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    Wal-Mart had $191 billion in revenues in 2002, making it the largest retailer in the US. Its strategy is to dominate retail markets everywhere by selling products at the lowest possible prices and expanding aggressively in the US and internationally. This strategy relies on Wal-Mart's immense size, resources, and financial power to outcompete rivals. However, critics argue Wal-Mart's labor practices and dominance hurt local communities and businesses.

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    Wal-Mart had $191 billion in revenues in 2002, making it the largest retailer in the US. Its strategy is to dominate retail markets everywhere by selling products at the lowest possible prices and expanding aggressively in the US and internationally. This strategy relies on Wal-Mart's immense size, resources, and financial power to outcompete rivals. However, critics argue Wal-Mart's labor practices and dominance hurt local communities and businesses.

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    59 views19 pages

    Wal-Mart: Staying On Top of The Fortune 500

    Uploaded by

    Dohaa Nadeem
    Wal-Mart had $191 billion in revenues in 2002, making it the largest retailer in the US. Its strategy is to dominate retail markets everywhere by selling products at the lowest possible prices and expanding aggressively in the US and internationally. This strategy relies on Wal-Mart's immense size, resources, and financial power to outcompete rivals. However, critics argue Wal-Mart's labor practices and dominance hurt local communities and businesses.

    Copyright:

    © All Rights Reserved
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    of 19

    Wal-Mart: Staying on Top of the

    Fortune 500
    Background
    Last year, Wal-Mart had revenues of $191
    billion. Wal-Mart's 2002 sales topped $218
    billion, with sales growth at 13.8 %. Its 2002 net
    income was $ 6.7 billion, a growth of 6 %.
    Wal-Mart has 1,283,000 employees, as of 2002;
    a growth of 11.2 %
    Wal-Mart is the largest retail store in the United
    States,
    continue
    During the 1970s, the retail industry became highly competitive, but, at the same
    time
    the economy became weak due to inflation. Sears was the leading retailer in the
    nation,
    during the 1970s, however, the recession of 1974-1975 and inflation affected Sears

    adversely. Sears targeted middle class families and expanded its overhead. Wal-
    Mart's strategy was to compete with its rivals and lower overhead expenses.
    Compared

    with Sears, which consisted of more than 6,000 distribution centers, Wal-Mart had
    only
    2,500 comparable units.
    Timeline
    1962 Wal-Mart opened the first store In Rogers, Ark.
    1970 Wal-Mart opens first distribution center and home office in
    Bentonville, Ark.
    1970 Wal-Mart traded stocks as a publicly held company
    1971 Wal-Mart in five states: Arkansas, Kansas, Louisiana, Missouri
    and Oklahoma.
    1972 Wal-Mart approved and listed on the New York Stock Exchange.
    1973 Wal-Mart in Tennessee.
    1974 Wal-Mart stores now in Kentucky and Mississippi, Texas
    becomes 9th.
    1977 Wal-Mart entered Illinois. 11th state: Alabama.
    • 1996 Wal-Mart enters China
    • 1997 Wal-Mart replaces Woolworth on the Dow Jones Industrial Average

    • 2000s

    • 2000 Wal-Mart ranked 5th by FORTUNE magazine in its Global Most Admired All-
    • Stars list.

    • H. Lee Scott named president and CEO of Wal-Mart Stores, Inc.


    • Wal-Mart ranked #1 Corporate Citizen in America in the 2000 Cone/Roper Report, an
    • annual national survey on philanthropy and corporate citizenship.
    • 2001 Wal-Mart has the biggest single day sales in history: $1.25 billion on the day
    after
    Thanksgiving.
    Wal-Mart Company Strategy
    • a. Dominate the Retail Market Everywhere
    • A key strategy of Wal-Mart is to dominate the retail market.
    Company founder Sam
    • Walton put in place a retail philosophy the company still follows.
    Wal-Mart is primarily a
    • discount retailer because they sell their products at the lowest
    possible prices. By
    • selling at the "lowest price." Walton outlines that the essence of
    successful discount
    • retailing to cut the price on an item as much as possible, lowering
    the markup, and earn
    • profit on the increased volume of sales.
    b. Growth by expansion in the US and Internationally.
    A strategic goal of Wal-Mart is to expand. It has done so successfully. Looking at the
    facts and figures clearly shows the corporations dominance and power. Currently the
    corporation employs over 1.3 million employees, one million in the US alone. The
    company owns over 4000 stores worldwide. Over 1,200 units (stores) are in operation
    internationally. Domestically, Wal-Mart is the largest US retailer, employing around 1
    million people. It has over 3,000 stores and outlets, and 77 distribution centers. The
    company serves more than 100 million customers weekly in all 50 states, Puerto Rico,
    and several nations around the world.
    c. Create Positive Brand and Name Recognition The company aims to
    create positive impression of customer satisfaction with the Wal-
    Mart brand. Their goal is to have the customer associate the retailer
    with the reputation of offering the best prices. The company
    accomplishes this through television advertising campaigns and
    newspaper adverts. Characteristic of Wal-Mart adverti singis the
    use of actual Wal-Mart stores and employees in its commercials. Key
    themes ,such as "Low Prices Always" are featured. The company
    engages in partnerships and co-branding. For example, many Wal-
    Mart stores have a McDonalds restaurant inside them. Due to the
    size of the retailer, certain exclusive promotions are made with
    Hollywood movie companies and music companies, for exclusive in
    Wal-Mart promotions and distribution
    d. Branching out into New Sectors of Retailing
    A successful company strategy has been to branch out
    into new sectors of retailing. Wal-Mart has recently
    become a major pharmacy, automotive repair shop,
    and is now moving into grocery sales. This is
    anexample of success - it exemplifies Sam Walton
    'svision of being the best retailer around After a store
    expands physically and geographically, it must then
    expand in terms of what they sell; branching out
    andcompeting with other businesses.
    What is the company's competitive strategy?

