BUSINESS MANAGEMENT

PROCESS
CASE 8
History

• Sam Walton a businessman from Arkansas, began his retail

career when he started work on June 3, 1940.

• Walton was extremely successful in running the store in

Newport, far exceeding expectations.

• Then he opened a new Ben Franklin franchise in Bentonville,

Arkansas, but called it "Walton's Five and Dime.

• On July 2, 1962, Walton opened the first Wal-Mart Discount

City store located at 719 Walnut Ave. in Rogers, Arkansas.
• Within five years, the company expanded to 24 stores
across Arkansas and reached $12.6 million in sales.

• In 1968, it opened its first stores outside Arkansas, in Sikeston,

Missouri and Claremore, Oklahoma.

• The company was incorporated as Wal-Mart Stores, Inc. on

October 31, 1969. In 1970, it opened its home office and first
distribution center in Bentonville, Arkansas.

• It began trading stock as a publicly held company on October 1,

1970, and was soon listed on the New York Stock Exchange.
 OPERATIONS

Operating divisions

Wal-Mart's operations are organized into three divisions:

1. Wal-Mart Stores U.S. 

2. Sam's Club
3. Wal-Mart International. 
 The company does business in nine different
retail formats

1.  supercenters,
2. food and drugs,
3.  general merchandise stores,
4. bodegas (small markets),
5. cash and carry stores,
6.  membership warehouse clubs,
7.  apparel stores,
8. soft discount stores,
9. restaurants.
Wal-Mart Stores U.S

• Wal-Mart Stores U.S. is Wal-Mart's largest division,

accounting for $258 billion, or 63.8% of total sales for
financial year 2010.
 
• It consists of three retail formats that have become
commonplace in the United States: 
Discount Stores, Supercenters, and Neighborhood Markets
 Walmart Discount Stores

• Walmart Discount Stores are discount department stores with

size varying from 51,000 square feet (4,738.1 m2) to
224,000 square feet (20,810.3 m2), with an average store
covering about 102,000 square feet (9,476.1 m2).

•  They carry general merchandise and a selection of groceries

 Walmart Supercenter

• Wal-Mart Supercenters are hypermarkets with size varying

from 98,000 to 261,000 square feet (9,104.5 to 24,247.7 m2),
with an average of about 197,000 square feet (18,301.9 m2 ).

• These stock everything a Wal-Mart Discount Store does, and

also include a full-service supermarket, including meat
and poultry, baked goods, delicatessen, frozen
foods, dairy products, garden produce, and fresh seafood
 Supermercado de Wal-Mart

• Wal-Mart opened "Supermercado de Wal-Mart" locations to

appeal to Hispanic communities in the United States.The first
one, a 39,000 square feet (3,600 m2) store in the Spring
Branch area of Houston, opened on Wednesday April 29,
2009.
• The store was a conversion of an existing Wal-Mart.Wal-Mart
also planned to open "Mas Club," a warehouse retail operation
patterned after Sam's Club.
 Sam's Club

• Sam's Club is a chain of warehouse clubs which

sell groceries and general merchandise, often in large
quantities.
• Sam's Club stores are "membership" stores and most
customers buy annual memberships
Finance

• For the fiscal year ending January 31, 2009, Wal-Mart

reported a net income of $13.6 billion on $404 billion of
revenue (3.4% profit margin).
 ACCOUNTING POLICIES
• Provides EDLP – “Everyday Low Price”

• Inventories

• Capitalized interest – $182 million in 2007, $150 million 2008, $88

million in 2009.

• Cash and cash equivalent.

• Receivables

• Goodwill – excess of purchase price over net assets acquired.

