Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2

Daniel RIOS Group 5

Diego BURILLO
Roger VENDRELL

1








FEG380 Analysis of Corporations

Assignment 2





















Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

2


Index





INTRODUCTION .................................................................................................................................... 3-4
TRIANGLE MODELS .................................................................................................................................. 5
FINANCE .................................................................................................................................................... 5-10
OBJECT .................................................................................................................................................... 10-12
SUBJECT ................................................................................................................................................... 13-17
CONCLUSION ..........................................................................................................................................18
REFERENCES ...........................................................................................................................................18












Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

3

I INTRODUCTION


Wal-Mart Stores, Inc. is the world's largest retailer and grocery chain by sales. Wal-Mart is so
large that its almost 50% more than its 5 closest competitors combined, including Target
(TGT) and Sears Holdings (SHLD). Because of its huge size and buying power, Wal-Mart can buy its
products at rock-bottom prices, exchanging high purchase volumes for low cost while passing the
savings onto its customers. Many suppliers give in to Wal-Mart's pressure because they depend on
the discount retailer for a majority of their sales.
Today, this retailing pioneer has annual revenues of over $400 billion, 8,000 stores and more
than 2.2 million employees worldwide. Wal-Mart operates each store, from the products it stocks, to
the front-end equipment that helps speed checkout, with the same philosophy: provide everyday low
prices and superior customer service. Lower prices also eliminate the expense of frequent sales
promotions and sales are more predictable.
Wal-Mart has invested heavily in its unique cross-docking inventory system. Cross docking
has enabled Wal-Mart to achieve economies of scale which reduce its costs of sales. With this
system, goods are continuously delivered to stores within 48 hours and often without having to
inventory them. This allows Wal-Mart to replenish the shelves 4 times faster than its competition.
Wal-Mart's ability to replenish their shelves four times faster than its competition is just another
advantage they have over competition. Wal-Mart leverages its buying power through purchasing in
bulks and distributing the goods on its own. Wal-Mart guarantees everyday low prices and considers
them the one stop shop.

History

The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and
publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas.
Wal-mart is also the largest grocery retailer in the United States. In 2009, it generated 51 percent of
its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sam's Club
retail warehouses in North America.

In the late 1980s and early 1990s the company rose from a regional to national giant. By
1988, Wal-Mart was the most profitable retailer in the US and by October 1989 it had become the
largest in terms of revenue. Geographically limited to the South and Lower Midwest up to the mid-
1980s, by the early 1990s Wal-mart's presence spanned coast to coast - Sam's Club opened in New
Jersey in November 1989 and the first California outlet opened in Lancaster on July 28, 1990. A Wal-
mart in York, Pennsylvania was opened in October 1990 bringing the main store into the Northeast.


Business Segments

Wal-Mart operates 8,000 stores across three business segments of retail stores worldwide
that offer a wide array of general merchandise including groceries, apparel, electronics, and small
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

4

appliances. In addition, the company is the world's largest retailer and grocery chain by sales and just
over half of the company's sales comes from grocery items. Over half of the company's stores are
located in the United States, with the majority of international stores located in Central and South
America and China.
Wal-Mart Stores (63.8% of Revenue)
Wal-Mart stores come in one of three traditional formats:
Supercenters average about 185,000 square feet in size and carry general merchandise and
include a supermarket.
Discount Stores average approximately 108,000 square feet in size and carry a wide assortment
of general merchandise, but a limited assortment of food products.
Neighborhood Stores are usually about 42,000 square feet in size and carry a limited assortment
of general merchandise, but have a full supermarket.
Sams Club (11.5% of Revenue)
It provides goods for stores, restaurants, offices, daycares and schools, and motels. Sams
Club management remains focused on growing this foundation and improving its relationships with
small business owners. To this end, the company has expanded its offerings of office furniture and
restaurant supplies. The company also has services geared towards small business, such
as prescription drug plans and workers compensation claims.
Wal-Mart International (24.7% of Revenue)
Wal-Mart operates international locations of its Wal-Mart and Sam's Club stores as well as other
retail and supermarkets in Central and South America, Mexico, Canada, Japan, China, and the United
Kingdom. The company also has a global e-commerce unit called Global.com. The purpose of the site
is to drive online growth in new and existing markets.











Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

5


III - Triangle models:


Finance

The Square model

Now we are going to continue with the third part of the triangle model: the finance cornerstone. The
square model allow us to study their financial situation with a simply scheme. We tried to focus our
analysis in the differences between the big numbers given by Wal-mart, and the official
information published in the financial statements. Thus, we will try to study the evolution of the
Balance Sheet and the Income statement during the last six years using the financial information
given from 10-k provided by Security Exchange Commission (SEC).

The Balance Sheet

As we can see in the chart, the tendency of the assets during these years was a slowly increase, but in
the last two years, this tendency has grown. This increase has been backed up by both current and
non-current assets. If we compare figures of 2007 and 2012, the total assets increased by 24.21%,
while the non-current and current assets increased by 23.49% and 25.96% respectively. As we can
see, the assets structure of the company hasnt changed very much while they have been growing.

Analyzing the liabilities and equity of Wal-mart,
we can observe that both have increased aligned
to the growth of assets. As it happened with the
assets, we can observe that liabilities and equity
increased both in a similar percentage, but we
can appreciate liabilities gained impact in the
balance sheet, mainly because of the non-
current liabilities, that have increased by a
27.31%, while the current and total liabilities and
equity have increased by 24.63% and 22.83%
respectively.



It is remarkable if we analyze the equity that the total non-
controlling interests have increased considerably. Its size
represents a very small percentage of the total equity but in
six years the amount have increased by a 178%, growing up
to a total of $5395 million.
Revenues
401.244
Assets
142.698
Liabilities
98.906
Equity
64.608
Costs 306.158 Profit 95.086
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012
B
i
l
l
i
o
n

$

The Balance Sheet
Total assets Total liabilities Total equity
Assets
163.514
YEAR 2008
(million $)
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

6

The Income Statement

As we can see in the chart, the solid position of Wal-mart is reflected in the figures. Even with the
crisis, the company has been able to keep
increasing their revenues, at the same time
the profit margin was stable, and starting to
increase during the last 2 years.

As the current crisis environment that
surrounds most of the modern countries the
performance of the company is remarkable.
The evolution percentages could help to have
an idea about the total growing. All the items
have a positive evolution, but the most
striking is seen in the revenues. This is
explained by the expansion of Wal-mart, in
national and international territory where it has been opening stores every year. This also comes
with the increase of costs, but as they increase in a smaller percentage than revenues (23.05% versus
24.45%) it is a good sign.


Analyzing last year, 2012, we can observe the same
tendency as in other years: the company grows in all its
aspects with similar percentages. Compared to 2011, assets
increased by a 5.01%, due mainly to the increase of current
assets by a 9.03%. This increase in the assets has been
financed mainly by current liabilities, which increased by a
15.28%, while companys non-current liabilities have been
reduced by a 10.76%. These changes have made the
company more dependent of short-term payments, as it
will have to face big amount of debt during the coming
years. Besides that, the total liabilities of the company have
increased in a small percentage, only a 3.08%, while the
total equity increased by a 7.89%.

This year the profit has grown a 4.51% compared to 2011 results. The growing percentages
continued in all the income statement. Revenues and costs of the firm have increased a 5.02 and a
5.18 percent points respectively, allowing the company to increase the profit in the percentage
mentioned before. Its not a good sign for a company having a bigger increase of the costs than the
revenues, but as the difference is almost insignificant (0.16%) is not a reason to worry about.


0
100
200
300
400
500
2007 2008 2009 2010 2011 2012
B
i
l
l
i
o
n

$

Income Statement
Revenue Costs Profit
Revenues
466.114
Assets
142.698
Liabilities
120.848
Equity
81.738
Costs 352.488
Profit 113.626
Assets
203.105
YEAR 2012
(million $)
Costs 352.488
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

7

Key Ratios

After using the Square model to analyze financial aspects. Those ratios are ROA (Return on Assets),
ROE (Return on Equity), Solidity and Earnings per Share.

Return on Assets

ROA =




ROA indicates how profitable a company is relative to its total assets and gives an idea of how
effectively it is converting the money it has to invest into net income. The higher ROA- the better,
because company earns more money on less investment.
2012 2011 2010 2009 2008 2007
Return on Assets (ROA) 8.37% 8.12% 9.07% 8.40% 8.20% 7.79%

As we can see ROA of Wal-mart fluctuated during the period from 2007 until 2012. The ratio was on
its highest level of 9.07% in 2010 and decreased in the next year, to increase to the amount in 2012
of 8.7%.

