External Environment Analysis
External Environment Analysis
MGT/488
October 21, 2010
Patti Berlin
External Environment Analysis
Sam Walton began Wal-Mart in 1962 and opened the first store in Rogers, Arkansas (History, 2010, p. 1). Walton was not new to the retail industry and had traveled the United States to learn as much as possible about the industry. Walton knew that customer needs were important to success and he wanted to know as much as possible about the industry to meet those demands. Sam Walton experienced strong competition from retailers such as Target and Kmart when he decided to expand the company. Currently, many retailers compete with Wal-Mart; however, the company has diversified to tire servicing, pharmaceuticals, home improvement, and in-store restaurants. Wal-Mart is presently capable of competing in a wide-ranging market.
Wal-Mart operates throughout the world in various segments including super centers, neighborhood markets, discount stores, and the Wal-Mart website. Wal-Mart’s net sales for the 2010 fiscal year were approximately $405 billion, a 1% increase from 2009 (Walmart Annual Report, 2010, p. 15). Wal-Mart also experienced 5.1% increase in operating profit from $22,798 million in 2009 to $23,950 million in 2010 (Walmart Annual Report, 2010, p. 15). Further, net profits increased from 7% from $13,400 million in 2009 to $14, 335 million in 2010 (Walmart Annual report, 2010, p. 30).
Wal-Mart’s reputation for low prices, product variety, and convenience has enabled the company to grow significantly and expand globally. Wal-Mart has capitalized on its strengths to increase successes. According to Pearce & Robinson (2009)
Wal-Mart redefined discount retailing and outperformed the industry in profitability by 4.5% of sales—a 200% improvement. Four resources—store locations, brand recognition, employee loyalty, and sophisticated inbound logistics—allowed Wal-Mart to fulfill customer needs much better and more cost effectively than Kmart and other discount
MGT/488
October 21, 2010
Patti Berlin
External Environment Analysis
Sam Walton began Wal-Mart in 1962 and opened the first store in Rogers, Arkansas (History, 2010, p. 1). Walton was not new to the retail industry and had traveled the United States to learn as much as possible about the industry. Walton knew that customer needs were important to success and he wanted to know as much as possible about the industry to meet those demands. Sam Walton experienced strong competition from retailers such as Target and Kmart when he decided to expand the company. Currently, many retailers compete with Wal-Mart; however, the company has diversified to tire servicing, pharmaceuticals, home improvement, and in-store restaurants. Wal-Mart is presently capable of competing in a wide-ranging market.
Wal-Mart operates throughout the world in various segments including super centers, neighborhood markets, discount stores, and the Wal-Mart website. Wal-Mart’s net sales for the 2010 fiscal year were approximately $405 billion, a 1% increase from 2009 (Walmart Annual Report, 2010, p. 15). Wal-Mart also experienced 5.1% increase in operating profit from $22,798 million in 2009 to $23,950 million in 2010 (Walmart Annual Report, 2010, p. 15). Further, net profits increased from 7% from $13,400 million in 2009 to $14, 335 million in 2010 (Walmart Annual report, 2010, p. 30).
Wal-Mart’s reputation for low prices, product variety, and convenience has enabled the company to grow significantly and expand globally. Wal-Mart has capitalized on its strengths to increase successes. According to Pearce & Robinson (2009)
Wal-Mart redefined discount retailing and outperformed the industry in profitability by 4.5% of sales—a 200% improvement. Four resources—store locations, brand recognition, employee loyalty, and sophisticated inbound logistics—allowed Wal-Mart to fulfill customer needs much better and more cost effectively than Kmart and other discount
References: Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2009). Strategic Management: Concepts & Cases Competitiveness and Globalization (8th ed.). Mason, OH: South Western Cengage Learning. Pearce, J. A. II, & Robinson, R. B. (2009). Strategic management: Formulation, implementation, and control (11th ed.). New York: McGraw-Hill. Useem, J., Schlosser, J., & Kim, H.). (March 3, 2003). One nation under Wal-Mart how retailing 's superpower--and our biggest most admired company--is changing the rules for corporate America. Retrieved November 1, 2010, from http://money.cnn.com/magazines/fortune/fortune_archive/2003/03/03/338383/index.htm Wal-Mart Stores, Inc.. (2010). Corporate. Retrieved November 1, 2010, from http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-faq Wal-Mart Stores, Inc.. (2010). History. Retrieved November 1, 2010, from http://walmartstores.com/sites/annualreport/2010/financials.aspx Wal-Mart Stores, Inc.. (2010). Walmart 2010 Annual Report. Retrieved November 1, 2010, from http://walmartstores.com/sites/annualreport/2010/financials.aspx