WAL-MART STORES, INC

Step 1: Identify the Firms Existing Vision, Mission, Objectives, and Strategies.
Vision and Mission:
There is no formal vision and mission of Wal-Mart available in this case study.
Objective:
Wal-Mart is a retail store that strives to excellently serve, respect and focus on both domestic
and international customer by providing every-day low prices general merchandise to satisfy
customers needs and help customers to save money.
Strategies:
1. Forward Integration
Wal-Mart acquired four stores and six sites from Makro, the Korean Club store
retailer. (pg 614)
2. Horizontal Integration
Wal-Mart had acquired entrenched, dominant player, the Wertkauf hypermarket chain

in Germany. (pg 611)

Wal-Mart acquired 229 stores of Asda Group PLC, the UKs third largest supermarket

chain. (pg 615)

3. Product Development
Wal-Mart reported experimenting internationally with new operational elements,
including jewelry, one-hour photos, optical labs, and online home-delivery programs.
(pg 605)
4. Market penetration
Wal-Mart plans to add another 50 German stores by the year 2003. (pg 614)
Wal-Mart plans to open 120-130 new stores in existing international markets. (pg 616)
Wal-Mart announced plans to open 44-55 new stores, 200 new Supercenters, 20-25
new Neighborhood Markets, and 40-45 new Sams Clubs. (pg 616)
5. Cost Leadership
Wal-Mart foresaw opportunities to serve customers in other countries, using its
management and IT skills, purchasing scale, and corporate mentality of keeping costs

low. (pg 607)

Sams Clubs used high-volume, low-cost merchandising, minimized handling costs,
leveraged their buying power, and passed the savings on the members.

Step 2: Develop Vision and Mission Statements for the Organization

Below is the proposed vision and mission statement for Wal-Mart:
Vision
To be the best and the leader of retail store in the world.
Analysis:
The proposed vision statement is good as it is not vague and achievable. Wal-Mart currently
has no vision statement hence it shall prompt to develop its vision statement where it may
consider adopting this proposed vision as its vision statement. This is to provide a clear
direction for Wal-Mart business.
Mission
To be the most successful retail stores in the world (3) by delivering services and general
merchandise (2) to the markets we served (1). Our excellent management team and IT skills
(4) are striving to keep costs low to offer every-day low-prices products and services (7) to
our customers. As a result, it improved the sales and profits (5) and add-value to the
customers.
1.
Customers

Yes

2.

3.

4.

5.

6.

7.

8.

9.

Product Markets Technology Concern for

Philosophy Self-Concept Concern Concern
or services
survival, growth,
for Public
for
profitability
Image Employees

Yes

Yes

Yes

Yes

No

Yes

No

No

Analysis:
Based on the analysis above, the proposed statement of Wal-Mart had met 6 out of 9 of the
elements of the mission statement. This shows that the mission statement being proposed is
strong even it is lacking of philosophy, concern for public image and concern for employees
elements. Wal-Mart has no mission statement currently hence it is suggested that Wal-Mart
should develop a mission statement as soon as possible, where it may consider adopting this
proposed mission statement as its companys mission statement and added with the elements

that is lacking in the proposed mission so that the business may create their strategies more
effectively.

Step 3: Identify the Organizations External Opportunities and Threats

Opportunities
1. Puerto Rico has a strong upper- and middle-class component of population and a very
nature of shopping. (pg 611)
2. Great Britain is a traditional, easier point-of-entry for retail stores. (pg614)
3. Gross margin grow mightily when a company sent its rivals packing. (pg 614)
4. The UKs healthcare chain store Boots, the French cosmetics group Sephora, and Frances
Carrefour has encountered a myriad of problems in the Japanese market. (pg 615)
5. Japan is the worlds second largest retail market. (pg 615)
6. Many Chinese customers made repeated visits to the same store. (pg 613)
7. Many customers from Mexico and Canada had crossed into the US to shop and familiar
with giant retailer. (pg 611)
8. The foreign urban center, China, is the best business location. (pg 607)
9. One of Wal-Marts markets, South Korea is the worlds 11st largest economy and has
population of 47 million. (pg 614)
10. Asda Group PLC management worked well with Wal-Mart, they trading skills and
technologies. (pg 615)

Threats
1. Japan has high labor costs and a multi-layered distribution system. (pg 615)
2. Japanese retailers were notoriously aggressive in fighting competitors. (pg 615)
3. There is a cultural difference in foreign countries and they often erred in picking products.
(pg 613)
4. Argentina customers care less about vast selection than creatively priced and promoted
5.
6.
7.
8.

specials. (pg 613)

Buying everything under one roof seemed an anathema to the Germans. (pg 614)
Germany is the Western Europe's largest and most price-sensitive market. (pg614)
Germany still used an inefficient vendor drop system. (pg 614)
Carrefour stocking a smaller selection of items than Wal-Mart, thus keeping down its

overhead. (pg 612)

9. International cities other than America are crowded and space-precious, and less parking
lots. (pg 607)

10. There is fierce competition from Carrefour in Brazil, where Carrefour already deeply
entrenched in the country and offering a number of incentive promotions to fend off the
American retailer. (pg 612)