• Cost of sales.
 Financial Summary
2009 Financial Review
(Amounts in millions except ratios and per share data)
Fiscal Year Ended January 31, 2009 2008 2007 2006 2005
Operating results
Net sales $401,244 $374,307 $344,759 $308,945 $281,488
Net sales increase 7.2% 8.6% 11.6% 9.8% 11.4%
Comparable store sales increase
in the United States (1) 3.5% 1.6% 2.0% 3.4% 3.3%
Cost of sales $306,158 $286,350 $263,979 $237,649 $216,832
Operating, selling, general and
administrative expenses 76,651 70,174 63,892 55,724 50,178
Interest expense, net 1,900 1,794 1,529 1,180 980
Eff ective tax rate 34.2% 34.2% 33.5% 33.1% 34.2%
Income from
continuing operations $ 13,254 $ 12,863 $ 12,189 $ 11,386 $
10,482
Net income 13,400 12,731 11,284 11,231 10,267
Per share of common stock:

Income from continuing

operations, diluted $ 3.35 $ 3.16 $ 2.92 $ 2.72 $ 2.46
Net income, diluted 3.39 3.13 2.71 2.68 2.41
Dividends 0.95 0.88 0.67 0.60 0.52

Financial position
Current assets of
continuing operations $ 48,754 $ 47,053 $ 46,489 $ 43,473 $ 37,913
Inventories 34,511 35,159 33,667 31,910 29,419
Property, equipment and
capital lease assets, net 95,653 96,867 88,287 77,863 66,549
Total assets of
continuing operations 163,234 162,547 150,658 135,758 117,139
Current liabilities of
continuing operations 55,307 58,338 52,089 48,915 42,609
Long-term debt 31,349 29,799 27,222 26,429 20,087
Long-term obligations
under capital leases 3,200 3,603 3,513 3,667 3,073
Shareholders’ equity 65,285 64,608 61,573 53,171 49,396

Financial ratios
Current ratio 0.9 0.8 0.9 0.9 0.9
Return on assets (2) 8.4% 8.5% 8.8% 9.3% 9.8%
Return on
shareholders’ equity (3) 21.2% 21.0% 22.0% 22.8% 23.1%
 Number of stores & percentage of sales, 2010

Format Number of %
Stores Sales
Hypermarkets & Superstores 5,636 84.29
Supermarkets & Neighbourhood stores 622 1.29
Discount stores 345 0.18
Other Grocery formats 9 0.25
Other Non-food formats 113 0.49
Cash & Carries & Wholesale clubs 863 13.24
Foodservice 390 0.22
EEO 3 0.00
Total 7,981 100.00
19
 Financial Tear Sheet

Stock Performance
WMT (Common Stock)

Exchange NYSE (US Dollar)

Price $54.70
Change (%) 0.00 (0.00%)
Volume 6,368,509
52 Week Low $47.77
Market Cap $198,919,120,900
Rolling EPS 4.04
PE Ratio 13.5396
Shares Outstanding 3,636,547,000

Data as of 12/02/2010 1:24 p.m. ET

HRM

Wal-Mart’s success in Human Resource Management is

keeping their workforce of 1.3 million from unionizing, while
adding to it and pursuing other HR activities to further Wal-
Mart’s success. 
. Some of Wal-Mart’s human resource activities include
employee advancement, employee recruitment on college
universities, and employee training and development. 
• Wal-Mart’s Human Resource Management, one of the most
important aspects is Wal-Mart’s employee advancement
program.

• In the realm of employee recruitment and employee training

and development, Wal-Mart has targeted college students to
add to their workforce.
 The results of these Human Resource
activities speak for themselves

• Focus on adding to their workforce over the next five

years by hiring 800,000 new employees bringing the total
over two million.

• Employees, as much as 60%, have gone on record saying

that they stay with Wal-Mart because the benefits allow
them to take care of their families.

