study by Arindrajit Dube
and Steve Wertheim of the University of California’s Berkeley
Labour Centre, however, sheds some light. Using figures for
Wal-Mart released through a sex-discrimination lawsuit, and
relying for the rest of the large retail sector on numbers from
the March 2005 “Current Population Survey,” the study finds
that Wal-Mart pays its hourly workers an average hourly wage
of $9.68, while other large retailers average $11.08. (The study
adjusts for the fact that Wal-Mart stores tend to be in lower-
income areas.) As for health benefits, Dube and Wertheim found
that Wal-Mart offers its hourly workers benefits worth 73 cents
per hour, while other large retailers offer $1.
The study suggests that Wal-Mart is significantly less generous
than other large retailers. In response, Wal-Mart has noted that
the Berkeley Labour Centre receives 10 per cent of its funds
from organized labour. The company instead cites a study that it
commissioned from the consulting group Global Insight, which
found that Wal-Mart’s wages are on par with those of other
retailers. But whichever study comes closer to the truth,
comparisons between Wal-Mart and the large retail sector as a
whole don’t tell the full story. After all, discount retailers like
Wal-Mart will inevitably pay less than many other large

retailers, and why shouldn’t they? Doing so allows them to offer
lower prices. Only by focusing exclusively on other discount
retailers like Costco and Target can we meaningfully compare
Wal-Mart’s wages and benefits to those of its competitors, but
we simply lack the hard data on most other outlets to do this.
But there are myriad other ways that employers can cut costs at
the expense of workers. And it’s in these areas that we can
gather more satisfactory information to compare Wal-Mart to its
competitors. The simplest way to save money is to avoid paying
people for all the hours that they’ve worked — a practice called
off-the-clock work. Of course, Wal-Mart can’t explicitly force
employees to work off-the-clock. But it can set payroll targets
that are nearly impossible to achieve without doing just that. As
one manager explained to The New York Times in 2002, “You
got to hit the payroll budget they set for you, but if you’re over,
they discipline you.” Plausible deniability, then, becomes
essential. Workers get assigned more work than they can
possibly complete on their shifts — while being warned that
overtime is out of the question. No intelligent employee would
fail to get the message: Finish the job by whatever means
necessary. “We worked off the clock pretty much every shift,”
one employee told the Times. “The manager said if our jobs
were not finished, we had to clock out and finish our jobs so no
overtime would show up.”
Wal-Mart insists that these cases are unrepresentative of the
company as a whole, and that any enterprise of their size is
bound to have a few rogue managers. But the verdicts so far
suggest a widespread problem. In 2000, Wal-Mart paid $50
million to settle an off-the-clock suit involving 69,000 Wal-
Mart employees in Colorado. Two years later, a federal jury
ordered Wal-Mart to pay back wages to 83 workers in Oregon
for off-the-clock work. Some 40 similar class actions are
pending, and in 2002, The New York Times reported on a
“wide-ranging legal battle between Wal-Mart and employees or
former employees in 28 states” over off-the-clock work. Last
December, a California jury awarded $172 million to thousands

of Wal-Mart employees who had been illegally denied lunch
breaks.
Free-market advocates who defend the company argue that
squeezing workers is an unavoidable reality of the discount
retail business. But a look at the annual reports of Wal-Mart and
its competitors points up a glaring difference between the
companies. Target’s and Costco’s annual reports for 2004-2005
include no cases of off-the-clock work. Wal-Mart’s lists 44 in
the last 10 years.
No girls allowed :-
In 1986, Walton was sensing some pressure to appoint a woman
to Wal-Mart’s all-male board. So he offered the job to
Arkansas’ first lady, one Hillary Clinton, who accepted. She
would later quote Walton’s pitch: “I think I need a woman;
would you like to be her?” Today, Wal-Mart’s challenges in the
field of gender equality are not so easily addressed. The
company keeps its payroll costs down by paying women less
than their male counterparts for performing the same work.
Evidence also exists that it fails to promote women at the same
rate as men.
In 2000, a female employee at a California Wal-Mart who found
herself denied promotions filed a sex-discrimination suit. That
case now involves nearly two million women, and, in 2004, it
was certified by Judge Martin J. Jenkins, of the United States
District Court in San Francisco as a class action. Discrimination
is a difficult thing to prove, but the figures in the case do not
look good. According to numbers compiled in 2003 by the
plaintiffs, female store managers average slightly under $90,000
in annual income, while their male counterparts average slightly
over $100,000. And while women make up 79 percent of the
store’s department heads (an hourly position), only 15.5 percent
are store managers. Judge Jenkins offered a strongly-worded
assessment of the evidence:
“Plaintiffs present largely uncontested descriptive statistics
which show that women working at Wal-Mart stores are paid

