A Closer Look at

Prepared by:
Sadat Shams ( ZR 1703015)
M d . A k ht a b U l H u d a ( Z R 1 7 0 3 0 1 6 )
 “If we work together, we'll
lower the cost of living for
everyone. We'll give the world
an opportunity to see what it's
like to save and have a better
life.”

- SAM WALTON (1918 – 1962)

FOUNDER, WALMART INC.

2
Sam Walton’s 10 Rules for Building a Business

A Commit to your business

Share your profits with all

B your associates, and treat
them as partners

C Motivate your partners

Communicate everything
D you possibly can to your
partners
Appreciate everything your
E associates do for business
Sam Walton’s 10 Rules for Building a Business

F Celebrate your success

Listen to everyone in your

G
company

Exceed your customers’

H expectations

Control your expenses

I
better than your competition

J Swim Upstream
 Timeline
First Walmart 24 stores Wal-Mart Stores,
1962 Store at Rogers,
1967 ($12.7 mln sales
1969 Inc. incorporated
Arkansas revenue)

Becomes a Installs largest

Listed on New
1970 publicly traded 1972 York Stock
1987 private satellite
company communication
Exchange
($16. 50 / share) system in U.S.

Walmart
Celebrates its first Wal-Mart Stores,
1993 celebrates its 1997 $100 billion sales
2018 Inc. becomes
first $1 billion
year. Walmart Inc.
sales week.
Walton’s 5 & Dime
Opened in 1950

6
1962
 1972
(51 stores)

3
22

6
19

1
 1980
(276 stores)

16
10
64 4
17
46
57
18 1
36
7
 1980
4 (1402 stores)
26 2
1
12
27 12

27 68 37
40 16
104 61
81 48
15 80
19 77
46
54 68 75
227

75 100
 North America Europe
Germany and UK
USA, Canada, Mexico
335
3791 17

South America 31 Asia

South Korea and China
Brazil and Argentina
2000
(4174 Stores Worldwide)
 North America Europe
USA, Canada, Mexico
642
799
8126 424

Africa
South America 1727 Asia
Brazil, Argentina, Chile,
Central America
2018
(11718 Stores
Worldwide)
 Annual Revenue (Bln)
$500
$486 $482 $486
$476
$469
$447
$422
$404 $408

$377

$348

$312

$284

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(projected)
Growth Gears Shapes 2018
2017 Revenue =
Revenue $500.343 bln
2.98% increase
2016 $485.873 bln year-over-year
0.78% increase
Revenue = year-over-year
$482.130 bln
 Net Income (Bln)
$17.00
$16.39 $16.36
$16.02
$15.70

$14.69
$14.37
$13.64
$13.38
$12.73

$11.23 $11.28

$10.27
$9.86

$6.67

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Net Income (Bln)
2019 saw a 32.37% decline from 2018
2018 saw a 27.71% decline from 2017
2017 saw a 7.15% decline from 2016

Walmart is seeing decline in net

income over the last 5 years!!!!
SWOT ANALYSIS

Strengths Weaknesses
- Economies of scale - Thin profit margins

S W
- Effective use of resources - Easily copied business
- Global organizational size model
- Global supply chain - Competitive disadvantage
- High efficiency of supply against high-end specialty
chain sellers
Threats Opportunities
- Healthy lifestyle trend - Expansion in developing
- Aggressive competition
- Online retailers of various
sizes
- Foreign Currency
T O countries
- Improvement in HR
practices to develop
competitiveness in the
Fluctuations labor market
- Improvement in quality
standards
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 Threat of
New Porter’s 5
Entrants
Forces Model

Suppliers’ Buyers’
Competitive
Bargaining Bargaining
Rivalry
Strength Strength

Threat of
Substitution
LOW Bargaining Strength of Customers
• Walmart Customers usually make
purchases worth comparatively
small amount of money
• Walmart has a very large pool of
customers
• Walmart is in B2C business,
therefore maintaining a large
customer pool is the key business
strategy
LOW Bargaining Strength of Suppliers
• Walmart has a large pool of
suppliers
• Supplier switching cost is quite low
• Lots of substitute products are
available
• Almost none of the products of
Walmart is critical
LOW Threat of New Entrants
• Walmart’s strength in supply chain
is their economies of scale.
• High Capital Requirement for new
entrant.
• A precise distribution system must
be buildup in order to compete
with Walmart – thus it is nearly
impossible for a new entrant to
make such high investment
HIGH Threat of Substitution
• E-commerce businesses like
Amazon.com are growing everyday
– this may result in downfall of
retail marketing
• Price and Quality of substitute
products and services such as 7-
eleven is quite competitive
• Customer switching costs is quite
low as well
 HIGH Competitive Rivalry
• Walmart’s US market share in retail
marketing is about 25%
• Industry growth is quite slow
• Competitors like Target aren’t far
behind Walmart
• Exit barrier is quite high for
Walmart
Strategic Risk
Factors of Failure to grow the eCommerce
Walmart Inc. business through the omnichannel
integration of physical and digital retail

Difficult to timely identify or effectively respond

to consumer trends or preferences may result
in loss of customers.

