Walmart Case Study

Only available on StudyMode
  • Download(s) : 74
  • Published : March 3, 2013
Open Document
Text Preview
e s

14/10/2011
Wal-Mart Case Study
Strategy Management
Presented By
Group 6, Section D
Name Roll No.
Abhishek Suryawanshi2011PGP913
Aditya Kiran Nori2011PGP514
Pankaj Gupta2011FPM09
Abhishek R Pai2011PGP508
Snehal Jogdand2011PGP667
Someswar Basak2011PGP891
Shriraman S2011PGP879

14/10/2011
Wal-Mart Case Study
Strategy Management
Presented By
Group 6, Section D
Name Roll No.
Abhishek Suryawanshi2011PGP913
Aditya Kiran Nori2011PGP514
Pankaj Gupta2011FPM09
Abhishek R Pai2011PGP508
Snehal Jogdand2011PGP667
Someswar Basak2011PGP891
Shriraman S2011PGP879

Executive Summary
Wal-Mart was a chain of discount stores that operated from several locations within the United States. Discount stores were those which sold merchandise at unprecedentedly low margins. To sustain this, they cut costs to the bone. Furthermore, In order to control the costs of goods sold, it built its own warehouses, through which it could buy in volume at attractive prices and store the merchandise.

Initially started in small southwestern towns, Wal-Mart rapidly expanded into several towns, and later into metropolitan areas in the country. A majority of Wal-Mart’s stores were located in towns with population between 5000 and 25000. Also, about 1/3 stores were located in areas which were not served by any of its competitors. Wal-Mart slowly expanded into densely populated areas with larger sized stores. However, due to increasing competition in these areas, Wal-mart also entered towns with populations between 1000 and 5000 with smaller sized stores.

Wal-Mart followed a methodology of centralized purchasing where requests were wired directly from the stores to the central computer, which were then transmitted to the distribution center. The central computer was also linked to all of Wal-Mart’s vendors in order to expedite requests. In order to increase its bargaining power, Wal-Mart took no more than a fifth of its volume from any vendor. Wal-Mart’s two step hub and spoke distribution model for merchandise transfer enabled it to consolidate operations in both delivery as well as pickup of new shipments.

Most of Wal-Mart’s stores were leased, which resulted in building rentals feeding into its sales. Also, its distribution network ensured that more space was available for selling the merchandise. Unlike other discount stores, Wal-Mart’s store managers were given more autonomy with respect to allocation of space, ordering of stock and setting up of displays. Wal-Mart also placed more emphasis on selling hard goods which generated more sales per square foot than soft goods. Its stores also had a larger number of SKU’s in comparison to competitors. To track the inventory and sales, a computerized system was installed. To further cap telephone costs, Wal-Mart was going to start a satellite network to facilitate real time communication between stores and headquarters. In order to improve productivity, it implemented electronic scanning of the Uniform Product Code at the point of sale.

With a marketing theme of “We sell for less”, Wal-Mart was very competitive in pricing. With more autonomy given to store managers, Wal-Mart was able to lower its margins to a large extent in highly competitive areas and cover them up in areas where it faced no competition. Wal-Mart ran about thirteen promotions a year, with its philosophy of “everyday low prices”. It heavily advertised when it entered a new area, and then dropped back after establishing its presence. It also used CAD to develop programs that would help it with the merchandise mix by taking into account several local parameters.

Wal-Mart administrative style emphasized frugality. It emphasized heavily on communication at all levels, with regular meetings between the top management as well as between...
tracking img