Presented By:Nimmy Merin

Neeraja N JAfrin M

Aida Ann Issac

History of Walmart• In 1945, Sam Walton opened the first Ben

Franklin franchise in Newport Arkansas and operated them with his wife, Helen and brother, Bud.

• These were small chains that were very successful.

• In November of 1962, Wal-Mart was opened.• Mid 1970’s Wal-Mart began to grow.

History of Walmart• Then 100 shares were worth $1,650 dollars

and now the same 100 shares are worth more than $6 million dollars.

• In 1992 Sam Walton Died and in 1996 Bud Walton died.

• In 2000, new president and CEO H. Lee Scott states took over Walmart.

• In February 2009, Mike Duke became the new president and CEO when Scott retired.

History of Walmart

• In 2014, Carl Douglas McMillon took charge as the company’s fifth CEO.

Vision

“To be the best retailer in the hearts and minds of consumers and employees”

Mission

“Saving people money so they can live better”

Proposed Vision

• “Our vision is to provide good quality and services to our customers while remaining the market leader and striving daily to be the most admired company.”

Proposed Mission

• “Our mission is to provide goods and services for our customers at everyday low prices. We strive to have the best, be the best, and provide quality and assurance to our customers. Our employees are a huge asset to our company. We also feel it is important to give generously to those who are less fortunate than others.”

Divisions

• Walmart Discount Stores (891)• Sam’s Clubs (602)• Supercenters (2612)• Neighborhood markets (153)

Walmart Discount Stores

• This strategy allows the company to give special attention to customers in smaller markets in rural America.

Sam’s Club

• Membership-only, cash-and-carry operations. • Offers bulk displays of name-brand

merchandise, some soft goods and institutional size grocery items.

• Most clubs have fresh food departments such as bakery, meat and produce sections.

Supercenters

• They combine groceries with general merchandise giving customers one-stop shopping.

• Company’s fastest growing division.• 24-hour service center, equipped with a

customer service desk and scanning registers to provide more efficient check-out procedures.

Neighborhood Market

• They offer customers groceries, pharmaceuticals and general merchandise.

• They provide fresh produce, meat and dairy items.

• One-hour photo processing.• Pet supplies and household chemicals.

International

• Walmart focused on global positioning.• It comprises of 6303 stores and 8 lakh workers

in 26 countries outside the US.• Wal-Mart expanded so that customers

everywhere would associate its name with low cost, best value, greatest selection of quality merchandise and highest standards of customer service.

Stores in US and WorldLocation Discount

StoresSuperCenters

Neighbor-hood

Sam’s Club Grand Total

United States

891 2612 153 602 4258

Location Discount Stores

Supermarket

Supercenters

Hypermarket

Other Total

International 762 1064 436 370 1120 6303

Organizational Structure

• Walmart has a hierarchical functional organizational structure.

• This structure has two features: hierarchy and function-based definition.

• The hierarchy feature pertains to the vertical lines of command and authority throughout the organizational structure. Ex: Except for CEO every employee has a superior.

• The function-based definition feature of the company’s organizational structure involves groups of employees fulfilling certain functions. Ex: Walmart has a department for the function of HR.

Firm’s Value Chain

Support ActivitiesFirms infrasctructure: Close connection between headquarter and local stores.

Human resources: - Based on Interaction practices between company and employees-Low pay but other benefits (health care plans, retirement plans, or promotion opportunities)-2.2 million associates globally. -Every time we open a supercenter, we provide roughly 300 jobs -Women57% of our U.S. workforce, 27% of corporate officers, and 20% of our Board of directors.

Techonology development: It is the key factor of the company. It constitutes a competitive advantage against competitors.- Computer-based technology POS (Point of sales) system Satellite System

Procurement:-Wal-Mart deals directly with manufacturers, by passing all intermediaries. - EDI : Electronic data interchange MANUFACTURER – WALMART - CUSTOMERS

Primary Activities

Inbound Logistics

Operations Outbound Logistics

Marketing and sales

Service

-VMI system (Vendor managed inventory) continuous replenishment

-EDI (Electronic Data Interchange

3 business segments:

a)WalMart stores- Super centers- Discount centers- Neighborhood

markets

b) SAM’S Club

c)WalMart international

-Hub and spoke distribution system.

- CROSS DOCKING: logistic technique to make the distribution process more efficient

- Word of mouth communication.

-Focuses on everyday low prices

“Save money, live better”

-Sales are on a self-service, cash-and-carry basis.

-Accepting returned goods

-Satisfaction guarantee

- Opening hours(24/7)

PESTEL Analysis• Political: Policies on economy, trading agreements

(North American Free Trade Agreement for economic growth).

• Economical: Unemployment Rate, slightly increase in consumption.

• Socio Cultural: Faster pace of live- Efficiency is key. • Technological: Use of IT technologies. Online shopping. • Environmental: Recycling, Contamination issues. • Legal: More laws and more complex.