Overall we can say that Wal-mart management is operating with its assets quite efficient because
even with fluctuation in crisis period ROA remained above 8%, what is a good figure.

Return on Equity

ROE =




We can define the Return on equity as the amount of net income returned as a percentage of
shareholders equity. Return on equity measures a corporation's profitability by revealing how much
profit a company generates with the money shareholders have invested.

The ROE is useful for comparing the profitability of a company to that of other firms in the same
industry.

2012 2011 2010 2009 2008 2007
Return on equity (ROE) 22.27% 22.01% 23.91% 20.26% 20.53% 19.70%

If we analyze the ROE of Wal-mart we can see they reached a peak of 23.91% in 2010, as it happened
with ROA, what means that a company had that percentage of net income for every dollar invested
by their shareholders and it made quite attractive for investors. As it happened with the ROA, the
ratio decreased during 2011 by a 1.9%, but increased again in 2012.

Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

8

Comparing to other retailing companies, we
can see that Wal-mart has an average ROE.
For stable and successful companies a Return
on Equity of more than a 12% to 15% is
considered desirable, but the ratio strongly
depends on many factors such as industry,
economic environment (inflation,
macroeconomic risks, etc.). But a higher ROE
does not necessarily mean better financial
performance of the company. As shown
above, in the DuPont formula, the higher ROE
can be the result of high financial leverage,
but too high financial leverage is dangerous
for a company's solvency.

Solidity

Solidity =

Solidity or Equity ratio shows us the percent of the Total Assets that is covered by the Equity.

2012 2011 2010 2009 2008 2007
Solidity 40.24% 39.17% 39.44% 42.72% 41.04% 40.70%

Solidity ratio of Wal-mart is quite high, what means that the company tends to finance its activities
with the money that given by their shareholders. Solidity ratio performed the same trend as the
others ratios that we have already seen, it reached a peak of 42.72% in 2009 than there was a fall
during two year period and it increased again in 2012 to 40.24%.

Earnings per share

Earnings per share =




EPS is one of the most important ratios, it helps to evaluate the profitability of the company and
determines share price on the market.
2012 2011 2010 2009 2008 2007
Earnings per share 4.52 4.47 3.71 3.39 3.13 2.71

0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
ROE Q1 2013
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

9

During the last six years EPS performed upward trend, EPS remained increasing constantly during
these years. All this makes Wal-mart quite attractive for investors.
The stock market

The historical evolution of the stock market

The 18
th
of October 2013, the value of a Walmarts share in the stock market was 75,71$. The
company entered in the stock market in the 70s, more precisely in 1972, and had obviously
extremely increased his value since its beginning.





We can highlight different main periods of evolution since the entrance in the stock market.
From 1972 to 1992 we show that the value increase slowly and regularly to achieve of value of 16$ in
October 1992. Then, the value will a little bit decrease until October 1997 to 11.38$.
And after that, Walmart recorded a real explosion of its value in the stock market, reaching a
value of 69.12$ per share in October 1999, otherwise a increase of more than 500%. This period can
partially be explained by the radical change in Woolworth Company, which leave the global retailing
to the sporting goods market.

Since this period, Wal-mart constantly recorded variations from July 2009 and July 2011, with
values respectively from 48.13$ to 51.90$. And then, the value of the share restarted to increase
again to reach the current value of the share of 75.71$.


The market value in a crisis context

Focusing on the period 2008, we can observe that the value of the share has not really
suffered of the financial and economic crisis. Of course we can see that there is a real decrease from
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

10

September to October 2008 with values from 62.41$ to 50.95$, but after that the value of the share
in the stock market stagnated July 2011 and increase until now.






