The strategy analysis of The strategy analysis of Wal-MartWal-MartTeam membersMr. Manoon Thanawang ID: 52740089Ms. Suwannee Neamprapant ID: 52740157Ms. Pornsawan Silpamongkol ID: 52740133Mr. Vitchayuth Pittayanantakij ID: 52740010Mr. Li Xiang Yu ID:52740034Outline The background of Wal-Mart Question AQuestion BQuestion CQuestion DThe background of Walmart1962, Sam Walton who was the founder and opened the companys first discount store in Rogers. Ark City1969, The company officially incorporated as Wal-Mart Stores Inc. on October 31.Sam WaltonThe 1970, marked the beginning of significant growth for the company. The first year of that decade saw the opening of the first Walmart distribution center.The 1972, after being approved and listed on the New York Stock Exchange, Walmart stock split 100 percent for a second time, with a market price of $47.50.The 1983,the first Sams Club opened in Midwest City Okla. The same year, Walmart opened stores in Indiana, Iowa, New Mexico and North Carolina.The 1990,Walmart became the nations No. 1 retailer , entering into California, Nevada, North Dakota, Pennsylvania, South Dakota, and Utah and acquiring the McLane Company of Temple, Texas. Branching out further in 1991, Walmart stepped into the international market with the opening of a retail unit in Mexico City.On April 5, 1992, Sam Walton passed away at the age of 74. Just weeks before, President George H.W. Bush presented him with the Medal of Freedom, the nations highest civilian honor, during a ceremony at Walmart headquarters.The year of 1997,Walmart became the largest private employer in the United States with 680,000 associates, plus an additional 115,000 international associates. Walmart also replaced Woolworth on the Dow Jones Industrial Average, and the company introduced OneSource nutrition centersAt the year of 2000, Walmart entered the new millennium with the appointment of H. Lee Scott Jr. as the third CEO of Wal-Mart Stores Inc. in 2000. That year, Fortune magazine ranked the company fifth in its Global Most Admired All-Stars list and named Walmart the third most admired company in America. As of 2005, Walmart employed more than 1.6 million associates in more than 6,200 facilities around the world including 3,800 U.S. stores and 3,800 international units with $312.4 billion in sales for the year. The company served more than 138 million weekly customers in the United States, Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea and the United Kingdom. View the current unit count for each country.On April 10, 2008, Sams Club celebrated its 25th anniversary. In 2008, Sams Club operated more than 590 locations nationwide and more than 100 locations internationally.The year of 2009, Mike Duke succeeded Lee Scott as president and chief executive officer, effective February 1, 2009. Duke was also elected to the companys board of directors. Scott continues serving as chairman of the executive committee of the board. The board also approved the promotion of Eduardo Castro-Wright to vice chairman of Walmart. Doug McMillon is promoted to president and chief executive officer of Walmart International, the companys second largest operating segment.Question APart AThe characterize of Wal-Marts strategyTraditionally, War-Mart has essentially had a low-cost, high volume strategy. The strategy aims at customer satisfaction through low prices and relatively goods customer service. Here are the basic details.The characterize of Wal-Marts strategyLow cost: Wal-Mart has lower operating expenses than the industry average. The primary cost advantage is Wal-Marts superior distribution capability(location of stores, inside-out growth patterns, cross-docking, superior information management). Low price is always the Wal-marts core strategy. The characterize of Wal-Marts strategyHigh Volume: Industry analysts watch Wal-Marts growth of sales figure very closely. Wal-Marts prices are low by the industry standard, which, combined with its lower costs, indicates a strategy that aims at growth in volume through grabbing increased market share.The characterize of Wal-Marts strategyCustomer Satisfaction: Low prices, advanced data management and extremely motivated employees means a better customer experience than at other discount retailers, even though Wal-Mart remains a self-service retailer. In addition, the large size of the traditional Wal-Mart stores adds convenience by offering a one-stop solution by offering a wide range of products.The characterize of Wal-Marts strategy“ALWAYS