Everyday low prices
SOME KEY POINTS
Wal-Mart Stores, Inc. was not only the largest retail organization by sales volume in the U.S. in 2006, but also the largest company in the world. As of January 31, 2006, Wal-Mart Stores, Inc. was structured into three business units, Wal-Mart Stores USA, SAM’S CLUB, and Wal-Mart International. The Wal-Mart Stores unit had 3,289 locations and included the company’s Supercenters, discount stores, and Neighborhood Markets in the U.S., as well as Walmart.com. The SAM’S CLUB unit had 567 locations and included the warehouse membership clubs in the U.S. plus samsclub.com. Wal-Mart International had 2,285 locations in 10 countries. Sales and profits for the year ending January 31, 2006 were a record high $312.4 billion and $11.2 billion, respectively.
Of special concern to management was the behavior of the company’s stock. Contrary to the upward direction of the firm’s sales and profits, the price of Wal-Mart’s stock had fallen from $56.98 in January, 2002 to $46.11 in January, 2006 and to $45.06 in March, 2006. Even though the board of directors had both repurchased stock and continually raised dividends, the stock had failed to respond.
The case ends with CEO Lee Scott seeking an expansion program to grow both sales and profits, both at home and abroad. The company also needed a strong program to pre-empt its social critics, instead of always being on the defensive. Scott realized that Wal-Mart could not allow itself to emphasize social over business objectives.
➢ To discuss the growth and competitive strategies that made Wal-Mart the largest company by sales in the U.S. ➢ To analyze Wal-Mart’s international growth strategies. ➢ To identify the impact of the founder upon Wal-Mart’s corporate culture. ➢ To consider the impact of Wal-Mart’s corporate culture upon management decision making and actions. ➢ To conduct a stakeholder analysis of Wal-Mart’s task environment. ➢ To understand the impact of social responsibility on financial performance. ➢ To evaluate management’s response to increasing stakeholder criticism. ➢ To discuss if and how Wal-Mart can sustain its growth strategies and competitive advantage. ➢ To discuss the interaction of corporate with country culture. ➢ To identify Wal-Mart’s core and distinctive competencies. ➢ To demonstrate the importance of marketing strategy in an established retail organization faced with a dynamic environment.
THINGS TO THINK ABOUT
➢ On a 5-point scale which retail store offers: (1) lowest price, (2) best quality for the price, (3) best designed stores, (4) best customer service, and (5) best selection of merchandise. (e.g. Kmart, Sears, Wal-Mart, Target, J.C. Penney, local chain, etc.) ➢ Think about the importance of marketing strategy in an established retail organization, which was faced with a dynamic environment, had record sales and profit growth, benefited from entrepreneurial leadership, and had a unique expansion strategy. ➢ An organization in an accelerated development stage refines its merchandising and operating methods to sustain its growth.
➢ What are the strengths and weaknesses of Wal-Mart?
➢ What are the opportunities and threats facing Wal-Mart? ➢ What are the strategic factors facing Wal-Mart?
➢ Does Wal-Mart have any core competencies? If yes, what are they? ➢ Does Wal-Mart have a distinctive competency? If yes, what is it? ➢ Discuss the role of international expansion for Wal-Mart as a growth strategy. ➢ Discuss Porter’s industry analysis forces and how each force pertains to Wal-Mart. ➢ What was Sam Walton’s philosophy of management?
➢ How important is corporate culture in this company? In what ways does it help the company and in what ways does it hurt the company? ➢ Explain why you feel that Wal-Mart was so successful in the retailing industry in the 1980s and 1990s. ➢ What is the competitive...