By: Megan Dow, Kristin Belanger, and

Angle Bourgoin

Overview of WAL-MART
Presentation

Overview of WAL-Mart
History
Stocks
Stock Information
The Divisions
BCG
Their Mission and Vision Statement
New Mission and Vision Statement
External Opportunities and Threats
CPM
EFE
Internal Strengths and Weaknesses
IFE

April 19, 2006

Analysis
SWOT Matrix
SPACE
IE Matrix
Grand Strategy Matrix
Key Ratios
Different Strategies
QSPM
Decisions
EPS/EBIT Analysis
Implementation
Evaluation
Update!
References
Questions?

Overview of Wal-Mart

There are 4 different segments

Wal-Mart Stores- sales amounted to 64.3%
Discount Stores- 1,568 U.S
Supercenters- 1,258 U.S
Neighborhood Markets- 49 stores U.S
Sams Club- sales amounted to 13.0%
525 stores U.S
Is a member only, cash and carry operations
International- sales amounted to 16.7%
Discount stores- 942
Sams Clubs- 71
Supercenters- 238
Neighborhood Market- 37
Other- amounted to 6.1%
McLane is the nations largest distributor of food and merchandise to
convenience stores

April 19, 2006

History of Wal-Mart
In 1945 Sam Walton
opened the first Ben
Franklin franchise in
Newport Arkansas and
operated them with his
wife, Helen and brother,
Bud.
These were small chains
that were very successful.
In November of 1962
Wal-Mart was opened.
Wasnt until mid 1970s
that Wal-Mart began to
grow.
April 19, 2006

1st IPO in 1970.

Then 100 shares were
worth $1,650 dollars and
now the same 100 shares
are worth more than $6
million dollars.
In 1999 named #1 stock
on the Dow.

History
1987
2 new concept
implemented
Hypermarkets, which
sell everything
including food
Supercenters which are
scaled down
supermarkets
Also David Glass named new
CEO of Wal-Mart

April 19, 2006

In 1992 Sam Walton Died

and in 1996 Bud Walton
died.
In 1995 Wal-Marts Annual
Report was dedicated to
Bud.

New president and CEO

H. Lee Scott states that
While our history is rich
with success, theres no
question that our best
years are yet to come.

WAL-MART

Years since started

April 19, 2006

Important People

Co-founders, Sam and James Bud Walton started 1st Wal-Mart in

Rogers, Arkansas, 1962
David Glass was named president 1984, in 1988 he became chief
executive officer
S. Robson Walton named chairman of the board in 1992
President and CEO in 2000- H.Lee Scott
Vice President- Laura Philips

April 19, 2006

Important Facts
In 2004, we conducted more than 15,000
factory inspections - that's an average of
more than 40 a day.
We serve more than 138 million customers
per week.
Wal-Mart employs 1.6 million associates
worldwide in more than 3,700 stores in
the US and more than 1,500 throughout
the rest of the world.
April 19, 2006

WMT

Traded on NYSE
Symbol WMT
Index Membership:
Dow Jones Composite
Dow Industrials
S&P 100
S&P 500
S&P 1500 Super Comp
Sector: Services
Industry: Discount Variety Stores

April 19, 2006

WMT vs Dow Jones & S&P 500

April 19, 2006

WMT vs Industry

April 19, 2006

WMT 5 years

April 19, 2006

WMT 30 years

April 19, 2006

Stock Splits
2:1 Stock Splits

Shares

Market Price
on Split Date

Cost Per Share

Record Date

Distributed

May-71

200

8.25

47.00

5/19/1971

6/11/1971

Mar-72

400

4.125

47.50

3/22/1975

4/5/1972

Aug-75

800

2.0625

23.00

8/19/1975

8/22/1975

Nov-80

1600

1.03125

50.00

11/25/1980

12/16/1980

Jun-82

3200

0.515625

49.88

6/21/1982

7/9/1982

Jun-83

6400

0.257813

81.63

6/20/1983

7/8/1983

Sep-85

12800

0.128906

49.75

9/3/1985

10/4/1985

Jun-87

25600

0.064453

66.63

6/19/1987

7/10/1987

Jun-90

51200

0.032227

62.50

6/15/1990

7/6/1990

Feb-93

102400

0.016113

63.63

2/2/1993

2/25/1993

Mar-99

204800

0.008057

89.75

3/19/1999

4/19/1999

April 19, 2006

Stocks
WMT

COST

Pvt1

TGT

Industry

Market Cap:

