Prepared for:

A Case Study Analysis Assoc. Prof. Dr. Nurol’ Ain Mustapha

Presented by:
Azira Abdullah
Rozana Othman
Naimey Abd Jalil
Nurul Hayati Abdullah
Andik Nurul Jannah Bachuk
PRESENTATION OUTLINE

Walmart

Strategy
Issues
Actions

Key
Financial
Environmenta
Ratios
l Analysis
 Walmart

Walmart s
Issues

Key
Environmental

Company
Analysis

Financial
Ratios Background
Strategy
Actions
 Walmart History
Vision and Mission Walmart Establishment
Walmart’s Stores

•Founder: Sam Walton

•Founder: Sam Walton
•In 1945, opened his Ben Franklin franchise (small
•In 1945, opened his Ben Franklin franchise (small
chain of 16-store operation) in Newport, Arkansas.
chain
•Samof 16-store operation) in Newport, Arkansas.
and his brother Bud Walton operated the
•Sam and his brother Bud Walton operated the
nation’s most successful Ben Franklin franchise.
nation’s most successful Ben Franklin franchise.
•The variety stores was gradually dying due to
•The variety stores was gradually dying due to
supermarkets and discounters were developing.
supermarkets
•In Nov 1962,and discounters were developing.
Walton opened the first Wal-Mart
•In Nov 1962, Walton opened the first Wal-Mart
Discount City store.
Discount City store.
In 1970, the company went public and sales began
In 1970, the company went public and sales began
to increase rapidly.
to increase rapidly.
•Sam Walton died in 1992 and his brother Bud
•Sam Walton died in 1992 and his brother Bud
Walton died in 1995.
Walton died in 1995.
•In 2000, H. Lee Scott was named as CEO of
•In 2000, H. Lee Scott was named as CEO of
Walmart.
Walmart.
•In Feb 2009, Mike Duke became the new
•In Feb 2009, Mike Duke became the new
president and CEO.
president and CEO.
Walmart History
Vision and Mission Vision & Mission
Walmart’s Stores

Vision
“Saving
“Saving people
people money
money to
to help
help them
them live
live
better”
better”

“As Walmart continues to grow into new

areas and mediums, our success will always
be attributed to our culture. Wether you
walk into a Walmart store in your
hometown or one across the country while Mission
Mission
you’re on vacation, you always be assured
you’re getting low prices and genuine
customer service that you’ve come to expet
from us. You’ll feel at home in any
deparment of any store…that’s our culture.”
 Walmart History
Vision and Mission Walmart Stores
Walmart’s Stores

Walmart's Store in US Walmart's International Store

Sam's Club 602 Hypermarkets 370

Neighborhood 153 Supermarkets 1064

Supercenters 2612 Supercenters 436

Discount Stores 891 Discount Stores 762

0 500 1000 1500 2000 2500 3000 0 200 400 600 800 1000 1200
Walmart

Issues

Key
Environmental
Analysis
Walmart s
Financial Issues
Ratios

Strategy
Actions
 Walmart Stores
Internet Retailing Sam’s Clubs
Get Foothold in Europe

•Membership only, cash and

carry operations.
•Offers bulk displays of name-
brand merchandise, some soft
goods and institutonal-size
grocery items. Problem for buyers
who are item
merchants and
compete for space in
•Usually offers over 3,500 the clubs.
items.
•Items is limited around 2,000
for wholesale part of the
business and;
•Between 1,000 and 1,500 for
personal and individual use.
 Walmart Stores
Internet Retailing Supercenters
Get Foothold in Europe

Operations

Is Walmart’s rate of
Combine Replace
Walmart stores,
In the third growth of supercenters
year, have
groceries jump-start on maturation too fast??
with the general
curve that’s
merchandise
general side of the store more like a
and food has Walmart store
merchand tended to build than a food
ise. slowly. store.
 Walmart Stores
Internet Retailing Walmart.com
Get Foothold in Europe

Walmart moved into internet

arena in 1996 with Mal-Mart Profits are not easily
On-line, and in 1stst Jan 2000 made over the
relaunched as Walmart.com. internet; issues of
cost delivery,
merchandise returns,
Provides easy access and data security.
24/7/365 to more than a
million products. How can Walmart
benefit from
Internet
Items ordered online can be
shipped to the customer’s homes retailing??
for a modest fee or free shipping
to the customer’s nearest
Walmart stores.
 Walmart Stores
Internet Retailing Competitors
Get Foothold in Europe

Should Walmart get a foothold in

Europe before competitors seize
the initiative??
Walmart

Walmart s
Issues

Key
Environmental

Key Environmental
Analysis

Financial
Ratios Analysis
Strategy
Actions
 Internal Analysis
External Analysis Micro Environment Factors

