Major Research Project A Presentation on Wal-Mart Stores Inc.

Presented To: Dr. Parikshit Charan

Presented By: Himanshu Sharma PGP II PGDM (G)

Topic Comprehensive study of Wal-Mart Stores Objective To study the various strategies of Wal-Mart Stores To study the supply chain management of Wal-Mart Stores

Introduction

The Wal-Mart stores story began in 1962, when Sam Walton opened first discount store in Rogers, Ark. The world's largest public corporation by revenue, according to the 2008 Fortune Global 500 The largest private employer in the world and the thirdlargest utility or commercial employer The largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables business

Source: www.walmartstores.com, www.forbes.com

Contd

Purpose

To we work together, lower the cost of living for everyone and give the world an opportunity to see what its like to save and have a better life. Sam Walton

3 Basic Beliefs & Values

Respect for the Individual Service to our Customers Striving for Excellence

Source: www.walmartstores.com

Board of Directors

Co-Founders Sam and Bud Walton H. Lee Scott, Jr. Chairman of the Executive Committee of the Board of Directors

S. Robson Walton Chairman of Board of Directors

Source: Wal-Mart Annual Report 2009

Michael T. Duke President and Chief Executive Officer

Products and Services Offered

Family apparel Automotive products Health and beauty aids Home furnishings Electronics Hardware Toys Sporting goods Lawn and garden items Pet supplies

Source: www.walmartstores.com

Contd

Vision centers Health clinics Fast food restaurants Hair salons Portrait studios one-hour photo centers Banks Pharmacies Jewelry House wares

Wal-Mart around the World

United States 4,258 Stores Argentina 28 Units Brazil 345 Units Canada 318 Units China 243 Units Costa Rica 164 Units Japan 371 Units Mexico 1,197 Units United Kingdom 358 Units

Source: www.walmartstores.com & annual report 2009

Corporate Strategy

Selling high quality and branded products at low prices To reduce prices use advance technology and warehousing Expansion in U.S. and International markets Dominance in retail market Creation of brand and company recognition Branching out into new retailing sectors

Competitive Strategy

Is to dominate every sector where it does business

Low prices Strong brand

To expand to win over competitors

Operations Strategy at Wal-Mart

Business and Marketing Strategy

Business Strategy

Low cost leadership Customer focus Team spirit

Marketing Strategies

Source: www.walmartstores.com

10 Foot Rule

Commit to the business Share the profits with all associates Motivate your partners, vendors, and suppliers Communicate everything about the business to everyone in the company Appreciate the associates and let them know they are appreciated Celebrate success Listen to everyone Exceed expectations Control expenses Swim upstream
Source: www.walmartstores.com

SWOT Analysis
Strengths Weaknesses
Efficiency in operations Community relation Low prices (EDLP) problems No. one company Labor relation problem Technology (Retail Link, RFID)

Opportunities
Strong brand equity New locations, and store types Overseas markets

Threats
Legal issues Legal issues

Supply Chain Management in Wal-Mart

Analysis
Sales by Segment
Net Sales

Net Sales

% of Total Sales

Walmart Stores U. S.
12% 25% 63%

Walmart Stores U. S.
Internation al

$255,745 $98,645 $46,854

63.74 24.58 11.68 100.00

Internatinal Sam's Club

Sams Club
Total Sales $401,244

Source: Walmart annual report 2009

Financial Highlights
Sales in billions
2009 Net sales Net sales increase Operating income Earnings per share Dividend per share

Except per share data

$401.20 $7.20% $22.80 $3.35 $0.95

Source: Walmart annual report 2009

Wal-Mart Success Factors

Flexibility Dependability Cost Quality Of Design Customer Service

Criticisms of Wal-Mart

Local communities

Store openings

At sites of archaeological relevance in Mexico At American Indian burial grounds and a Civil War battle site in Tennessee

Economic Impact

In a paper published in Farm Foundation in 1997, Kenneth Stone, Professor of Economics at Iowa State University found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening Traditional Moms & Pops forced out of business

Contd
Pricing and Competition Issues

Sued by many competitors for predatory pricing (intentionally selling a product at low cost in order to drive competitors out

of the market)

Investigated by the Federal Competition Commission for

monopolistic practices Retailer pressured suppliers to sell goods below cost or at prices significantly less than those available to other stores in 2003, the German High Court ruled that Wal-Mart's low cost pricing strategy "undermined competition" and ordered Wal-Mart to raise its prices Wal-Mart sells all its stores in Germany

Contd
Working conditions

In 2000, Wal-Mart paid $50 million to settle a class-action suit

that asserted that 69,000 current and former WalMart employees in Colorado had been forced to work off-the-clock

In December 2005, a California court ordered Wal-Mart to pay$172 million in damages for failing to provide

meal breaks to nearly 116,000 hourly workers

On October 16, 2006, 200 workers at Wal-Mart Super Center,

Florida, walked out in protest against new store policies and rallied outside the store, shouting "We want justice", criticizing the company's recent policies as "inhuman.

A report by Congressman Miller alleged that in ten percent of

Wal-Mart in India

Wal-Mart has tied up with Bharti Enterprises to have joint venture to form Bharti Wal-Mart Pvt. Ltd. for wholesale cash-and-carry and back-end supply chain management operations in India It opened its first best price modern wholesale store in Amritsar (Punjab) in May 2009 Its head office is located in Gurgaon (Haryana) It has public-private partnership with the Punjab government they have pioneered Bharti Wal-Mart Training Center which offers students world class training and exposure in retail

Source: www.walmartstores.com, www.bharti.com

Overview about 1st Store

Started its operations on 30th May 2009 Location: 7 km from Amritsar city, national highway 1 Area:3.5 acres Surroundings : Agricultural land and small villages Initial investment:7 million dollar Who can be member? Businessmen which include:

Retailers Wholesalers Manufacturers Traders Self employed professionals

Contd

These all must have proper business license or vat/tot number, with past 2 months sales report AGE:18 years and above All the members will be given a card , which they have to show at the time of entrance in the premises One businessman will be given two more additional cards for other members of his family Membership Cards are made free of cost

Contd

Major Clients

Border security force Army Air force Medium and small retailers

It has tie-ups with 30,000 retailers and 8,000 suppliers across the country

Why Amritsar

The first Best Price store has been opened in Amritsar because this city has a large wholesale market and is a feeder market for small business. Company want to start from north corner of India and Amritsar is the best option for that. All retail chains start from south, so they(BhartiWalMart) decided totally opposite, as to start their wholesale chain from north, to create a bench mark. There are many small towns near Amritsar so the company want to target these places.

Contd

There is huge mismatch between the prices charged from different retailers and wholesalers in Amritsar There is huge business opportunity in Amritsar and border cities From Amritsar they are also feeding Jammu and Kashmir

Challenges in India

Protests from small businesses (kirana )

FDI restrictions. Indias poor infrastructure Poor public image predatory pricing , unemployment Indias diversity and heterogeneity Competition from Indian Retailers including Pantaloon, Shoppers Stop , Piramals

Bibliography

Websites:

www.walmartstores.com www.walmart.com www.marketingteacher.com www.bharti.com www.businessline.com Walmart annual report 2009

Bajaj Chetan, tuli Rajnish, Srivastava V Nidhi, P. 2009, Retail Management, Oxford University Press. Pierce II A John, Robinson B Richard Jr., Mital Amita, P. 2008, Strategic Management Formulation, Implementation and Control, Tata Mcgraw-Hill

Annual Report

Books: