Professional Documents
Culture Documents
Employees Rank 1 in Q1 Fortune500 Revenue 2012 2.2 million (2012) 2009 and 2010 $ 113 Bn
Blue ocean
Vision If we work together, well lower the cost of living for everyonewell give the world an opportunity to see what its like to save and have a better life Sam Walton Mission statement We save peoples money so they can live better
Division
Operations Walmart Stores US Walmart International
Sams Club
Retail
Wal-Mart Supercenters
Sams Club
Current Scenario
Revenue Q1 2012 $ 113 Bn (+8.5%) Gross Profit of Q1 2012- $ 32.64 bn
These two approaches were to fulfill the underlying philosophy behind the concept Offer shoppers lower prices than they get anywhere else Wal-Mart cuts down its profit per product and transfers that to the consumer, here Economies of Scale balances out the difference Wal-Mart also cuts down middle-men, thus purchasing straight from the manufacturer and selling directly to the consumer For this Wal-Mart had a decentralized and non-hierarchy structure
Promoting private labels (26%) Providing products at 15-20% less than the price of the competitors
Business Model
Eliminate middle-man and pass the savings onto the customer Provide everything the customer needs under one roof Aggressive Growth Harvesting the business from local competitors Better Supply Chain Management at every step Better communication Uniform Product code UPC and satellite communication
Distribution Wal-Mart Retail Outlets centers Consumers Consumers
Strategic control- With HP, Wal-Mart has created an Information system looking after Logistics, stocks, consumer preferences, product categories/lines etc For information sharing in the organization Individuals/cash registers to individual retails to organization
Features
Open Door Policy - Managers' doors are open to employees at all levels Sundown Rule - Answering employee, customer, and supplier questions on the same day the questions are received Grass Roots Process - Capturing suggestions and ideas from the sales floor and front lines 3 Basic Beliefs & Values - Respect for the Individual, Service to our Customers, Striving for Excellence 10-Foot Rule - Making eye contact, greeting, and offering help to customers who come within 10 feet Wal-Mart Cheer - An actual structured chant that was created by founder Sam Walton to lift morale every morning
More customers
1990s
Wal-Mart begins importing from the cheapest source of production around the world due to external factors 1995- 6% of the total merchandise were imported
Post 2000 Wal-Mart starts importing heavily from countries like China, India, Brazil 2005- 60% of its merchandise were imported
Competitive Advantage
Value Chain
Value Creation (% per activity) Inbound Logistics (3.4%) Operations (Building Rentals) (1.9%) Licensing (0.2%) Marketing (1.1%) Shrinkage (1.3%) Salary/Wages (10.8%) Cost of Goods Sold (74%)
Backward integration
Mclane Company- Supply Chain Solutions Texas Retail Grocery
Horizontal integration
Canada- Woolco stores Canada- Woolworth Corp
International Strategy
Wal-Mart constantly expands its market through Global Expansion
Organizational Structure
Chairman
CEO
Directors
CAO
CFO
Wal-Mart is a Transactional Organization- Each retail outlet operates independently Wal-Mart establishes indirect control through Cultural Process, this has become part of the organizational culture
Market Process
Wal-Mart plays a dominant role in its relationship with its suppliers Wal-Mart is usually the biggest buyer of its respective suppliers Thus the Bargaining Power of the Suppliers gets minimized, Wal-Mart often dictates terms to its suppliers Being the industry leader Wal-Mart is relatively independent of competitors, as it sets standards for the industry Wal-Mart made Pepsi initially introduce its low-cal variant only its retail outlets
PESTEL
Political- Aware of the political situation of every country they enter or occupy a position in and continuously preparing for any problems concerning the political sector Economic- Wal-Mart can be said to be economically stable, even during recession in US the company came out with great revenues and offered consumers with great value products. On a macro front, Wal-Mart operates in countries with a stable and promising economy Social- Wal-Mart does not offer products which harm the sentiments of any segment, race or gender of the society. Wal-Mart also engages in social activities, The WalMart Foundation is well known for its charities (5 mn to Japan Earthquake Relief)
PESTEL
Technological- Wal-Mart offered new innovations in its technological aspect and introduced new concepts with regards to its industry. Use of highly advanced cash register or better performing slot machines. It also makes use of better security systems. Popularisation of Bar-codes and Micro Electronic Tags Legal- following the different laws of a country they engage transaction in. The company doesnt want to risk their clients welfare and company image by breaking local and international laws. Wal-Mart makes sure that the transactions they engage in will have a legal basis Environmental- making sure of the products they sell are proven to cause minimal problems to the environment. Environmental regulations on what type of product they will sell in their store. Introduction better waste management strategies that aim to reduce pollutants and create a cleaner environment for the future