The Five Forces Model1. Bargaining Power of

Customers: LowI. Customers usually make small purchases. II. A large number of customers.III. Wal-Mart’s main customers are

individuals.

2. Bargaining Power of Suppliers: Medium-LowIV. Wal-Mart purchases huge quantities of

products from its suppliers.V. Low switching costs from one supplier to

another.VI. Products have a lot of substitutes.VII. Almost all the products are not critical for

Wal-Mart.

The Five Forces Model3. Potential entrants / Barriers to entry: Medium-HighI. Economies of scale.II. High capital requirements.III. Customers mainly look for products with low prices and

standard quality.IV. Low switching costs among companies for customers.V. Requires a precise distribution system.

4. Power of Substitutes: HighI. Prices and quality of substitute products are very competitive.II. Performance of substitute products are similar.III. Consumer switching costs are low.

The Five Forces Model5. Potential Competitors/ Rivalry: HighI. Wal-Mart represents the 25% share of the U.S. Supermarket

business.II. Competitors have similar sizes.III. Industry growth is slow.IV. Exit barriers are high.V. There is a high production capacity

WAL-MART main competitors:

Retailer Industry: • Target • K-Mart

Supermarket Industry: • Dollar General • Lowe’s Food.

Business Level Strategy: Combined Strategy

Walmart combines a Cost-Leadership and Differentiation strategies because:

I. Allowed to achieve a large scale and an efficient supply chain.

II. Has its own low-cost brands, like Great Value.

III. A unique cost structure that allows Walmart to establish the lowest prices and achieve competitive advantage. (best value/price combination )

IV. Present in many different industries and markets with efficient distribution channels.

V. Very difficult strategy to imitate by offering a broad quantity of products at a low price.

Main Competitors

Retailer Industry: Target

I. Target is the main competitor of Walmart II. ranked #33 in the Fortune 500.III. Target offers very similar products.IV. Target went abroad in January 2011.

Mission: to Make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences.

Supermarket Industry: Dollar General

I. One of the main competitors, pursuing low prices.

II. Good location in smaller communities is the main competence advantage.

III. Strategy: Save time, save moneyIV. Many items per $1

Mission: to best serve others by keeping it real and simple.

Key Internal Factors• Strengths

– Stores in all 50 states– New concepts:

• Hypermarkets, supermarkets– Wide variety of merchandise– Nationally advertised merchandise– Limited lines of merchandise – made in USA– Point-of-sale bar code scanning– Great employee benefits

• Weaknesses– Little Differentiation– Management resisted putting women on board of directors– Hiring illegal minorities to clean– Growth for employees only in division

IFE MatrixStrengths Weight Rating Weighted

Score

Stores in all 50 states 0.09 4 0.36

New Concepts - Hypermarkets, supermarkets 0.1 3 0.3

Wide variety of merchandise 0.1 3 0.3

Nationally advertised merchandise 0.08 3 0.24

Point-of-sale bar code scanning 0.13 4 0.52

Great Employee Benefits 0.09 3 0.27Weaknesses

Little Differentiation 0.1 3 0.3

Management resisted putting women on board of directors 0.13 3 0.39

Hiring illegal minorities 0.08 2 0.16

Growth for employees only in its division 0.1 3 0.3

Total 1 3.14

Key External Factors

Opportunities • Retail market growth in emerging markets. • Rising acceptance of own label products. • Trend toward healthy eating. • Online shopping growth.

Threats • Increasing competition from online competitors. • Increasing resistance from local communities. • Rising commodity product prices.

EFE MatrixOpportunities Weight Rating Weighted

ScoreRetail market growth in emerging markets. 0.1 3 0.3

Rising acceptance of own label products. 0.14 4 0.56

Trend toward healthy eating. 0.16 4 0.64

Online shopping growth. 0.11 3 0.33

Threats

Increasing competition from online competitors. 0.15 3 0.45

Increasing resistance from local communities. 0.14 3 0.42

Rising commodity product prices. 0.2 4 0.8

Total 1 3.5

CPMWal-Mart Target Kmart

Critical Success factors Weights RatingWeighted

Score RatingWeighted

Score RatingWeighted

ScoreMarket Share 0.03 3 0.09 2 0.06 2 0.06

Inventory System 0.02 3 0.06 3 0.06 2 0.04

Financial Position 0.04 2 0.08 2 0.08 3 0.12

Product Quality 0.05 3 0.15 3 0.15 2 0.1

Consumer Loyalty 0.03 3 0.09 2 0.06 2 0.06

Sales Distribution 0.02 3 0.06 3 0.06 2 0.04

Global Expansion 0.03 3 0.09 2 0.06 2 0.06

Organization Structure 0.02 3 0.06 3 0.06 2 0.04

Production Capacity 0.01 3 0.03 2 0.02 2 0.02

Advertising 0.25 4 1.00 3 0.75 2 0.5

Customer Service 0.05 3 0.15 3 0.15 3 0.15

Price Competition 0.4 3 1.20 2 0.8 2 0.8

Management Experience 0.05 3 0.15 2 0.1 3 0.15

Total 1 3.21 2.41 2.14

SWOT matrix

Strengths1- Strong customer loyalty2- A well recognized brand all over the world.3- Affordable pricing4- Offers customer oriented products5- Diversified/differentiated products6- Wal-Mart shares its stock and profits with its employees.7- Customers who are members of SAM’s club are able to buy in bulk.8- Offers Satisfaction Guaranteed Program to create goodwill amongst its customers.