less than men in every region, that pay disparities exist in most
job categories, that the salary gap widens over time, that women
take longer to enter management positions, and that the higher
one looks in the organization the lower the percentage of
women.”
Wal-Mart has argued that most of the decisions about hiring and
promotion are decentralized. The plaintiffs contend, however,
that a company in which headquarters chooses to regulate
certain regional minutiae, such as individual store temperatures,
also has the capacity to keep an eye on gender issues.
But is Wal-Mart really any different from its competitors when
it comes to treating its female employees fairly? An extensive
search of cases against Target doesn’t turn up any similar
accusations, and while Costco does face a gender discrimination
class action, it involves hundreds of women, not millions. Brad
Seligman, who is lead counsel on the gender discrimination
cases against both Wal-Mart and Costco, stresses that, even
accounting for differences in size, Wal-Mart is exceptional.
“I’m the first to concede that the Costco case is nowhere in the
same league as the Wal-Mart case,” says Seligman. “I’ve done
50 class actions in my time, and Wal-Mart stands out above all
of them, both in terms of the depth and pattern of discrimination
and in their reaction to the charges.”
We care, but not that much:-
Few discount retailers make it easy for workers to unionize. But
it’s hard to find one that has been more aggressive, brutal, and
openly hostile to unions than Wal-Mart. Sam Walton faced his
first major union challenge in the 1960s. Two Wal-Marts in
Missouri were on the verge of organizing, and Walton called in
a lawyer named John Tate to stop them. In 1989, Tate, by then
an executive vice president of the company, described the
events to Fortune: “I told [Walton], ‘You can approach this one
of two ways: hold people down, and pay me or some other
lawyer to make it work. Or devote time and attention to proving
to people that you care.'” Walton soon followed up with a

management seminar called “We Care,” began to call employees
“associates,” and introduced a widely-praised profit-sharing
plan. Whether satisfaction or fear was at play, no union ever
formed.
Since Walton’s death, however, the “hold people down and pay
me or some other lawyer to make it work” method appears to
have gained favour. In 2000, when workers in a Jacksonville,
Texas, meat-cutting department successfully voted to unionize,
Wal-Mart announced two weeks later that it would be closing its
meat-cutting departments nationwide and switching to pre-cut
meat. Four of the employees who voted in favour of the union
were fired. (The company claims that the timing was
coincidental and that the dismissals were unrelated, but a
National Labour Relations Board judge disagreed. Wal-Mart is
appealing the case.)
A year ago, employees at a Wal-Mart tire and lube shop thought
they had enough votes to unionize, but the company fired one of
the likely yes-voters and transferred in six likely no-voters.
Again, an administrative judge ruled that Wal-Mart’s conduct
had been illegal, but the goal of blocking the union had been
achieved.
And in February 2005, the company announced that it would be
closing a Wal-Mart in Quebec, one of only two unionized Wal-
Marts in North America (the other is also in Quebec). Wal-Mart
claimed the store was losing money, but it refused to release
numbers.
Wal-Mart’s strong-arm approach is the product of a simple cost-
benefit analysis. As Thomas Cochan, a professor at MIT’s Sloan
School of Management, explains, “we have a law that is no
longer serving its basic objective of providing people with the
ability to organize. The incentives are too weak to keep
companies from violating the law if they don’t want to comply.”
The National Labor Relations Board can order an employer to
rehire a terminated employee and to pay back wages, but it
can’t impose criminal penalties or punitive damages. This is
rather like telling a bank robber that the penalty for a failed

