walmart t4
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Case Analysis 1974 - 1985
MBAM 619
Scott Campbell - Christina Connolly - Maureen Stafford
Political Change
• Distrust and Instability• Nixon and Ford
– Brief relief with Carter
• Vietnam War• Energy crises
– 1973 • Nixon’s demands
– 1979
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Economic Change• 1970’s: Decade of Crisis
– Most traumatic decade for economy since Great Depression
– Nearly every economic indicator goes south• Productivity • Costs • Unemployment soared• Stagflation (high inflation but slow econ. growth)• Exports low• Imports swamped market
• 1980’s: Economic Malaise– Deep recession (1981 - 1982)
• Broke skyrocketing inflation• Paves the way for growth during the decade
Economic Troubles (1974 - 1985)
Source: http://harvardbusiness.org/flatmm/hbextras/200805/recessions/
73 - 75: Stagflation
75 - 80: Uneasy growth; stagflation continues
80 - 81: Short Recession
81 - 82: Deep Recession
Social Change
• Household structure changed:– More single family homes
• Female householder 58% change (1970-1980)
• Male householder 41% change
– Non-family householder • Male householder increased by
117%
• Increase in personal savings levels throughout the Carter administration
• Consumers are better informed
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Technological Change
• SKU presence, larger than other stores
• UPC scanners – sped up process
• Satellite network– Real-time communication– Reduced telephone
charges ($10 million)
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SWOT
Strengths
• Walton’s continued involvement with the company
• Communication system/sharing of information
• Linked to their 3,000 vendors
• Quick turn around time of merchandise in a distribution center (within 48 hours of request)
• Efficient use of delivery trucks to and from stores (60% full on backhauls)
• Identified best product mix for in store display (hard vs. soft goods)
• Capitalized on branded merchandise for national advertisements
• Industry leader in technology innovation
Weaknesses
• Was not seen as a place for consumers to invest in apparel, hardware, electronics
• Employee remunerations were not stellar
Opportunities
• Growing population in the Sunbelt area, more than any other area in the U.S.
• Consumers’ need to save money
• Reduce “shrinkage” problem by incentivizing employees
• Acquire other discount stores’ leases who were going out of business
Threats
• Discount Store competitors increase by 64% in the 1970s.
• Uncertain economy
• Change in politics
• Competitors copying production/technology
Implementing streamlined technology progressively
Expensive; adoption time; availability to competitors
Accelerated growth and expansion; real-time communication
Greater productivity
Large strides in communication and efficiency technologies
Philosophy of “Everyday Low Prices”
Higher demand for discount store products
Greater interest in lower prices
More single parent households; personal savings increases
Focus on hard goods; more SKU’s; lower prices vs. comp.; buy American
Increased competition in discount store market
Be the low-cost leader; capitalize on high unemployment
People seeking value
Recessions; Nearly every economic indicator went south
Consistently low prices, tailored to local needs; nearby stores
People withholding income
Deliver on consistency
Growing distrust in stability and leadership
Oil embargoes, Vietnam, Watergate, change of Presidents
Strategic Response
Impact of Change
Nature of Change
Wal-Mart PEST Analysis1974 - 1985
Opportunities Threats
Questions?
Sources- Ghemawat, Pankaj. “Wal-Mart Stores’ Discount Operations.” Harvard Business School Case, Rev: 4/12/07.
- Harvard Business Publishing: “Brief History of Recessions” http://harvardbusiness.org/flatmm/hbextras/200805/recessions/ (Accessed 1/7/09)
- eNotes.com: “1970’s and 1980’s Decade Overviews”
http://www.enotes.com/1970-business-economy-american-decades
http://www.enotes.com/1980-business-economy-american-decades
"1970s Flashback-Economy / Prices ." 1970s Flashback 1970 - 1979. 07 Jan. 2009 <http://www.1970sflashback.com/1971/ECONOMY.asp>. "Can a President Tame the Business Cycle?"
NYTimes.com 18 Oct. 2008. New York Times. 07 Jan. 2009 <http://www.nytimes.com/interactive/2008/10/18/business/20081019-metrics-graphic.html>.
"Government Spending Grew Faster Than Revenues for Most Administrations." The Heritage Foundation - Conservative Policy Research and Analysis. 07 Jan. 2009 <http://www.heritage.org/research/features/BudgetChartBook/fed-rev-spend-2008-boc-C2-Government-Spending-
Grew-Faster.html>. U.S. Census Bureau, "Families and Living Arrangements"; 07 Jan. 2009, <http://www.census.gov/population/www/socdemo/hh-fam.html>.