‘The Sacrifice of Savings’

By Luke Meyer

Background

Sam Walton founded Wal*Mart in 1962

Wanted to have discount stores available to ‘small town’ folk

Believed in treating employees good

Walton had an intimate knowledge of the competition

Experienced intense growth in a relatively short time (stores in 47 states by 1994)

Wal*Mart Annual Sales

1/31/72 $44.0 Million

1/31/80 $1.2 Billion

1/31/92 $43.9 Billion

1/31/02 $217.8 Billion

S.W.O.T. Analysis (Strengths)

Guaranteed low prices of products

Substantial growth Convenience factor – wide

range of products all in one store and consumers are able to shop on-line

Hours of operation ‘Traiting’– making products

available based on customer preference

Location, location, location

Stengths Contd…

Intimate knowledge of the competition

Major contributor (see PDF of 2004 contributions)

Diversification of stores – Sam’s Clubs & Supercenters)

International Operations Proficient IT support –

tracks how products are performing store by store

S.W.O.T. Analysis (Weaknesses)

Hierarchal advancement – unequal opportunities

Early acceptance/use of micro-managing techniques

Low wages Benefits system –

unaffordable health care for employees

Weaknesses Contd…

Lack of flexibility –not as supple as specific product focused competitors

Immigration violations Closing down U.S.

plants Poor substitutes to

name brand products

Wal*Mart Greeter

Weakness or Strength???

S.W.O.T. Analysis (Opportunities)

Mergers – forming strategic alliances with other global retailers

Expand globally by implementing more stores overseas

Work on changing the anti-Wal*Mart attitude – ex. reverting back to the “Buy American” strategy

Having more products available to purchase on-line

S.W.O.T. Analysis (Threats)

Competition from other discounters

Concentrated price competition – outsourcing to low cost regions of the world

Remaining non-unionized Management complacency

– management is only promoted within their internal group

Threats Contd…

Being #1 makes you a target for publicity which is…

-Wal*Mart’s PR bloopers

http://money.cnn.com/galleries/2007/biz2/0701/gallery.101dumbest_wal art/index.html

-Wal*Mart, The High Cost of Low Price

http://www.walmartmovie.com/wmtv/

-The Daily Show on Wal*Mart

http://www.onlisareinsradar.com/archives/002392.php

not always a good thing

Recommendations

Re-evaluate internal and external values, policies, procedures etc.

Weed out bad management – those who employ unequal opportunities

Cut spending and invest in associates

Re-adopt buy ‘America Made’ (only 15% off all Wal*Mart products are made in the USA)