Wal Mart Business Case Study

by: Nihat Canak

Index of contents

1 Wal-Mart Overview  3

2 Wal-Mart’s Strategy 5

3 Wal-Mart Management  7

4 Wal-Mart’s Culture 9

5 Financial Performance 11

6 Issues that Management Needs to Address and Recommendations  13

Bibliography 15

1 Wal-Mart Overview

Wal-Mart, the largest retail company in the world, specializes in the operation of mass merchandising and supermarket stores. The company operates through three segments, namely the Wal-Mart stores, Sam’s Club, and the International segments in Asia, Europe, and South America. Wal-Mart is headquartered in Bentonville, Arkansas. Wal-Mart recorded total revenues of $287.9 billion during the fiscal year ended January 2005, an increase of 11.3% over fiscal 2004. The company recorded a net income of $10.2 billion in fiscal 2005, an increase of 13.4% over 2004.

There are several issues that impresses me about this company and of course some that I find unimpressive. First of all, a question that I asked myself for so many times was: How could it be that it is so easy to get in but so hard to get out? I can imagine that ever since they built a “super” WALMART here in Cullowhee, the place has really livened up (I can not tell how it was before. I just spent a year in Cullowhee as an international student). I mean where else can a guy go at 2 o’clock in the afternoon and find more people than there are open registers. It is literally amazing to me for the simple fact that every experience is a new one. You walk in and there is just as much hustle and bustle as Santa’s workshop, or Hugh’s Mansion. So you grab a cart and immediately jump in the fast lane. Not a good move in my opinion, once I had a fender bender with an elderly woman. She rammed into the back of my leg in a motorized cart and before I could say excuse me she said, “That’s how people get run over.” But as usual I kept on truckin’ and the first place I go is to the toiletries section. I always go there first because no matter what you always need something. From that point on, you are infected with the Wal-Mart virus. This infection deteriorates the bankbook and can result in permanent financial trauma. My advice is to practice safe Wal-Mart spending and bring somebody who has no money. The worst part of the whole experience comes upon exiting the building when you have to pass the security checkpoint at the door wearing a rubber glove.

I really hate this part because it makes you feel like you did steal something. The person politely asks for your receipt and looks at it to make sure you got everything. What are they going to do, look at it and say “excuse me sir are you aware that you stole this?” Meanwhile, I am standing there getting checked for a box of q-tips and this little dude walks by smiling with an X-Box and a bag of DVDs. This might sound a little funny but after analyzing the business aspects of these experiences it makes all sense. The structure of the stores, the concept of processes within stores, and customers responses to these things are part of an intelligent and unique strategy. All in all I really think that although a trip to Wal-Mart can be dangerous, the personal interaction is priceless.

2 Wal-Mart’s Strategy

At first view, Wal-Mart’s winning strategy in the U.S. was based on selling branded products at low cost. Each week, about 100 million customers visited a Wal-Mart store somewhere in the world. The company employed more than 1.3 million associates (Wal-Mart’s term for employees) worldwide through more than 3,200 stores in the United States and more than 1,100 units in Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom. (The first international store opened in Mexico City in 1991.)

Wal-Mart enjoyed a 50 percent market share position in the discount retail industry. Procter & Gamble, Clorox, and Johnson & Johnson were among its nearly 3,000 suppliers. Though Wal-Mart may have been the top customer for consumer product manufacturers, it deliberately ensured it did not become too dependent on any one supplier; no single vendor constituted more than 4 percent of its overall purchase volume. Further, Wal-Mart had persuaded its suppliers to have electronic “hook-ups” with its stores.

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