heist is being required to return the money to the bank. And
Wal-Mart takes full advantage of such laxity. Store managers
are equipped with 56-page pamphlets titled “The Manager’s
Toolbox to Remaining Union Free,” and representatives from
the “People Division” in Bentonville are flown out at a
moment’s notice if there are any signs of union activity.
According to a 2004 report in The Nation, stores even
administer personality tests to applicants to screen out potential
union sympathizers.
Although Target and Kmart both take pains to head off workers
who might organize a union — Costco, by contrast, has some
unionized employees — Wal-Mart still leads the competition.
Over the past 10 years, the NLRB or its administrative law
judges have determined in at least 11 cases that Wal-Mart or
individual Wal-Mart stores were engaging in unfair labour
practices to prevent unionization, according to the agency’s
website. In that same period, both Target’s and Costco’s records
appear to have remained clean. An excerpt from one of the
decisions against Wal-Mart gives a sense of the extent of the
violations:
The Respondent, Wal-Mart Stores, Inc., its officers, agents,
successors, and assigns, shall cease and desist from:
1. Promising to remedy employee concerns in an effort to
undermine support for the Union.
2. Removing supervisors from their position in an effort to
undermine support for the Union.
3. Engaging in surveillance of the union activities of employees.
4. Coercively interrogating employees concerning the union
sympathies and support of other employees.
5. Installing new equipment to remedy employee complaints in
order to undermine support for the Union.
6. Transferring employees into the TLE [Tire Lube and Express
division] to dilute the support for the Union.
7. Transferring employees into the TLE to remedy employee
complaints about inadequate staffing in order to undermine
support for the Union.

8. Transferring employees out of the TLE in order to dilute the
support for the Union.
The post-Sam era:-
“Sam would have been proud” is the highest tribute that can be
paid at the company Walton left behind. Increasingly, though,
it’s also clear that what the writer Barbara Ehrenreich termed
the “Cult of Sam” has played a large role in its current woes.
Walton, in his day, played a hard game, but he knew when to
hold back. Unions were fiercely resisted, but employees were
treated respectfully. Wages were low, but people were made to
feel they had a stake in the company. Bargaining with suppliers
would be tough, but some holds would be barred. Walton’s
instincts, in short, helped to keep the company’s foibles in
check. Absent Walton, the redeeming features of Wal-Mart
began to disappear. What remained were the relentlessness, the
chauvinism, and, above all, the cheapness. As so often happens,
the leader wasn’t doctrinaire; but the followers are. A Fortune
article from 2003 notes how, at Wal-Mart headquarters,
“nothing backs up a point better than a quotation from Walton
scripture.”
It won’t be easy for Wal-Mart to change its ways. Wake Up
Wal-Mart likes to point out that Wal-Mart could raise its
average wages by two dollars an hour if it raised prices by only
a penny on the dollar. But Wal-Mart is led by people whose
lives are devoted to coming up with ways to shave a penny — or
a half penny, or a quarter penny — off of a dollar. Wal-Mart’s
chief spokesman summed up the difficulty in an interview with
The New York Times. Change might be necessary, he admitted,
but, “at the same time, we can’t change who we are — we can’t
change what makes Wal-Mart Wal-Mart.”
But they may have to. Union-busting, gender discrimination,
and off-the-clock work aren’t innovative; they’re illegal. And
there are signs that the company is beginning to recognize the
need for change. In a message to company managers posted on
Wal-Mart’s internal website and published by The New York

Times in February, CEO Lee Scott wrote: “If you choose to do
the wrong thing… if you choose to take a shortcut on payroll, if
you choose to take a shortcut on a raise for someone, you hurt
this company. And it’s not unlikely in today’s environment that
your shortcut is going to end up on the front page of the
newspaper.” With any luck, Wal-Mart will work through its
identity crisis and produce a company that’s a model for the
industry. With even more luck, Americans will begin a
thoughtful debate about balancing our needs as consumers and
our needs as producers. Until then, we can focus on getting
Wal-Mart employers to abide by the laws we have. In many
instances, that alone would be a significant improvement.
· Give the company's organizational structure ?
ANS:- Walmart Organisation Structure
Wal-Mart follows a Divisional Organisation Structure at the top
level and a matrix organizational structure at the store level.
The key divisions are:
· Wal-Mart Realty
· Wal-Mart International
· Wal-Mart Specialty stores
· Sam’s club and super-centres
Each division is given enough resources and autonomy and has
its own functional workforce.
The benefit of this organizational structure is that companies
are able to specialize its activities into self-reliant divisions,
each capable of satisfying e.g. customer demands and changes
within the business environment.
The detailed structure is given below:
· The head office is essentially the place for divisional or senior
vice presidents.
· There are many Districts which in turn consist of many stores.
Each district is run by a District Manager, who lives in the
field. These District Managers have been replaced by “Market
Managers” who will be responsible for a large number of stores.