LOW PRICES.” or “EDLP”(Everyday Low Price)That is Wal-Marts slogan and its business model, low price enable by operating efficiently and buying power. The low price was made from the economies of scale, therefore, Wal-Mart could decrease the purchasing cost and decrease goods price. Wal-Mart is the largest retail enterprise all of the world, it always on the top of the “World Top 500”. There was $3600,000,000,000 annual business turnover Now, more than 5500 branches all around the world.Part B The generic strategies of company employingStaff welfare policy Profit sharingEmployee buy stockA 401(k) planDismiss interview systemOthersPaid vacation and holidays, Stock ownership/stock loan program, Competitive wages, A discount card, Medical and dental coverage ,Life insurance, Accidental death and dismemberment coverage ,Short- and long-term disability insurance ,Free confidential professional counseling and assistance ,Scholarship bonuses ,Child-care discountsThe generic strategies of company employingThe policy that inspired resignation on the management layerTwo cardThe card oneThe spirit of grass rootsThe card twoSkillful staffPart 3The chief components of its strategyCore idea : always low priceThe low price comes from the low cost. Absolutely cost in the first flight.The essence of Wal-Mart is: to makes the principle of modern industry and production use of in the business, and focusing on achieved standardization of business(goods, services, the name of store, face of store and so on), specialization of business(the purchasing, distribution, selling and management, these functions must take these apart ) and simplification(to make simple and normative business activities on each business each terms and positions). Thereby, to achieved the purpose that scale effect.Question Bpart A Management Strategy (Making)Three strategiesCompetition strategyDirection strategyFunctional strategyCompetition strategy Absolutely cost in the first flightLow price investEconomic scaleKeep revenueAnd advantageMaintaining The market shareThe benign cycle of low costDirection strategyIt focuses on one industry and growth style.Always on the retailingConvergence Vertical growthhorizontal growthchain-store operations and supermarketFunctional strategy The core power The core power of Wal-Mart good idea of operation and cultureLow revenue but much more salesCustomers SatisfactionStrive for Excellence and swim upstreamRespect for the IndividualPay attention to long-term benefit MarketingLow revenue but much more salesTarget market aimed in the low and middle income groups.Just gained the half of profit what they can gain, makes the half other one to attracted the more than 3 times customers.Every day low priceMore economy than competitors forever Customers SatisfactionThe Customer is kingService to Our Customers Exceeding Customer Expectations (Customer bus in Kunming city) Strive for Excellence and swim upstreamRespect for the IndividualPay attention to long-term benefit MarketingThe two model of supply chain1.Push system. Make the manufacturer to be the core, distributor pushing the goods to customers level by level.2.Pull system.The customers demand drove supply. There is the high concentrated level, and high reflection level.Others functional strategyFinancial strategyOperating strategyHR strategyR&D strategyInformation system strategyPart B Management strategy(Implementing)How to implementing the core power of Walmart?Low revenue but much more sales EDLP，Rollback，Special Buy Wal-mart avoid the middleman and purchases directly from the manufacturers, at the same time drove the price down 2%-6% on the market price. The sum of the new price money approximately equal the commision of selling agent, if manufacturers refused, Wal-mart will stop the cooperation. Warehousing and Distribution. A big part of distribution of the suppliers products are handled by Wal-Mart and 80 percent of the purchases are directly shipped in the Warehouse. And still the Wal-Mart is continuously upgrading its distribution system wherein the products that arrive via the inbound trucks were loaded and unloaded on outbound trucks without sitting first in the inventory of the warehouse. Innovation of technologyFor example:Activity invested in the retail information. It first used the computer tracked the inventory (1969), the first used the bar code (1980), the first used the EDI(Electronic Data Interchange ),(1985)The fist used the telxon/datalogic(1988)Innovation of managementExamplelocal touch at the abroad