walmart t4

14
Case Analysis 1974 - 1985 MBAM 619 Scott Campbell - Christina Connolly - Maureen Stafford

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Page 1: Walmart T4

Case Analysis 1974 - 1985

MBAM 619

Scott Campbell - Christina Connolly - Maureen Stafford

Page 2: Walmart T4

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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Page 3: Walmart T4

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

Page 4: Walmart T4

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

Page 5: Walmart T4

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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Page 6: Walmart T4

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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Page 7: Walmart T4

SWOT

Page 8: Walmart T4

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

Page 9: Walmart T4

Weaknesses

• Was not seen as a place for consumers to invest in apparel, hardware, electronics

• Employee remunerations were not stellar

Page 10: Walmart T4

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

Page 11: Walmart T4

Threats

• Discount Store competitors increase by 64% in the 1970s.

• Uncertain economy

• Change in politics

• Competitors copying production/technology

Page 12: Walmart T4

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

Page 13: Walmart T4

Questions?

Page 14: Walmart T4

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&nbsp;&nbsp;&nbsp;&nbsp;." 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>.