· Reason for Market divisional structure – the company is
working to increase the merchandising power of the individual
markets, which are now based more on the economic landscape
of an area, less on the physical geographies.
· Wal-Mart has rolled out a “Store of the community” program,
which customizes everything in a store based on a community’s
specific needs, from store layout to item
Selection, which has been illustrated in the new Plano, TX
store.
The Market office is not only going to be home to the Market
Manager, but to a series of Market Merchandisers in each of the
general areas of the store: Food & Consumables,
Fashion/Apparel, Homeliness & Headlines(the first two of
which have already been created and filled in most, if not all,
markets).
· Each Wal-Mart store has the same job categories, job
descriptions and management hierarchy.
· At the bottom of the ladder, the primary entry level hourly
positions are cashier, sales
Associate and stocker.
· The first step up is hourly Department Manager. Other hourly
supervisor positions include Customer Service Manager(CSM),
known as Check-Out Supervisor(COS) at Sam’s Club. The
highest level hourly manager at Wal-Mart is support Manager.
· The next step up is to management trainee, a four-to-five
month program which prepares employees for positions as
Assistant Managers.
· The first salaried management position is Assistant Manager.
· Each Store has several Assistant Managers, Varying with the
size of the store
· The next level is Co-Manager, a position used only in large
stores.
· The top store position is Store Manager /General Manager in
Sam’s Clubs
· The stores contain 40-50 different departments

· Based on the paper and the concepts learned in class, do an
external analysis of Walmart. Support all your claims
with pieces of scholarly evidence.ANS:-
External Environment
1. Political
Wal-Mart made sure that they knew of the political situation of
every country they have operated in and the company has made
sure that it has a good position with regards to political issues.
Wal-Mart is every time ready to face any problems concerning
the political sector. Some times Wal-Mart spent money in
political issues.
2.Economic
Wal-Mart is economically stable for the past years. Its
economical environment is doing well so they can try to
improve their products and able to give best to their clients. It
is not only the internal economic situation of the company
should be taken in consideration but also consider the economy
of the country, Wal-Mart checks first the economic status of the
country they are operating in before they decide to open the
branch in that country. The economic environment is a major
factor in the strategies of discounts retailers. The United States
GDP has been growing steadily since 2009 at 3.5% annually.
3.Social
Wal-Mart makes sure that the products they offer should be
accepted by the society where they are operating in. Wal-Mart
does not authorize the delivery of some products they know will
cause outbursts or complains from different groups in the
society. Wal-Mart is maintaining very good relationship with
different sectors in the society although some sectors have
problems with them. Wal-Mart also participates in social
activities that tend to develop a better relationship between

them, the clients and the society they are operating in.
4.Technological
Wal-Mart offered new innovations in its technological aspect
and introduced new concepts with regards to its industry. Wal-
Mart is using advanced cash register and better performing slot
machines. Wal-Mart is using better security system. Since
technology rapidly changes Wal-Mart keeps updating to up to
date technology and keep an eye on the technology how its
changes. If other companies use new technologies to provide
services, Wal-Mart has a capability to adopt those technologies.
5.Environmental
Wal-Mart makes sure that the products they sell are proven to
cause very less harm to the environment. Wal-Mart has
developed certain regulations on what type of product they will
sell in their store. Wal-Mart has also introduced better waste
management systems that aim to reduce pollutants and provide a
cleaner environment for the future. Wal-Mart makes sure that
its waste system is developed to prevent any mistakes from the
personnel.
6.Legal
Wal-Mart makes sure that it follows the different laws of a
country where they are doing their transaction. The company
doesn’t want to risk their client’s welfare and company image
by breaching local and international laws Wal-Mart makes sure
that the in the country where they are doing transactions in will
have a legal basis and will be sanctioned by local or
international legal organizations.
7.Market Competition
Wal-Mart is offering low price, low cost operations as well as
their operational efficiency; Wal-Mart tops the list of retailers
worldwide. While some retailers such as Dollar General
offering a low price initiative with comparable low price