Step 4: Construct a Competitive Profile Matrix (CPM)

Wal-Mart
Critical Success
Factors
Financial Position
Global Expansion
Product Line
Experience
Price competitions
Market Share
Customer Service
Customer loyalty
Product Quality
Technology
Total

Weight
0.15
0.18
0.09
0.10
0.09
0.03
0.09
0.06
0.10
0.11
1.00

Rating
3
4
4
3
3
3
4
3
3
3

Score
0.45
0.72
0.36
0.30
0.27
0.09
0.36
0.18
0.30
0.33
3.29

Carrefour
Rating
2
3
3
4
3
2
3
4
3
3

Metro

Score
0.30
0.54
0.27
0.40
0.27
0.06
0.27
0.24
0.30
0.33
2.98

Rating

Score

2
2
2
2
2
2
2
3
3

0.30
0.36
0.18
0.20
0.18
0.06
0.18
0.36
0.30
0.22

2.34

Analysis:
Based on the CPM above, it shows that the weighted score of Wal-Mart is 3.29, the highest
among other firms. This shows that Wal-Marts critical success factors bring it a better
position as compared to its competitors, which are Carrefour (2.98) and Metro (2.34). It also
indicates that Wal-Mart has dominant advantage in terms of competitiveness in the current
market.
Step 5: Construct an External Factor Evaluation (EFE) Matrix

Weight

Ratin
g

Weighted
score

1.
Puerto Rico has a strong upper- and middle-class component
of population and a very nature of shopping. (pg 611)

0.09

0.40

2.
Great Britain is a traditional, easier point-of-entry for retail
stores. (pg614)

0.05

0.10

Key External Factors

Opportunities

3.
Gross margin grow mightily when a company sent its rivals
packing. (pg 614)

0.06

0.24

4.
The UKs healthcare chain store Boots, the French cosmetics
group Sephora, and Frances Carrefour has encountered a myriad of
problems in the Japanese market. (pg 615)

0.05

0.10

5.

Japan is the worlds second largest retail market. (pg 615)

0.02

0.08

6.
Many Chinese customers made repeated visits to the same
store. (pg 613)

0.07

0.21

7.
Many customers from Mexico and Canada had crossed into
the US to shop. (pg 611)

0.08

0.24

8. The foreign urban center, China, is the best business location.

(pg 607)

0.05

0.20

9.
One of Wal-Marts markets, South Korea is the worlds 11st
largest economy and has population of 47 million. (pg 614)

0.05

0.20

10.
Asda Group PLC management worked well with Wal-Mart,
they trading skills and technologies. (pg 615)

0.10

0.4

0.04

0.08

0.05

0.20

3.
There is a cultural difference in foreign countries and they
often erred in picking products. (pg 613)

0.06

0.12

4.
Argentina customers care less about vast selection than
creatively priced and promoted specials. (pg 613)

0.03

0.09

0.03

0.12

0.03

0.03

Germany still used an inefficient vendor drop system. (pg 614)

0.01

0.01

8.
Carrefour stocking a smaller selection of items than Wal-Mart,
thus keeping down its overhead. (pg 612)

0.01

0.01

9.
International cities other than America are crowded and spaceprecious, and less parking lots. (pg 607)

0.05

0.10

Threats
1.
Japan has high labor costs and a multi-layered distribution
system. (pg 615)
2.
Japanese retailers were notoriously aggressive in fighting
competitors. (pg 615)

5.
Buying everything under one roof seemed an anathema to the
Germans. (pg 614)
6.
Germany is the Western Europe's largest and most pricesensitive market. (pg614)
7.

10.
There is fierce competition from Carrefour in Brazil, where
Carrefour already deeply entrenched in the country and offering a
number of inventive promotions to fend off the American retailer.
(pg 612)

0.07

Total

1.00

Analysis:
The EFE of Wal-Mart shown weighted score of 3.14, it was significantly above the average
weighted score of 2.50. This indicates that Wal-Mart had effectively make use of the
opportunities it had and good in dealing with threats that are faced by it. Wal-Mart is
suggested to continue utilizing the advantages it owned to further develop more strategies to
improve its business performance in the future.

Step 6: Identify the Organizations Internal Strengths and Weaknesses

Strengths
1. In 2008, analyst predicted that Wal-Mart share could reach $35.7 billion and 5% of the
China market. (pg 614)
2. Wal-Mart was credited with holding down inflation in Mexico, with improving Britains
cost of living, and with helping to revolutionize the distribution system in China. (pg 616)
3. In the 2003 Financial Times/ PricewaterhouseCoopers annual survey of The Worlds
Most Respected Companies and Most Respected Business Leaders, Wal-Mart was
ranked 8th and CEO Lee Scott ranked 11th. (pg 616)
4. Wal-Mart is the worlds largest retailer that still thinks of itself as a small-town outfit. (pg
605)
5. The computer system developed by Wal-Mart held 3 times more data than the computers
of United States Internal Revenue Service and was second only to the technology system
of the Pentagon. (pg 610)
6. Wal-Mart investigating the use of RFID, a state-of-the-art microchip process that had the
potential to streamline and enhance inventory tracking, receiving, stocking, and scanning.
(pg 616)
7. By 2002, Wal-Mart was the dominant retailer in Canada. (pg 611)
8. By 2002, Wal-Mart was thriving in Great Britain. (pg 613)
9. Wal-Mart has a total of 1227 stores in many countries. (pg 606)
10. Wal-Mart culture is widely accepted by Chinese associates in China. (pg 613)