Researching new retail models to suit for customers new demand.Strive for ExcellenceCustomer satisfactionRule No.1 ,Customer is right foreverRule No.2 ,If you doubted inside yourself , Refer to the No.1 pleaseSundown rule, todays job must finished in today.The commodity inspection system, be sure the high goods qualityAnd othersRespect for the Individualcompany employees not called “staff”, they are called “copartner” or “associate”.Managers and staffs they are the associate relationship , and there are no discriminate anymore, they shoulder the responsibility of company together.Focus on long-term benefit Walmart win the competitors through build customers loyalty ,and maintains the long-term relationship with Copartners.According to the market demand, Wal-Mart participated into the producing planning of upriver manufacturers.Therefore it could first own the goods which the market needs.MarketingExpanding strategyFrom country to cityMost of retail company enter in chose the business center of city, but Wal-mart chose from the country to the city, before it enter in city, to the best of its ability satisfied each markets demand.The four styles of retail1Wal-Mart low price marketplaceStarting time:1962Scale: 40,000-125,000 sq.ft Employee:150 sort of commodities:80,000To issues all kinds of high quality goods and services and convenient shopping environment.2 Wal-Mart supermarketStarting time:198824hours openScale 109,000-230,000 sq.ft Employee 350Sort of 100,000 commodities and sort of 30,000 food goods.3Sams ClubStarting time 1983,Scale 110,000-130,000Employee 125 Sort of commodity 4,000Membership fee( normal $30/year, firm $35/year)People can buy the commodities which cant be substitute under the most preferential price Primary issues the PC, furniture, TV, cloth and the like.4Neighborhood MarketStarting time1998, Scale 42,000-55,000 sq.ftEmployee 80-100 sort of commodities:28,000To issued the medical and general cargo, vegetable, cooked foods, flesh, milk, and the like.Public imageExample 1 Buy made in U.SAdvertising message: we will try our best to selling American products anywhere and anytime, we believe you will do it.Example 2Green policyWal-mart taken the initiative for green activity.Wal-mart saidAnimal Welfare：Wal-Mart supports the animal welfare guidelines released by the Food Marketing Institute (FMI). American Flag ：we display the flag at all Wal-Mart stores and Supercenters. Case-Ready Meat ：With case-ready fresh meat, products will arrive in Wal-Mart Supercenters already packaged and ready for our customers. Conflict Diamonds：We strongly believe that purchasing and selling conflict diamonds - that is, diamonds used to fund civil wars in numerous countries - is a direct violation of our ethical policies. Revision to Gun Policy - June 2002. ：NICS Hiring Older WorkersQuestion CPart AWhere are we now?To knowing ourselves by SWOTThe SWOT analysisStrengthsIt is the world largest company in term of revenues.It is well known for lowest cost products.Wal-mart has the largest employee base.Walmart is operating in 14 countries with 2,980 stores.The company covered most of the US market and having a huge market share.Walmart offer variety of products in their storesIt sells 40% of private brands which are produced through contracts with manufactures.High customer satisfaction.The SAMs Club customers are able to buy the products in bulk quantity and getting the advantage of low prices.A Wal-Mart super store offers non stop shopping for their customers.Satisfaction guaranteed programs promoting customer goodwillBuy from local merchants when possibleStock ownership and profit-sharing with employeesWeaknessesThe Corporation is huge but still has presence in 14 countries.Customers sometimes are curious about the quality of products.Keep poor performance employees on hand.The market share is low outside the US market.Supplier profit margin is very lowOpportunitiesMost of the International Market are untapped specially the Asian Countries.Joint ventures to increase market share in international market. The inflation in US market diverts the customer from buying expensive products towards cheap products. A lot of retail organizations are leaving out of business due to the drop in disposable incomes. This can help Wal-mart by growing its customer base due to the bargains that it can provide its customers.Due to the cheap rate that the organization is able to buy its products from suppliers, it is able to provide customers with even better bargains to give