25/08/2015

Presentation on

Presented by
Abu Motahar Mohammad Sohel
ZR 1302025

Md. Mahbub-Ur-Rahman
ZR 1103019

Md. Hafiz-Al-Asad
ZR 1401003

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Sequence of Presentation
1

Introduction to Wal-Mart.

History of Wal-Mart.

Business Description & Competitors.

Vision, Mission and Values.

Corporate Strategy.

Competitive Strategy.

Sequence of Presentation
7

Business Strategy.

SWOT Analysis.

Five Forces Model.

10 SCM at Walmart.
11

Key Success Factors.

12 Criticism of Walmart.

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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%).
Worlds biggest retailer.

Walmart at a Glance
Founded

: Arkansas, USA (1962) by Sam Walton.

Headquarters

: Bentonville, Arkansas, U.S.A.

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Walmart at a Glance
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Products : Discount Stores, Super centers, Neighborhood Markets.

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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Walmart at a Glance

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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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
various formats across the world.

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in

Company Overview

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Company Overview

As of April 30, 2014: 10,994

o Walmart US 4,233

o Sams Club 635

o International 6,126

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History of Walmart
o 1918: Born in a farmers 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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History of Walmart
1970: Walmart became public.
1990: 1st National retailer.
1991: International Expansion.

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History of Walmart
o 1993: Creation of Great Value.
o 2003: Largest corporation in the world.
o 2012: 50th Anniversary.

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Business Description

Products

Services

Photo processing service

Cellular service plan
Money order services

Walmart
Great value
Sams choice

Brands

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Dry and wet grocery

Beverages
Frozen food
Jewelry etc.

Competitors

Tesco
PLC

Metro
AG

Amazon

Inc

CVS
Care
mark

Staples
Inc

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Competitors

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Competitors

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Vision
To be the best retailer in the hearts and minds of
consumers and employees.

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Mission
Saving people money so they can live better.

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Slogan
Save Money. Live better.

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Values of Walmart

Integrity

Opportunity

Family and
Community

Purpose

Responsibility

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Md. Mahbub-Ur-Rahman

Corporate Strategy

Competitive Strategy

Business Strategy

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The Corporate Strategy

Dominance in the Retail Market.

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The Corporate Strategy

Expansion in the U.S. and International Markets.

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The Corporate Strategy

Creation of Positive Brand and Company Recognition.

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The Corporate Strategy

Branch Out into New Sectors of Retail.

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The Corporate Strategy

Sam Walton gave 3 Policy Goals to define Wal-Mart's business:

Respect for
the
Individual

Strive for
Excellence

Service to
Customers

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Sam Waltons 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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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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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, WalMart 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.

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The company accomplishes this through television

advertising campaigns and newspaper adverts.

The company engages in partnerships and cobranding.

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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Competitive Strategy
Low Cost Leadership. The

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giant retailer prides itself on

providing customers with low-cost
items that beat competitors.
Differentiation Strategy. WalMart uses the differentiation strategy
to succeed by creating a product or
service unique to customers. WalMart has achieved this strategy by
offering unique warranties and
brand images exclusive to the
store.

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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Business Strategy
Low Cost Leadership Strategy: Walmarts value
proposition is based on offering Everyday Low Price (EDLP).
This is the core of Walmarts Business Model and the rest of
the key features of Walmarts 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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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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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. Sams club caters to the
wholesale purchase need of customers.

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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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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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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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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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Walmart Growth Strategy

Maintain current net sales growth

approximately 12 percent per year.

of

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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Md. Hafiz-Al-Asad

SWOT
Analysis

Five Forces
Model

Key Success
Factors

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SCM at
Walmart

Criticism of
Walmart

SWOT Analysis
Strengths
Powerful retail brands, large
scale of operation worldwide.
One Stop Retail.
Strategic business programs.
Efficient working capital
management.
Opportunity
Global food safety initiative
standard.
Increasing demand of online
sales.
Increasing opportunity in
growing economy.

Weakness
Self Cannibalization.
Involvement in numerous legal
issues.
Continuous product recall.
Community relations problem.

Threats
Intense competition.
Price matching program by
target.
Foreign currency fluctuation.

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Five Forces Model

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Five Forces Model

1. Bargaining Power of Customers: Low .
o Customers usually make small purchases.
o A large number of customers.
o Wal-Marts main customers are individuals.

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Five Forces Model

2. Bargaining Power of Suppliers: Medium-Low .
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.

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Five Forces Model

3. Potential Entrants / Barriers to Entry:

Medium-High.

Economies of scale.

High capital requirements.

Customers mainly look for products with

low prices and standard quality.

Requires a precise distribution system.

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Five Forces Model

4. Threat of Substitutes: High.
o

Prices and quality of substitute products

are very competitive.

o

Performance of substitute products are

similar.

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Consumer switching costs are low.

Five Forces Model

5. Potential Competitors/ Rivalry:

Wal-Mart represents the

High.

25%

share of

the U.S. supermarket business.

o

Competitors have similar sizes.

Industry growth is slow.

Exit barriers are high.

There is a high production capacity.

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Supply Chain Management at Walmart

Relationship with
Suppliers
Use of Cutting Edge
Technology

Strengths of SCM

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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 Walmarts future plan.

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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.

Introducing it's
WAVE
Technology
Truck System

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Use of Cutting Edge Technology

Sophisticated IT and online capability for real-time access to
detailed figures on most operations.

Tracking capability of its goods movement through its entire value

chain.

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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.
The company has more
than 88,000 associates
engaged in logistics and
information
systems
activities for effective
and efficient supply
chain management.

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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.

Apparel supervisor Sonia Barrett uses a handheld

scanner to read EPC labels on men's denim jeans

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Strengths of SCM

VendorManaged
Inventory
(VMI)

Enterprise
Resource
Planning
(ERP)

Customer
Relationship
Management
(CRM)

Sales Force
Automation

Key Success Factors

Economies of
Scale

Supply Chain
with
Integrated
Technology

Superior
Logistics
Systems

Decentralized
Operations

Every Day
Low Prices

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Criticism of Walmart

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Criticism of Walmart
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.

An anti-Walmart sign on
the front lawn of a Ballston
Spa home.

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Criticism of Walmart
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).

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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.

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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 parttime 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.

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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.

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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.

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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 antiunion tactics such as managerial
surveillance and pre-emptive closures
of stores or departments who choose
to unionize.

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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.

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Criticism of Walmart
Allegations of Bribery:
Walmart Mxico, 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.

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Criticism of Walmart

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