0.21

3.14

Weaknesses
1. Wal-Mart President and CEO Lee Scott claimed no firm blueprint or timeline in
international expansion. (pg 607)
2. Wal-Mart had abandoned efforts to establish a presence in Indonesia and Hong Kong. (pg
607)
3. Wal-Mart did not own its own distribution system in Brazil, it was dependent on
distributors to get goods to the store in a timely fashion. (pg 612)
4. Wal-Marts stock-handling equipment didnt work with the standardized local pallet
designs, and its computerized bookkeeping system did not fit the Brazilian system. (pg
612)
5. Sams Clubs were less than successful in Brazil because the concepts of a membership fee
and bulk buying were foreign to customers. (pg 612)
6. Wal-Mart closed 2 stores due to clash of shopping culture in German. (pg 614)
7. Wal-Mart lost some top-management talent, faced contentious vendor relations. (pg 614)
8. In Germany, Wal-Mart could not stay open 24 hours and could not open in Sunday due to
German law. (pg 614)
9. Sam Waltons 10-Foot Rule was distasteful to Germans. (pg 614)
10. The Japanese, who fastidiousness in product quality, rejected what they considered the
inferior quality of Wal-Mart products. (pg 615)

Step 7: Construct an Internal Factor Evaluation (IFE) Matrix

Weight

Ratin
g

Weighted
Score

1.
In 2008, analyst predicted that Wal-Mart share could reach
$35.7 billion and 5% of the China market. (pg 614)

0.04

0.16

1.
Wal-Mart was credited with holding down inflation in
Mexico, with improving Britains cost of living, and with helping
to revolutionize the distribution system in China. (pg 616)

0.06

0.24

3.
In the 2003 Financial Times/ PricewaterhouseCoopers annual
survey of The Worlds Most Respected Companies and Most
Respected Business Leaders, Wal-Mart was ranked 8th and CEO
Lee Scott ranked 11th. (pg 616)

0.05

0.2

Key Internal Factors

Strengths

4.
Wal-Mart is the worlds largest retailer that still thinks of
itself as a small-town outfit. (pg 605)

0.12

0.48

5.
The computer system developed by Wal-Mart held 3 times
more data than the computers of United States Internal Revenue
Service and was second only to the technology system of the
Pentagon. (pg 610)

0.10

0.40

6.
Wal-Mart investigating the use of RFID, a state-of-the-art
microchip process that had the potential to streamline and enhance
inventory tracking, receiving, stocking, and scanning. (pg 616)

0.09

0.32

7.
By 2002, Wal-Mart was the dominant retailer in Canada. (pg
611)

0.05

0.20

8.

0.05

0.20

0.02

0.06

0.04

0.16

1.
Wal-Mart President and CEO Lee Scott claimed no firm
blueprint or timeline in international expansion. (pg 607)

0.08

0.08

2.
Wal-Mart had abandoned efforts to establish a presence in
Indonesia and Hong Kong. (pg 607)

0.06

0.12

3.
Wal-Mart did not own its own distribution system in Brazil,
it was dependent on distributors to get goods to the store in a
timely fashion. (pg 612)

0.03

0.06

4.
Wal-Marts stock-handling equipment didnt work with the
standardized local pallet designs, and its computerized
bookkeeping system did not fit the Brazilian system. (pg 612)

0.04

0.08

5.
Sams Clubs were less than successful in Brazil because the
concepts of a membership fee and bulk buying were foreign to
customers. (pg 612)

0.01

0.02

0.03

0.06

0.06

0.06

8.
In Germany, Wal-Mart could not stay open 24 hours and
could not open in Sunday due to German law. (pg 614)

0.01

0.02

9.
Sam Waltons 10-Foot Rule was distasteful to Germans. (pg
614)

0.01

0.02

By 2002, Wal-Mart was thriving in Great Britain. (pg 613)

9.
Wal-Mart has a total of 1227 stores in many countries. (pg
606)
10.
Wal-Mart culture is widely accepted by Chinese associates
in China. (pg 613)
Weaknesses

6.
Wal-Mart closed 2 stores due to clash of shopping culture in
German. (pg 614)
7.
Wal-Mart lost some top-management talent, faced
contentious vendor relations. (pg 614)

10.
The Japanese, who fastidiousness in product quality,
rejected what they considered the inferior quality of Wal-Mart
products. (pg 615)
Total

0.05
1.00

0.10
3.04

Analysis:
Based on the Internal Factor Evaluation (IFE) analysis of Wal-Mart above, the weighted
score is 3.04, significantly above the average weighted score of 2.50. This indicates that the
internal position of Wal-Mart is strong. Wal-Mart may continue emphasize on its main
success factor which is considering itself as a small-town outfit to develop appropriate
strategy that may remain or further improve its internal position.