confidence them to shop at Wal-mart.ThreatsRegulation of Wal-Mart pharmaciesSmall towns do not want entry of Wal-MartBad media exposure for Kathie Lee BrandVariety of competition nationally, regionally and locallySubstitute products more easily because of intense competitionWal-Mart is criticized several times by community groups.The competitors are gaining control over International Market.Being a worldwide retailer means that you are uncovered to political troubles in the countries that you operate in.Part 2CultureThe headquarters of wal-mart is located in the Bentonville of Arkanesas province ,the middle northeast of U.S. The population was 19,730 at the2000 census. The 2007 US Census estimates that the population of the city was 33,744, ranking it as the states 11th largest city, behindHot Springs.3It is part of the FayettevilleSpringdaleRogers, AR-MOMetropolitan Statistical Area.Home This small town is the world headquarters for the worlds largest company (Walmart surpassed General Motors in sales in 2001). Corporate offices are on the commercial strip on the edge of town, while the original Waltons Five and Dime on the town square, where Sam Walton started up, is preserved as a public visitors center for the company.The Wal-Mart CultureWal-Mart Stores, Inc. was founded on principles developed by Sam Walton. These principles carried out every day by hard-working and friendly associates have created a unique corporate culture that is key to Wal-Marts competitive edge.The basic beliefs guiding Wal-Mart Stores, Inc. are:Three Basic BeliefsRespect for the IndividualEvery associates opinion is respected. Managers are considered servant leaders who help new associates realize their potential through training, praise and constructive feedback. An open door management philosophy encourages associates to raise questions and concerns in an open atmosphere. The customer is the boss. Everything possible is done to make shopping at Wal-Mart and SAMS CLUB a friendly, pleasant experience. The Ten-Foot Attitude means that associates are to greet each person they see. The Satisfaction Guaranteed refund and exchange policy allows customers to be fully confident of Wal-Mart and SAMS CLUBs merchandise and quality. Service to the CustomerStrive for ExcellenceWal-Mart and SAMS CLUB associates share an exceptional commitment to customer satisfaction. At the start of each day, store associates gather for the Wal-Mart or SAMS CLUB cheer and review sales from the previous day, as well as discuss their daily goals. The Sundown Rule requires a continual sense of urgency, with questions asked in the morning answered before the end of the day.Another culturesOpen DoorOur management believes open communication is critical to understanding and meeting our associates and our customers needs. Associates can trust and rely on the open door; its one of the most important parts of our cultureSundown RuleObserving the Sundown Rule means we do our best to answer requests by the close of business on the day we receive them. Whether its a request from a store across the country or a call from down the hall, we do our very best to give each other and our customers same-day service. We do this by combining our efforts and depending upon each other to get things done.10-Foot RuleThe 10-foot Rule is one of our secrets to customer service. During his many store visits, Sam Walton encouraged associates (employees) to take this pledge with him: I promise that whenever I come within 10 feet of a customer, I will look him in the eye, greet him, and ask if I can help him.Servant LeadershipSam Walton believed that effective leaders do not lead from behind their desks. Its more important than ever that we develop leaders who are servants, who listen to their partners their associates in a way that creates wonderful morale to help the whole team accomplish an overall goal,” Sam said.TeamworkSam Walton, our founder, believed in the power of teamwork. As our stores grow and the pace of modern life quickens, that philosophy of teamwork has only become more important over the yearsWalmart CheerDont be surprised if you hear our associates shouting this enthusiastically at your local Walmart store. Its our cheer, and while it might not sound serious, we take it seriously. Its one way we show pride in our company.Bentonoville was the original place, the enterprises culture has been become to adult, Actually, although War-mart was not asked suppliers opened the office in the town, more and more higher competition of