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Appendix B
Continuing Case
New Improved Walmart Hits No. 1 in Midst of Global Recession We live in turbulent times. Since the collapse of the U.S. housing market in 2008, the unemployment rate has more than doubled. Iconic American businesses have gone belly up or been bailed out with taxpayer money. Entire nations have teetered on the edge of bankruptcy. Yet, despite widespread turmoil, some organizations have actually defied the global recession—Walmart is a case in point. During this same period of economic decline, Walmart increased profits, created thousands of new jobs annually, expanded its operations overseas, launched a sustainable-business revolution, extended health coverage to 1.2 million people, unveiled a hunger-relief program, developed 75 percent of store management from hourly associates, and saved the average American household $3,100 annually. In the words of the company motto, Walmart has helped people “Save money. Live better.” As the world’s largest corporation and private employer, Walmart possesses a massive economic profile. In 2010, the Bentonville, Arkansas–based retailer hit No. 1 on the Fortune 500 list and was ranked among the top ten world’s most admired companies. Fiscal year sales reached $405 billion, and the company’s diverse workforce grew to more than 2 million people worldwide. The big-box leader operated 8,400 retail units in 15 countries, including 2,747 supercenters, 803 discount stores, and 596 Sam’s Clubs in the United States alone. It donated more than $400 million to charities and maintained partnerships with 61,000 suppliers. If Walmart were a country, its economy would rank among the top 25 nations, rivaling Saudi Arabia and Sweden. The company’s recession-defying growth springs from a familiar but groundbreaking retail formula: unbeatable low prices made possible by high-volume purchasing, ultra-efficient logistics, and advanced supply-chain technology. Significant cost reductions from increased efficiencies and economies of scale enable Walmart to sell merchandise at rock-bottom prices and still make a profit. Walmart supercenters are the visual embodiment of such economies of scale: Spanning the length of multiple football fields, the massive one-stop marketplaces offer mountains of discounted brand name and private label merchandise across a range of categories, from groceries and electronics to housewares and automotive. Walmart’s success traces back to a legendary American businessman, Sam Walton. Born in 1918 to a farm family in Kingfisher, Oklahoma, Walton recognized early in life that his ability to milk cows, deliver papers, and quarterback a team to a state football championship could lead to greater achievements. At college, Walton was head of the Reserve Officers’ Training Corps (ROTC), the founder of a newspaper delivery business, and class president. After finishing studies at the University of Missouri, with a degree in economics, the young graduate went to work for J.C. Penney Co., where he learned retail sales and a technique called “management by walking around.” After serving his country as a World War II Army captain, Walton began to realize his full entrepreneurial potential. Upon leaving the service in 1945, Walton became a franchisee of Ben Franklin Stores, where he honed his trademark strategy of purchasing in high volume while lowering markups. In 1950, he launched his own store—Walton’s Five and Dime—in Bentonville, Arkansas. The rest is history: Walton opened the first Walmart Discount City store in Rogers, Arkansas, in 1962, and in 1969 the business incorporated as Wal-Mart Stores, Inc. After growing his company regionally for two decades, the affable “Mr. Sam” transitioned to chairman of the board and set management’s sights on national and international expansion. Walmart opened its first supercenter in 1988, moved into all 50 states by 1995, spread to 15 countries by 2005, and planned a global 50th anniversary for 2012. Samuel Moore Walton...
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