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Walmart
Sam Walton opened the first Wal-Mart discount store in Rogers Arkansas back in 1962, and 47
years later, Wal-Mart operates 8,159 units in 15 countries. Wal-Mart is currently the world’s
largest retailer and according to the Forbes top 500 businesses lists for 2009, Wal-Mart ranks
second in the nation and third in the world (behind Royal Dutch Shell and Exxon Mobil) - with a
total annual sales of 405,607 million.Wal-Mart employs over 2.1 million people worldwide,
making them one of the largest private employers in both the US and Canada, and the largest
private employer in Mexico.Even in the midst of a recession it’s estimated that Wal-Mart stores’
retail market share has raised markedly and they are seeing sales gains for 2009. Wal-Mart has a
dramatic story of success from its humble beginnings to its transformation into an industry
leader; one can only wonder what the future holds for this corporate giant.

Wal-Mart officially incorporated in 1969 and began selling shares of stock in 1970. In 1971 they
had their first 100 percent split at $47, then again the following year for $47.50 (after being listed
on the New York stock exchange). Their 11th and most recent 100 percent stock split occurred in
1999 at $95.

One aspect of Wal-Mart’s structure that has given them a competitive edge is their efficiency in
logistics. Beginning in the early 1970’s, Wal-Mart utilized a warehouse distribution strategy
facilitating bulk purchasing and streamlined distribution processes enabling them to dramatically
minimize distribution costs. Today Wal-Mart has 147 distribution centers with the average
facility serving 75-100 stores. Their truck fleet travels about 800 million miles a year and they
move over 5.5 billion cases of products. A Wal-Mart distribution center can have up to twelve
miles of conveyor belts and about 500-1,000 employees.

Wal-Mart has also been able to gain competitive advantage with their embracement of
technology. In 1987, Wal-Mart completed a $24 million investment in a satellite network - the
largest private network at that time. This network included voice and video communication
which streamlined the company’s communication and facilitated the flow of sales and inventory
information to the corporate headquarters in Bentonville, Arkansas. During a period of slower
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growth in the early 21st century, Wal-Mart made substantial technology investments that were
successful in gaining more inventory control and improving company performance.

In addition to their technological competitive edge, Wal-Mart continues to make smart strategic
decisions to exploit potential new revenue sources as they continually to expand into new
markets. Wal-Mart opened their first Sam’s Wholesale Club in 1983 marking the inception of
Wal-Mart’s second division of operations which now consists of over 700 stores. Later, Wal-
Mart devised and opened the first Wal-Mart Super center in 1988. Wal-Mart Supercenters
include the normal discount retail store and many extras. They include a complete super-market,
garden center, pet shop, pharmacy, tire and lube express, optical center, photo processing center,
and some additional smaller shops ranging from hair, nail, video, and fast-food outlets. Today
there are over 2,700 supercenters in the US. By 1998 they introduced the Neighborhood market
concept which catapulted them into becoming the largest US food retailer by 2001.

By 1991, Wal-Mart began its international expansion with the introduction of its first store into
Mexico. Two years later they formed Wal-Mart International - their rapidly growing third
division. Today, Wal-Mart has a total of 3,859 international locations and operates in Argentina,
Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, India, Japan,
Mexico, Nicaragua, Puerto Rico, the United States and the United Kingdom. Wal-Mart is now
planning on expanding their operations in Brazil and China even further.

Some innovative products and programs Wal-Mart has created have contributed to their
popularity and profitability. “Sam’s Choice” marked the launch of the first Wal-Mart brand
product in 1991 , and today Wal-Mart has over 30 different product lines encompassing an
astounding variety of products in food, apparel, homeliness and hard lines. In 2006, Wal-Mart
began its $4 generic prescription program - an astounding savings from the $29 average price of
generic prescription drugs.Wal-Mart began its site to store program in 2007 which offers free
shipping to a local store for purchases on their website walmart.com.

This year, Wal-Mart has rolled out plans for a National wireless service and has announced plans
for providing consumer electronics support and installation services which would compete with
Best Buy’s “Geek Squad”. CEO Raul Vasquez said last month that they want to become the
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biggest and most valued online retailer which suggests plans for Walmart.com expansion and
that could cause some concern at Amazon.com.

Walmart’s three Basic Belief’s and Values are: “Respect for the individual, Service to our
customers, and Striving for Excellence.” These long-standing belief’s haven’t stopped them
from becoming the source of some controversy and damaging press over the past decade
including involvement in multiple lawsuits involving questionable business practices. Notably,
there have been multiple allegations of sexual discriminatory practices and cases involving
unpaid wages. In 2006 a controversial movie debuted, “Wal-Mart, the high cost of low price.”
This movie highlighted the various recent lawsuits and pointed to the effects of Wal-Mart’s
alleged low wages on the usage of public assistance by Wal-Mart employees - stating that Wal-
Mart is costing taxpayers over 1.5 billion dollars to support its employees. Currently, Wal-Mart
is spending millions of dollars each year to support and improve its public image through public
relations, media firms, and political consultants.

To achieve a greater understanding of Wal-Mart Stores, Inc., it is important to analyze the

industry, market structure, and supply and demand conditions affecting Wal-Mart, and by
examining their past financial performance we might offer a glimpse as to what one should
expect in their future performance as a company.

One of the short term problems facing Wal-Mart is in line with their strategy of cutting their
prices. This issue is threatening the sales and profits of the company, since they are not able to
meet their target profit because of this price cutting. Another problem that can be attached is the
inability of the management to sustain their competitive advantage because lowering the price of
their products may compromise their competitive advantage in terms of considering as a
company that provides quality products. This will have a connotation that customer loyalty in
Wal-mart is at large because of the low price but not because of the quality of their products

In spite of the success Walmart was able to achieve, Wal-Mart are in terms of the criticisms of
the people internal and external to the company. Because of the strategy of Wal-Mart many
business are affected most especially the small business since Wal-Mart are enjoying high
competitive entrants. The company's price advantage extends to groceries, particularly in the
large footprint format. Also, another point of criticism is in line with their management
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approach. It is shown that Wal-Mart’s managers are dominated by men; this situation on the
other hand, leads to problems like biased promotion decisions

Its major problem which can be at the same time considered to be a threat, remains to be that of
the competitors who are striving hard to reach what Wal-Mart has attained. Wal-Mart has been
considered a veteran and a notorious in the game, running over even those that have been long
there before its arrival. These stores end up closing because Wal-Mart incredibly beats them. In
fact, to prevent Wal-Mart from monopolizing businesses, small-town locals have turned down
proposals of building a Wal-Mart store in their area.