••Wal-Mart
Wal-Mart careful
careful attention
attention toto its
its market
market niche
niche of
of customers
customers that
that
looking for
looking for quality
quality products
products at at aa bargain
bargain price
price (pricing
(pricing policy)
policy) as
as
“Low Price
“Low Price Leader”
Leader” in
in retailing
retailing market.
market.
Give more
Give more special
special attention
attention toto customers
customers inin smaller
smaller
markets (rural
markets (rural America)
America) & & neighborhood
neighborhood market.
market.
••Provide
Provide memberships
memberships to to customers
customers (with
(with additional
additional benefits
benefits and
and
services), cash
services), cash and
and carry
carry operations,
operations, 24-7hrs
24-7hrs stores.
stores.
Customers

••New
New threatens
threatens from
from newnew supermarkets
supermarkets and and discounters
discounters stores
stores
that provide
that provide low
low price.
price.
••Compete
Compete with with other
other retailers
retailers (eg:
(eg: Targets,
Targets, Venture,
Venture, Kmart)
Kmart)
provide similar
provide similar products
products with
with more
more lower
lower prices.
prices.
••Challenges
Challenges by by new
new entrants
entrants that
that provide
provide substitutes
substitutes products
products in
in
market
market
••But,
But, Walmart
Walmart develop
develop newnew strategies
strategies -- Supercenters
Supercenters move
move more
more
into food
into food distribution
distribution with
with better
better facilities
facilities and
and services
services (not
(not
provided by
provided by the
the competitors)
competitors)
As leads
As leads in
in the
the industry
industry inin information
information technology
technology
(has world largest private satellite communication
(has world largest private satellite communication
system ))
system
Competitors
 Internal Analysis
External Analysis Micro Environment Factors

••Offers
Offers more
more variety
variety merchandise
merchandise with
with brand
brand name
name suppliers.
suppliers.
(private label brands)
(private label brands)
••Use
Use the
the bargaining
bargaining power power strategies
strategies by
by control
control aa quantity
quantity to
to
order and
order and itit is
is easy
easy to
to switch
switch to
to new
new suppliers.
suppliers. For
For instance,
instance, Wal-
Wal-
Mart requires
Mart requires purchasing
purchasing an an abundance
abundance of of goods
goods from
from
wholesalers to
wholesalers to cover
cover their
their mass
mass consumption
consumption
Supplier

••Rewarded
Rewarded withwith raises,
raises, bonuses
bonuses and
and personal
personal recognition.
recognition. Staff Only
••Employees
Employees has has aa portion
portion as
as stakeholders
stakeholders (share
(share in
in investment)
investment) in
in the
the
company.
company.
••Motivates
Motivates and and empower
empower employees
employees through
through free
free education
education and
and
trainings, and
trainings, and new
new program
program that
that will
will enrich
enrich employees'
employees' knowledge.
knowledge.
••Promote
Promote from
from within,
within, moving
moving low-level
low-level employees
employees to to higher
higher positions
positions
as aa way
as way of
of retaining
retaining and
and satisfying
satisfying employees.
employees.
••Equal
Equal employment
employment opportunity
opportunity to to avoid
avoid discrimination
discrimination (promotion
(promotion for
for
woman in higher management
woman in higher management positions. positions.
••Treats
Treats employees
employees as as part
part of
of the
the organization
organization (referred
(referred as
as associates).
associates).

Employees
 Internal Analysis
External Analysis Micro Environment Factors
Shareholders
••Providing
Providing analyst
analyst to
to analyze
analyze the
the market
market and and toto convincing
convincing their
their
shareholders.
shareholders.
••As
As aa name
name of
of powerful
powerful retail
retail brand.
brand. ItIt has
has aa reputation
reputation for
for value
value
for money,
for money, convenience
convenience and
and aa wide
wide range
range of of products
products all
all in
in one
one
store..
store

••Close
Close to
to customers
customers through
through advertising
advertising through
through radio,
radio,
television, newspapers
television, newspapers ads.
ads.
••Give
Give social
social welfare
welfare by
by offering
offering scholarship
scholarship programs
programs
••Community
Community involvement
involvement (charity,
(charity, donations,
donations, foundations).
foundations).
••Got
Got honored
honored with
with Ron
Ron Brown
Brown Corporate
Corporate Leadership
Leadership Awards.
Awards.