Object

The main activity of Wal-mart is aiming for goods retailing, offering a wide range of products
divided in the next categories:

- Electronics & Office (computers, cell phones, digital cameras, iPods, business furniture)
- Movies, Music & Books
- Home, Furniture & Patio (all sort of home furnishing)
- Apparel, Shoes & Jewellery (baby, young and adult)
- Baby & Kids (clothes and accessories)
- Toys & Video Games
- Sports, Fitness & Outdoors
- Auto & Home Improvement (accessories for auto and home such as auto batteries or air
conditioners)
- Photo & Gifts
- Crafts & Party Supplies
- Pharmacy, Health & Beauty (vitamin, bath, makeup)
- Grocery, Household & Pets

But the activity of the company is not limited only to good retailing, so Wal-mart also offer the
following services;

- Photo services (photo lab services inside stores and online)
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

11

- Pharmacy (is a recent service offered since 2006 which includes over 300 generic
medications and customers prescriptions for a mere $4)
- Financial services (these services includes credit cards, debit cards, bill payment, money
transfers, check cashing and check printing)
- Wireless service (this is a Wireless phone service due to a partnership with service provider
T-Mobile)

Focusing on goods retailing, Wal-mart offers store brands or generic brands-, which are low-
priced alternatives to name brand products. Many products offered under Wal-mart brands are
private label products. However, the problem is that store brands have less information on the label
than is found on real private label products, so the consumer does not know for sure it is identical to
the private label implied by the packaging design. Often, the only information about it is distributed
by Wal-mart.

Its estimated that about 40% of products sold in Wal-mart are private label store brands, or
products offered by Wal-mart and produced through contracts with manufacturers. The first private
label brand launched by Wal-mart was a brand mostly dedicated to drinks called Sam's Choice in
1991, produced by Cott Beverages exclusively for Wal-mart. Nowadays, it has become one of the
most popular beverages in the United States. Other major brands we can find in Walmart are Great
Value (launched in 1993 as the second tier of Wal-mart's grocery branding strategy), Equate (a brand
used for consumable pharmacy and health and beauty items), Mainstays (a brand dedicated to home
dcor), Ol' Roy (a brand of dog food), Dr. Thunder (a brand of soft drink similar to Dr. Pepper), Special
Kitty (a brand of cat food and other cat care products), Parent's Choice (a brand for all kind of baby
products), White Stag (a brand for women's clothing, footwear and jewellery) and George (formal
clothing for men, women and children).

There are other additional brands such as Faded Glory, No Boundaries, Simply Basic or
Hometrends, as well as former brands such as Athletic Works, Durabrand, Metro 7 or Existo.

Speaking about Wal-marts pricing strategy, it follows the slogan "Low prices, always", used from
1962 until 2006. It means that the basis of the business is not only temporary promotions or
discounts, but everyday low prices. This leads to an average consumer with a low purchasing power,
and this fact is intensified by the economic crisis.

One of the reasons why Wal-mart can do it is because of the minimal cost required in terms of
advertising, marketing and promotional expenses typically incurred by the national brands.
Moreover, in terms of quality these products are quite similar compare to products from national
brands and competitors.

Another reason for this low-pricing strategy is related to Wal-marts supply chain management,
using a logistics technique known as cross docking: is a practice to load the products directly into
outbound trucks, trailers, or rail cars, with little or no storage in between, reducing labour costs,
inventory holding costs and warehousing costs. Thus, products are routed from suppliers to Wal-
marts warehouses, where they are then shipped to stores without sitting for long periods of time in
inventory. This is an effective way to reduce costs significantly and they passed those savings on to
their customers with highly competitive pricing.

On the other hand, in the last years the company has expanded their activities: in 2001 the
company teamed with Procter & Gamble to produce Secrets of the Mountain and The Jensen Project
(two-hour family movies which featured the characters using Wal-mart and Procter & Gamble
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

12

branded products). The Jensen Project also featured a preview of a product to be released in several
months in Wal-mart stores. A third movie, A Walk in My Shoes, was aired in 2010, and a fourth movie
is in production.

In the past, and even nowadays, Wal-mart has been criticized due to some ideological issues
related to a conservative position: for example, in 1999 Wal-mart decided not to stock emergency
contraception pills in its pharmacies, and in 2004 Wal-mart carried an anti-Semitic hoax called The
Protocols of the Elders of Zion. Since 1991, Wal-mart has not carried albums marked with the
Parental Advisory Label.

One of the last relevant moves of Wal-mart related to its products has been a new chemical
policy that promises to bring safer, healthier products to its customers. This new policy focuses on
chemical ingredients in consumables household cleaners, personal care products and cosmetics-.
This strategy is targeting about ten key chemicals of concern for substitution with better ingredients,
and looking to take its private brand products through a rigorous screening process.