• If employees were unhappy and leaving at a considerable rate,

then the focus would be on filling these open spaces rather
than expanding their workforce
 MARKETING

Wal-Mart is the largest retail store in the US. It has over

3, 700  stores countrywide and many others internationally.
SWOT: Wal-Mart
Strengths
• The company has assembled a
credible international portfolio of
operations.
• Despite challenges from the likes of
Tesco and Carrefour, Wal-Mart`s
growth and performance has yet to
be threatened
• Sales and profitability growth have
been impressive in the bulk of Wal-
Mart`s international operations.
3
• Wal-Mart`s multi-format strategy gives
it a degree of flexibility in store
development.
• Behind the scenes, Wal-Mart`s buying
power, logistical networks and IT
systems are the envy of the retailing
world. These infrastructures have been
rapidly exported to new international
markets, usually boosting performance.
• Barring any unforeseen disasters, Wal-
Mart's global leadership and ongoing
international domination appear
assured.
SWOT: Wal-Mart
Weaknesses
• Still largely reliant on increasingly
delicate US economy.

• Has missed out on a variety of

international acquisition
opportunities.

• Sticks too rigidly to established

formulas, although is showing a bit
more flexibility (eg Neighborhood
Markets).

• Own brand development has lagged

that of rivals in key markets.

4
 Opportunities
• Still massive scope for
organic expansion in the
fragmented US market.
• A mega-merger or takeover of
rival global retail group such
as Carrefour.
• Further acquisitions in Japan
would bolster its scale there.
• Move into non-food retailing
in the UK.
• Entry into new retail
segments, such as drugstores,
department stores, speciality
units.
• Cross fertilisation of best
practise across all markets.
Greater exploitation of buying
synergies.
• Internationalisation of private
label ranges.
• Development of wholesaling
and in-house manufacturing.
SWOT: Wal-Mart
Threats
• The global growth of competitive
discount retailers.

• Growing use of planning laws by

authorities and pressure groups to
block big-box developments.

• Wal-Mart is a big and easy target

for anti-capitalist, anti-
globalisation, environmental and
labour pressure groups.

• Price-driven approach does not

enjoy universal appeal and some
shoppers may start demanding
better merchandise, stores and
service.
6
 Walmart Strategic business goals and
objectives.

• Increasing sales through its friendly prices.

• The quality of care accorded to customers once they report to their

retail stores.

• The company ensures their growth rate does not stagnate.

• The company ensures that they always look for ways of sustaining
their competitive advantage
• The Company is driven by the pursuance of technological
improvements.

• Creativity and innovation is another business objective for the

company.

• The Company also values being considered as a strategic

community partner.

• Uses the aspect of availability as another business objective.

Analyzing Walmart's situation

• Walmart is dealing with attacks from a range of stakeholders

in the retail industry.

• Trade unions, human rights organizations and former

employees. these groups have all accused the retailer of
abusing its employee's rights.
Strategic goals for Walmart's future growth

• Walmart needs to target external markets.

• It should focus on customizing its business objectives within

each country.

• The retail giant needs to make product quality as part its

major business strategy
Strategic marketing program marketing
objectives, targeting and positioning.

• The Company needs to change its marketing objectives in

such a way that they can attract a different market segment.
• In the past, the company has been associated with the middle
class or low-income earners.
• In the year 2006, the company opened up stores with this
objective in mind.
• stocked a wide range of sophisticated products such as
jewelry, electronics, a sushi bar and a variety of electronics.
• In the year 2006, the company wanted to follow their rival-
Target's product portfolio.
• Additionally, the company should venture into other countries
 Marketing program
4Ps

Product

• The Company had introduced Metro 7 stalls in 1,500 stores.

These stores offered jewelry, expensive wine and other
expensive commodities
 place

• Since the Company has already saturated the local market,

then the focus should be on international markets
Price

The pricing aspect of Walmart's marketing mix is part of the

reason why the company has done so well so far; this is its
winning formula
Promotion

• One of the most notable promotional strategies in Walmart is

the use of public relations.
• The company takes part in charitable events and has marketed
itself as a community based institution.
Presented by,

Ananya mitra
Neha raj
Anisha kumari
Linthoi
Rubina chakravarty
Souvik bhattacharjee
Partha sarthi boral
Sidhartha sarkar