Step 8: Prepare SWOT Matrix, SPACE Matrix, QSPM. Give advantages and
disadvantages of alternative strategies.
i.

Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

Strengths

Weaknesses

1. In 2008, analyst predicted

that Wal-Mart share could
reach $35.7 billion and
5% of the China market.
(pg 614)
2. Wal-Mart was credited
with holding down
inflation in Mexico, with
improving Britains cost
of living, and with helping
to revolutionize the
distribution system in
China. (pg 616)

1. Wal-Mart President and

CEO Lee Scott claimed no
firm blueprint or
timeline in international
expansion. (pg 607)
2. Wal-Mart had abandoned
efforts to establish a
presence in Indonesia and
Hong Kong. (pg 607)
3. Wal-Mart did not own its
own distribution system in
Brazil, it was dependent
on distributors to get

3. In the 2003 Financial

Times/
PricewaterhouseCoopers
annual survey of The
Worlds Most Respected
Companies and Most
Respected Business
Leaders, Wal-Mart was
ranked 8th and CEO Lee
Scott ranked 11th. (pg 616)
4. Wal-Mart is the worlds
largest retailer that still
thinks of itself as a smalltown outfit. (pg 605)
5. The computer system
developed by Wal-Mart
held 3 times more data
than the computers of
United States Internal
Revenue Service and was
second only to the
technology system of the
Pentagon. (pg 610)
6. Wal-Mart investigating
the use of RFID, a stateof-the-art microchip
process that had the
potential to streamline and
enhance inventory
tracking, receiving,
stocking, and scanning.
(pg 616)
7. By 2002, Wal-Mart was
the dominant retailer in
Canada. (pg 611)
8. By 2002, Wal-Mart was
thriving in Great Britain.
(pg 613)
9. Wal-Mart has a total of
1227 stores in many
countries. (pg 606)
10. Wal-Mart culture is
widely accepted by
Chinese associates in

goods to the store in a

timely fashion. (pg 612)
4. Wal-Marts stock-handling
equipment didnt work
with the standardized local
pallet designs, and its
computerized
bookkeeping system did
not fit the Brazilian
system. (pg 612)
5. Sams Clubs were less
than successful in Brazil
because the concepts of a
membership fee and bulk
buying were foreign to
customers. (pg 612)
6. Wal-Mart closed 2 stores
due to clash of shopping
culture in German. (pg
614)
7. Wal-Mart lost some topmanagement talent, faced
contentious vendor
relations. (pg 614)
8. In Germany, Wal-Mart
could not stay open 24
hours and could not open
in Sunday due to German
law. (pg 614)
9. Sam Waltons 10-Foot
Rule was distasteful to
Germans. (pg 614)
10. The Japanese, who
fastidiousness in product
quality, rejected what they
considered the inferior
quality of Wal-Mart
products. (pg 615)

China. (pg 613)

Opportunities

SO strategies

1. Open more stores in China

1. Puerto Rico has a strong
market. (S2, S10, O8, O5)
upper- and middle-class
2.
Manufacture and develop
component of population
own brand products to
and a very nature of
customers. (S3, O6)
shopping. (pg 611)
3. Tapping into Great Britain
2. Great Britain is a
by opening stores there. (S3,
traditional, easier pointS8, O2)
of-entry for retail stores.
(pg614)
3. Gross margin grow
mightily when a company
sent its rivals packing. (pg
614)
4. The UKs healthcare chain
store Boots, the French
cosmetics group Sephora,
and Frances Carrefour
has encountered a myriad
of problems in the
Japanese market. (pg 615)
5. Japan is the worlds
second largest retail
market. (pg 615)
6. Many Chinese customers
made repeated visits to the
same store. (pg 613)
7. Many customers from
Mexico and Canada had
crossed into the US to
shop and familiar with
giant retailer. (pg 611)
8. The foreign urban center,
China, is the best business
location. (pg 607)
9. One of Wal-Marts

WO strategies
1. Expand presence in South
Korea by opening more
stores. (W1, O9)
2. Acquire quality merchandise
from foreign suppliers to
offer more variety of quality
products to customers.
(W10, O5, O1)
3. Send manager to training to
understand different cultures
and buying habits in
different countries. (W5,
W6, W9, O2, O5, O8)

markets, South Korea is

the worlds 11st largest
economy and has
population of 47 million.
(pg 614)
10. Asda Group PLC
management worked well
with Wal-Mart, they
trading skills and
technologies. (pg 615)
Threats

ST strategies

WT strategies

1. Japan has high labor costs

and a multi-layered
distribution system. (pg
615)
2. Japanese retailers were
notoriously aggressive in
fighting competitors. (pg
615)
3. There is a cultural
difference in foreign
countries and they often
erred in picking products.
(pg 613)
4. Argentina customers care
less about vast selection
than creatively priced and
promoted specials. (pg
613)
5. Buying everything under
one roof seemed an
anathema to the Germans.
(pg 614)
6. Germany is the Western
Europe's largest and most
price-sensitive market.
(pg614)
7. Germany still used an
inefficient vendor drop
system. (pg 614)
8. Carrefour stocking a
smaller selection of items
than Wal-Mart, thus

