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Wal-Mart and Wal-Mart China Analysis

Essay by   •  July 17, 2011  •  Case Study  •  3,242 Words (13 Pages)  •  1,926 Views

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I. Introduction:

Wal-Mart was founded by Sam Walton, a businessman from Arkansas, he began his retail career when he started work on June 3, 1940, at a J. C. Penney store in Des Moines, Iowa. This is where he remained for 18 months. In 1945, he met Butler Brothers, a regional retailer that owned a chain of variety stores called Ben Franklin and they offered him a store in Newport, Arkansas.

On July 2, 1962, Walton opened the first Wal-Mart Discount City store located at 719 Walnut Ave. in Rogers, Arkansas. The building is now occupied by a hardware store and an antique mall. 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 had 38 stores operating with 1,500 employees and sales of $44.2 million. It began trading stock as a publicly held company on October 1, 1970, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a market price of $47. By this time, Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974. As it moved into Texas in 1975, there were 125 stores with 7,500 employees and total sales of $340.3 million. Wal-Mart opened its first Texas store in Mount Pleasant on November 11, 1975. ("SWOT Analysis Wal-Mart".)

In the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates. This year also marked the completion of the company's satellite network, a $24 million investment linking all operating units of the company with its Bentonville office via two-way voice and data transmission and one-way video communication. At the time, it was the largest private satellite network, allowing the corporate office to track inventory and sales and to instantly communicate to stores. In 1988, Sam Walton stepped down as CEO and was replaced by David Glass. Walton remained as Chairman of the Board, and the company also rearranged other people in senior positions. Inside a Wal-Mart Supercenter in West Plains, Missouri

In 1988, the first Wal-Mart Supercenter opened in Washington, Missouri. Thanks to its superstores, it surpassed Toys "R" Us in toy sales in the late 1990s. The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying Asda in the UK for $10 billion. ("SWOT Analysis Wal-Mart".)

In 1998, Walmart introduced the "Neighborhood Market" concept with three stores in Arkansas. This "green themed" idea was clearly a success. By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business.

In 2000, H. Lee Scott became President and CEO, and Walmart's sales increased to $165 billion. In 2002, it was listed for the first time as America's largest corporation on the Fortune 500 list, with revenues of $219.8 billion and profits of $6.7 billion. It has remained there every year, except for 2006.

In 2005, Walmart had $312.4 billion in sales, more than 6,200 facilities around the world--including 3,800 stores in the United States and 2,800 elsewhere, employing more than 1.6 million associates worldwide. Its U.S. presence grew so rapidly that only small pockets of the country remained further than 6miles (100km) from the nearest Wal-Mart.

Walmart also has their own "in-house" brand called Equate. This offers the customer top quality merchandise, in a less expensive package. This idea has made Walmart billions in revenue. The name Equate has brand name recognition in itself.

Strengths and weaknesses

Wal-Mart has so many strengths and some of those strengths are:

* Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.When you hear the name Walmart, you also think of their slogan, "Rolling back prices." They are known for having everything you need in one stop and giving it to you at the cheapest price. You also recognize the color scheme of the supercenter with the blue and white and the neighborhood markets with their green marketing.

* Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA). By globalizing they are securing more brand recognition.

* The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart's efficient procurement.

* A focused strategy is in place for human resource management and development. People are key to Wal-Mart's business and it invests time and money in training people, and retaining a developing them.

Wal-Mart also has a few weaknesses and those weaknesses are listed below:

* Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.

* Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.

* The company is global, but has a presence in relatively few countries Worldwide.

Core Competencies:

Wal-Mart has competitive advantage over its competitors because of the following core competencies.

* As promised in its slogan Wal-Mart has been providing products at lower prices, it is possible

due to the low cost operations. Wal-Mart share the value of low cost with customers by selling

the products at lower prices.

* Hard working, efficient and process oriented employees have been working with Wal-Mart.

* Better use of technology to directly connect with supplier and partners.

* Implemented Just-in-time inventory process to reduce the cost of managing inventory at

Warehouses

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