193.36B

26.06B

N/A

45.01B

1.84B

Employees:

1,800,000

60,500

133,0001

338,000

18.62K

8.60%

11.00%

N/A

11.50%

9.60%

312.43B

55.68B

19.70B1

52.62B

3.63B

Gross Margin (ttm):

23.06%

12.37%

N/A

32.15%

28.72%

EBITDA (ttm):

23.25B

2.06B

N/A

5.73B

268.09M

Oper Margins (ttm):

5.93%

2.79%

N/A

8.22%

6.37%

Net Income (ttm):

11.23B

1.08B

1.11B1

2.41B

128.53M

EPS (ttm):

2.682

2.215

N/A

2.708

1.16

P/E (ttm):

17.30

24.97

N/A

19.08

17.08

PEG (5 yr expected):

0.99

1.72

N/A

0.96

1.07

P/S (ttm):

0.61

0.46

N/A

0.85

0.51

Qtrly Rev Growth (yoy):

Revenue (ttm):

COST = Costco Wholesale Corp.

Pvt1 = Kmart Corporation (subsidiary or division)
TGT = Target Corp.

April 19, 2006

Industry = Discount, Variety Stores

1

= As of 2005

Their Mission Statement

They dont have a formal mission statement
They are most interested in the customers needs
The culture consists of
Respect for the individual
Service to our customers
Strive for excellence
If they did have a formal mission statement it would be,
To provide quality products at an everyday low price
and with extended Customer servicealways.

April 19, 2006

Mission Statement

April 19, 2006

Their Vision Statement

"The secret of successful retailing is to give your
customers what they want. And really, if you
think about it from your point of view as a
customer, you want everything: a wide
assortment of good-quality merchandise; the
lowest possible prices; guaranteed satisfaction
with what you buy; friendly, knowledgeable
service; convenient hours; free parking; a
pleasant shopping experience."
- Sam Walton (1918-1992)
April 19, 2006

New Mission Statement

Our mission is to provide goods and services for our customers at
everyday low prices. With our innovative technology we strive to
have merchandise ranging from food, clothes, music, etc. on hand
24 hours a day 7 days a week. We are committed to the growth of
Wal-Mart and challenge ourselves to be better. We strive to have the
best, be the best, and provide quality and assurance to our
customers. Our employees are a huge asset to our company, and we
would not be the company we are today without them. They have a
huge impact on what our company was, what it is, and what it will
be. We also feel it is important to give generously to those who are
less fortunate than others, which is why Wal-Mart donates
thousands of dollars a year to different organizations.

April 19, 2006

New Vision Statement

Our vision is to provide good quality and
services to our customers while remaining
the market leader and striving daily to be
the most admired company.

April 19, 2006

Divisions of WAL-MART
McLanes
Neighborhood
Markets
International
Sams Club
Supercenters
Distribution Centers

April 19, 2006

McLanes
Nations largest distributor of food and
merchandise to convenience stores.
In 2003 was sold to Berkshire Hathaway,
Inc. so Wal-Mart could focus on core retail
business.

April 19, 2006

Neighborhood Markets
Began in 1998
Located in market with
Wal-Mart Supercenters
Offers customer
groceries,
pharmaceuticals &
general merchandise.
Provides 28,000 items to
customers.

April 19, 2006

International
Wal-Mart expanded so
that customers
everywhere would
associate its name with
low cost, best value,
greatest selection of
quality merchandise and
highest standards of
customer service.
Wal-Mart focused on
Global Positioning.
April 19, 2006

Sams Club
Membership-only, cash-and-carry operations.
Financial service credit card program (Discover
Card) available at all clubs.
Annual membership fee is $35; the Elite
Membership is $100.
Elite membership has additional benefits like
automotive service contracts, roadside assistance,
home improvement, auto brokering and pharmacy
discounts.

Bulk displays and name brand merchandise.