1. Replace vender drop system

of Wal-Mart stores in
Germany with RFID. (S6,
T9)
2. Pursue partnership with
Japanese retailer to reduce
competition & improve
market share. (S3, T1, T2,
T3)
3. Introduce new products and
services in supercenters such
as pharmacy to attract more
customers. (S7, S8, S10,
T10)

1. Acquire the remaining

66.7% in Seiyu with RM2
billion. (W1, T1, T2)
2. Create a joint-venture with
local retailer in Germany.
(T5, T6, W6, W8)
3. Hire new foreign manager
instead of sending local
manager to foreign markets
stores. (W7, T3, T4, T5)

keeping down its

overhead. (pg 612)
9. International cities other
than America are crowded
and space-precious, and
less parking lots. (pg 607)
10. There is fierce
competition from
Carrefour in Brazil, where
Carrefour already deeply
entrenched in the country
and offering a number of
inventive promotions to
fend off the American
retailer. (pg 612)

ii.

Strategic Position and Action Evaluation (SPACE) Matrix

Financial Position (FP)

1. Wal-Marts both net sales and net income increased 6% from 2001 to 2002.
2. Wal-Marts EPS increased from $1.41 in 2001 to $1.49 in 2002.
3. Wal-Marts current ratio improved from 0.9:1 in 2001 to 1.0:1 in 2002.
Industry Position (IP)
1. Wal-Mart is the largest retailer in the world.
2. Germany laws and regulations interfere the retailer setting of product cost and
limiting stores opening time.

Ratings
5.0
5.0
4.0
14.0
6.0
2.0
8.0

Stability Position (SP)

1. Wal-Mart had a 20-year average return on equity of 33% and compound
average sales growth of 35%.
2. Japan is currently suffering economic weakness and price deflation.

- 1.0
-5.0
- 6.0

Competitive Position (CP)

1. Wal-Mart has large number of stores located worldwide.
2. Wal-Mart key values are every-day low prices and the focus on the customer.

-3.0
-1.0
- 4.0

Conclusion
SP Average is -6.0 2 = -3.0

IP Average is +8.0 2 = 4.0

CP Average is -4.0 2 = -2.0

FP Average is +14.0 3 = 4.7

Directional Vector Coordinates: x-axis: -2.0 + (+4.0) = +2.0

y-axis: -3.0 + (+4.7) = 1.7
BMS should pursue Aggressive Strategies.

As referring to the SPACE Matrix above, Wal-Marts directional vector is fall on the upperright quadrant, indicating that aggressive strategy is the most suitable strategy that Wal-Mart
should pursue. Hence, Wal-Wart is recommended to use backward, forward, horizontal
integration, market penetration, market development, product development and/or related and
unrelated diversification in its strategys decision making process.

iii.

Quantitative Strategic Planning Matrix (QSPM)

Strategy 1 Open more stores in existing potential market

Advantages
Disadvantages
1. May raise the awareness of customers on 1. Need either hire new staff and manager or
Wal-Mart as the number of store is

transfer existing staff and manager to

increasing.
foreign countries for handling new stores.
2. Improved sales thus profits of Wal-Mart. 2. Selection of location need to be carefully
3. Increased Wal-Marts presence in market
planned.
hence increased market share.
3. Cost to set up new stores.
4. Need to investigate and understand
cultures of foreign country before setting
up new stores.

Strategy 2 Create joint-venture with existing retailer

Advantages
Disadvantages
1. Easier to enter market and accept by 1. Existing retailer might not interested with
customers.
Wal-Mart offers.
2. Eliminate or less competition.
2. Profits gain needed to be share.
3. Improved profits.
3. Less freedom in terms of operational
4. Could get access to managerial talent
management.
from new partner.

Key Factors
Opportunities
1.
Puerto Rico has a strong upper- and middleclass component of population and a very nature of
shopping. (pg 611)
2. Great Britain is a traditional, easier point-of-entry
for retail stores. (pg614)
3.
Gross margin grow mightily when a company
sent its rivals packing. (pg 614)
4.
The UKs healthcare chain store Boots, the
French cosmetics group Sephora, and Frances
Carrefour has encountered a myriad of problems in
the Japanese market. (pg 615)
5.
Japan is the worlds second largest retail market.
(pg 615)
6.
Many Chinese customers made repeated visits
to the same store. (pg 613)
7.
Many customers from Mexico and Canada had
crossed into the US to shop. (pg 611)
8. The foreign urban center, China, is the best
business location. (pg 607)
9.
One of Wal-Marts markets, South Korea is the
worlds 11st largest economy and has population of
47 million. (pg 614)
10.
Asda Group PLC management worked well
with Wal-Mart, they trading skills and technologies.
(pg 615)
Threats
1.
Japan has high labor costs and a multi-layered
distribution system. (pg 615)
2.
Japanese retailers were notoriously aggressive
in fighting competitors. (pg 615)