Strong competition from other retailers and

wholesale club operators (whether through physical
retail, digital retail or the integration of both)

General or macro-economic
factors, both domestically and
internationally
Operational Risk
Factors of Disruption in
Information
Walmart Inc. system and
Information
security
Supplier
Performance
and Product
Safety

Natural
Disasters,
Geo-political
Events

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 Financial and Legislative Risk Factors of Walmart Inc.

1 2 3

Fluctuations in foreign Failure to meet market Legislative, judicial,

exchange rates expectations accounting, legal, tax,
regulatory, political
and economic risks and
conditions specific to
the countries or
regions 24
Allocation of Capital Expenditures 2018 2017
(Million USD)
New stores and clubs, including 914 2,171
expansions and relocations
Remodels 2,009 1,589
eCommerce, technology, supply 4,521 4,162
chain and other
TOTAL US 7,444 7,922
Walmart International 2,607 2,697
Total CAPEX 10,051 10,619

Strategic Capital Allocation

of Walmart in 2018
 Walmart’s Business Model
Invest in differentiating on access
Leading on price
Be competitive on assortment

Deliver a great
experience by the motto
of EDLP
Walmart sells mainly through three
store formats:
Supercenters
Discount stores
Neighborhood markets
When it comes to merchandising Walmart
sold three main categories
Grocery – 56% of net
sales

Health and wellness –

11% of net sales
General Merchandise –
33% of net sales
 How does Walmart
manage to be competitive
with such low prices?

EDLP (everyday low price)

EDLC (everyday low cost)
Rollbacks
Savings Catcher, Save Even More and
Ad Match
Walmart Pickup
Pickup Today
Online Grocery
Money Back Guarantee
How does
Walmart
distribution
work?
78% of Walmart U.S.’s purchases of
store merchandise shipped through
157 distribution centers, located
throughout the U.S. The remaining
merchandise gets shipped directly
from suppliers.

32
At the international level, Walmart
utilizes 188 distribution facilities
located in Argentina, Brazil, Canada,
Lorem ipsum dolor sit amet,
Central America, Chile, China, Japan,
consectetur adipiscing elit
Mexico, South Africa, and the UK

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 Cross-docking in Walmart

• Shipments spend less than 24 hours in a

cross-dock facility

• To Transport non perishable merchandise

from DCs, Sam’s Club uses a combination of
private truck fleet, as well as common carriers

• The segment contracts with common carriers

to transport perishable grocery merchandise
from distribution facilities to clubs. 34
How Walmart Survived Recession of 2008?

Opportunities come
infrequently. When it
rains gold, put out the
bucket, not the thimble.
 Walmart in 2008 – DEFEATING Recession!!!

Walmart sells Walmart’s cheapo People could spend Growth in rapidly

necessities, not reputation served it less on high value expanding int.
discretionary items well – Walmart is a assets (cars, operations added
- overwhelming penny pincher’s houses) – so more more dollars to
majority of its sales paradise money spent in Walmart’s top line
are not impulse Walmart than the slower
buys growth of the
massive U.S. base
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 Walmart’s Value Chain
Firm Infrastructure
ACTIVITIES
SUPPORT

Human Resources

MARGIN
Technology Development
Procurement
Inbound Outbound Marketing
Operations Service
Logistics Logistics & Sales
PRIMARY ACTIVITIES
RANA PLAZA
TRAGEDY
24 th April, 2013

38
 RANA PLAZA TRAGEDY
The Aftermath
• Accord on Factory and Building
Safety in Bangladesh - Walmart
refused to sign
• In 2011, Walmart rejected
reforms to pay more for apparel
to help Bangladesh factories
improve safety standards

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 RANA PLAZA TRAGEDY
The Aftermath
• 17 North American retailers,
including Walmart announced a
plan to improve factory safety in
Bangladesh
• Less stringent than the accord
• Lacked legally binding
commitments to pay for those
improvements

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Alliance for Bangladesh
Worker Safety: Impact
• 428 factories have completed Corrective Action
Plans covering all material items

• Nearly 1.6 million factory employees have been

trained on basic safety

• More than 1.5 million workers in 1,000 factories

have access to a helpline to anonymously report
safety or other job-related concerns

• The Alliance has provided, together with factory

owners, wages for more than 6,600 displaced
workers
 But why the
decrease in net
income?
• Rise of AMAZON!!
• Massive surge in Online sales (33%)
• Change in accounting policy related
to Walmart's 2016 equity
investment in Chinese online
distributor JD.com
• Investment in Flipkart
 THANK YOU

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