How Can Wal-Mart Fail?

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"How Can Wal-Mart Fail?"

Introduction
The demise of so-called corporate giants dates back to 476 A.D. with the fall of the Roman Empire. The decline of the Roman Empire can be compared to today's failures in corporate America. Such viewpoints suggest that decay, financial problems and division of an empire were some of the causes. In particular, economic issues were a major factor. Economic decay included trade deficit, environmental changes, hoarding of the bullion, looting of the treasury, lack of leadership and disorganization (Gill). Again, it is hard to believe that these were some of the root causes. However, they sound all too familiar with the corporate failures that have been crashing to earth recently.

Huge Fortune 500 companies, such as Enron, WorldCom, Kmart, Xerox and Polaroid, have failed miserably. These are companies that were not supposed to collapse. However, they now fall into the "corporate failures" category. The statistics are staggering. Last year, 257 public companies with $258 billion in assets declared bankruptcy that shattered the previous year's record of 176 companies and $95 billion (Icon Today).

Why do companies fail? Do they fizzle due to the same reasons as the Roman Empire or are their more modern reasons? Ask the CEOs, and you will get every excuse in the book. Such excuses include: a bad economy, market turbulence, a weak yen, hundred-year floods, perfect storms (Icon Today). In essence, these are all forces that are claimed to be outside the control of the CEO. However, Fortune magazine, after review of recent failures, stated that "Most companies founder for one simple reason: managerial error." (Corporate Transition).

Keeping the above in mind, could Wal-Mart, the world's largest company, become a part of the infamous and ever growing "corporate failure" list? Will it soon be featured in Fortune magazine and make more headlines than Enron? Will Wal-Mart soon emulate its former competitor, Kmart, the national retail giant, by filing for bankruptcy? Only time will tell. However, this notion is possible based on several possibilities that will be analyzed below. History of Wal-Mart

The watershed period for discount retailing was established roughly 40 years ago, starting with Kmart, Target and last but not least Wal-Mart. With a hope and a prayer, Sam Walton, with his tiny chain of variety stores in Arkansas and Kansas, decided to tour the country to study this new radical retailing concept and was convinced it was the start of something new. He and his wife, Helen, gambled their life savings in order to open the first Wal-Mart store in Rogers, Arkansas, borrowing heavily on Sam's vision that the American consumer was shifting to a different type of retail consumption. As his competitors quickly expanded across the country during the 60s, Sam was able to establish 24 stores by 1967 totaling $12.6 million in sales while moving outside Arkansas with stores in Sikeston, Missouri and Claremore, Oklahoma (Wal-Mart Online). In 1970, Wal-Mart got the lift it needed when its stock was offered for the first time on the New York Stock Exchange. This public offering was the catalyst to its extraordinary expansion to 276 stores in 11 states by the end of the 1970s. Sam contributed this growth to an understanding of what consumers wanted from a retailer (Wal-Mart Online). During the 1980s, Wal-Mart was on the verge to becoming the successful Roman Empire of the retail industry, with sales growing to $26 billion, compared to $1 billion in the early 1980s along with an increase in employment of approximately tenfold. At the end of the 1980s, there were nearly 1,400 stores all across the United States. During this surge of growth, Sam's Club was introduced in 1983. Wal-Mart journeyed one step further and opened the first Supercenter in 1988. The Supercenter featured a complete grocery department along with 36 departments of general merchandise. All of this...
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