STRATEGIC ALTERNATIVES
Strategy 1
Strategy 2
A
AS
TAS
TAS
Weight
S

0.09

0.36

0.09

0.05

0.20

0.10

0.06

0.12

0.18

0.06

0.08

0.05

0.20

0.10

0.05

0.20

0.15

0.04

0.04

0.16

0.05

0.1

0.20

0.05

0.02
0.07
0.08

0.10

3.
There is a cultural difference in foreign
countries and they often erred in picking products.
(pg 613)
4.
Argentina customers care less about vast
selection than creatively priced and promoted
specials. (pg 613)
5.
Buying everything under one roof seemed an
anathema to the Germans. (pg 614)
6.
Germany is the Western Europe's largest and
most price-sensitive market. (pg614)
7.
Germany still used an inefficient vendor drop
system. (pg 614)
8.
Carrefour stocking a smaller selection of items
than Wal-Mart, thus keeping down its overhead. (pg
612)
9.
International cities other than America are
crowded and space-precious, and less parking lots.
(pg 607)

0.06

0.12

0.12

0.14

0.28

0.04

0.16

0.04

1.
Wal-Mart was credited with holding down
inflation in Mexico, with improving Britains cost of
living, and with helping to revolutionize the
distribution system in China. (pg 616)

0.06

0.24

0.18

3.
In
the
2003
Financial
Times/
PricewaterhouseCoopers annual survey of The
Worlds Most Respected Companies and Most
Respected Business Leaders, Wal-Mart was ranked
8th and CEO Lee Scott ranked 11th. (pg 616)

0.05

0.15

0.20

4.
Wal-Mart is the worlds largest retailer that still
thinks of itself as a small-town outfit. (pg 605)

0.12

0.48

0.12

0.03
0.03
0.03
0.01
0.01

0.05

10.
There is fierce competition from Carrefour in
Brazil, where Carrefour already deeply entrenched in
the country and offering a number of inventive
promotions to fend off the American retailer. (pg 612)

0.07

Total

1.00

Strengths
1.
In 2008, analyst predicted that Wal-Mart share
could reach $35.7 billion and 5% of the China
market. (pg 614)

5.
The computer system developed by Wal-Mart
held 3 times more data than the computers of United
States Internal Revenue Service and was second only
to the technology system of the Pentagon. (pg 610)

0.10

0.3

0.4

6.
Wal-Mart investigating the use of RFID, a stateof-the-art microchip process that had the potential to
streamline and enhance inventory tracking, receiving,
stocking, and scanning. (pg 616)

0.09

0.18

0.36

0.05

0.20

0.15

0.05

0.20

0.15

0.04

0.24

0.04

0.08

0.16

0.32

7.
By 2002, Wal-Mart was the dominant retailer in
Canada. (pg 611)
8.
By 2002, Wal-Mart was thriving in Great
Britain. (pg 613)
9.
Wal-Mart has a total of 1227 stores in many
countries. (pg 606)
10.
Wal-Mart culture is widely accepted by
Chinese associates in China. (pg 613)
Weaknesses
1.
Wal-Mart President and CEO Lee Scott claimed
no firm blueprint or timeline in international
expansion. (pg 607)

0.02

2.
Wal-Mart had abandoned efforts to establish a
presence in Indonesia and Hong Kong. (pg 607)

0.06

3.
Wal-Mart did not own its own distribution
system in Brazil, it was dependent on distributors to
get goods to the store in a timely fashion. (pg 612)

0.03

4.
Wal-Marts stock-handling equipment didnt
work with the standardized local pallet designs, and
its computerized bookkeeping system did not fit the
Brazilian system. (pg 612)

0.04

5.
Sams Clubs were less than successful in Brazil
because the concepts of a membership fee and bulk
buying were foreign to customers. (pg 612)

0.01

6.
Wal-Mart closed 2 stores due to clash of
shopping culture in German. (pg 614)

0.03

0.12

0.06

7.
Wal-Mart lost some top-management talent,
faced contentious vendor relations. (pg 614)

0.06

0.06

0.18

8.
In Germany, Wal-Mart could not stay open 24
hours and could not open in Sunday due to German
law. (pg 614)
9.
Sam Waltons 10-Foot Rule was distasteful to
Germans. (pg 614)

0.01

0.01

0.03

0.05

0.20

0.01

10.
The Japanese, who fastidiousness in product
quality, rejected what they considered the inferior
quality of Wal-Mart products. (pg 615)

0.05

Total

1.00

4.09

3.89

Comments:
Based on the QSPM for Wal-Mart above, the total attractiveness score for open more stores is
4.09; while acquire existing retailer in competitive market is 3.89. It can be see that the
attractive score for first strategy is higher than the second. Hence, Wal-Mart may choose to
open more stores in existing potential market as its business strategy.

