Presentation on Walmart

Presented by
Abu Motahar Mohammad Sohel
ZR 1302025
Md. Mahbub-Ur-Rahman
ZR 1103019
Md. Hafiz-Al-Asad
ZR 1401003
2

Sequence of Presentation
1 • Introduction to Wal-Mart.
2 • History of Wal-Mart.
3 • Business Description & Competitors.
4 • Vision, Mission and Values.
5 • Corporate Strategy.
6 • Competitive Strategy.
3

Sequence of Presentation
7 • Business Strategy.
8 • SWOT Analysis.
9 • Five Forces Model.
10 • SCM at Walmart.
11 • Key Success Factors.
12 • Criticism of Walmart.
4

Introduction to Walmart
• An American public corporation that runs a chain of
large discount department stores & warehouse stores.
• World's largest public corporation by revenue.
• Largest private employer in the world.
• Fourth largest utility or commercial employer.
• Largest grocery retailer in the United States (20%).
• Largest toy seller in the United States (22%).
• World’s biggest retailer.
5

Walmart at a Glance
• Founded : Arkansas, USA (1962) by Sam Walton.
• Headquarters : Bentonville, Arkansas, U.S.A.
6

Walmart at a Glance
• Products : Discount Stores, Super centers, Neighborhood Markets.
7

Walmart at a Glance
• Revenue : US$ 485.65 billion (Jan 31, 2015).
• Net Income : US$ 16.36 billion (Jan 31, 2015).
• Total Assets : US$ 204.75 billion (2014).
• Total Equity : US$ 76.25 billion (2014).
8

Walmart at a Glance
Slogans:
o The Lowest Prices. Guaranteed!
o Save Money, Live Better
o We Sell For Less Everyday!
10

Company Overview
• Founded by Sam Walton in 1962
• Incorporated on October 31, 1969.
• Publicly traded on the New York
Stock Exchange in 1972.
• Walmart operate retail stores in
various formats across the world.
11

13
As of April 30, 2014: 10,994
o Walmart US – 4,233
o Sam’s Club – 635
o International – 6,126
Company Overview

History of Walmart
o 1918: Born in a farmer’s family in Kingfisher, Oklahoma.
o 1940: Graduated from the University of Missouri.
o 1950: Gave up job and opened his first store in Arkansas.
o 1962: Walten Brothers opened fist Walmart in Arkansas.
14

• 1970: Walmart became public.
• 1990: 1st National retailer.
• 1991: International Expansion.
15 History of Walmart

o 1993: Creation of “Great Value”.
o 2003: Largest corporation in the world.
o 2012: 50th Anniversary.
16 History of Walmart

Business Description
• Dry and wet grocery
• Beverages
• Frozen food
• Jewelry etc.
Products
• Photo processing service
• Cellular service plan
• Money order services
Services
• Walmart
• Great value
• Sam’s choice
Brands
17

Competitors
Tesco
PLC
Metro
AG
Amazon
Inc
CVS
Care
mark
Staples
Inc
18

Vision
“To be the best retailer in the hearts and minds of
consumers and employees.”
21

Mission
“Saving people money so they can live better.”
22

Slogan
Save Money. Live better.
23

Values of Walmart
Integrity Opportunity
Family and
Community
Purpose Responsibility
24

Md. Mahbub-Ur-Rahman25
Corporate Strategy
Competitive Strategy
Business Strategy

The Corporate Strategy
 Dominance in the Retail Market.
26

 Expansion in the U.S. and International Markets.
27

 Creation of Positive Brand and Company Recognition.
28

 Branch Out into New Sectors of Retail.
29

 Sam Walton gave 3 Policy Goals to define Wal-Mart's business:
Respect for
the
Individual
Service to
Customers
Strive for
Excellence
30

Sam Walton’s Practices
• Consistently stock the shelves with a
wide range of goods at low prices.
• Keep the store open later than most
other stores, especially during the
Christmas season.
• Discount Merchandising.
o Buy wholesale goods from the lowest
priced supplier.
o Pass on the savings to the customer.
31

Strategic Goals
 Three successful elements and a fourth element of Walmart
strategy formulation:
1. Dominate the Retail Market wherever Wal-Mart has a
presence.
• Wal-Mart is primarily a discount retailer.
• Lowering the markup, and earn profit on the
increased volume of sales.
• Competitiveness of every unit.
32

Strategic Goals
2. Growth by expansion in the US and Internationally.
• Gain entry into a nation by Corporate Takeover of a
national retailer. Once the company is bought, Wal-
Mart converts the stores into Wal-Mart stores.
3. Create widespread name recognition and customer
satisfaction with the Wal-Mart brand, and associate the
retailer with the reputation of offering the best prices.
• The company accomplishes this through television
advertising campaigns and newspaper adverts.
• The company engages in partnerships and co-
branding.
33

