Acknowledgement

A case study report like this one can complete with very much of commitment, dedication &
most is full effort. First and foremost, I would like to acknowledge the support of my IPM
lecture panel at Business School, Narahenpita who has supported, guided, and motivated us
to come up with the new ideas and creative thoughts to complete this project report
successfully.

Specially Mrs. Chandima Bambarendra (AMIPM, AHRP)

And also I want to acknowledge my IPM colleagues and group members.

I thank them one and all.

Finally, my family has been a constant source of inspiration and encourage to me.

Thank you all.

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 a. Executive Summary

Through this Walmart case study, I analyzed a business problem. The problem of, Walmart
facing and tries to overcome of the U.S financial crises due to the great economic recession
impact on 2008.

Wal-Mart Stores, Inc., branded as Walmart, is an American multinational retail corporation

that runs chains of large discount department stores and warehouse stores. The company is
the world's third largest public corporation, according to the Fortune Global 500 list in 2012,
the biggest private employer in the world with over two million employees, and is the largest
retailer in the world. Walmart remains a family-owned business, as the company is controlled
by the Walton family, who own a 48 percent stake in Walmart. It is also one of the world's
most valuable companies.

Walmart is planning “strategically” how to retain and win in the market, increase sales by
decreasing the prices of the commodities, attracting higher level and lower level income
customers, customer satisfaction, also as well as how to transform to get the advantage or
create an opportunity from this financial crisis.

Utilizing all the available information, this research has finally identified few possible
recommendations which mainly focus on aiding the Walmart to maximize its efficiency
levels further reducing some of its bottle necks which in turn will contribute towards the
Walmart sustainability and good will.

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 b) Problem Statement
 Concise
How Walmart has done the transformation strategically to win the market
position?
 Specific
1. Great economic recession in U.S (2008)-

The Great Recession (also referred to as the Long Recession, or the global recession of 2009)
is a marked global economic decline that began in December 2007 and took a particularly
sharp downward turn in September 2008. The initial phase of the ongoing crisis, which
manifested as a liquidity crisis, can be dated from August 7, 2007, when BNP Paribas, citing
a "complete evaporation of liquidity," terminated withdrawals from three hedge funds. The
bursting of the U.S. housing bubble, which peaked in 2006, caused the values of securities
tied to U.S. real estate pricing to plummet, damaging financial institutions globally. The
global recession has affected the entire world economy, with greater detriment to some
countries than others. It is a major global recession characterized by various systemic
imbalances and was sparked by the outbreak of the U.S. subprime mortgage crisis and
financial crisis of 2007–08. The economic side effects of high levels of household debt, trade
imbalances, high unemployment, and limited prospects for global growth in 2013 and 2014
continue to provide obstacles to full recovery from the Great Recession.

2. Financial crisis –

The global recession (2008) triggered by the financial crisis. The bursting of the U.S. housing
bubble, which peaked in 2006, caused the values of securities tied to U.S. real estate pricing
to plummet, damaging financial institutions globally. The financial crisis was triggered by a
complex interplay of policies that encouraged home ownership, providing easier access to
loans for subprime borrowers, overvaluation of bundled sub-prime mortgages based on the
theory that housing prices would continue to escalate, questionable trading practices on
behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow
over long-term value creation, and a lack of adequate capital holdings from banks and
insurance companies to back the financial commitments they were making. Questions
regarding bank solvency, declines in credit availability and damaged investor confidence had
an impact on global stock markets, where securities suffered large losses during 2008 and
early 2009. The financial crisis of 2007–2008, also known as the Global Financial Crisis and
2008 financial crisis, is considered by many economists the worst financial crisis since the
Great Depression of the 1930s. It resulted in the threat of total collapse of large financial
institutions, the bailout of banks by national governments, and downturns in stock markets
around the world. In many areas, the housing market also suffered, resulting in evictions,
foreclosures and prolonged unemployment. The crisis played a significant role in the failure
of key businesses, declines in consumer wealth estimated in trillions of U.S. dollars, and a
downturn in economic activity leading to the 2008–2012 global recession .

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 3. Consumer buying power-
As there is a financial crisis in U.S the consumer buying power becomes
low.

4. Less efficiency and effectiveness in store management-

As to the vice chairman of Walmart stores “customers spend average
spend only 21 minutes in the store, if you don’t make it easy for them to
shop during those 21 minutes , the possibility that they are going to buy
from you is much, much smaller”
As customers, they have no enough time to spend hours and hours for
shopping in their busy scheduled life style. They like well organized and
convenience place for shopping.
For minimum spending of time, Walmart has established their, online
purchasing website, “Walmart.com”, where customers can browse and
purchase goods. Online purchasing is a good innovation of saving time.