Media
Internal Analysis
External Analysis External Factor: PESTEL
Political
• Wal-Mart made sure that
they were aware of the
political situation of every
country they have
operated in and the
company has made sure
that it has a reasonable
position with regards to
political issues.
Economic
• Contribute to economic
growth for the country
through taxes and reduces
the unemployment rates.
• Create job opportunity
such as employs 70,000
employees in China.
Internal Analysis
External Analysis External Factor: PESTEL
Social
•Wal-Mart is also involved in community
activities and philanthropy that tend to
develop a better relationship with the
clients and the society they are operating
in.
Wal-Mart foundation become
largest contributor in America.
Provided more than $415 mil. in
cash & in kind of merchandise.
• Gain strong social support from
communities with offers product that
needed and accepted for communities.
Technological
• Wal-Mart offered new innovations in its
technological aspect and Wal-Mart was a
leader in the use of information technology
to maximize operational efficiency.
Radio Frequency Network to trace
inventory
Deployed a private satellite
communication systems
Installed point-of-sale barcode
scanning
Owns a fleet truck- tractors which can
making deliveries quicker
• With this technology, Wal-Mart is getting
better, quicker & more accurate
information to manage and control every
aspect of their business.
Internal Analysis
External Analysis External Factor: PESTEL

Environmental Legal
•Wal-Mart are very active in •Wal-Mart support the government
protect the environment. legislations to provide health
•Wal-Mart environment goals are: insurances to their employees.
 supplied 100% by renewable • Support government policy with
energy promote home country product –
 Create zero waste ‘Buy Americans’.
 Produce environmentally
friendly products
•Donate $5.7mil. for the creation
of green jobs in United States
Pledge to double it solar energy,
reduce electricity and water in its
stores.
Walmart

Issues

Key
Environmental
Analysis
Walmart s
Financial Financial Ratio
Ratios

Strategy
Actions
Finacial Ratios
Liqudity Ratios

LIQUDITY RATIOS EXPLAINATION

Current Ratio
1.000.82 0.88
0.80
0.60
Ratio

0.40
0.20 0.00 0.00 0.00
0.00
2008 2009 0 0 0 - This ratios explained that the firm has a
Year margin of safety after fulfilling its short-
term obligation. It shows that 2009 has
higher liquidity than 2008.
Acid Test Ratio
0.27 0.26

0.25
Ratio

0.230.22
0.21
0.19
2008 2009
Year
Finacial Ratios
Activity Ratios

ACTIVITY RATIOS EXPLAINATION

Inventory Turnover
10.00 8.87
8.14
Times

8.00
6.00
4.00
•This ratios explained that inventory
2.00
turnover and also total assets turnover for
0.00
0.00 0.00 0.00 2009 is better than 2008. it shows that
2008 2009
Year
0 0 0 Wal-Mart can manage their inventory.
• For the total assets turnover,it shows that
Total Asset Turnover the sales volume are significant for the
9.00 8.20 amount of commited assets.
8.00
7.00
6.00
5.00
Times

4.00
3.002.29
2.00
1.00 0.00 0.00 0.00
0.00
2008 2009 0 0 0
Year
Finacial Ratios
Leverage Ratios
LEVERAGE RATIOS EXPLAINATION

Debt Ratio (%)

4%
3.41% 3.34%
4%
3%
Percentage

3%
2%
2% •The debt ratio for 2009 was lower than
1%
1% 0.00% 0.00% 0.00%
2008 which means in 2008 Wal-Mart can
0%
2008 2009 0 0 0
managed their debt wisely.
Year
•For time interest earned, it shows that in
2009 the TIE was lower than 2008, it
Times Interest Earned explained that the Wal-Mart might run in
1211.24 11.00
debt of service problem.
10
8
Times

6
4
2 0.00 0.00 0.00
0
2008 2009 0 0 0
Year
Finacial Ratios
Profitability Ratios
PROFITABILITY RATIOS EXPLAINATION

Gross Profit Margin •The gross profit margin in 2008 is stable

23.50%
25%
23.70% and quite favorable when compared to the
20%
2009. it shows that Wal-Mart has the
ability to make payment after deducting
Percantages

15%
10%
the expenses.
5%
0%
0.00% 0.00% 0.00%
•-For the operating profit margin , 2008
2008 2009 0 0 0
was higher than 2009 it shows that Wal-
Years
Mart has no ability to make profit after
deducting manufacturing and operating
Operating Profit Margin profit. The higher operating profit are
5.86%
6%
6%
better.
6%
Percantages

6%
5.68%
6%
6%
6%
6%
2008 2009
Years
Finacial Ratios
Profitability Ratios

PROFITABILITY RATIOS EXPLAINATION

Net Profit Margin •The net profit margin in 2009 was lower
compared to 2008. When the gross profit
3%
3.40% margin is within expectations but the net
3%
profit margin is too low, high interest
Percantages

3%
3% payments may be to blame.
3.34%
3% •This may due to the ability of Wal-Mart
3% cannot make profit after deducting all
3%
2008 2009 costs, expenses, interest and taxes.
Years
Walmart

Issues

Key
Environmental
Analysis
Walmart s
Financial Strategy Actions
Ratios

Strategy
Actions