Strategic Goals
4. Branching out into new sectors of retailing such as
pharmacies, automotive repair, and grocery sales.
• Move into the grocery store business with its new
"Neighborhood Markets."
34

• Low Cost Leadership. The
giant retailer prides itself on
providing customers with low-cost
items that beat competitors.
• Differentiation Strategy. Wal-
Mart uses the differentiation strategy
to succeed by creating a product or
service unique to customers. Wal-
Mart has achieved this strategy by
offering unique warranties and
brand images exclusive to the
store.
35

• The company's competitive strategy is to dominate every
sector where it does business.
• It measures success in terms of sails and dominance over
competitors.
• Sell goods at low prices, outsell competitors, and to expand.
• To build more stores, make existing stores bigger, and to
expand into other sectors of retail.
• Every step of the way, it strives to make money and dominate
its competitors, to the point of putting some competitors out
of business.
36

Business Strategy
• Low Cost Leadership Strategy: Walmart’s value
proposition is based on offering Everyday Low Price (EDLP).
This is the core of Walmart’s Business Model and the rest of
the key features of Walmart’s Business Model are aligned to
keep the everyday low price.
• Pressure Over Vendors: To deliver low price, Walmart
exchanges information on sales and inventory levels based
on “Vendor Partnership” concept. It has its own distribution
channel which is a major distribution channel for many
vendors.
37

Business Strategy
Investment in Technology:
Walmart invested heavily on technology
to help enhance communication
between headquarters, stores, and
vendors. As a result inventory costs
decreased and inbound logistics
became more efficient.
Human Resource Policy: Walmart
was recognized as one among 100 best
companies to work for in America. It
used to offer a percentage of store profit
as incentives to store managers.
38

Business Strategy
Location Selection: Walmart
focused on rural suburban areas
ignored by other companies.
Establishing stores close to distribution
center, it developed a dense distribution
network that allowed the firm to spread
costs and exploit economies of density.
Product Selection: Walmart gives
its customers a wide range of
selection. It offers grocery items in
super centers. Sam’s club caters to the
wholesale purchase need of customers.
39

Business Strategy
Cost Consciousness: Walmart developed a cost
conscious culture for the company to reduce costs
whenever possible. It controlled costs by systematic
elimination of superfluous expenses.
Customer Service: Walmart implemented policies to
create friendly shopping environment for customers. It started
its “Aggressive Hospitality” program in 1984, where
customers were received by “people greeters” and they
enjoyed benefits such as extended opening hours, free
parking, no hassle refund and exchange policies, speedy
checkout lanes, wider aisles, and clean stores.
40

Practices Followed
• Aggressive Hospitality.
o Using door-greeters.
o Patriotic themes and displays in stores.
o Compels its staff to engage in morning cheers.
41

Practices Followed
• Affiliations with Charities. The United
Way and Children's Miracle Network.
• Sundown Rule. All customer and
supplier requests or queries must be
reasonably answered within 24 hours by
all employees.
• Ten Foot Rule. Store employees must
greet, smile, and attend to a customer in
a store when within 10 feet of them.
42

Business Strategy
• The company uses its size, financial
power, immense resources to
dominate retail.
• The power and size of the company
enables it to realize its goals with
ruthless efficiency.
• The strategy is very clear and
direct. It was put into place in the
1960's by Sam Walton, and refined
over the decades.
43

Walmart Growth Strategy
Maintain current net sales growth of
approximately 12 percent per year.
Expand into international markets that have
large population centers.
Increasing the overall efficiency of the
organization by reducing operating costs or
cost of goods sold.
44

Md. Hafiz-Al-Asad45
SWOT
Analysis
Five Forces
Model
SCM at
Walmart
Key Success
Factors
Criticism of
Walmart

SWOT Analysis
Strengths
• Powerful retail brands, large
scale of operation worldwide.
• One Stop Retail.
• Strategic business programs.
• Efficient working capital
management.
Weakness
• Self Cannibalization.
• Involvement in numerous legal
issues.
• Continuous product recall.
• Community relations problem.
Opportunity
• Global food safety initiative
standard.
• Increasing demand of online
sales.
• Increasing opportunity in
growing economy.
Threats
• Intense competition.
• Price matching program by
target.
• Foreign currency fluctuation.
46

Five Forces Model
1. Bargaining Power of Customers: Low.
48
o Customers usually make small purchases.
o A large number of customers.
o Wal-Mart’s main customers are individuals.

Five Forces Model
2. Bargaining Power of Suppliers: Medium-Low.
49
o Wal-Mart purchases huge quantities of
products from its suppliers.
o Low switching costs from one supplier to
another.
o Products have a lot of substitutes.
o Almost all the products are not critical for
Wal-Mart.

Five Forces Model
3. Potential Entrants / Barriers to Entry: Medium-High.
50
o Economies of scale.
o High capital requirements.
o Customers mainly look for products with
low prices and standard quality.
o Requires a precise distribution system.