Weaknesses1- Wal-Mart has no formal mission statement.2- Wal-Mart‘s has a vast product line but may lack some flexibility to compete against its rivals in somesectors.3- No reaction towards the incompetent employees.4- Store policies are obsolete.5- Lack of female employees’ empowerment.6- Wal-Mart faces many difficulties in countries like India and China.

Opportunities1- In the economic slowdown many consumers prefer to bargain, this will benefit Wal-Mart to further increase its sales.2- As many retail businesses are on decline due to drop off in disposable incomes. Therefore, Wal-Mart is able to increase its customer base by providing bargaining to the potential customers.3- Online shopping has become very common.4- European and Asian market are still unexploited by retailers.5- Consumer’s buying patterns are similar worldwide.6- The retail sales are expected to increase in the long term.

7- Strong distribution network.

Strengths/Opportunities (SO Strategies):1- Being a well recognized brand known as retail market leader, Wal-Mart can take advantage of thismajor strength by allowing customers to go for bargain and offers discounts as well while other retailers don’t do this so often. (S1,O1)2- During economic slowdown most of the people disposable income gets reduced. At this time, Wal-Mart is able to gain/retain customer’s loyalty by offering products at affordable prices. (S3, O2).3- As the trend of online shopping has grown more over the years, Wal-Mart can keep its customer up to date and allows them to order online by offering customer oriented products. (S4,O3)

Weaknesses/Opportunities (WO Strategies):1- Wal-Mart has to set a clear mission statement as there is lot of potential increase in retail business inthe future and this is one of the reasons, Walmart could not achieve profits in other countries like India. (W1,O6)2- Since customer buying patterns are similar across

the world, Wal-Mart can update its customers about its new products and policies on internet as well. (W4,O3)3- European and Asian markets are still unexposed to retail shopping; Wal-Mart can make use of thisadvantage by market expansion in other locations of the world by offering products at cheap pricesspecifically at the time of economic instability. (W6,O4)

Threats1- Strong competitions amongst its rivals.2- As a global retailer, Wal-Mart has to face political instability in the country which they operate in.3- Intense price competition can become a threat to the company as the manufacturing cost becomes low because of outsourcing from other regions of the world and therefore has lead to price deflation.

Strengths/Threats (ST Strategies):1- Wal-Mart has a strong brand image; it can face a massive competition against its rivals. This can beavoidable by offering differentiated products at affordable prices (S1, T1) (S5, T1).2- Wal-Mart has been able to develop a brand value that is able to sustain itself even at the time ofeconomic/political instability in the country which they are operating by introducing differentiated products and satisfied guaranteed programs to create goodwill with the customers (S5,T2) (S8,T2)

Weaknesses/Threats (WT Strategies):1- To avoid any tough competition, Wal-Mart should focus on existing product line or to remain above the competition by investing more on advertising campaign to keep its competitors always on pressure (W2,T1).2- Make a thorough study of the foreign market and adapt according to their culture to establish itself inthe Asian/European market.(W6,T2)

BCG Matrix

SPACE Matrix

SPACE Matrix

IE Matrix

Grand Strategy MatrixUsed for creating different and alternative strategies for an organization. Each quadrant has different set of strategies.

Grand Strategy Matrix

Walmart’s 5 Key Financial Ratios

• 1. Price-Earning(P/E) Ratio is 13.2• 2. Price-to-book Ratio is 2.4 • 3. Return on Equity(ROE) is 18.6% • 4. Debt/Equity Ratio is 0.5421• 5. Current Ratio is 0.92

Recommendations

Conclusion

• Walmart success is achieved through a few factors which are internally and externally improved.

• These factors not only have increased the sales but also the reputation among the its groceries provision and also it utilization of store based on technological advancement.

• Walmart encounters aggressive competition in all areas of its business activity. The market for each of their business segments are characterized by vigorous competition among major corporations with long established positions and a large number of new and rapidly growing firms.

• Walmart needs to remain themselves to be ethical company which bring 3 major value of ethical sources and CSR management in term of ENERGY CONSERVATION, ZERO WASTER MANAGEMENT and SOCIETY IMPACT OPTIMIZATION.

Thank You For Shopping At WALMART