Walmart

Introduction

Sam Walton Founder of Wal-Mart graduated from the University of Missouri in 1940 with the aspiration of all college graduates to go work for a good company and make good money doing so. After being drafted into the war he came back ready and eager to go into business for himself. He was a quick learner and with great instincts learned from other retailers’ successes and was adept at garnering ideas for improvements from employees and promptly took those ideas and created his own low price retail store called Wal-Mart. The company grew and Sam proved to be an effective visionary leader. His folksy demeanor and talent for motivating people, combined with very hands-on management style and obvious talent for discount retailing, produced a culture and set of values and beliefs that kept Wal-Mart on a path of continuous innovation and rapid expansion. Wal-Mart emerged as the premier discount retailer in the U.S in the 1980s every one came to know Sam Walton. He was a community spirited man who was concerned for his employees but also a devoted family man who epitomized the American dream and demonstrated the virtues of hard work. Sam Walton’s vision before his death in 1992 was to become a 125 billion dollar company by 2000 but his predecessor David. D. Glass not only beat that target by two years but also pushed revenues from 20.6 billion to 165 billion. When David Glass retired in 2000 H. Lee Scott took over his reign and has continued the dominance and growth of Wal-Mart with sales of 100 billion matching its growth for the first 35 years.

S.W.O.T Analysis

The greatest strength for Wal-Mart from its start in 1969 to this day has been the vision and dedication of the top level management CEO’s David Glass and current CEO H. Lee Scott and no one can deny Sam Walton the founder for his great vision that he made become crystal clear. From the founding to this day Wal-Mart’s top level management has been striving to come up with greater ways to bring Wal-Mart at level it is today and keep it at tops of all retailers and companies world wide. Wal-Mart’s greatest strength after its management is its size which management has helped it to grow with increasing sales and net income since 1993. The way they have implemented there strategic strengths in the industry is first by coming up with multiple store fronts to reach all markets and segments of people. They have created a careful strategic planning on where and when to open new stores. There geographic expansion strategy which focused on opening outward in to new geographical areas. Wal-Mart expands into adjoining geographic areas, saturating each area with stores before moving into new territories. This type of strategy created synergy by doing this by clustering new stores in a relatively small area, Wal-Mart could spread advertising expenses for breaking into new markets across all area stores, and a tactic the company used it used to keeps its advertising cost at 1% of sales compared to 2-3% for competitors. Wal-Mart although not the first but the best at everyday low prices having 8-27% below those of such leading supermarkets this in turn has been Wal-Mart’s winning strategy against competitors in find all ways to cut cost and create synergy through the cost cutting there for keeping prices way lower than that of its competitors therefore being the most popular amongst consumers when it comes to low price retailing. Wal-Mart cut cost on many different levels but its most effective strategy it has found it with its suppliers. Its relationships with its suppliers is its main competitive advantage by having procurement management spend a lot of time with vendors and understanding there cost structure. Thus they made the negotiation process transparent, doing all it could to cut down cost and quote Wal-Mart an attractively low price. Some 200 vendors have established offices in Bentonville to work closely with Wal-Mart on a continuing basis where they are encouraged to voice any problems in their relationship with Wal-Mart and to become involved in Wal-Mart’s future plans. Most vendors view Wal-Mart’s single bottom line price and its expectation of close coordination as a win-win proposition not only because of benefits of cutting out “funny-money” costs but because they learn collaborative efforts and mutual data-sharing which often had tremendous benefits in the rest of there operations. In executing Sam Walton’s strategic vision of become the largest low price discount retailer in the world they also increased shareholder’s wealth every year almost five times more now in earnings per share than in 1993 (see graph exhibit 3). Wal-Mart has been the leader in its industry and growth rate of more than 32 countries because it has had many strengths but with all strengths