Toyota Prius

Executive Summary
From 1983 to 1993 Wal*Mart showed tremendous growth by growing from $4.667
Billion in sales to $67.345 Billion in sales, and net incomes of $196 Million, and
$2.333 Billion, respectively. The five year sales growth was over 28% compared to
only 8.1% by Kmart, its largest direct competitor at the time. In order to reach such
success and rapid growth, Wal*Mart used a variety of different strategies to foster
the growth, including building new stores in towns with a population of 5-25k,
pricing lower than the competition, expanding into Club Stores, grocery, and
developing the logistics to handle the growth. Wal*Marts competitive strategy of
maintaining the lowest cost while providing adequate service and products has
proven sustainable, but other competitors have stepped into the market and are
threatening to take control of some potential growth areas from Wal*Mart.
Financial Performance Highlights
During Wal*Marts rapid growth in the 1980s and 1990s, the company took several
approaches to grow the business. Wal*Marts primary competitive advantage was
Cost Leadership. Wal*Mart focused on providing the lowest cost to its customers in
every category. The company placed a lot of emphasis in structure and it had plans
in place for each of the pieces of Porters Value Chain (Exhibit 1, Appendix 1). The
support activities Wal*Mart focused on included Firm Infrastructure, HR
Management, Technology Development, and Procurement.
The firms infrastructure primarily was based on the hub-and-spoke model. One
centralized corporate headquarter location served as the main location for strategic
decisions, while a hub-and-spoke distribution setup enabled warehouse locations to
distribute effectively and efficiently to all of the stores while still allowing for growth.
Wal*Mart invested heavily in Information Technology to help support the growth and
keep costs low. IT Investments allowed for early adoption of sales reporting,
inventory management, and
Electronic Data Interchange which allowed 90% of Wal*Marts inventory
requirements to be communicated directly to vendors automatically.
The powerful relationship with Vendors that Wal*Mart maintained allowed the
company to get the best pricing possible, and even receive investments in IT from
outside companies. Proctor & Gamble invested in inventory management systems
with Wal*Mart to help forecast demand. By maintaining relationships with key
vendors, generating volume discounts, and maintaining long periods of Account
Payables, Wal*Mart was able to reach record growth and profitability.
Strategy
Wal*Marts main strategy is to secure the a broad competitive scope in the market.
The low-cost/high-volume approach to retail has proven successful and still has

Wal*Mart Stores
Organic Growth at Wal*Mart
Using the case data, how does Wal*Marts financial performance
(e.g., sales, sales growth, profitability) compare with that of its
competition?
What is Wal*Marts strategy?
To what extent do/do not Wal*Marts resources and activities
reinforce this strategy?
How sustainable is Wal*Marts competitive advantage?
How should Wal*Mart respond to Targets superior performance
in recent years? Is organic products or upscaling a good idea?
Can Wal*Mart be beaten?

Appendix
Exhibit 1 Porters Value Chain