offerings as Wal-Mart, Wal-Mart is still the leader in the retail
market. With that said, Wal-Mart’s emerging market is being
contested by other major players such as Carrefour and Metro.
Retailers such as Carrefour and Metro moved into the
international marketplace long before Wal-Mart.
8. Bargaining power of Buyers
The bargaining power of buyers highly influences Wal-Mart.
Company is trying its best to keeps its prices low for the
products and services they are providing. When the products are
similar then the buyer will compare the price among suppliers
which increases the competition and lead to lower prices and
profits. Wal -Mart offers a wide range of products with the
strategy of “Every Day Low Price” that appeal to large
audience.
9. Bargaining power of Suppliers
The company makes sure that their suppliers have high
bargaining power through helping them show their importance
in the industry. Wal-Mart makes sure that the price being asked
for a material has the same value as the same materials’ quality
and durability. This will ensure that budgets will not be wasted.
Wal-Mart holds a greater part of market share and suppliers
know that, so the power of suppliers is low in case of Wal-Mart.
Influence of External Environment in Wal-Mart
1.Political
The political factor can negatively affect the Wal-Mart sales

and profits because government can change the rules and the
regulations at anytime which can be influenced Wal-Mart
directly.
For example; the sale of Wal-Mart in February, 2013 was lower
than the expected due to delay in income tax refunds. The sale
of Wal-Mart globally can be influenced by those issues. Since
to decrease working expenditure and gaining more profit Wal-
Mart has operated in different countries Such as; Germany,
Canada, China, Mexico, UK and India. If these countries face
any political instability or any problem, it can reduce the market
share of Wal-Mart.
2.Economic
Raise the price of products and services which cause to push
inflation. This affects the performance of the entire company,
not only on its relationship with the customers, but also affects
the overall system. Purchasing power depends up on the
economic condition. The management of Wal-Mart says that
economic factor; both domestically and internationally might
affect Wal-Mart financial performance unfavourable. In U.S and
other countries higher fuel price, energy cost and higher interest
rate, inflation, weak housing market, unemployment rate, higher
debt and changes in tax law and overall economic slowdown
could affect consumer demand for the services and products
selling through Wal-Mart stores. Others factors like higher
transportation cost, foreign exchange rate fluctuation,
healthcare and insurance, and other economic factors can raise
the cost of general and administrative expenses and harmfully
effect the operations of Wal-Mart.
3.Technological
The Internet and e-commerce greatly influence the overall
performance of Wal-Mart. Thus, it results the company to
launch its online stores which enables the company to be
connected with the customers. Just like the employees, as of
now, customers are also changing in demands, particularly in

the ways of buying and availing products and services. E-
commerce or the process of buying and selling goods and
services over the internet had opened a new way of connection
between the buyers and the sellers.
4.Substitute product
Customer mainly influenced by low prices. Therefore, if cost of
switching the product is low then threat of substitutes is higher.
Normally, there are three factors that can influence the
customer to switch the product such as; willingness of buyers to
switch the product, performance and price. On the other hand, if
the buyers become loyal to the products then threat of substitute
can be decreased. In Wal-Mart “Every Day Low Price” strategy
customers in touch with the company.
5.Customer
There are two types of customer in retail. The first is related to
the customer’s price sensitivity. If each brand of a product is
similar to all the others, then the buyer will base the purchase
decision mainly on price. This will increase the competitive
rivalry, resulting in lower prices, and lower profitability. The
other type of buyer power relates to negotiating power. Large
quantity buyers tend to have more influence with the firm, and
can negotiate lower prices. Some factors affecting buyer power
are as follows,
(a). Size of customer
Larger quantity buyers will have more power over suppliers in
retail industry.
(b). Number of buyers
When there are a small number of buyers, they will tend to have
more power over suppliers. The Department of Defense is an
example of a single buyer with a lot of power over suppliers.
(c). Purchase quantity and quality
Consumer can buy high quantity of product, if there will low