Subject

To analyze Wal-mart from a subjective perspective, we will take a closer look at its employees,
ownership structure and resources.

Employees

Wal-mart is the biggest company in the world in terms of number of employees. In 2013, the
company have 2 200 000 employees, whereas the second employer of the world only have a little bit
less than 1 700 000 employees.



0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
W
a
l
-
M
a
r
t

S
t
o
r
e
s
C
h
i
n
a

N
a
t
i
o
n
a
l

S
t
a
t
e

G
r
i
d
S
i
n
o
p
e
c

G
r
o
u
p
H
o
n

H
a
i

P
r
e
c
i
s
i
o
n

C
h
i
n
a

P
o
s
t

G
r
o
u
p
U
.
S
.

P
o
s
t
a
l

S
e
r
v
i
c
e
V
o
l
k
s
w
a
g
e
n
C
h
i
n
a

A
v
i
a
t
i
o
n

I
n
d
u
s
t
r
y

C
o
m
p
a
s
s

G
r
o
u
p
A
g
r
i
c
u
l
t
u
r
a
l

B
a
n
k

o
f

I
n
t
e
r
n
a
t
i
o
n
a
l

B
u
s
i
n
e
s
s

D
e
u
t
s
c
h
e

P
o
s
t
M
c
D
o
n
a
l
d
'
s
C
a
r
r
e
f
o
u
r
I
n
d
u
s
t
r
i
a
l

&

T
e
s
c
o
G
a
z
p
r
o
m
S
o
d
e
x
o
20 biggest companies (number of employees)
Number of employees
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

13



But Wal-mart is really criticized for their policy with the employees. Their worldwide power
put the company in a too strong position against their suppliers to get the lowest prices but also
against their employees. In fact, the firm has been criticized and attacked because of the
compensations, the working conditions, the discrimination and the lack of trade-unions for their
employees.

This very strong policy explains for example a really high turnover of 37%, knowing that the
average turnover of companies is between 15% and 20%. This very rapid turnover also explain the
complete lack of trade-unions, it is really difficult to organize unions without constant employees.



Ownership structure

The owners of Wal-mart are principally Institutions with 86.24% of the shares, whereas 13.25% are
owned by funds and 0.52% by insiders.

















Moreover, Wal-mart is owned principally by the Walton family, more precisely by the Walton
Enterprises LLC. They have 48.94% of the shares of the company through this institution. The family
is extremely powerful, the rest of the company is owned by thousands of different owners with less
than 3% of the shares each. These results can explain the difference between the institutions and the
funds.
86.24%
13.25%
0.52%
Institutions
Funds
Insiders
0.00
50,000.00
100,000.00
150,000.00
200,000.00
250,000.00
Institutions Funds Insiders
Institutions
Funds
Insiders
Ownership Structure
Mil USD
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

14


















The current chairman is the son of Sam Walton, the founder of Wal-mart. He is Robson Walton (Rob
Walton), whereas the current President and Chief Executive Officer of Wal-mart Stores Inc. is Mike
Duke. Here is the board of directors.

0.00
200,000,000.00
400,000,000.00
600,000,000.00
800,000,000.00
1,000,000,000.00
1,200,000,000.00
1,400,000,000.00
1,600,000,000.00
1,800,000,000.00
Equity Ownership (Institutions) in shares
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

15



Resources

The term resources in the context of a company could be very large. It can include the
assets, the organization, the management, or knowledge for example. But these resources must
permit to get and to hold a sustainable competitive advantage and that is why the resources must
have four attributes: it must be valuable, rare, imperfectly imitable, and there cant be a
strategically equivalent substitute.

According to this definition of the resources, we can highlight two strategic and principal
resources for Wal-mart Stores Inc: its low prices and its leadership.

Save money. Live Better says de slogan. In fact, Wal-mart is very big by its size and its
amount of revenue. Wal-mart is the third company in the world comparing the revenues. And this
situation turns it very influential, as they are in a situation extremely powerful against the suppliers,
the employees and even the local authorities. It allows them offering the lowest prices in any
situation by reducing purchase prices and employees costs but it also allows them making easier any
establishment by pressuring the local authorities, like it happened in Chicago. This situation offers to
Wal-mart a very favorable situation to reduce always more the prices, especially producing in China
even if the working conditions, the salaries and more generally the employees situation is really
disputed.