Step 9: Recommend specific strategies and long term objectives. Show how much your
recommendations will cost. Clearly itemize these costs for each projected year.
Specific Strategy Recommended
Open more stores in existing potential market to expand presence in international market.
The potential market includes:
a. Main city of Shanghai, Guangzhou and Beijing
It is suggested that Wal-Mart may open 1 supercenter in Shanghai, 1 supercenter in
Guangzhou, and 1 supercenter in Beijing. Shanghai, Guangzhou, and Beijing are the
richest cities of China. Shanghai has more than 16 million of population; Beijing has
more than 14 million of population; while Guangzhou has more than 10 million of
population. It is believed that Wal-Mart may attract more customers to visit its stores
where Wal-Mart culture is widely accepted by Chinese associates.
b. Main city of San Juan
It is suggested that Wal-Mart may open 1 supercenter in the main city of San Juan.
San Juan is the capital of Puerto Rico where it has a population of 395, 326,
composed of strong upper- and middle class population. It is also the 46th largest-city

under the jurisdiction of the United States. It is believed that Wal-Mart may attract
many customers as San Juan citizens have a very nature of shopping.

Long-term Objectives Recommended

i.
ii.

To dominate the market of China and Puerto Rico in retail store sector.
To provides better services that adapted to customers culture and that exceed

iii.

customers expectation.
To strengthen the Wal-Mart image of Everyday Low Price in customers mind.

Budget of Recommended Strategy

No.
1
2
3
4
5
6
7

Items
Market research and survey
Acquire buildings for set up new stores
Staff recruitment for new stores
Staff training
Acquire products from appropriate suppliers
Marketing
Gather customers feedback
Total

Projected Costs ($)

1,000,000
10,000,000
3,000,000
200,000
22,000,000
5,000,000
600,000
41,800,000

Step 10: Specify how your recommendations can be implemented and what results you
can expect. Prepare forecasted ratios and projected financial statements. Present a
timetable or agenda for action.
Recommendation Implementation
1. Market Research
Wal-Mart may assign few experienced employees to do paperwork research and carry
out site visit to identify the appropriate location in each countrys capital to open up a
new store. This market research also includes the research regarding the current
culture practices of the citizens, any specific rules and regulations regarding new store
opening, as well as the major competitor in the market. These research can be done
through survey, questionnaire, or acquire information from third parties by paying a
fees needed.
2. Acquire buildings for set up new stores

After market research regarding location is completed, Wal-Mart may either rent or
purchase that particular location to build and renovate it to become Wal-Mart
supercenter.
3. Staff recruitment for new stores
Wal-Mart may transfer existing manager and staff to the new stores if there are any
additional employees available. Wal-Mart may also hire new manager and staff, either
local (send to new stores oversea) or foreign, to work in the new stores. The human
resource department shall select suitable candidates that willing and have ability to
work under the foreign environment. Besides that, the candidates that can understand
foreign country language will have better chances of being selected.
4. Staff training
The staff that is selected to be work in the new store shall be trained with Wal-Mart
own Three Basic Beliefs which are respect for the individual, service to our
customers, and to strive for excellent, as well as the culture of foreign country. This is
to equip them with the right knowledge to serve the customers and thus enhance the
stability of the store in the foreign market. Human resource department shall select the
best training courses from the course offeror with good quality and reasonable fees.
This training course shall also be approved by each new store manager to ensure that
the course is desirable and is appropriate and adapted to both culture of Wal-Mart and
foreign countries.
5. Acquire products from appropriate suppliers
After identify the demands of foreign market consumers through research, Wal-Mart
shall acquire products from appropriate suppliers, including both local and foreign
suppliers. The lowest-cost possible products with attributes that may satisfy
customers needs will be place in a priority position.
6. Marketing
Wal-Mart may provide promotion or special offers for the opening day of each new
store to attract customers interest and attention. It may approach to newspaper firm,
such as Peoples Daily from China, and El Vocero from Puerto Rico, to distribute its
flyer to as many household as possible.
7. Gather customers feedback
This can be implemented through interview or questionnaire survey where the
respondent will be Wal-Mart new stores customers. This is to investigate their
satisfaction level and seek for area that needed to be improved to build a better image
in consumers mind.
Forecasted Statement of Profit & Loss and Other Comprehensive Income

Wal-Mart Stores, Inc.

Budgeted Statement of Profit & Loss and Other Comprehensive Income
as at 31 Dec 2003, 2004 & 2005
2003
2004
$million $million
Sales
258,723 327,351
Cost of Sales
201,344 232,843
Gross Profit
57,379
94,508
Operating Expenses:
Selling and Administrative Expenses
40,142
43,983
Interest Costs:
Debt
980
1,011
Capital Leases
256
271
Profit before Interest and Taxes
16,001
49,243
Provision for income taxes
-4,012
-4,266
Profit before Interest
11,989
44,977
Minority interest and equity in unconsolidated subsidiaries
-192
-187
Net Income
11,797
44,790

Forecasted Statement of Financial Position

Wal-Mart Stores, Inc.
Budgeted Statement of Financial Position
As at 31 Dec 2003, 2004, 2005
2003
$millio
n
Assets
Current Assets
Cash & cash equivalents
Receivables
Inventories
Prepaid expenses and other
Total Current Assets
Property, Plant & Equipment, at Cost
Land
Building and improvements
Fixtures and equipment
Transportation equipment
Less accumulated depreciation
Net property, plant and equipment
Property under Capital Lease