Cannibalization- Sams Club was open to cater to Small and Medium Sized businesses Loyalty programs
Membership to Sams Club Members on social mediums like Facebook
Communication
Open door policy Upward communication with programs like Yes We Can Sam Reducing margin for error through Management Information Systems
Pioneers in developing and adapting to latest technologies Identifying the potential of e-commerce and penetration in the online sphere Non-unionized workforce
Low salaries Lack of employee benefits Over-time (70 hours a week +overtime)
Consumables
Reduce Outlays/ Seasonal advertising/ in-store signage
Private Label
Expand Private Label Categories
Win. Play. Show Reducing products and suppliers/ Suppliers to reduce prices/ Optimizing the products in each of its stores, for this products were put into three categories Win/Play/Snow
Win
Top priority categories/ gain market share/ lead with price and value
Play
Strategic categories/ a balance growth and profit in the context of overall market performance
Show
Reduce the number of products they stock, but not exit the category
Fast. Friendly. Clean Improving the customers in-store experience as well as becoming more efficient in and out of each store
Merchandise Flow
48 hours Merchandise Replenishment Cycle/ Cross-dockingreduced operating costs, reduces inventory levels and eliminates unnecessary handling and storage of product
2011 Scenario
Wal-Mart lost 1st position among Fortune 500 to Exxon Weakening of Dollar to the Yuan Stress on a unionized workforce Tough competition from Target, providing better variations of products. Apart from that numerous one dollar stores are giving Wal-Mart tough time Saturation of American market- 95% of Americans live in a 15 mile radius of a Wal-Mart/ one quarter of American population visit Wal-Mart every week Wal-Mart criticized for being futile for American economy
Strength
Strong Brand Name It has ability to make strategic adjustments
Weakness
Its standing in the supply chain
Its supply chain system as the products are kept in a secure place until it is needed
Its website is easy to use, attractive, and informative
SWOT
Opportunity
To attract clients who have varied tastes It is to improve the features of their website
Threat
It is the competitors Competitors could have a better standing in the supply chain The laws in the country they are operating in The tariff and taxes that the company has in different countries The culture of some clients in other countries they operate in
Future outlook
Long-term Objective Sales growth of 5% to 7% in the fiscal 2012-13 Increase its overall square footage by 36 million to 39 million square feet in 2012 and by 45 million to 49 million square feet in fiscal 2013 International return on investment should rise 3 to 4% between fiscal 2012 and 2017
Functional Tactics
Maintaining the revenues through the grocery and private label products Embracing social media and developing mobile strategies
My Local Wal-Mart Facebook Grabble- receipts on mobile Mobile marketing through Proximity Technology
10,000 items back to stores, propelling sales of goods Sam's Club adding 5 new warehouses in US to increase loyalty/membership in the Q1 of 2012, Expanding or relocating over 10 warehouse clubs over the Q2 and Q3 Association with Apple Inc. to sell Apple merchandise as Sams Club Launching smaller format stores like Wal-Mart Express Wal-Mart Christmas Price Guarantee/ Black-Friday to create positive brand recognition Stock based on customer demand rather than low prices (matching the competitors pricing sometimes)
Global Challenges
Inability to increase the same store sales Reluctance of consumer to spend Global Financial crisis Emergence of lower priced rivals and shift in psychology Call for unionizing workforce Weakening of Dollar
Challenges in India
Protests from small businesses ( Kirana) FDI restrictions no policy clarity Indias poor infrastructure image Poor public image predatory pricing , unemployment Indias diversity and heterogeneity Competition from India Retailers including Shoppers Stop , Pantaloon , Big Bazaar , etc. Regional governments are very strong politically
Conclusion
Recent years have seen a sluggish growth for Wal-Mart specially due to saturation of American market Criticism of Wal-Mart as an employer and pay-master has to be tackled soon to prevent the company image from harm Growing threat from competitors like Target, Costo, Amazon, Tesco are challenging Wal-Marts position as industry leader Governance issues have to be sorted out at the earliest Could expand in newer formats such as online retail in the emerging markets It should not tinker with its supply chain as that is its brand identity It should work on its image and get its strategies sorted out. Before execution can commence.
Thank You