April 19, 2006

Worldly Stores
DISCOUNT
STORES

SUPERCENT
ERS

Argentina

11

Brazil

12

213

China

20

Germany

94

Korea

15

Mexico

472

75

50

33

United Kingdom

248

10

International
Totals

942

238

71

37

Country

Canada

Puerto Rico

April 19, 2006

SAM'S
CLUBS

NEIGHBORHOOD
MARKETS

Stores in US and World

U.S. Totals

1568

1258

525

49

Grand
Totals

2510

1496

596

86

April 19, 2006

BCG

April 19, 2006

External Factors

April 19, 2006

Key External Factors

Opportunities
Agreement with Berkshire Hathaway, Inc. acquired
McLane Company, Inc.
Fortunes number one Most Admired Company and
largest company in nation
Worlds largest private satellite communication
systems
Ron Brown Corporate Leadership Award

Threats
Buy American policy
Target
A solution to the monopoly that Wal-Mart has created
April 19, 2006

EFE
Key External Factors

Weights

Rating

0.0 to 1.0

1 to 4

Weighted Score

Opportunities

Agreement with Berkshire Hathaway, Inc.

acquired McLane Company, Inc.

0.1

0.3

Fortunes number one Most Admired Company

and largest company in nation

0.14

0.56

Worlds largest private satellite communication systems

0.16

0.64

Ron Brown Corporate Leadership Award

0.11

0.33
0

Threats

Buy American policy

0.15

0.45

Target

0.14

0.42

0.2

0.8

A solution to breaking the monopoly Wal-Mart has created

Totals

April 19, 2006

3.5

Internal Factors

April 19, 2006

Key Internal Factors

Strengths
Stores in all 50 states
New concepts:
Hypermarkets, supermarkets

Wide variety of merchandise

Nationally advertised merchandise
Limited lines of merchandise made in USA
Point-of-sale bar code scanning
Great employee benefits

Weaknesses

No formal mission statement

Management resisted putting women on board of directors
Hiring illegal minorities to clean
Growth for employees only in division

April 19, 2006

IFE
Key Internal Factors

Weights

Rating

0.0 to 1.0

1 to 4

Weighted Score

Internal Strengths
Stores in all 50 states

0.09

0.36

New Concepts - Hypermarkets, supermarkets

0.1

0.3

Wide variety of merchandise

0.1

0.3

Nationally advertised merchandise

0.08

0.24

Point-of-sale bar code scanning

0.13

0.52

Great Employee Benefits

0.09

0.27

0
Internal Weaknesses
No formal mission statement

0.1

0.3

Management resisted putting women on board of directors

0.13

0.39

Hiring illegal minorities

0.08

0.16

0.1

0.3

Growth for employees only in its division

Totals

April 19, 2006

3.14

SWOT
Increase the amount of hypermarkets, supermarkets
in 50
states as well as connect to the private satellite
systems(S2, SO)

Create mission statements for all of the acquired

companies and the different divisions of Wal-Mart
(O1, W1)

Use the Most Admired Company award as leverage

to advertise the wide variety of merchandise (S3, O2)

Use the Buy American policy to advertise

nationally how American Wal-Mart is (S3, T1)
Use point-of-sale bar code scanning as
leverage over competitors like Target (S5, T2)
Offer more merchandise that is not apart of the
"Buy American" policy to attract more customers (S3,
T1)
Find a solution to the monopoly that has been created
and come up with a new concept to beat the problem.
(S2, T3)

April 19, 2006

Increase minority sales through buying minority

products and selling them in discount stores (T1, W3)

CPM
Wal-Mart
Critical Success factors

Weights

Ratin
g

0.0 to
1.0

1 to 4

Target

Weighted
Score

Ratin
g

Kmart

Weighted
Score

1 to 4

Ratin
g

Weighted
Score

1 to 4

Market Share

0.03

0.09

0.06

0.06

Inventory System

0.02

0.06

0.06

0.04

Financial Position

0.04

0.08

0.08

0.12

Product Quality

0.05

0.15

0.15

0.1

Consumer Loyalty

0.03

0.09

0.06

0.06

Sales Distribution

0.02

0.06

0.06

0.04

Global Expansion

0.03

0.09

0.06

0.06

Organization Structure

0.02

0.06

0.06

0.04

Production Capacity

0.01

0.03

0.02

0.02

Advertising

0.25

0.75

0.5

Customer Service

0.05

0.15

0.15

0.15

Price Competition

0.4

1.2

0.8

0.8

0.05

0.15

0.1

0.15

Management Experience
Totals

April 19, 2006

3.21

2.41

2.14

SPACE

April 19, 2006

IE Matrix

April 19, 2006

Grand Strategy Matrix

April 19, 2006

Key Ratios
Last Trade:

