By: Team A
ECONOMICS FOR BUSINESS I - ECO/360
June 13, 2005
Wal-Mart has grown to be one of the biggest corporations in the world, employing 1.3 million workers worldwide in 2003 in over 4,300 stores with sales around $256 billion. They sell everything from clothing, tools, toys, electronic goods, appliances and groceries. A major force behind its success was the vision, enterprise and daring of its founder, Sam Walton. He was the one who started the "super center" retail event. He also implemented a supply chain strategy that required stores to reorder stocks only as needed instead of keeping huge amounts of merchandise in warehouses. Mr. Walton also mastered the art of low pricing that attracted millions of customers. Through the years, this company has employed more than 1.5 million associates worldwide through more than 3,600 facilities in the United States and more than 1,570 units in Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany and the United Kingdom. More than 138 million customers per week visit Wal-Mart stores worldwide. In this paper, Team A will introduce Wal-Mart and give a little background on its history. We will discuss in detail, the analysis and cost structure of the company. We will also discuss the primary economic variables that will impact the long-run profitability of Wal-mart.
INTRODUCTION TO OUR COMPANY (WAL-MART)
The company that Team A has selected to discuss is Wal-Mart. Wal-Mart has become one of the biggest discount retailers in America and they strive on providing low prices and high service. They have come a long way from their beginnings in Bentonville, Arkansas. Sam Walton, the founder of Wal-Mart, Inc. had visions of service excellence when creating his stores. Mr. Walton is often quoted as stating that, "The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything; a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience." (www.walmart.com) Wal-Mart takes pride in providing the highest quality of service possible, evident when you walk in through the door. There is always a greeter to welcome you both on your way in and out of the store. Recently, Wal-Mart has begun the transformation from discount store to neighborhood supermarket by adding full-service gas stations, deli, and meat/seafood counters to their already regular services such as layaway, one-hour photo, ophthalmology services and car servicing; creating a one-stop shopping environment, as their commercials claim. You can purchase everything from tires and car batteries to groceries and everything in between. Mr. Walton would be proud of how popular his stores have become and how they affect the communities they represent.
The Wal-Mart family of stores also includes members only Sam's Club which adheres to Sam Walton's philosophy of providing great service at a discounted price. These warehouse stores offer the opportunity to purchase products in bulk, thus making this a small business owner's supplier by allowing them to select their own products without having to pay someone else to deliver them. By the turn of the century Wal-Mart had been named "Retailer of the Century" by Discount Store News; made FORTUNE magazine's list of the "100 Best Companies To Work For;" and was ranked on Financial Times' "Most Respected in the World" list. In 2002, Wal-Mart became No. 1 on both the FORTUNE 500 list and FORTUNE magazine's "Most Admired Company in America". In addition, Wal-Mart was presented with the Ron Brown Award for Corporate Leadership, a presidential award that recognizes companies for outstanding achievement in employee relations and...