Professional Documents
Culture Documents
Section : B
TABLE OF CONTENTS:
Wal-Mart Inc
Introduction:
Wal-Mart Stores (Wal-Mart or ‘the company’) is the largest retail company in the
world; it operates retail stores in various formats including supercenters, discount stores and
neighborhood markets. On January 31, 2008, Wal-Mart operated 891 discount stores, 2,612
supercenters, 153 neighborhood markets and 602 Sam’s Clubs in the US & units outside the
United States 3,615. Internationally, the company operated units in Argentina, Brazil,
Canada, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto
Rico, the UK and China. The company is headquartered in Bentonville, Arkansas and
employs about 2.1 million people.
Wal-Mart creates the ideal one-stop shopping experience. Wal-Mart is organized into
ten distinct divisions. These include: Wal-Mart stores, SAM'S CLUBS, Neighborhood
Markets, International, walmart.com, Tire & Lube Express, Wal-Mart Optical, Wal-Mart
Pharmacy, Wal-Mart Vacations, and Wal-Mart's Used Fixture Auctions. Through these
divisions, Wal-Mart offers thousands of products. The Wal-Mart stores contain groceries,
clothes, healthcare products, toys, electronics, bedding, sports and recreation, automotive,
among other items. Because of this conglomeration of products, the typical consumer can go
into any Wal-Mart and walk out without having to stop at another store for anything that they
could need.
By the turn of the century, Discount Store News had named Wal-Mart "Retailer of the
Century" and made Fortune magazine's lists of the "Most Admired Companies in America"
and the "100 Best Companies to Work For." They were also ranked on Financial Times'
"Most Respected in the World" list. In 2002, Wal-Mart became number one on the Fortune
500 list and was presented with the Ron Brown Award for Corporate Leadership, a
presidential award that recognizes companies for outstanding achievement in employee and
community relations. Wal-Mart is currently at no.8 at global 2000 companies rating in Forbes
magazine.
Why do we do SWOT:
To evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a
projects or in a business venture.
To know state of your business and your expectation for the future.
SWOT ANALYSIS :
Internal Analysis:
Strengths:
The strengths of a business or organization are positive elements, something they do
well and is under their control. The strengths of a company or group and value to it, and can
be what gives it the edge in some areas over the competitors. The following section will
outline main strengths of walmart.
Management:
Wal-Mart's policies and practices are designed to ensure an environment that is
equitable and inclusive. To that end, Wal-Mart solicits feedback from all of their employees,
annually, regarding their opinions of their work experience and the company's
implementation of Wal-Mart's basic beliefs and values. In addition, they provide training on
working with people, leadership skills, equal employment opportunities, diversity and sexual
harassment prevention.
Wal-Mart is committed to the customers and communities they serve. Wal-Mart hires
locally, representing the diversity and uniqueness of everyone's hometown. As the
demographics of the nation have changed, so has the family of Wal-Mart's employees. More
than 15 percent of their employees are over the age of 55, and they are the nation's largest
employer of Hispanics and African-Americans.
Wal-Mart also has very strong community-based initiatives. They have continually
gave college scholarships for high school seniors, raised funds for nearby children's hospitals
through the Children's Miracle Network Telethon, provided money and manpower for fund
raisers, school benefits and churches, Boy and Girl Scouts, park projects, police and fire
charities, food banks, senior citizen centers, and more. They also educate the public about
recycling and other environmental topics with the help of a "Green Coordinator," a specially
trained employee who coordinates efforts to make an environmentally responsible store.
Along this same line, Wal-Mart has created Environmental Demonstration Stores in
Lawrence, Kansas; Moore, Oklahoma; and City of Industry, California. These stores serve as
a "test tube" for environmentally friendly building materials and experimental methods for
conserving energy and water.
Finally, the corporate structure of Wal-Mart is very well rounded and managed with
three core values: respect for the individual, service to their customers, and striving for
excellence. The management of Wal-Mart is the backbone to the entire company and these
core-values have propelled Wal-Mart to the top of their industry and have allowed Wal-Mart
to be the world's largest company.
Marketing:
The nature of Wal-Mart's marketing is in its Every Day Low Price (EDLP) campaign.
