Case Name: Wal-Mart Stores Inc.: Dominating Global Retailing Company Name (background): Wal-Mart Stores, Inc.

Sam Walton opened up Walton's 5&10 in Bentonville, Arkansas, on May 9, 1950, . The first store with the Wal-Mart name was opened in 1962 in Rogers, Arkansas, 95% financed by Sam Walton himself. Retailer (Lagers Grocery retailer) Type Founded 1962 Employees More than 2 million Headquarters Bentonville, Arkansas. The Retailing Industry (consumer goods) Industry Competitors Target, Kmart, ShopKo, Meijer, Circuit City and Bed, Bath, and Beyond Mission: "help people save money so they can live better" Vision: Our vision is to provide good quality and services to our customers while remaining the market leader and striving daily to be the most admired company Goals: Environmental sustainability has become an essential ingredient to doing business responsibly and successfully. As the world's largest retailer, our actions have the potential to save our customers money and help ensure a better world for generations to come. We've set three aspirational sustainability goals: To be supplied 100% by renewable energy To create zero waste To sell products that sustain people and the environment Industry Analysis Dominant characteristics Market size The second largest Industry in the world with $4.8 trillion (USA). Life cycle stage Maturity potential to grow- yes Growth rate 3.8 % per year Rivals scope- Local, regional, international, global Vertical integration Fully balanced backward and forward integration Industry change Fast change due to ecommerce Product/service differentiation no or very low product differentiation Economy of scale - Economies of scale advantages in distribution, advertising, and procurement. Barriers to entry Entry barriers are high due to the presence of sizable economies of scale and large capital requirements; current industry members will strongly contest efforts of new entrants to gain a market foothold. Situation Analysis External F=Favorabl environme e/UF=unfav nt orable Social/cult F ural Demograph F Porter 5 forces Buyers Supplier Forces of changes The growth and profitability of the retail industry is influenced by factors that have long existed as well as some that are emerging. For example. Consumer spending, Economic performance, Technological change and Move to sustainability. Key survival factors/attractiveness Unattractive industry for potential new entrants. An attractive industry for the already established key players. Rising GDP growth, burgeoning population, greater disposable income, and increasing consumer spending are combining to drive the Global Retail industry and opportunities for retail segment players.

S=Strong/M=Medium/W=Weak Weak: There is a broad base of buyers so no single buyer can demand price concessions; buyers purchase merchandise in small quantities; buyer loyalty for certain brands exists. Weak: Industry members account for a big fraction of

ic Trends Economic Trends Political/Le gal Technolog y Trends Global Overall general environ. F F F

suppliers total sales and continued high volume purchases are important to the wellbeing of suppliers. Rivals Strong: Competing sellers have triggered heated price competition and are active in making fresh moves to improve market standing and business performance. Substitu Weak: Substitutes for big box retailers are smaller grocery tes stores; substitutes are higher priced relative to the performance they deliver. Threat Weak: Entry barriers are high due to the presence of sizable of new economies of scale and large capital requirements; current entrants industry members will strongly contest efforts of new entrants to gain a market foothold. Overall Competi tive environ. Medium

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Competitor environment Major competitors: Target, Kmart Competitive edge: 1. Distribution capabilities: Efficient distribution; e.g. cross-docking, predominance of Wal-Marts own distribution centers, and inside-out location strategy. 2. Partnership relationship with suppliers: Wal-Mart integrates suppliers via IT and treats them well in terms of pricing; they are more partners than value takers. 3. Advanced data-mining: Active collection and usage of customer purchase behavior info. 4. Workforce culture: Customer-oriented workforce motivated through generous monetary participation and belief in Wal-Mart culture. 5. EDLP: Maintenance of everyday low prices. Internal Circumstances Core competencies: Wal-Marts core competence can be said to be its knowledge achieved by its inventory management skills with its supply chain management facilitated by its innovations like the cross-docking techniques and its innovation in information technology and in relationship strategy maintained with its customers, suppliers, and associates and its cost strategy achieved with its scale of operations. Distinctive competencies: 1. Corporate Leadership: Industry Leader for (2012) ROA (Rate on Assets) 8.4%, ROI (Return on Investment) 18.6%, ROE (Return on Equity) 23.4%, Market Cap 233B out of 275B in Dec-2012, ROIC (Return On Invested Capital) 14.9% 2. Everyday Low Price (EDLP) strategy. 3. Massive buying power & tough negotiating skills of Managers. 4. Operational Excellence. 5. Strong logistics and distribution network. 6. Automated and efficient distribution system 7. Economies of scale advantages in distribution, advertising, and procurement. Financial Situation: * Overall internal circumstances: Favorable Resources (source: company website) Financial: Wal-Mart is financially successful by a number of measures, experiencing varying rates of growth in international markets. This consistence growth, matched with economies of scales enables WalMart to have superb credit ratings with the financial and lending institutions, allowing them access to large amount of borrowed funds should the need arises. It has also a Free Cash Flow of $10.745B. SWOT Analysis: Strength: 1. Offer Low prices to its customers in retail industry. 2. Huge and Loyal Customer base.

3. Strong employee base. 4. Strong Financial position. 5. One-stop-shopping 6. Use of information technology to support its international logistics system. 7. Supply Chain Management & Distribution. 8. Marketing & Sales. 9. Research & Development. 10. Corporate Leadership. Weakness: 1. Customers complains about product quality. 2. Revenues are declining. 3. Human Resources Management (Anti-Union, Low average employee wage, Gender issue). 4. May not have more focused competitors due to variety of products. Opportunity: 1. Technological Environment (Increasing use of RIFD). 2. Increase in Online Sale. 3. To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets. 4. The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets. Threats: 1. Being number one means that you are the target of competition, locally and globally. 2. Being a global retailer means that you are exposed to political problems in the countries that you operate in. 3. Government regulations in different countries. 4. Economic slowdown in USA. Challenges: 1. Sustainability issue of its performance. 2. Poor labor relations. 3. Poor customer satisfaction. Strategic Recommendations: Corporate level: 1. Adopt Transactional Strategy (Respond and focus on local market, Diversion from current American model to better served customers abroad. Business Level: 1. Improve Corporate Social Responsibility (Raise employee wages, More employments to minority groups and women. 2. Overall Analysis (scale of 0 to 10): Effective: ?
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