    The company's competitive strategy is to


    dominate every sector where it does
    business. It measures success in terms of sails
    and dominance over competitors. Its
    strategy is to sell goods at low process, outsell
    competitors, and to expand. Generally,
    Wal-Mart does everything it can to win over
    competitors
    How does the strategy relate to the company’s strengths and resources?

    The company uses its size, financial power, immense resources to dominate retail.
    That translates into effective use of strategy whether its operating a local store, to
    acquiring another retail chain in another country. The power and size of the company
    enables it to realize its goals with ruthless efficiency.

    4. How clear and long term is the strategy?

    The strategy is very clear and direct. It was put into place in the 1960's by Sam Walton,
    and refined over the decades. The company is proud of its strategy and even
    incorporates it within its moniker "Always Low prices, Always."

    5. What was the CEO's public message?

    The public message of the company is consistent, and has been so over time. Founded

    by Sam Walton, the company has grown considerably. The core message is that Wal-
    Mart is a "family friendly" store, and that it is good to its customers, and that it is an

    asset to the local community.


    Wal-Mart Policy Issues
    Wal-Mart's expansion into the foreign market
    Wal-Mart has moved in the past year to further expand into the
    world marketplace. The
    retailer already has close to 400 European stores, mostly in the
    UK and Germany
    (dir.yahoo.com). Where Wal-Mart wants to grow is in the Asian
    market.
    To expand beyond just retail and move into other sectors
    Wal-Mart has shown a definite desire to move just beyond retail
    shopping. Of the
    nearly 3000 stores in the US, 475 are Sam's Club warehouses,
    specializing in bulk
    sales from food to electronic items (ElBoghdady, Dina, "Washington
    Post"). Their chief
    competitor in this area is Costco, another warehouse chain, but Wal-
    Mart has the
    advantage of having more stores and the regular Wal-Mart stores to
    back up their
    investments.
    Dominance in Labor Relations
    Wal-Mart has long tried to hold the upper hand over its work force. They have
    consistently fought attempts by several segments of their work force to unionize. A
    recent example is Wal-Mart's battle against the United Food and Commercial Workers
    (UFCW) (Bernstein, Aaron, www.businessweek.com). There have been several
    disagreements between the Union and Wal-Mart, as Wal-Mart will not allow its workers
    to unionize. Several battles have been fought in court and in the U.S. Congress over
    Wal-Mart's questionable labor practices. Wal-Mart's policy has been one of delay and

    "terror" in the words of one union representative who has accused the company of old-
    fashioned union-busting tactics.
    Stakeholder Analysis
    • Market Stakeholders
    1. The Stockholders
    2. The Wal-Mart Executives
    3. The Employees
    4. The Communities where Wal-Mart is located
    5. Consumers
    • Non-Market Stakeholders
    1. Labor Unions
    2. International Retail Stores
    3. Politicians
    Political/Public Affairs Strategy
    Public Affairs
    Wal-Mart's power position relative to the key policy issues and
    stakeholders is one of
    domination. The size, wealth, and financial power of the
    company is impressive. It is
    the largest retailer in the United States. It is the largest political
    donor in the retail
    sectors. This dominance, and the company's finances, coupled
    with retaining the top
    lobby shops in the US give the company an advantage in
    Washington.
    PACs and Giving Strategy
    Wal-Mart has a Political Action Committee: Wal-Mart Stores INC PAC for Responsible
    Government. In 2001, up to February 2002, Wal-Mart has contributed $461,000 to
    federal candidates. The donations are distributed roughly 75% to Republicans, and
    25% to Democrats. The total donations by PACs in the retail sector in 2001-2 thus far

    totaled $1.5 million. Wal-Mart is the top political contributor among all retail sector
    PACs, totaling $600,000 in total contributions. In 2000, a Presidential election year,
    Wal-Mart PAC gave $457,050. (FEC and www.opensecrets.org) The giving strategy to
    political campaigns is substantial. Mostly to the Republicans.
    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.

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