STRATEGIC

MANAGEMENT
Submitted to:
Prof. U.S. Racherla

Submitted By:
Group 4
Kartik Bajaj (15125019)
Kinsuk Ghatak (15125020)
Kumar Shashwat (15125021
Manpreet Singh (15125022)

Was Founded in
1962 by Sam
Walton
Operates in 16
countries
globally
Has Largest
market share of
total global
retail
Is Largest
Global
Corporation by
Revenue

WALMARTS TIMELINE

Topped the
Fortune
500
rankings of
Americas
largest
companies
for the first
time.

2002

First $1
billion
sales week

1993

First
Internation
al store
opened in
Mexico.

1991

The first
Sams club
opened in
Midwest
City,
Oklahoma

1983

1980

Walmart
crossed $1
billion of
sales

ENVIRONMENTAL SCANNING

HISTORY OF WALMART

Most retailers thought that big towns (> 0.1 million) were the only viable options
for discount-retailing.

STRATEGY FORMULATION

Sam Walton instead saw the small towns as an opportunity for discount retailing
business.

STRATEGIC EXECUTION
Sam then opened discount retail outlets in smaller communities and towns.

STARTEGY CONTROL
He faced distribution challenges and therefore adjusted his distribution strategy.

STARTEGIC EVALUATION
This structure was a huge success, and was replicated for large distribution hubs
serving up to 100 discount stores.

VISION: To be the best retailer in the hearts and minds of

consumers and employees.
MISSION: Saving people money so they can live better.

WALTONS VALUES & PRINCIPLES

WALMARTS 10 FOOT ATTITUDE
Whenever an employee comes within 10 feet of a customer, he will greet
him with a smile and ask if the customer needs any help.

SUNDOWN RULE
Every request, no matter big or small, gets same day service

THREE BASIC BELIEFS

Service to our customers
Respect for the individual
Striving for excellence

WALMARTS DIFFERENT STORE FORMATS

Innovation formed the basis for Walmarts sustainable growth and
success.
They experimented different store formats like Helens Arts &Crafts
and Dot Deep Discount Drugstores, which were unsuccessful and
others like Sams warehouse clubs, Supercenters , and
Neighborhood Marketers, which grew rapidly.
They had also started to built a substantial online business through
its websites www.walmart.com and www.samsclub.com. Its
presence online was extended through its online pharmacy and
music download service.

Sams
Warehous
e Clubs

Supercent
ers

Neighborh
ood
Markets

Not retail outlets

European concept of
hypermarket.

Supermarkets with an
average floor space
of 42,000 sq. feet.

Required membership
& not open to public

Combined a discount
store with grocery
supermarket.

Unlike Supercenters,
which had an
average floor space
of 187,000 sq. feet.

Limited products with

most of them in
multi-packs and
catering size packs.

Incorporated
specialty units like an
eyeglass store, hair
salon, dry cleaners,
photo lab etc.

Walmart Discount
stores
->102,000
sq. feet

Customer service was

minimal, the main
motive was to offer
lowest possible
prices.

These were open

24*7

Sams Club->129,000
sq. feet

WALMARTS INTERNATIONAL EXPANSION

No standard pattern i.e. Greenfield Entry, Joint Venture or
acquisition
The biggest challenge for Walmarts international expansion
was to adapt to the environment and conditions of each
country that it entered, as different countries varied largely in
their consumer habits and preferences, infrastructure,
competitive situation, as well as political & regulatory
environment.
Its most successful operations were in adjacent countries of
Mexico & Canada. UK & China too were big markets for
Walmart.
Walmart failed to establish itself in Germany and sold its 85
stores to Metro Retail after 8 years of consistent losses.
Walmart withdrew from South Korea in 2006, and its Seiyu
chain in Japan has also been a constant loss maker.

 Walmarts
most
successful
operations
were in
adjacent
countries of
Mexico &
most successful operations were in adjacent countries of Mexico
& Canada
Canada.
It has not
been able
to perform
exceptional
ly in any
other
country.

ONTINGENCY THEORY: INTERNAL & EXTERNAL ANA

Customer Loyalty
High Brand Value
Efficient Inventory
Management
Low Price
Efficient SCM
Bargaining Power
Strong Values

Insistence on doing things

the Walmart way.
Incapability in
comprehending culture
and understanding
circumstances of different
places for expansion.

STRENGT
H

WEAKNES
S

OPPORTU
NITY

THREAT

Strategic Alliances &

Mergers
Increased demand
Technological
Development
New retail formats

Cultural/Social difference in
new markets
Economic problems
Political scenario
Intense competition

WALMARTS SALES DATA

Sales

GRAPHICAL
EXPLANATIO
N OF
WALMARTS
SALES DATA

Walmart US

12%
28%

Walmart
International

60%

Sam's Club

300
250

Sales ($ billion)

200
150

Walmart US
100

Sam's Club
Walmart
Internationa
l

50
0
1

10

11

BCG MATRIX
N/A

WALMART US

WALMART
INTERNATIONAL
STARS

QUESTIO
N MARKS

CASH
COWS

DOGS
SAMS CLUB

Walmart Growth
Sales & Inventory YoY

500
450
400
350

Fig.300
in $Bn
250
200
150
100
50
0
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

CAGR Sales : 8%
CAGR Inventory : 5.5 % ; That means : Turning towards
Lean / JIT

Wal-Mart Competitor Analysis

Sales Revenue ; FY 2011
500
450
400
350
300

Fig. in $ Bn 250
200
150
100
50
0

Wal-Mart

Target

DollarGeneral

Costco

Inventory T/O Ratio

Costco

DollarGeneral

Inv. T/O Ration= Total

COGS / Avg. annual Inv.