Five Forces Model
4. Threat of Substitutes: High.
51
o Prices and quality of substitute products
are very competitive.
o Performance of substitute products are
similar.
o Consumer switching costs are low.

Five Forces Model
5. Potential Competitors/ Rivalry: High.
52
o Wal-Mart represents the 25% share of
the U.S. supermarket business.
o Competitors have similar sizes.
o Industry growth is slow.
o Exit barriers are high.
o There is a high production capacity.

Supply Chain Management at Walmart
Relationship with
Suppliers
Use of Cutting Edge
Technology
Strengths of SCM
53

Relationship with Suppliers
• Scale of operation helps to bargain with
suppliers to get the bottom prices.
• Procurement personnel spend a lot of time with
the vendors to understand their cost structures
and to get the minimum price in a win-win
situation.
• Encouraged its vendors to contribute ideas
about how to make its stores more attractive
with their products.
• Vendors were encouraged to voice any problems
in their relationship with Walmart and to become
involved in Walmart’s future plan.
54

Use of Cutting Edge Technology
• Probing, testing and then deploying the newest
equipment, retailing techniques, computer
software program etc. to increased productivity
and drive costs down.
55
Introducing it's
“WAVE”
Technology
Truck System

• Sophisticated IT and online capability for real-time access to
detailed figures on most operations.
• Tracking capability of it’s goods movement through its entire value
chain.
56

• Walmart has Data Sharing Systems and Retail Link System with
30,000 suppliers, which allow them to avoid both stock outs and
carrying excess inventories, identifying slow-selling items to
reduce costs.
57
• The company has more
than 88,000 associates
engaged in logistics and
information systems
activities for effective
and efficient supply
chain management.

• Walmart has introduced Electronic Product Code (EPC) and
Radio-frequency Identification (RFID) systems. With the help of
EPC and RFID, the company can track movement of any items in
real time.
58
Apparel supervisor Sonia Barrett uses a handheld
scanner to read EPC labels on men's denim jeans

Strengths of SCM
Vendor-
Managed
Inventory
(VMI)
Enterprise
Resource
Planning
(ERP)
Customer
Relationship
Management
(CRM)
Sales Force
Automation
59

Key Success Factors
Economies of
Scale
Supply Chain
with
Integrated
Technology
Superior
Logistics
Systems
Decentralized
Operations
Every Day
Low Prices
60

Opposition from Local Communities:
• Local communities try to oppose the construction when Walmart
plans new store locations. Opponents cite concerns such as
traffic congestion, environment problems, public safety, absentee
landlordism, bad public relations, low wages and benefits etc.
Criticism of Walmart62
An anti-Walmart sign on
the front lawn of a Ballston
Spa home.

Predatory Pricing:
Walmart has been accused of
selling merchandise at such low
costs that competitors have
tried to sue it for predatory
pricing (intentionally selling a
product at low cost in order to
drive competitors out of the
market).
Criticism of Walmart63

Criticism of Walmart
Employee & Labor Relations:
• With close to 2.2 million employees worldwide, Walmart has
faced a torrent of lawsuits and issues with regards to its
workforce. These issues involve low wages, poor working
conditions, inadequate health care, as well as issues
involving the company's strong anti-union policies.
64

Low Wages:
• Walmart reports that full-time
hourly associates received, on
average, $10.11 an hour.“, which
is about 20% less than the
average retail worker.
• Because Walmart employs part-
time and relatively low paid
workers, some workers may
partially qualify for state welfare
programs. This has led critics to
claim that Walmart increases the
burden on taxpayer-funded
services.
65

Working Conditions:
• Walmart has also faced
accusations involving poor
working conditions of its
employees.
• Walmart has also been
accused of ethical problems.
It is said that the Walmart
employees are gender
discriminated when trying to
be hired and discriminated
against in the work area.
66

Health Insurance:
• Walmart spends an average
of $3,500 per employee for
health care, 27% less than
the retail-industry average of
$4,800.
• Walmart's health insurance
covered 44% or
approximately 572,000 of its
1.3 million U.S. workers.
67

Anti-Labor Union Policies:
• Walmart has been criticized for its
policies against labor unions.
Critics blame workers' reluctance to
join the labor union on Walmart anti-
union tactics such as managerial
surveillance and pre-emptive closures
of stores or departments who choose
to unionize.
68

Imports and Bargaining Power:
• As a large customer to most of its
vendors, Walmart openly uses
its bargaining power to bring
lower prices to attract its
customers.
• The company negotiates lower
prices from vendors. If a vendor
does not keep prices competitive
with other suppliers, they risk
having their brand removed
from Walmart's shelves in favor
of a lower-priced competitor.
69

Allegations of Bribery:
Walmart México, its subsidiary
in that country, had paid
millions of dollars in bribes to
local officials to expedite permits
for construction and operation of
its many stores in that country.
70

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