2004
$millio
n

2005
$millio
n

2,455
2,200
24,133
1,561
30,349

2,671
2,400
26,522
1,677
33,270

2,941
2,600
27,166
1,723
34,430

13,241
30,712
16,433
1,211
61,597
-15033
46,564

15,624
32,545
17,988
1,452
67,609
-17299
50,310

17,924
35,155
19,326
1,533
73,938
-19233
54,705

2005
$million
381,068
250,811
130,257
46,133
994
244
82,886
-4,681
78,205
-200
78,005

Property under capital lease

Less accumulated amortization
Net property under capital leases
Other Assets and Deferred Charges
Net goodwill and other acquired intangible assets
other assets and deferred charges
Total Assets
Liabilities and Shareholders' Equity
Current Liabilities
Commercial paper
Accounts payable
Accrued liabilities
Accrued income taxes
Long-term debt due within one year
Obligations under capital leases due within one year
Total Current Liabilities
Long-term debt due within one year
Long-Term Obligations Under Capital Leases
Deferred Income Taxes and Other
Minority Interest
Shareholders' Equity
Share Capital
Capital in excess of par value
Retained Earnings
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity

4,631
-1,522
3,109

4,677
-1,613
3,064

4,698
-1,743
2,955

8,723
720
9,443
89,465

8,955
650
9,605
96,249

9,340
587
9,927
102,017

823
17,932
7,322
1,422
2,066
151
29,716
17,677
2,965
1,234
1,321

765
19,244
7,533
1,571
1,722
154
30,989
19,651
2,711
1,311
1,452

788
19,532
7,633
1,682
1,523
158
31,316
21,344
2,699
1,471
1,618

445
1,498
34,609
36,552
89,465

445
1,521
38,169
40,135
96,249

445
1,528
41,596
43,569
102,017

Forecasted Ratio
Wal-Mart Stores, Inc.
Forcasted Ratio Analysis For the Year Ended 31 Dec 2003, 2004, 2005
Formula:
1. Current Ratio
2. Net Profit Margin

Current Assets/Current Liabilities

(Net Income/Sales) x 100%
[(Profit After Tax- Preferred Dividends)/ Ordinary
3. Return on Stockholder's Equity Shareholders Equity] x 100%

[(Profit before Interest & Tax + Income Tax + Interest)/

Total Asset] x 100%

4. Return on Asset
Amount in $'million
Current Ratio

2003: 30,349/ 29,716= 1.02: 1

2004: 33,270/ 20,989= 1.07: 1
2005: 34,430/ 31,136=1.10: 1
Net Profit Margin
2003: 11,797 / 258,723 *100% = 4.6%
2004: 44,790 / 327,351 * 100% = 13.7%
2005: 78,005 / 381,068 * 100% = 20.4%
Return on Stockholder's Equity
2003: 11,797 / 36,552*100% = 32%
2004: 24,790 / 40,135*100% = 62%
2005: 38,005 / 43,569 *100% = 87%
Return on Asset
2003: ( 16,001 + 4,012 + 192 ) / 89,465 = 0.23*100%= 23%
2004: ( 29,243 + 4,266 + 187 ) / 96,249 = 0.35*100%= 35%
2005: ( 42,886 + 4,681 + 200 ) / 102,017 = 0.47* 100%= 47%

Timetable or Agenda for Action

2003
Work Plan
Market Research
Acquire locations
for new stores
Staff recruitment
for new stores
Staff training
Acquire products
from appropriate
suppliers
Marketing

Jan

Feb Mar

Apr

May

Jun Jul

Aug

Sept

Nov

Dec

Opening of new
stores
Gather customers
feedback

Step 11: Recommend specific annual objectives and policies

Annual Objectives
1. To increased market share by 5%.
2. To increased profits of Wal-Mart by 15%.
3. To expand sales in China and Puerto Rico by 20%.
Policies
1. Staff Working Hours Policy
Each staff shall work for 6 days a week, 12 hours per day. There will be two shifts
which are 7am-7pm and 7pm-7am. Every staff is fixed to a shift and is entitled to
freely select a day in a week as leave, but subject to supervisor approval to prevent
duplication with other staffs selection of leave day who in a similar position.
2. Staff Attendance Policy
Every staff shall punch-in and out in every working day using punch card to prove
for attendance. He/she shall not absence without valid reason for 6 times in a year or
will be punished by deduction of bonus in the year end. The staff shall contact the
ACTIVITY
THREE:
supervisor if there is a possible late to work or absence to avoid being
punished.
3. Staff Resignation Policy
TAKE CORRECTIVE
Each staff shall at least provide three months notice in writing to the responsible

party and inform the supervisor prior to his/her resignation.

ACTIONS

Step 12: Recommend procedures for strategy review and evaluation

The recommended strategy for review and evaluation is by following the strategy evaluation
framework below:
ACTIVITY ONE: REVIEW UNDERLYING BASES OF STRATEGY
Prepare revised Internal
Factor Evaluation (IFE) Matrix
Matrix

Prepare revised External

Factor Evaluation (EFE)

Compare revised to existing

existing
Do
significant
NO
differences

Compare revised to

occur?

YES

ACTIVITY TWO: MEASURE ORGANIZATIONAL

PERFORMANCE
Compare planned to actual progress toward meeting

Do significant
differences
occur?
NO

Continue present course

YES