price of product, because of the low price factors consumer will
neglect quality factor.
(d). Consumer’s mentality
Mostly Rural Indian consumers buy products from local
suppliers like, Kirana stores and urban consumers prefer both
sources of supplier.
(e). Discount factor
It makes the consumer to buy product through internet from
different companies with different types of discount like gift,
cash discount etc.
6.Supplier power
The supplier’s power is highly influences Wal-Mart. When
multiple suppliers are producing a commoditized product in
retail industry, the company will make its purchase decision
based mainly on price, which tends to lower costs. On the other
hand, if a single supplier is producing something the company
has to have, the company will have little leverage to negotiate a
better price. The retail company is much larger than its
suppliers, and purchases in large quantities, and then the
supplier will have very little power to negotiate. There are some
reasons when suppliers are more powerful such as;
(a). Supplier concentration
The fewer the number of suppliers for a products in retail, the
more power they will have over the retailers. This is a real life
situation.
(b). Switching costs
Suppliers of retail stores become more powerful as the cost to
change to another supplier increases.
(c). Uniqueness of product

Suppliers that produce products specifically for a retailers and
retailers will have more power than product suppliers.
7.Competitor
Costco and Target is the competitor of Wal-Mart in local market
and they are the more significant threat to the market share of
the Wal-Mart. Costco is the largest discount wholesaler which
can compete with the Sam’s Club of Wal-Mart. Target can be
the biggest threat in terms of competing with Wal-Mart in all
levels. The low price strategy followed by the Target is the
same strategy which is Wal-Mart using. Target is gaining
recently more market share by adding more grocery options in
stores and expended its stores internationally. Tesco is a British
retailing company that is known to have gained large
international and domestic market share. Tesco is the third
largest retailing firm behind Wal-Mart and Care-Four. Like
other retail companies, Tesco wants to have clients that will
patronize their product. The company uses a loyalty program to
gain the loyalty of its clients. Compared to Wal-Mart, Tesco has
started to concentrate on the housing market but it has not been
that successful as of late.
· Based on the paper, do an internal analysis of Walmart.
Support all your claims with pieces of scholarly evidence.
ANS:- Internal Environment
Wal-Mart is the largest non-government employer and
corporation in the world, Wal-Mart is bound to have an
interesting internal structure put in place. The main Wal-Mart's

Internal Environment is as given below,
1.Corporate Structure
Corporate structure was structured into three business units,
Wal-Mart Stores USA, Sam’s Club, and Wal-Mart International.
Wal-Mart is a public corporation, however the majority of the
stock is still held by Walton family members. Therefore, there
is lots of family involvement at the top level. The headquarters
are in Bentonville, Arkansas, along with the control and
decision making ability of the organization. There is a very
hierarchical structure in place which only fuels the "good 'ol
boys club" for top management. The other unique element in
Wal-Mart's corporate structure is a strong culture that is fuelled
by the Wal-Mart way of doing things, which as far as they are
concerned is the only way.
2.Management
The top management and most support functions are centralized
at the headquarters in Arkansas. Most of the top management
started by working their way up for a store manager and making
a name for themselves. It is assumed that in order to be an
effective executive the individual needs to have the experience
from the store in order to know what they are talking about. The
control also lies in Bentonville, each day the store managers in
each and every store must submit reports and update the
inventory, where the results are sent to headquarters and
reviewed.
3.Corporate Culture
Down to earth and committed to being the very best there is
from top to bottom. Culture comes from the Sam Walton spirit,
or known as the philosophy that people are the way to success
from top to bottom. Buying out companies overseas seems to be
a way into international markets for Wal-Mart. Sam Walton
believed that a strong culture would help them to be a retail
giant. He was once quoted as saying: "The reason for our