Target

Wal-Mart
0

10

12

Purchasing & Vendor Relationships

Centralized purchasing.
FEROCIOUS buying power & RUTHLESS
bargaining power with suppliers
Dedicated supplier support (Ex. P&G)
Integrated Information system , resulting in real
time tracking , monitoring & inventory mgt.
Strict norms ,standards , eco friendly attitude
for the suppliers.
Buying from multiple suppliers Strategic
Sourcing
Less supplier power and very high
buyer's power.
Extreme pressure on vendors
for low cost

External analysis

External analysis
Existing Rivalry

Customers Power

Exit Barriers are high

Slow growth in the market
Buyers switching cost is
low.
Very high because of
Price Elastic demand
low switching cost
Kmart , Target in discount Cost sensitive
stores
customers.
PriceClub, Pace
Looking for discounts
Warehouse Clubs
and offers every time
FredMeyer Super Centre

External analysis
Power of Substitutes
Threat is medium.
Alternatives are in
development

Power of supplier

Less
High buyers power
Less switching cost
Multiple suppliers
High competition
Non critical products
Power of New
Entrants :
Less
High set up &
distribution cost

Warehousing & Distribution

82% of shipments done
through Walmart owned
Warehouses.
Hub & Spoke model.
Large Warehouses cover for
75-110 stores within 200
miles.
Cross Docking system.
RFID controlled inventory &
Logistics Mgt.
Very efficient fleet mgt.
Global purchasing centers
(China) for direct overseas
sourcing.
More tightly packed
trucks=> Higher inventory
turns & Lower distribution
costs.

Cross Docking

Inventory Replenishment

Ref. : HBR, George Stalk, Jr.Philip EvansLawrence E. Shulman

In store Operations
Excellence , Customer Service & Individual
respect are the three pillars of values
Customer centric
POS data (Know your customer better for better
offerings)
Decentralized , flat organization structure
Transition from branded products to great value
private label products
Tailored merchandise for local markets

Strategic Marketing

Pull strategy based on traditional American virtues of hard

work + Patriotism + National Causes
No promotional price cutting. Entire strategy built

upon EDLP
Advtg. / Sales = 0.55% , but still worlds top advertisers in
2012.
Repositioning from Heartless Corporate Giant to
Eco Friendly , sustainable company.
New logo with spark , symbolizing Sam Waltons
philosophy of innovation. The ideas that kept the
company running for 50+ years. Its also a symbol of
inspiration (walmartbrandcentre.com)

Competitive Advantage &

Positioning analysis for WalMart
Cost Focus Strategy (Cost Advantage)
Everyday low Price
Addressing the price sensitive customer
segment in all the varieties
Competitive Advtg.
Industry
Wide
(Broad)

Competitve
Scope
Segment sp.
(Narrow)

Low Cost

Uniqueness

Cost Leadership
Strategy

Differentiation
Leadership
Strategy

Cost Focus
Strategy

Differentiation
Focus Strategy

C.K Prahlads resource based

model analysis
Competitive advantage through best
use of core competencies
Core Competency : Ability to generate large sells
volume, allowing the company to remain profitable
with low margin & operational excellence
Trunk : Tangible links Physical embodiments
The stores and other infrastructures
Small Brunches : Different Bus like Wal-Mart
neighborhood markets , Supercentres , Sams
warehouse clubs, International Units
Fruits / Leaves : End products Commodities &
Customer satisfaction

IT at the backbone

Electronic Data Exchange for real time inventory mgt.

Continuous innovation for
RFID controlled logistics
Huge investment in own satellitesustainability
POS data mining (Right item @ the right store @ right time)
Accurate forecast , prediction, replenishment and shelves mgt.
Daily sales prediction depending on several variables
Speed at the heart and crucial for completive advtg.
Information Insights of customer needs / Customer at centre
One of worlds biggest tech spenders ($10.5 Bn in 2015-16)

HR Mgt.

Associates based on respect, expectations, close

communication & incentives
Hourly wage system
Relatively low pay , but competitive + Employee benefits
like healthcare & Profit incentives
Close collaborative flat work culture / Fun at work
But things are changing because of competitive positioning

Cost cutting
Sales growth
Overtime (Unpaid)
Gender discrimination
Things changed after
Sam Waltons death

Management Style

Fast response management system Key link

between H.O and stores
Thinking ahead of competitor The Saturday
meetings , sales analysis , regional VP meets
Operations , Management & Merchandising meeting
Uniquely designed Saturday meetings involving
participation form impetrators and tycoons ,
celebrities
Recent challenges : Huge size is becoming
difficult to manage.
Saturday meets losing its value