Walmart

International Business Report

LISA TREVINO September 18, 2011

Description
Walmart ranked in the top ten among retailers in Fortune Magazines 2010 Most Admired Companies survey. They are a leader in sustainability, corporate philanthropy and employment opportunity. More than 200 million times per week at more than 9700 retail units under 60 different banners in 28 countries, Walmart serves customers and members. They employ 2.1 million associates worldwide, including almost 1.4 million in the United States and had fiscal year 2011 sales of $419 billion.

History
In 1962, Sam Walton opened his first discount store in Rogers, Arkansas. On October 31, 1969 the company incorporated as Wal-Mart Stores, Inc. The company went public in 1972 and shares were listed on the New York Stock Exchange. Because of the new capital, they grew to 276 stores in 11 states by the end of the 1970s. In 1983, the first Sams Club members-warehouse store opened. The supercenter followed in 1988, featuring a complete grocery, and 36 departments of general merchandise. By 1989, there were 1,402 Walmart stores and 123 Sams Club locations. Sales grew from $1 billion in 1980, to $26 billion.

Going International
In 1991, Walmart became an international company when they opened a Sams Club near Mexico City, Mexico. Today, Walmart International is a fast-growing part of Walmarts overall operations. They currently have 4,557 stores and more than 730,000 associates in 27 countries outside the continental U.S. and their net sales exceeded $109 billion in 2010.

Mission
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We save people money so they can live better. This was the mission that Sam Walton envisioned when he opened his very first Walmart. No matter where the person lives, Walmart is dedicated to offering the best quality merchandise at the lowest

prices in all their stores. They believe that if they help the customer save money, they will live better. They will save by buying items at their store and then be able to buy something extra with the savings.

Business Segments- Organization

Walmart has 3 business segments. Below are Fiscal Year 2010 highlights: Net Sales Walmart U.S. $260 billion Retail Units 3,804 4,557 609 Total Sq Footage 617 million 287 million 81 million

Walmart $109 billion International Sams Club $49 billion

Goals
Walmarts goals continue to deliver shareholder value by improving where they need to and continue to build momentum where they are already succeeding. Leadership is aligned on executing plans for the future to support their financial priorities of growth, leverage and returns. Walmarts priority of growth focuses on sales through comparable store and club sales and unit square feet growth. Fiscal 2012 goal is to increase sales 3.4%, and 60% coming from international sales. They plan to deliver square footage growth of 3% to 4% , and this takes into account their move in the U.S. toward smaller, more productive supercenters. Walmarts priority of leverage encompasses the Companys objective to increase its operating income at a faster rate than the growth in net sales by growing its operating, selling, general and administrative expenses at a slower rate than the growth of its net sales. In fiscal 2012, they have some planned investments in global e-commerce which will be reflected in unallocated corporate overhead. These are strategically important to the company but may contribute to higher growth in these unallocated expenses. Walmarts priority of returns focuses on how efficiently the Company employs its assets as reflected in its return on investment (ROI) and how effectively the Company manages working capital as reflected in its free cash flow. For fiscal 2012, they are focusing on their commitment to keep ROI stable. The
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past quarter was a flat 19.2% compared to last years ROI of 19.3%. This is a very strong return relative to their competitors. Expectations for full fiscal year 2012 EPS is to be between $4.35 and $4.50, an increase from fiscal 2011 underlying EPS of $4.07. Capital expenditure plan of between $12.5 billion and $13.5 billion for the year. This does not include CapEx for any acquisitions. Guidance ranges are as follows: Walmart U.S., $6.5 billion to $7 billion, Walmart International, $4 billion to $4.5 billion, Sams Club, $1 billion, corporate and other will be $1 billion, unchanged.