success is our people and the way that they are treated and the
way they feel about their company." Wal-Mart has worked to
keep a small-town feel for its stores while becoming a retail
powerhouse. Wal-Mart's primary concerns are low cost, low
cost, and low cost. Wal-Mart really sells itself as being a great
place to work, that its employees have a lot of fun at work, and
are ready to help its customers out.
4.Research and Development
Wal-Mart is facing the challenge of continuing to grow when
margins are continuously shrinking. In order to help their
bottom line, Wal-Mart needs to introduce more products on its
private label brand, where the margins are higher. In addition to
the private label, apparel and house wares are an area with high
margins that Wal-Mart will focus on increasing sales. Wal-Mart
pays close attention to societal trends and supply chain
technology. Tremendous research of competitors and their
strategies in order to learn from their mistakes. Management
monitors demographics & preferences of consumers.
5. Operations
Wal-Mart is connects each store with headquarters and over
2,000 suppliers so that they will never run out of or have too
much inventory. Wal-Mart turns over their inventory more than
any other retail store. Strength and weakness of operation of
Wal-Mart are as follows,
Strengths
· Maintains excellent service with discount prices.
· Excellent up-to-date computerized inventory system.
· Strategically located distribution centres are a distinctive
competency.
· Large number & size of U.S. stores achieves economies of
scale necessary for low cost competitive advantage.
Weaknesses
· Slowing of comparative store sales growth indicates stores
may need upgrading or are being located too close to each

other.
· Customer ratings of staff friendliness & courtesy dropped 20%
since 1999 – now below industry average.
· Lack of economies of scale in many international locations
due to low market share.
· Acquired foreign stores tend to be too small with limited
parking.
6.Human Resources
Wal-Mart is the largest non-government employer in the world.
They realize that turnover is high in retail, but that their
associates are one of their most important assets. Their written
policy regarding associates is as follows: "They are encouraged
to maintain the highest standards of honesty, morality, and
business ethics". In order to become a Wal-Mart associate,
candidates must take a multiple-choice test and select what are
considered the appropriate "Wal-Mart" responses in order to be
hired. There are and have been several cases regarding
discrimination on the basis of gender (female) that females are
often not hired or promoted to be managers. Some of the
strength and weakness of Wal-Mart are as follows,
Strengths
· Wall-Mart jobs highly desired, e.g., new Chicago store.
· Corporate policy dedicated to improve employee involvement
and expertise through seminars & training.
· Not unionized. Loyal employees.
· Special awards for employee performance.
· Employees encouraged asking questions and offering
suggestions.
Weaknesses
· Drop in customer rating of staff is a red flag for potential
people problems.
· Poor history of integrating staff of acquired foreign store
chains into Wal-Mart.
· Poor history of promoting women & minorities into

management led to law suits.
· Poor employee benefit package creates resentment.
· Anti-union stance may antagonize employees & customers –
especially in other countries.
7. Finance
Finance is the back bone of any organization. It is most
important to manage in good manner to the organization. Wal-
Mart internal financial strength and weakness are given below,
Strengths
· Increasing sales easily supports debt.
· Over 40 years of record sales and profits.
· Earnings per share at record high levels.
· Return on equity above 20% since 2002.
Weaknesses
· Comparative store sales growth falling since 1999.
· Asset turnover (sales/total assets) in continuous decline since
2001.
· Long-term obligations for leases are high ($3.7 billion in 2006
from $2.0 billion in 1996).
· Return on assets declining.
· Stock price falling.
· Long term debt increasing to finance acquisitions.
9. Stakeholders
According to walmartstores.com, Wal-Mart is committed to
engaging all of their shareholders, both internally and
externally, to become the most sustainable, responsible

company they can. Wal-Mart believes that by listening to, and
partnering with their stakeholders, they are truly saving their
customers money so they can live better. Wal-Mart’s
stakeholder group differs, in an effort to adapt to the changing
needs, and issues that continue to evolve in the marketplace. As
Wal-Mart pursues their corporate goals, they further strengthen
relationships with shareholders in order to be transparent and
enhance their relevancy with the customers and communities
they serve.
9.Information Services
Wal-Marts inventory system, Retail Link, is a web-based
technology that ties ALL Wal-Mart stores to thousands of
suppliers to allow for suppliers to be aware of what is needed
by stores. Wal-Mart was the first chain to have computers in all
of its stores and to have them connected to each other. This
system connects to headquarters, which sends reports on what
the store is selling, what's just sitting on the shelves, and what
stores are selling the most items.
· What strategies did Walmart develop and implement in order
to have a competitive advantage and above average returns?
Support all your claims with pieces of scholarly evidence.
ANS :- Strategies Adopted By Wal-Mart
Generic Strategy – It is evident that the generic strategy
adopted by Wal-Mart is Cost-Leadership. Wal-Mart adopted a
very firm policy to maintain the low cost. It follows the
Everyday low price (“EDLP”) strategy where it promises
consumers a low price without the need to wait for sale price
events or comparison shop. EDLP saves the effort and expense