 Measurable
-Inflation rate
-Purchasing power of consumers
-Average time spending in Wal-Mart
-Lead time measuring
-Inventory control data monitoring

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Figure Inflation rate, Purchasing power of consumers

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 c) Literature Review

INDUSTRY ANALYSIS
The retail industry is dominated by few retail giants, with Walmart competing in several
retail categories. Walmart competes against Kmart and Target in the general merchandise
retailing; against Costco in the warehouse club segment; and against Kroger, Albertson’s and
Safeway in the supermarket retailing. Competition among retailers centers on pricing, store
location, variations in store format and merchandise mix, store size, shopping atmosphere,
and image with shoppers. Further analysis provided by the following figure diagnoses the
competitive environment of the retail industry.

POTERS 5FORCES Model of Competition on WALMART

Threat of New Entrants

5. Entry barriers are high due to the
presence of sizable economies of scale
and large capital requirements; current
industry members will strongly contest
efforts of new entrants to gain a
market foothold.

Bargaining Power of
suppliers Bargaining Power of
Industry Rivalry
Industry members account for customers
Competing sellers have
a big fraction of suppliers’ There is a broad base of buyers
triggered heated price
total sales and continued high so no single buyer can demand
competition and are active in
volume purchases are price concessions; buyers
making fresh moves to
important to the wellbeing of purchase merchandise in small
improve market standing and
suppliers. quantities; buyer loyalty for
business
certain brands exist

Threat of Substitutes
Substitutes for big box retailers are
smaller grocery
Stores: substitutes are higher
priced relative to the performance they
deliver

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WALMART’S STRATEGIES

CORE STRATEGY

The core feature of Wal-Mart’s strategy is overall low-cost leadership. . They do nothing to
really differentiate themselves from competitors and provide no-frills self-service stores that
always provide the lowest prices It attracts a broad spectrum of customers by supplying a
wide selection of the lowest-cost general merchandise.
Walmart achieves a cost advantage by controlling its cost drivers relentlessly wringing cost
efficiencies out of its supply chain. Wal-Mart has built enough clout with suppliers that they
can dictate the prices and go in and change suppliers manufacturing processes in order to
wring out more and more savings for the consumer. Everything that Wal-Mart does from
calling suppliers collect to having execs double up in hotel rooms, is to save the customer
money. While they do try to provide good customer service on top of low prices, Wal-Mart’s
strength is low-prices. No one has such a supplier and distribution network like Wal-Mart
that allows such low prices.
(Walmart’s customer’s in-store experience is based on “fast, friendly, clean” & their
merchandising strategy is based on “win, play, show”. Walmart has fewer stock items in
stores. Walmart is expecting by this strategic action is, if they maintain fewer stock items,
walmart can lower the maintaining cost and other relevant costs, so they can sell the good for
a lower price in higher volume so Walmart can increase the sales. But Walmart should more
selective about which products to carry.)

COMPLEMENTARY STRATEGIES
To strengthen its competitiveness, Walmart collaborates closely with suppliers with strong
Brand-name/Image who are dominant in their category, who have full product lines, and who
can bring in new and better products to retail shelves. Walmart’s procurement personnel
spends considerable time meeting with vendors, understanding their cost structure, and
learning how a vendor could cut down its costs in order to capture win-win relationships for
both parties.

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To expand its geographic coverage, the company opens stores in small towns surrounding a
targeted metropolitan and saturates each area before moving into new territory. International
expansion involves a combination of new store construction and acquisition. As Walmart
enters foreign markets, it intends to “remain local” by customizing its offering to match the
taste and preferences of local buyers and operating through the management of natives of the
foreign countries.
Walmart also employs simultaneous offensive initiatives on many fronts. Experiments in
store layout, merchandise displays, store color schemes, and promotions are always under
way. Wal-Mart also engages in preemptive strikes especially when it enters a new market by
securing a dominant position in the geographic area and forcing smaller retailers out of
business.

SUPPORTING STRATEGIES
Marketing and Sales: Wal-Mart meets customers’ needs with four different retail
concepts: Discount stores, Supercenters, Sam’s Clubs and Neighborhood markets.
Technology:
Walmart is a first-mover in upgrading and improving its technological capabilities. It uses
computers, satellite, and information systems in communicating with vendors, electronically
purchasing orders, tracking sales and inventory, identifying slow-selling items and squeezing
costs out of the supply chain.
Ex: Distribution Center Operations: Several labor-intensive tasks
had been automated and cost-efficient system of conveyors, bar-coding and handheld
computers have been utilized to continuously streamline distribution operations.

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SWOT Analysis on WALMART

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PEST Analysis on WALMART

 Political

Walmart has been at times subjected to political action law suit. For instance, it has
been subjected to the law suit for gender discrimination.

 Economic

The US has its plan to moderate the increase of supercenters in order to leverage
capital assets through a plan which is designed to increase returns and sales in U.S.
stores. This is likely to affect Walmart.

