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Presentation on Walmart

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Presentation on Walmart

  1. 1. 1 Presentation on
  2. 2. Presented by Abu Motahar Mohammad Sohel ZR 1302025 Md. Mahbub-Ur-Rahman ZR 1103019 Md. Hafiz-Al-Asad ZR 1401003 2
  3. 3. Sequence of Presentation 1 • Introduction to Wal-Mart. 2 • History of Wal-Mart. 3 • Business Description & Competitors. 4 • Vision, Mission and Values. 5 • Corporate Strategy. 6 • Competitive Strategy. 3
  4. 4. Sequence of Presentation 7 • Business Strategy. 8 • SWOT Analysis. 9 • Five Forces Model. 10 • SCM at Walmart. 11 • Key Success Factors. 12 • Criticism of Walmart. 4
  5. 5. Introduction to Walmart • An American public corporation that runs a chain of large discount department stores & warehouse stores. • World's largest public corporation by revenue. • Largest private employer in the world. • Fourth largest utility or commercial employer. • Largest grocery retailer in the United States (20%). • Largest toy seller in the United States (22%). • World’s biggest retailer. 5
  6. 6. Walmart at a Glance • Founded : Arkansas, USA (1962) by Sam Walton. • Headquarters : Bentonville, Arkansas, U.S.A. 6
  7. 7. Walmart at a Glance • Products : Discount Stores, Super centers, Neighborhood Markets. 7
  8. 8. Walmart at a Glance • Revenue : US$ 485.65 billion (Jan 31, 2015). • Net Income : US$ 16.36 billion (Jan 31, 2015). • Total Assets : US$ 204.75 billion (2014). • Total Equity : US$ 76.25 billion (2014). 8
  9. 9. Walmart at a Glance9
  10. 10. Walmart at a Glance Slogans: o The Lowest Prices. Guaranteed! o Save Money, Live Better o We Sell For Less Everyday! 10
  11. 11. Company Overview • Founded by Sam Walton in 1962 • Incorporated on October 31, 1969. • Publicly traded on the New York Stock Exchange in 1972. • Walmart operate retail stores in various formats across the world. 11
  12. 12. 12 Company Overview
  13. 13. 13 As of April 30, 2014: 10,994 o Walmart US – 4,233 o Sam’s Club – 635 o International – 6,126 Company Overview
  14. 14. History of Walmart o 1918: Born in a farmer’s family in Kingfisher, Oklahoma. o 1940: Graduated from the University of Missouri. o 1950: Gave up job and opened his first store in Arkansas. o 1962: Walten Brothers opened fist Walmart in Arkansas. 14
  15. 15. • 1970: Walmart became public. • 1990: 1st National retailer. • 1991: International Expansion. 15 History of Walmart
  16. 16. o 1993: Creation of “Great Value”. o 2003: Largest corporation in the world. o 2012: 50th Anniversary. 16 History of Walmart
  17. 17. Business Description • Dry and wet grocery • Beverages • Frozen food • Jewelry etc. Products • Photo processing service • Cellular service plan • Money order services Services • Walmart • Great value • Sam’s choice Brands 17
  18. 18. Competitors Tesco PLC Metro AG Amazon Inc CVS Care mark Staples Inc 18
  19. 19. Competitors19
  20. 20. Competitors20
  21. 21. Vision “To be the best retailer in the hearts and minds of consumers and employees.” 21
  22. 22. Mission “Saving people money so they can live better.” 22
  23. 23. Slogan Save Money. Live better. 23
  24. 24. Values of Walmart Integrity Opportunity Family and Community Purpose Responsibility 24
  25. 25. Md. Mahbub-Ur-Rahman25 Corporate Strategy Competitive Strategy Business Strategy
  26. 26. The Corporate Strategy  Dominance in the Retail Market. 26
  27. 27. The Corporate Strategy  Expansion in the U.S. and International Markets. 27
  28. 28. The Corporate Strategy  Creation of Positive Brand and Company Recognition. 28
  29. 29. The Corporate Strategy  Branch Out into New Sectors of Retail. 29
  30. 30. The Corporate Strategy  Sam Walton gave 3 Policy Goals to define Wal-Mart's business: Respect for the Individual Service to Customers Strive for Excellence 30
  31. 31. Sam Walton’s Practices • Consistently stock the shelves with a wide range of goods at low prices. • Keep the store open later than most other stores, especially during the Christmas season. • Discount Merchandising. o Buy wholesale goods from the lowest priced supplier. o Pass on the savings to the customer. 31
  32. 32. Strategic Goals  Three successful elements and a fourth element of Walmart strategy formulation: 1. Dominate the Retail Market wherever Wal-Mart has a presence. • Wal-Mart is primarily a discount retailer. • Lowering the markup, and earn profit on the increased volume of sales. • Competitiveness of every unit. 32
  33. 33. Strategic Goals 2. Growth by expansion in the US and Internationally. • Gain entry into a nation by Corporate Takeover of a national retailer. Once the company is bought, Wal- Mart converts the stores into Wal-Mart stores. 3. Create widespread name recognition and customer satisfaction with the Wal-Mart brand, and associate the retailer with the reputation of offering the best prices. • The company accomplishes this through television advertising campaigns and newspaper adverts. • The company engages in partnerships and co- branding. 33
  34. 34. Strategic Goals 4. Branching out into new sectors of retailing such as pharmacies, automotive repair, and grocery sales. • Move into the grocery store business with its new "Neighborhood Markets." 34