needed to mark down prices in the store during sale events and
to these events; and is believed to generate shopper loyalty.
Porter’s Five Forces –
· Competition between rival companies
· Currently, there are three main incumbent companies that exist
in the same market as Wal-Mart: Sears, K Mart, and Target
· Wal-Mart often has an absolute cost advantage over other
competitors
· Wal-Mart has a mature industry life cycle and thus a tough
competition is maintained
· Bargaining Power of Buyers
· The Individual buyers has quite a minimal power when it
comes to Wal-Mart
· Consumer could shop at a competitors who offers comparable
products at comparable prices, but the convenience is lost as the
convenience
· Wal-Mart has a wide range of customers, but they most target
the lower middle class citizens because those are the customers
that are seeking the best quality for the lowest price
· Bargaining Power of Suppliers
· The high market-share of Wal-Mart doesn’t give a lot of
power because by Wal-Mart threatening to switch to a different
suppliers would create tactic to the suppliers.
· Another potential risk to suppliers is that Wal-Mart could
vertically integrate
· Substitute Products
· When it comes to this market, there are not many substitute
that offer convenience and low pricing
· Online shopping proves another alternatives because it is so

different and the customer can gain price advantages because
the company does not necessarily have to have a brick and
mortal store, passing the savings onto the consumer
· Entry Barriers
· Entry barriers are relatively high, as Wal-Mart has an
outstanding distribution
Systems, locations, brand name, and financial capital into the
industry which has already some matured players
Competition of Wal-Mart
When we look at Wal-Mart from the US context, the main
competitors are target & K-Mart. An interesting fact to note
about these companies is that all three originated in different
parts of the US but in the same year.
The comparison of Wal-Mart with K-Mart is given below:
A brief insight into K-Mart reveals the following points:
· K-Mart was very inflexible in terms of its business operations
which led to the decline in their market share
· After 2005 merger with sears, the new CEO and the Board of
Directors were not competent enough to take tough decisions on
time which also contributed to the inflexibility in the operations
in general
· The market scenario in the USA revels that it has more or less
matured and there hardly seems to be any expansion horizons
left. This has led to an intense competition among the rivals and
the margins have been decreasing drastically
· K-Mart lacked an efficient Supply Chain Management System.

Its policies with the various warehouses and other distribution
intermediaries were not competitive enough. Thus K-Mart lost a
large number of warehouses to Wal-Mart which in turn
increased their Supply Chain Costs
· The K-Mart & Sears together hold 3rd position in terms of
market share in the USA currently
· What recommendations do your group have for Walmart?
ANS :- Recommendations of Wal-Mart
There is lack of inter-divisional cooperation. Therefore it can
switch to a match between cooperate-level strategies & multi-
divisional structure: i.e. it can change to cooperative form of
Divisional Structure.
Some of the benefits are :-
· Cooperative Form: Organizational structure using horizontal
integration to bring about inter-divisional cooperation.
· Structure integration creates tight links among all divisions
· Divisions formed around product, market or both, Therefore
there’s greater synergy within the company.
· Cooperate office decides strategies planning, HR, Marketing,
etc to eliminate redundancy
· Links resulting from effective integration mechanisms support
sharing of both tangible and intangible resources.
· Rewards are according to division and overall company
performance
· Centralization is one integrating mechanism that can be used
to link activities among divisions, thus allowing the firm to
exploit common strength and share competencies.
· Culture stresses cooperative sharing.

Group Case 1Team MembersEtimad Uddin Khan Mohammed (98326)Ab.docx

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