Vision
To be a company of the future that embraces advances in technology and energy and to keep prices low. (paraphrased) CEO Scott Lee Walmart recently outlined a set of goals that were aimed at helping Walmart strip out excess costs and promote low prices at a time when its core lower-income shoppers are being squeezed by a failing economy with falling house prices. They also pride themselves in being environmentally conscience by using renewable energy and creating zero waste. Walmart is also working with suppliers to make the most energy intensive products in its stores 25 percent more energy efficient within three years. Another area they are passionate about is healthcare. By working with doctors to increase the number of prescriptions that they electronically fill in the US they drove down more costs by being more efficient. Continual cost saving measures and a focus on their customers has established Walmart as one of the leading retailers in the world.

Values
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Walmart is known for its unique corporate culture. They have 3 basic beliefs that make them a great company. They live out these beliefs each day in the way they serve their customers and each other.

1. Respect for the individual Even though the backgrounds and personal beliefs of each employee is different, they never take each other for granted. They are encouraged to express their thoughts and ideas and treat each other with dignity. 2. Service to the customers Customers are the reason theyre in business, so they treat them that way. They offer quality products and very low prices and believe in exceptional customer service. 3. Striving for excellence They are never satisfied and strive to excel in all areas. Although they are proud of all their accomplishments, they continue to model the company after their founder, Sam Walton, who constantly searched for new ways to improve all that he did. The question that is asked frequently is Is this the best I can do?

Identity
Walmart is traditionally known for its low prices and broad selection, but is also known for constricting their suppliers, taking over areas where they can succeed by putting smaller stores out of business, and some questionable labor practices. They are in a somewhat unique position that falls in between the higher-end competitors like Costco and Target, and lower- end competitors such as the dollar stores. Their strategy has been to focus on the high-end competitors but they have been more successful at the lower end of the market with customers who were more cost conscious.

Strategy
Walmart has adopted a localization strategy for its international sector. They have customized their products to meet the demands of the locals. In 2011 they announced that they were accelerating their global commitment to sustainable agriculture. Since grocery is half of their business, this encompasses a large part of their strategy. They will focus on supporting the local farmers and their communities, through a combination of sourcing from them and providing training in agricultural practices. Second, they will reduce waste in the agriculture supply chain and help growers produce more food with fewer resources. Lastly, focus on sustainably source key agricultural products. In many countries, they have joint ventures with existing stores. For instance in Mexico, where Walmart has been since 1991, they entered into partnership with Cifra and eventually changed the name to Walmart de Mexico.
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They purchase from countless suppliers in the international markets they serve. This brings many direct jobs as well as indirect. Investing in the local communities by promoting social development and support programs has been very rewarding for Walmart. They have been known to donate some of the following: Vegetable gardens and family farms Food for the poor Given school educators nutritional training National disaster relief Orphanage and hospital maintenance

By taking a leadership role in agriculture, Walmart will continue to reduce costs while providing their customers with affordable, fresh, and high quality food.

SWOT Analysis
Strengths Brand name known worldwide Ability to make strategic adjustments when needed Efficient supply chain Attractive and user friendly website Low costs for the consumer Management infrastructure Promise to never increase margins High customer satisfaction Buy from local merchants when possible Good locations Large market share
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Weaknesses Poor sales of higher end items Criticism of the company Unreliable stocked items on shelves Too many part time employees vs full time

Limited size selections for the consumer Products that come from some countries with unfair labor laws Keep poor performing employees on hand

Opportunities Discovering ways to give the company a more distinctive look More of the international market is available for penetration Cooperative ventures to increase market share in international markets Lobby of government for tax breaks and incentives Promote a more energy efficient world Promote fair trade Expand diversity programs even more

Threats Regulations of Walmart pharmacies Small towns do not want entry of Walmart Bad media exposure Current economy Tariffs Other warehouse retailers Competitors gaining control over international markets

Cage Analysis

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References
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http://ivythesis.typepad.com/term_paper_topics/2010/03/global-strategy-analysis-wal-mart.html http://csumba.org/mba602/2010-Spr/Walmart%27s%20Global%20Strategy.pdf http://walmartstores.com/AboutUs/321.aspx

http://moneyland.time.com/2011/02/22/walmarts-identity-crisis-and-the-betrayal-of-the-blue-collarshopper/

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