  35. 35. Competitive Strategy • Low Cost Leadership. The giant retailer prides itself on providing customers with low-cost items that beat competitors. • Differentiation Strategy. Wal- Mart uses the differentiation strategy to succeed by creating a product or service unique to customers. Wal- Mart has achieved this strategy by offering unique warranties and brand images exclusive to the store. 35
  36. 36. Competitive Strategy • The company's competitive strategy is to dominate every sector where it does business. • It measures success in terms of sails and dominance over competitors. • Sell goods at low prices, outsell competitors, and to expand. • To build more stores, make existing stores bigger, and to expand into other sectors of retail. • Every step of the way, it strives to make money and dominate its competitors, to the point of putting some competitors out of business. 36
  37. 37. Business Strategy • Low Cost Leadership Strategy: Walmart’s value proposition is based on offering Everyday Low Price (EDLP). This is the core of Walmart’s Business Model and the rest of the key features of Walmart’s Business Model are aligned to keep the everyday low price. • Pressure Over Vendors: To deliver low price, Walmart exchanges information on sales and inventory levels based on “Vendor Partnership” concept. It has its own distribution channel which is a major distribution channel for many vendors. 37
  38. 38. Business Strategy Investment in Technology: Walmart invested heavily on technology to help enhance communication between headquarters, stores, and vendors. As a result inventory costs decreased and inbound logistics became more efficient. Human Resource Policy: Walmart was recognized as one among 100 best companies to work for in America. It used to offer a percentage of store profit as incentives to store managers. 38
  39. 39. Business Strategy Location Selection: Walmart focused on rural suburban areas ignored by other companies. Establishing stores close to distribution center, it developed a dense distribution network that allowed the firm to spread costs and exploit economies of density. Product Selection: Walmart gives its customers a wide range of selection. It offers grocery items in super centers. Sam’s club caters to the wholesale purchase need of customers. 39
  40. 40. Business Strategy Cost Consciousness: Walmart developed a cost conscious culture for the company to reduce costs whenever possible. It controlled costs by systematic elimination of superfluous expenses. Customer Service: Walmart implemented policies to create friendly shopping environment for customers. It started its “Aggressive Hospitality” program in 1984, where customers were received by “people greeters” and they enjoyed benefits such as extended opening hours, free parking, no hassle refund and exchange policies, speedy checkout lanes, wider aisles, and clean stores. 40
  41. 41. Practices Followed • Aggressive Hospitality. o Using door-greeters. o Patriotic themes and displays in stores. o Compels its staff to engage in morning cheers. 41
  42. 42. Practices Followed • Affiliations with Charities. The United Way and Children's Miracle Network. • Sundown Rule. All customer and supplier requests or queries must be reasonably answered within 24 hours by all employees. • Ten Foot Rule. Store employees must greet, smile, and attend to a customer in a store when within 10 feet of them. 42
  43. 43. Business Strategy • The company uses its size, financial power, immense resources to dominate retail. • The power and size of the company enables it to realize its goals with ruthless efficiency. • The strategy is very clear and direct. It was put into place in the 1960's by Sam Walton, and refined over the decades. 43
  44. 44. Walmart Growth Strategy Maintain current net sales growth of approximately 12 percent per year. Expand into international markets that have large population centers. Increasing the overall efficiency of the organization by reducing operating costs or cost of goods sold. 44
  45. 45. Md. Hafiz-Al-Asad45 SWOT Analysis Five Forces Model SCM at Walmart Key Success Factors Criticism of Walmart
  46. 46. SWOT Analysis Strengths • Powerful retail brands, large scale of operation worldwide. • One Stop Retail. • Strategic business programs. • Efficient working capital management. Weakness • Self Cannibalization. • Involvement in numerous legal issues. • Continuous product recall. • Community relations problem. Opportunity • Global food safety initiative standard. • Increasing demand of online sales. • Increasing opportunity in growing economy. Threats • Intense competition. • Price matching program by target. • Foreign currency fluctuation. 46
  47. 47. Five Forces Model47
  48. 48. Five Forces Model 1. Bargaining Power of Customers: Low. 48 o Customers usually make small purchases. o A large number of customers. o Wal-Mart’s main customers are individuals.
  49. 49. Five Forces Model 2. Bargaining Power of Suppliers: Medium-Low. 49 o Wal-Mart purchases huge quantities of products from its suppliers. o Low switching costs from one supplier to another. o Products have a lot of substitutes. o Almost all the products are not critical for Wal-Mart.
  50. 50. Five Forces Model 3. Potential Entrants / Barriers to Entry: Medium-High. 50 o Economies of scale. o High capital requirements. o Customers mainly look for products with low prices and standard quality. o Requires a precise distribution system.
