Walmart Report

Introduction

In this report, we would present a case study of strategic audit for Wal-Mart in China. We would begin by discussing the strategic posture, current performance, corporate culture and top management of Wal-Mart in China. Then, we would analyze the external environment of Wal-Mart by performing the PEST analysis and Six-Forces Model analysis. After that, we would analyze the internal environment of Wal-Mart by performing analysis on each of the corporate function. Based on the analysis in the external and internal environment, we would be able to present the SWOT model and identify the strength, weakness, opportunity and threat for Wal-Mart. From the SWOT analysis, recommendations would be made to Wal-Mart. At last, we would suggest ways to evaluate and control the strategies recommended to Wal-Mart.

Strategic Posture

The Mission

The Wal-Mart has a mission of Ў§To give ordinary folk the chance to buy the same thing as rich people."

The Objective

The Wal-Mart China has established an objective, Ў§Create 100 billion revenue in China retaining business.ЎЁ

Corporate Strategy

Wal-Mart has adopted the horizontal growth as the corporate strategy in China. Since there is a large demand for consumptions in some smaller cities such as Shaoxing, this offers a good chance for Wal-Mart to expand in China. To meet the demand, Wal-Mart would build stores in several second-tier cities including Yuxi, Yunnan, Weifang, Shandong, Wuhu and Anhui by the end of 2005. In 2006, the number of outlets would be increased from 49 to 62. This allows Wal-Mart to cover a larger geographic area as well as enjoy a larger economic of scale in China.

http://www.chinadaily.com.cn/english/doc/2005-11/10/content_493549.htm

Business Strategy

Wal-Mart has adopted the cost leadership strategy to compete with its competitors. This is because it has applied the Ў§Every Day Low PriceЎЁ strategy and chosen to serve the broad mass market. To achieve cost leadership, Wal-Mart has establish efficient logistic distribution centre and large economic of scale to minimize cost. Besides, the top management would hold meeting everyday to review price on market and negotiate price with supplier to achieve Ў§Every Day Low PriceЎЁ.

http://www.secretchina.com/news/big5/articles/3/8/26/49430.html

Current Performance

Current Performance in Global

Based on the revenue in global from 2001 to 2004, Wal-Mart had topped the Fortune 500 List from 2002 to 2005 for four consecutive years [4] [5]. In 2004, Wal-Mart achieved a global sales revenue of US 288.91 billion [5] and global profit of US 64.8 billion [6].

4. www.china.org.cn/chinese/HIAW/521246.htm

5 http://news3.xinhuanet.com/fortune/2005-04/05/content_2786744.htm

6big5.chinabroadcast.cn/gate/big5/gb.chinabroadcast.cn/3821/2004/05/14/622@159215.htm

Current Performance in China

In 2005, Wal-Mart has established 49 outlets in China, including Supercentre, SamЎ¦s Club and NeighboorhoodЎ¦s Market [7]. In 2004, Wal-Mart achieved sales revenue of 76.3 billion and a sales growth of 30.5 % [8]. In addition, based on its operating situation in 2004, it had been ranked 17 in the Chain Operating Enterprises in China. [8]. However, it still has not made any profit in China in the previous years.

7. http://www.chinadaily.com.cn/english/doc/2004-11/29/content_395728.htm

8. http://www.i18.cn/newscenter/news/guoneinews/2005-2-28/21424.shtml

Corporate Culture

The founder of Wal-Mart, Sam Walton, had established special and unique corporate culture among employees (who are called as associates), which contributed to the success of Wal-Mart in US.

Basic Beliefs

There are three basic beliefs related to the Wal-Mart culture:

Respect for Individual

Every individual associateЎ¦s opinion is respected. The associates are encouraged to raise questions and concerns in an open atmosphere. Managers are considered as "servant leadersЎЁ to help new employees realize their potential through training,