0
100
200
300
400
500
600
20 biggest companies (Revenues in $Billion)
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

16

The total leadership of Wal-mart is also a strategic point which can be considered as a
resource. We can highlight the competitive situation of the firm.

Domestic Competitors

Target (TGT) is Wal-Mart's most direct competitor, offering a range of general merchandise in
a similar store format (standard Targets, with limited food offerings, compare to Wal-Mart's discount
stores, and Supertargets compare directly to supercenters). Targets major competitive advantage
over Wal-Mart lies in its customer base: the average household income for Target customers is about
$50,000 a year, whereas the average yearly income for a Wal-Mart customer is only $35,000. Finally,
because of its focus on low prices, Wal-Mart has found it difficult to promote higher-quality items
or private labels that come in at a higher price point; meanwhile, Target has had success with its
quality-at-value-prices strategy among higher-income demographics, where price is not the only
influence on sales. This higher-income customer base gives Target more stability than Wal-Mart,
particularly as energy costs rise and the real estate market slows.
Kmart (SHLD), as the third discount retailer of the "Big Three", has seen steadily declining
sales since 2000, losing considerable market share to both Wal-Mart and Target.

Other Retailers

As a large-scale retailer, Wal-Mart competes with a wide variety of other, specialized
retailers, such as Safeway in groceries, Best Buy (BBY) in consumer electronics, and department
stores such as Macy's in apparel and home decor. Wal-Marts focus on price differentiation means
that these companies, while competing in overall market share, are not necessarily competing for the
same type of customer; however, in more volatile or price-sensitive markets, such as consumer
electronics, discounters like Wal-Mart are able to leverage their pricing advantage and apply
increasing pressure on other retailers.
Sam's Club directly competes with Costco Wholesale (COST) and BJ's Wholesale Club (BJ) in
the warehouse club sector, where Costco has the advantage in terms total sales.

International Competitors

Wal-Mart's major international competitors are Britain's Tesco, France's Carrefour, and
Germany's Metro. Each of these companies has a competing presence in China, the UK, and Japan,
with Wal-Mart contending with at least one of them in many of its other markets.











0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Revenues in 2012 (million $)
Alexis DE SOUSA FEG380 Analysis of Corporations Assignment 2
Daniel RIOS Group 5
Diego BURILLO
Roger VENDRELL

17


IV CONCLUSION

A solid supply chain infrastructure, strengthened over the years, beside a small requirement
of spending in marketing and advertising, allows Wal-mart to keep costs under control, offering really
low prices to the consumers which competitors cannot match,. In the present economic situation,
this is a crucial issue to keep and gain a relevant market share, while some other companies try to
follow Wal-marts strategy. But this will of a price always lower leads to several excesses, especially
in term of working conditions and against suppliers, and it multiplies the attacks against the firm and
increases the criticizes. This is a really important point that Wal-mart has to consider.

Moreover, globalization and international expansion is getting bigger and more important for
Wal-mart, and thats probably one of the reasons of its continuous growth in a difficult situation for
the consumers, increasing assets every year and keeping the same proportion between incomes and
costs. So we can conclude that Wal-mart has a really strong position in the market in the present and
a really bright future, gaining more market share year to year under its low-pricing strategy, and
specially referring to the international market.

Wal-mart financial position is also very strong, experiencing a constant growth year by year,
increasing the size of the company by opening new stores using their business model. In this
situation where many big companies had to downsize or face loses, Wal-mart have been able to
maintain its structure, increasing at the same time the size of the balance sheet and keeping the
company profitable in short and long terms. Key ratios as the return on equity or the earnings per
share show Wal-mart as a company to invest in, sharing profits year by year, and increasing them
constantly by a 4-5%


V- REFERENCES

http://www.wikinvest.com/stock/Wal-Mart_(WMT)/Data/ROE/2013/Q1
http://stock.Wal-mart.com/annual-reports
http://en.wikipedia.org
http://finance.yahoo.com
http://investors.morningstar.com
http://www.theatlantic.com/business/
http://www.ehow.com/
http://www.businessinsider.com/
http://www.usanfranonline.com/