This is what makes Wal-Mart successful. Sam Walton devised a system for which price
setting was to be followed. Sam wouldn't allow management to hedge a price at all. If the list
price was $1.98, but Wal-Mart had paid only 50 cents, they would mark it up 30 percent, and
that's it. Sam's philosophy was "No matter what you pay for it, if we get a great deal, pass it
on to the customer."
The other major campaign Wal-Mart employs is the Rollback. This occurs when Wal-
Mart lowers the already lowered Every Day Low Prices. This has really been a successful
way for Wal-Mart to increase its patrons. When consumers shop, they are always looking for
the best deal, since Wal-Mart already offers low prices, when they rollback prices, they are
able to out-price all of their competition.
Wal-Mart has been known for their customer oriented approach. Wal-Mart maintains
one of the best satisfaction guaranteed programs, which promotes customer goodwill. One
can return virtually any product to Wal-Mart without any problems. They simply take the
product back and promptly refund the price of the product, nearly no questions asked. They
also promote goodwill among consumers by employing a tactic, which Sam created known as
the "Ten Foot Rule." This is simply the idea that if a customer comes within ten feet of an
Finally, perhaps the single most important marketing aspect of Wal-Mart is that they
create the ideal one-stop shopping experience. Wal-Mart is organized into ten distinct
divisions. These include: Wal-Mart stores, SAM'S CLUBS, Neighborhood Markets,
International, walmart.com, Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy,
Wal-Mart Vacations, and Wal-Mart's Used Fixture Auctions. Through these divisions, Wal-
Mart offers thousands of products. The Wal-Mart stores contain groceries, clothes, healthcare
products, toys, electronics, bedding, sports and recreation, automotive, among other items.
Because of this conglomeration of products, the typical consumer can go into any Wal-Mart
and walk out without having to stop at another store for anything that they could need.
Finance/Accounting:
Wal-Mart has many assets at its disposal, reporting a net income of $13.04 billion in
the 2009 financial year with a growth rate of 5.3%. In terms of profitability Wal-Mart
performed behind retailers Home Depot, Dell and Target, and ahead of Costco and Kroger . It
has thousands of stores not only in the US, but also wholly owned operations in Mexico,
Net sales in fiscal 2009 were a record $405,607 billion, Up 7.2% from fiscal year 2008.
International 24.60%
Wal-Mart U.S.63.70%
(Amount in US dollars)
The strength of Wal-Mart is also shown through its ratios. Nearly all of Wal-Mart's
ratios are strengths when measured against the industry averages. Through our ratio analysis,
we have shown that Wal-Mart is the best-equipped company to succeed in the marketplace.
Human resource:
MANAGERIAL ECONOMICS Page 8
SWOT ANALYSIS OF WALMART Inc.
Wal-Mart proudly states on its website that its culture is guided by the 3 Basic
Beliefs, Sam’s Rules, and the Sundown and 10-Foot rules. The company has consistently
appeared on Fortune’s 100 Best Companies to work for in the United States. It employed
more than 2.1 million associates world wide.
Production/Operations :
Perhaps the strongest aspect of Wal-Mart is in its access to distribution networks.
Wal-Mart uses a system known as cross-docking. This is simply the process of continuously
delivering goods to warehouses where they are sorted and distributed to their stores within
one day. This enables Wal-Mart to take advantage of economies of scale with shipping trucks
with full loads. This also gives Wal-Mart the ability to increase the speed of deliveries, a
faster response to market demands, and a low inventory. This system has allowed Wal-Mart
to decrease its sales cost by 2 to 3 percent over the industry. This savings is then priced into
the products with the earlier discussed EDLP programs.
This system is maintained through the most important aspect of Wal-Mart, its
employees. With over one million employees worldwide, Wal-Mart definitely has the
manpower to move goods. This is also facilitated with a proprietary satellite-based
communication system that enables managers and point-of-sale systems real-time
information on the needs of each store.
Weaknesses:
Weaknesses of a company or organization are things that need to be improved or
perform better, which are under their control. Weaknesses are also things that place you
behind competitors, or stop you being able to meet objectives. This section will present main
weaknesses of walmart.
Management:
Marketing :
The biggest source of marketing weakness stems from Wal-Mart lobbying to expand
into new markets. There are thousands of towns across the United States that have tried to
block the introduction of Wal-Mart because of the economic impact that it has on small-town
stores and shops. Wal-Mart has a damaged reputation because when they move into a
location they end up "forcing" these types of businesses out of business.
