2. 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.
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3. Walmart at a Glance
• Founded : Arkansas, USA (1962) by Sam Walton.
• Headquarters : Bentonville, Arkansas, U.S.A.
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4. Walmart at a Glance
• Products : Discount Stores, Super centers, Neighborhood Markets.
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5. 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).
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7. Walmart at a Glance
Slogans:
o The Lowest Prices. Guaranteed!
o Save Money, Live Better
o We Sell For Less Everyday!
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8. 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.
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10. 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.
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11. • 1970: Walmart became public.
• 1990: 1st National retailer.
• 1991: International Expansion.
11 History of Walmart
12. 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
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20. 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.
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21. 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.
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22. 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.
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23. 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."
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24. 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.
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25. 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.
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26. 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.
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27. 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.
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28. 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.
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29. 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.
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30. Practices Followed
• Aggressive Hospitality.
o Using door-greeters.
o Patriotic themes and displays in stores.
o Compels its staff to engage in morning cheers.
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31. 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.
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32. 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.
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33. 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.
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34. 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.
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36. Five Forces Model
1. Bargaining Power of Customers: Low.
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o Customers usually make small purchases.
o A large number of customers.
o Wal-Mart’s main customers are individuals.
37. Five Forces Model
2. Bargaining Power of Suppliers: Medium-Low.
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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.
38. Five Forces Model
3. Potential Entrants / Barriers to Entry: Medium-High.
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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.
39. Five Forces Model
4. Threat of Substitutes: High.
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o Prices and quality of substitute products
are very competitive.
o Performance of substitute products are
similar.
o Consumer switching costs are low.
40. Five Forces Model
5. Potential Competitors/ Rivalry: High.
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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.
41. Supply Chain Management at Walmart
Relationship with
Suppliers
Use of Cutting Edge
Technology
Strengths of SCM
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42. 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.
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43. 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.
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Introducing it's
“WAVE”
Technology
Truck System
44. 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.
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45. 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.
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• The company has more
than 88,000 associates
engaged in logistics and
information systems
activities for effective
and efficient supply
chain management.
46. 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.
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Apparel supervisor Sonia Barrett uses a handheld
scanner to read EPC labels on men's denim jeans
48. Key Success Factors
Economies of
Scale
Supply Chain
with
Integrated
Technology
Superior
Logistics
Systems
Decentralized
Operations
Every Day
Low Prices
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