Walmart Business Model Study
School of Language and Management, Heriot-Watt University, Edinburgh, UK School of Management, Politecnico di Milano, Milano, Italy School of Business Management, Umea University, Umea, Sweden firstname.lastname@example.org Abstract----This report explores the features and the role of business model of Walmart in creating and capturing value. A successful business model always links to its strategy, internal and external environment, technologies, management and value chain. The first part of this report introduces Walmart’s mission, strategy and its history. The second part analyses Walmart’s business model using Nine Building Blocks. The third part critically discusses the validity of the Walmart’s business model. According to the analysis of the business model, the fourth and fifth parts address the low cost strategy and how Walmart innovates the business model to achieve its mission. This report concludes that the Walmart's business model is a successful one, but also needs to continuously innovate and develop the research on limitations. 1. Introduction small towns led to criticism that the stores took business away from small, hometown merchants (Magretta, 2002). When Walton died in 1992, the adjustment to a post-Sam environment proved difficult. Even though Walmart executives had emphasized for years that their company depended on a set of principles and habits more than it did on any one person, Walton's death wound up marking a fateful shift in how the company was perceived. Between 1997 and 2001, the company's stock value increased by over 500 percent, rising by 70 percent in 1997 alone. This undoubtedly helped to mollify employees who'd been unhappy with the slump earlier in the decade. (Frank, 2006)
“Saving people money so they can have a better life” Walmart’s mission on which its business model is based on. The current President and Chief Executive officer of Walmart; Michael Duke stated that the company is well positioned in today’s difficult economy and tomorrow’s changing world (WM Annual Report, 2008). With $405 billion in revenues net sale (WMAR, 2010), Walmart is said to be World largest retailer in the world and the largest employer in the US (Basker, 2007). 2 million associates in more than 8,400 stores around the world Walmart’s serve more than 200 million customers and members each week. Walmart has grown in the US market because it connects itself symbolically to the dominant ideologies of American life. As a matter of approach, Walmart chains are assumed to focus on sales and margins in the short run. Indeed its Everyday Low Pricing format has catapulted it into the leading grocery chain in the U.S and International that was very successful (Jones, 2004).
1.2. History Walmart is an American public corporation that runs a chain of large discount department stores and warehouse stores that operates in various formats around the world. It was found in 1962 by Sam Walton Headquartered in Bentonville, Arkansas. From the beginning Sam Walton’s guiding philosophy for his stores was to offer consumers a wide selection of goods at a discounted price. The strategy of the company was locating stores in small towns where residents had few options for retail shopping. Walmart’s success in
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1.2 Walmart today Today, with $288 billion in annual revenues (more than Switzerland's GDP) and over $10 billion in profits, Walmart is the world's largest corporation, according to 2005 Fortune 500 list. It operates over 5,000 stores worldwide and employs over 1.6 million people” (Frank, 2006) Walmart USA alone has more than 4,300 stores employing more than 1.4 million associates including Walmart Discount Stores, Walmart Supercenters, Walmart Neighborhood...