Finance/Accounting :
Weaknesses in Wal-Mart's finances are seen in three of its ratios. The fixed asset
turnover, earnings per share, and average collection period ratios are not very good. The fixed
asset turnover ratio is telling us that they have made a lot of investments, but that they are not
being fully used at this point in time. The earnings per share ratio is not good because when
compared to the industry, they are not earning as much money for each shareholder.
However, this is most likely due to the sheer number of outstanding shares. The average
collection period is a cause for concern because it means that they are allowing their debtors
to carry accounts with Wal-Mart for an above average period of time. This is not good
because it increases the likelihood of non-payment.
Human resource:
Non-Unionization :
Unlike its competitors in the retail industry Wal-Mart has remained non-unionized. Its
alternative is an open door policy which aims to encourage employees to take their
complaints beyond management. Wal-Mart employees commence at lower wages than
unionized corporations, quitting by the end of the first year
Low Wages :
The average Wal-Mart associate makes between a paltry $12,000 and 17,000
Key strengths:
The key strengths are Financial position, employees, customer oriented, one-stop
shopping, satisfaction guaranteed programs, employee stock ownership and profit-sharing,
Key weakness:
The key weaknesses are some ratios are not sufficient, non-unionization, no formal
mission statement, few women and minorities in top management, undifferentiated products
and services, site research, slow speed of checkout service, and finally a damaged reputation.
Technological :
An opportunity facing the industry is that internet shopping is growing. To take
advantage of internet shopping, the industry is focused around the customer. The customer
receives friendly site designs, efficient order fulfillment, fast delivery and professional
customer response. They process returns, refunds, and rebates quickly.
Competitive :
An opportunity facing the industry is that the value of money is weakening. The
weakening value of money will help the industry because it reduces the ability of foreign
manufactures to offer discounts.
Threats:
Economic :
A threat is that the economy is very slow right now. There is no way of preventing it
and no way to change it. This impacts all businesses and causes profit margins to be reduced
as price-cutting ensues to attract more consumers.
Technological :
A threat facing the industry is that technological advances may make the products
obsolescent. As technology advances, products being sold today are gone tomorrow; this
provides fewer products for retailers to sell.
Competitive :
A threat is that the industry is not following consumer taste. To overcome the threat of
not providing consumers wants the industry is expanding rapidly in the urban centers while
traditional "wet markets" are being edged out as the middle-class enlarges and young people
flock to the cities.
Key opportunities:
Key threats:
The main threats that we identified were technology making products obsolete,
customer and employee theft, slow economy, the Chinese regulations, and not offering what
the consumer wants.
Better segmentation.
Worldwide presence.
Competitor Analysis:
Competition against Wal-Mart comprises of similar discount retail stores as well as
grocery supermarkets. Its key competitors are Target, Costco and to a lesser extent companies
such as Sears and Kohl’s (Robbins, 2004).
Conclusion:
In conclusion, Wal-Mart is the number one retailer in the United States and is at the
top of the Fortune 500 listing. Wal-Mart operates in many countries world-wide and is
moving into new countries every year.
Wal-Mart is also expanding as a retailer. They have expanded into many other
sectors of the marketplace, including groceries, gas stations, electronics, and auto
maintenance. Each year, Wal-Mart finds new ways to grow and offer more services to their
customers.
Each year, the number of people who have a stake in Wal-Mart also grows. Each
year, more claims are made against Wal-Mart by the unions and other businesses that have
been forced out of business. Wal-Mart is often able to uncut many other local industries and
more and more local businesses are shutting down when Wal-Mart moves into town. The
unions are filing more court claims against Wal-Mart because they encourage their workers
not to join unions.
As a result of Wal-Mart's ever growing size and variety of services they offer, their
public affairs department is going to become more and more important. And as the animosity
against Wal-Mart becomes more widespread, here and in foreign countries, Wal-Mart is
going to have to work harder to maintain their good reputation. Wal-Mart's foundation will
become increasingly more important for giving things back to the community.
References:
www.walmartfacts.com
www.hoovers.com
www.gartner.com
www.wikipedia.com
www.finance.yahoo.com
www.walmartstores.com