 Social

There has been a trend in various places that Walmart is the best place to go shopping.
Therefore, consumers in US who want one stop service go to Walmart as their first
choice because of the social influence

 Technology

Walmart retail uses modern technologies for the core purpose of marketing. It mostly
relies on the internet and social media for advertising and selling of its product. The
CEO of Walmart once noted that, technology is among the foremost concerns on the
agenda of marketing in Walmart.

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POTER’S Value Chain Analysis on WALMART

Primary
Activities

Support
Activities

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d) Alternatives
1) Improve the store efficiency by in-store merchandising with back-end logistics.
2) Financial crisis
 Buying power become low
 Exchange rates
 Inflation

3) Atmosphere-

Changing of interior designing

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e) Implementation

1. Develop strategic plan called “project impact” to remodel the Walmart.

2. Change the shopping environment
 Logo
 Slogans
 Coloures
 Store arrangements
3. Increase the efficiency of shopping floor by more products with less spending time.
4. Reposition of goods
 Pharmaceutical items
 Grocery items
 Apparel
 Hardware

5. Logistics and inventory management system.

-Reducing 15% of stock keeping units

6. Improve the merchandising strategies

 Buy high volumes with few rangers of products.
 Introduce the “cheap-chic” products for the low price concern consumers.
7. Develop the innovative marketing strategies such as,
 Cheap chic
 WIN-PLAY-SHOW
 FAST-FRIENDLY-CLEAN

8. Wal-Mart should project a more community friendly, environmentally concerned, and

outstanding employer image. A portion of profits should be returned to the
community by sponsoring charity events, scholarships, community clean-up, and the
like to remedy the fierce resistance of local residents and replace it with a welcoming
attitude. This should allow Walmart to gain easy entry in other smaller towns and
even in major metropolitan areas.

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 f) Conclusion

In conclusion, Wal-Mart is the number one retailer in the United States and is at the top of the
Fortune 500 listing. Wal-Mart operates in many countries world-wide and is moving into
new countries every year.

Wal-Mart is also expanding as a retailer. They have expanded into many other sectors of the
marketplace, including groceries, gas stations, electronics, and auto maintenance. Each year,
Wal-Mart finds new ways to grow and offer more services to their customers.

Each year, the number of people who have a stake in Wal-Mart also grows. Each year, more
claims are made against Wal-Mart by the unions and other businesses that have been forced
out of business. Wal-Mart is often able to uncut many other local industries and more and
more local businesses are shutting down when Wal-Mart moves into town. The unions are
filing more court claims against Wal-Mart because they encourage their workers not to join
unions. As a result of Wal-Mart's ever growing size and variety of services they offer, their
public affairs department is going to become more and more important. As Wal-Mart att
ectors of the marketplace, there is going to be more regulation against them and their public
affairs department is going to have to work harder to make it possible for Wal-Mart to
continue to grow.

And as the animosity against Wal-Mart becomes more widespread, here and in foreign
countries, Wal-Mart is going to have to work harder to maintain their good reputation. Wal-
Mart's foundation will become increasingly more important for giving things back to the
community.

In order for Wal-Mart to stay at the top of their game and follow the company strategy and
achieve their key policy goals, they are going to have deal better with their stakeholders and
make sure they guard their reputation well.

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References
Books-
 Armstrong M – A Handbook of Human Resource Practice (Kogan Page, 2011)
 Dessler G. – Human Resource Management, 11th Edition
 Brooks 1 – Organizational Behaviour, Individuals, Groups and Organization – 2nd
edition (Prentice Hall, 2003)
 Huczynski A and Buchanan D – Organizational Behavior: An Introductory Text
(Prentice Hall, 2000)
 Johnson G and Scholes K — Exploring Corporate Strategy (Prentice Hall, 2002)
 Coulter M — Strategic Management 2nd Edition (Prentice Hall, 2001)
 Lynch R — Corporate Strategy (Prentice Hall, 1999)

Web sites-
 http://www.walmart.com/
 http://en.wikipedia.org/wiki/Walmart
 file:///C:/Documents%20and%20Settings/Administrator/Desktop/Great_Recession.ht
m
 file:///C:/Documents%20and%20Settings/Administrator/Desktop/Financial_crisis_of_
2007%
 http://www.slideshare.net/ahadel/wal-mart-assignmentstrategic-managementahmed-
m-adel
 www.bloomberg.com Bloomberg, provider of worldwide financial information
 www.emerald-library.com/EMR provides access to journals
 www.forbes.com Business and financial news
 www.hemscott.net provides company information
 Charles Fishman, “The Wal-Mart You Don’t Know,” available from
http://www.fastcompany.com/magazine/77/Wal-Mart.html,
 Stephanie Armour, “While hiring at most firms chills, Wal-Mart’s heats up,” available
from http://www.usatoday.com/money/industries/retail/2002-08-25-walmart-
employment_x.htm
 file:///C:/Documents%20and%20Settings/Administrator/Desktop/walmart/GDP%20-
%20Purchasing%20Power%20Parity%20-%20United%20States.htm

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