Business Strategy Retail Wal Mart
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Wal-Mart is the largest retailer globally with $405.6 billion in revenue. It has a powerful brand and large scale of operations worldwide. However, it faces weaknesses such as self-cannibalization and legal issues. Its strategies include strategic business programs, efficient working capital management, and expanding online sales. Wal-Mart has a sustainable advantage through its size, discounts, distribution network, and IT infrastructure. It is recommended that Wal-Mart improve its public perception and expand internationally with local retailers.
Business Strategy Retail Wal Mart
- 1. Industry Analysis - Retail Company – Wal-Mart Save money. Live better. Group 1 Kalpesh Agarwal - PGPM508_01 Sivaram Gunavel - PGPM508_12 Chetan Mahindra - PGPM508_23 Jaspal Singh - PGPM508_47
- 2. Overview of Retail is sale of goods to end user, not for resale but for use and Retail Industry consumption Global Retail Industry – Revenue $11,326.8 billion (2008), CAGR – 80% 4.1% (2004-2008) 14% Global Retail Industry – Revenue Forecast (2013) $14,347.3 billion 6% – Increase of 26.7% over 2008 Industry Group Segmentation Speciality Retail Specialty Retail Multiline Retail Multiline Retail Catalog and Internet Retail Catalog and Internet Retail
- 3. Overview of Retail Industry Global Retail Industry Group Global Retail Industry Group Value Value - Forecast Global Retail Industry Group Value Global Retail Industry Group Value 12000 0.07 Forecast 11395 0.06 16000 6.00% 11500 11326.8 14347.3 0.05 14000 13648 5.00% 11000 10794.2 12944.4 12284.6 0.04 11708.6 4.00% 10500 12000 11326.8 $ billion 10199.5 3.00% 0.03 $ billion 10000 10000 9646.1 0.02 2.00% 9500 8000 0.01 1.00% 9000 0 6000 0.00% 8500 -0.01 4000 -1.00% 2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013 Year Year $ billion % Growth $ billion % Growth
- 4. Global Retail Market Segmentation Global Market Segmentation Global Top 10 Retailers Rest of Top 10 Global Retailers World Rank Name of Company Country of Origin 6.90% 1 Wal-Mart US Asia Pacific 2 Carrefour S.A France 26.50% 3 The Home Depot US 4 Tesco UK 5 Metro AG Germany 6 The Kroger Co. US North & Europe South 7 Target Corp. US 34.00% America 8 Costco Wholesale Corp. US 32.60% 9 Sears Holding Corp. US 10 Schwarz Unternehmens Germany Source: 2008 Global Power of Retailing (Deloitte)
- 5. Porter’s Five Force Analysis NEW ENTRANTS Moderate Diversification/ M&A . Easy to Enter but Less tough to survive CUSTOMERS SUPPLIERS COMPETITION POWER POWER Less bargaining Major Player: Wal- Highly dependent on the Industry Mart, Costco, Carre Power but No four, Home Depot Switching Cost SUBSTITUTES Very High Departmental Store Moderate /General Merchandising Store Varies from Low to High based on Geography
- 6. Retail Opportunities Opening: Market is just beginning its Retail story Peaking: Market is developing quickly Declining: Market is big, new entrants getting tighter Closing: Market have high penetration
- 7. Company Over view – Wal-Mart Mission of Wal-Mart SAVING PEOPLE MONEY SO THEY CAN LIVE BETTER Largest Retailer – Revenue $405,607 million Business Segment Wal Mart Stores Sam’s Club International Segment
- 8. SWOT STRENGTHS WEAKNESS • Powerful Retail • Self Cannibalization Brand, Large scale of • Involvement in numerous operations worldwide legal issues • One Stop Retail • Continuous Product Recall destination • Community Relations • Strategic business Problem programs • Efficient working capital Management OPPORTUNITY THREATS Global Food Safety Initiative Intense competition Standard Price matching program by Increasing demand of Online Target sales Foreign currency fluctuation Increasing opportunity in Growing economy
- 9. Value Chain
- 10. Salient Features – Wal-Mart Winning Strategy Strong Distribution, Inventory Management System Differentiated Pricing Cost Advantage Strategy IT Advantage 3 Basics beliefs of the Company Respect for the Individual Service to the Customer Striving for Excellence
- 11. Corporate Strategy Dominance in Retail Market Expansion in US and International Market Creation of Positive Brand and Company Recognition Branching into new sectors of Retail
- 12. Key Strategic Moves by Wal-Mart Acquisition of McLane Company in year 1990 Diversification in Grocery and Food Retailing Razor thin margin – provides Great Value to customer Acquiring of PACE club of K Mart
- 13. Sustainability of Wal-Mart Strategy Leader in discount Retailing Size and Volume of Wal-Mart gives itself advantage over its suppliers and competitors Extensive distribution and network Discounting Retailing format to work in International Market as not much competition Extensive IT infrastructure provides leverage over competitors
- 14. Recommendation Must adopt a friendlier corporate attitude It needs to relax its anti-unionization policy Improve public perception that Wal-Mart can destroy communities International expansion should be done with the help of Local retailers