  51. 51. Five Forces Model 4. Threat of Substitutes: High. 51 o Prices and quality of substitute products are very competitive. o Performance of substitute products are similar. o Consumer switching costs are low.
  52. 52. Five Forces Model 5. Potential Competitors/ Rivalry: High. 52 o Wal-Mart represents the 25% share of the U.S. supermarket business. o Competitors have similar sizes. o Industry growth is slow. o Exit barriers are high. o There is a high production capacity.
  53. 53. Supply Chain Management at Walmart Relationship with Suppliers Use of Cutting Edge Technology Strengths of SCM 53
  54. 54. Relationship with Suppliers • Scale of operation helps to bargain with suppliers to get the bottom prices. • Procurement personnel spend a lot of time with the vendors to understand their cost structures and to get the minimum price in a win-win situation. • Encouraged its vendors to contribute ideas about how to make its stores more attractive with their products. • Vendors were encouraged to voice any problems in their relationship with Walmart and to become involved in Walmart’s future plan. 54
  55. 55. Use of Cutting Edge Technology • Probing, testing and then deploying the newest equipment, retailing techniques, computer software program etc. to increased productivity and drive costs down. 55 Introducing it's “WAVE” Technology Truck System
  56. 56. Use of Cutting Edge Technology • Sophisticated IT and online capability for real-time access to detailed figures on most operations. • Tracking capability of it’s goods movement through its entire value chain. 56
  57. 57. Use of Cutting Edge Technology • Walmart has Data Sharing Systems and Retail Link System with 30,000 suppliers, which allow them to avoid both stock outs and carrying excess inventories, identifying slow-selling items to reduce costs. 57 • The company has more than 88,000 associates engaged in logistics and information systems activities for effective and efficient supply chain management.
  58. 58. Use of Cutting Edge Technology • Walmart has introduced Electronic Product Code (EPC) and Radio-frequency Identification (RFID) systems. With the help of EPC and RFID, the company can track movement of any items in real time. 58 Apparel supervisor Sonia Barrett uses a handheld scanner to read EPC labels on men's denim jeans
  59. 59. Strengths of SCM Vendor- Managed Inventory (VMI) Enterprise Resource Planning (ERP) Customer Relationship Management (CRM) Sales Force Automation 59
  60. 60. Key Success Factors Economies of Scale Supply Chain with Integrated Technology Superior Logistics Systems Decentralized Operations Every Day Low Prices 60
  61. 61. Criticism of Walmart61
  62. 62. Opposition from Local Communities: • Local communities try to oppose the construction when Walmart plans new store locations. Opponents cite concerns such as traffic congestion, environment problems, public safety, absentee landlordism, bad public relations, low wages and benefits etc. Criticism of Walmart62 An anti-Walmart sign on the front lawn of a Ballston Spa home.
  63. 63. Predatory Pricing: Walmart has been accused of selling merchandise at such low costs that competitors have tried to sue it for predatory pricing (intentionally selling a product at low cost in order to drive competitors out of the market). Criticism of Walmart63
  64. 64. Criticism of Walmart Employee & Labor Relations: • With close to 2.2 million employees worldwide, Walmart has faced a torrent of lawsuits and issues with regards to its workforce. These issues involve low wages, poor working conditions, inadequate health care, as well as issues involving the company's strong anti-union policies. 64
  65. 65. Criticism of Walmart Low Wages: • Walmart reports that full-time hourly associates received, on average, $10.11 an hour.“, which is about 20% less than the average retail worker. • Because Walmart employs part- time and relatively low paid workers, some workers may partially qualify for state welfare programs. This has led critics to claim that Walmart increases the burden on taxpayer-funded services. 65
  66. 66. Criticism of Walmart Working Conditions: • Walmart has also faced accusations involving poor working conditions of its employees. • Walmart has also been accused of ethical problems. It is said that the Walmart employees are gender discriminated when trying to be hired and discriminated against in the work area. 66
  67. 67. Criticism of Walmart Health Insurance: • Walmart spends an average of $3,500 per employee for health care, 27% less than the retail-industry average of $4,800. • Walmart's health insurance covered 44% or approximately 572,000 of its 1.3 million U.S. workers. 67
  68. 68. Criticism of Walmart Anti-Labor Union Policies: • Walmart has been criticized for its policies against labor unions. Critics blame workers' reluctance to join the labor union on Walmart anti- union tactics such as managerial surveillance and pre-emptive closures of stores or departments who choose to unionize. 68
  69. 69. Criticism of Walmart Imports and Bargaining Power: • As a large customer to most of its vendors, Walmart openly uses its bargaining power to bring lower prices to attract its customers. • The company negotiates lower prices from vendors. If a vendor does not keep prices competitive with other suppliers, they risk having their brand removed from Walmart's shelves in favor of a lower-priced competitor. 69
  70. 70. Criticism of Walmart Allegations of Bribery: Walmart México, its subsidiary in that country, had paid millions of dollars in bribes to local officials to expedite permits for construction and operation of its many stores in that country. 70
  71. 71. Criticism of Walmart71
  72. 72. 72