environment, there were lots of American suppliers collected in the near of the town and opened theirs office. Therefore, they were able to negotiated with Wal-Mart on R&D of products, transportation, and quality control and the like.The scale of these office from the family to company which more than 100 persons, such as Proctor-Gamble, it established a team which more than 300 people at the town for servicing Wal-mart, but there were some company office only one person even part-time job at there.These local workers whom work for their suppliers were called “The Sales Representative”. Most of them had worked for Wal-mart, they know the operating process of supermarket, therefore, the suppliers were able to know the fresh news from local workers and then, the chance coming.This is why the culture seem to be so much stronger in Bentoville than out in the stores.Question DPart AWal-Mart will continue to be successful if it maintain his advantage of operating and improving its internal management by it-self.This is the Wal-Marts forecast on five years ago.Think Wal-Marts are everywhere you turn today? Just wait five years. Industry analysts predict that by 2010, Wal-Mart estimated sales will exceed $500 billion dollars a year.Super Centers are clearly the companys growth vehicle, with 3,131 expected to be in operation in 2010. Conventional Wal-Mart stores will shrink from 1,995 to 668 units by that year. The 99,000-square-foot Super Center concept will continue to be rolled out, and a 45,000-square-foot neighborhood market prototype will take off after 2010.Five-Year Plan (2005)Next year alone Wal-Mart plans to add 250 more Supercenters, but thats just the beginning.In a presentation to shareholders in 2005, Wal-Mart CFO Tom Schoewe said there is room for 4,000 additional Super Centers in the U.S. market. And this insatiable pursuit of growth extends around the world. In China, for example, Wal-Mart plans to grow 30 to 50 percent in square footage each year for the foreseeable future, according to the Wall Street Journal.Company executives are boastful about Wal-Marts great leap forward while never pausing to consider the consequences of their expansion. Wal-Mart CEO Lee Scott told the Chicago Tribune earlier this year, When you get as large as we are, you have to paint a picture in peoples minds that you can still grow. Otherwise they think of $285 billion and think Thats the end of that. Well it isnt. Its not even the start of it. We have a five-year plan, and have a pretty good idea in five years where well be.Financial data in U.S. Dollars Values in Millions (Except for per share items)http:/moneycentral.msn.com/investor/invsub/results/statemnt.aspx?Symbol=wmt&lstStatement=Income&stmtView=AnnIt is five years later, let us to see the outcome of Wal-Marts five years plan.Does it achieve the goal?Total Revenue, $312,101.00$450,000.00$400,000.00$350,000.00$300,000.00$250,000.00$200,000.00$150,000.00$100,000.00$50,000.00$0.003871839083394483981440179Total RevenueTotal Revenue$14,335.00$13,400.00$12,731.00$11,284.00$11,231.00$16,000.00$14,000.00$12,000.00$10,000.00$8,000.00$6,000.00$4,000.00$2,000.00$0.003871839083394483981440179Net income net income Part BImproveInternational strategy1, To expanding abroad marketsExample Chinese marketWal-mart should be Enhancing the strategy of localization, but dont forgot Wal-marts cultures.Chinese problems(1) EDLP not really EDLPThe price of EDLP are close with market price even more over it sometimes.(2)The low wage on staffs The average level ￥800/month industry level ￥1200/month(3)There are some barricade from government, Wal-Mart China havent build the GPS for global purchasing, transportation and distributionAnother abroad market Example: Thailand, Russia, and Australia and so on2Cooperation(1)To cooperated big network company for online shopping such as Amazon, eBay, alibaba (阿里巴巴, China) (2)To established the relationship with MAERSK, UPS, FedEx, Panalpian and so on for international logistics.To enhanced the public image.Increasing investment on public service3. To find out the new management talent4. Maintain the goods quality, increasing the service.5. To try the new expanding strategy“From countries to city” and “Expanding from city”Competition advantageQualityLow priceServicePublic ImageChainInfo. System Low costLogisticsrelationship ExpandingInnovationChallengeLong-termGainRespectForIndividualdesign10 FootSatisfactionService For CustomersHR PolicyExcellenceCheck onSteadinessFour stylesUpriverIdeasThe EndThanks