Trade Time:

45.54

Day's Range:
4

a
y
'
s
R
a
n
g
e
:

5
.
4
0
-

52wk Range:

4:00PM ET

45.40 - 45.74

4
5
.
7
4

42.31 - 50.87

4
5

Change:
Prev Close:

45.82

Open:

45.62

Bid:
Ask:
1y Target Est:

2
w
k

0.28 (0.61%)

56.47

Volume:

12,143,600

Avg Vol (3m):

11,944,400

Market Cap:

189.78B

R
a
n
g
e
:

5
0
.
8
7

o
l
u
m
e
:

v
g

V
o
l

N/A
N/A

2
.
3
1

2
,
1
4
3
,
6
0
0

1
,
9
4
4
,
4
0
0

P/E (ttm):
(
3
m
)

a
r
k
e
t

EPS (ttm):
1

C
a
p
:

P/

8
9
.
7
8
B

Div & Yield:

1

E
(
t
t
m
)

6
.
9
8

E
2.

P
S
(
t
t
m
)

6
8

Di

0.
v

6
7

&
Y
i
e
l
d
:

April 19, 2006

16.98

(
1
.
5
0
%
)

2.68
0.67 (1.50%)

Different Strategies
Add more hypermarkets and
supermarkets to establish more growth
Buy products from other countries to have
more of a variety of merchandise and
better quality merchandise for customers

April 19, 2006

QSPM
More hypermarkets/
supermark
et

Wal-Mart
Key factors

Weight

External

AS

TAS

1 to 4

AS

TAS

Buy American
AS

1 to 4

TAS

1 to 4

Agreement with Berkshire Hathaway, Inc. acquired McLane's Company, Inc.

0.1

0.3

0.2

0.2

0.14

0.56

0.56

0.42

0.16

0.64

0.48

0.48

0.11

0.33

0.33

0.22

"Buy American" policy

0.15

0.45

0.45

0.6

Target

0.14

0.56

0.56

0.42

0.2

0.8

Fortune's number one Most Admired Company and largest company in nation

World largest private satellight communication systems

Ron Brown Corporate Leadership Award

A solution to breaking the monopoly that Wal-Mart has created

total should be 1.0

N/A

Internal

1 to 4

Stores in all 50 states

N/A

1 to 4

1 to 4

0.09

0.36

0.36

0.36

New Concepts - hypermarkets and supermarkets

0.1

0.3

0.4

0.3

Wide variety of merchandise

0.1

0.3

0.4

0.3

Nationally advertised merchandise

0.08

0.24

0.32

0.24

Point-of-sale bar code scanning

0.13

0.52

0.52

0.39

Great Employee Benefits

0.09

0.27

0.27

0.18

0.1

0.3

0.3

0.3

Management resisted putting women on board of directors

0.13

0.39

0.39

0.39

Hiring illegal minorities

0.08

0.16

0.16

0.16

0.1

0.3

0.3

0.3

No formal mission statement

Growth for employees only in its division

April 19, 2006

total should be 1.0

1
6.78

5.26

Decisions
We decided to add more hypermarkets
based on the QSPM even though the
numbers were close for both strategies

April 19, 2006

EPS/EBIT Analysis

Amount needed = $1 Billion

Stock Price = $45.54
EBIT Range = 435,950 - 635,950
Tax Rate = 26%
Interest rate = 5%
# Shares Outstanding = 4,453,000

April 19, 2006

EPS/EBIT
In $Millions

Common Stock
Financing

High
EBIT (12,719,000 in 2003)

Debt Financing

Low

High

Low

635,950

435,950

635,950

435,950

31,798

21,798

938,900

638,900

604,153

414,153

Taxes 26%

165,347

113,347

165,347

113,347

EAT

773,553

525,553

438,806

300,806

4,453,000

4,453,000

13,964,000

13,964,000

5.68

5.64

3.65

3.65

Interest 5%
EBT

# Shares Outstanding
EPS

April 19, 2006

Implementation
Begin adding more hypermarkets to towns
with populations large enough to support
them.
Increase the amount of hypermarkets by
one in every state (50 stores)
Increase revenue by Debt Financing per
EPS/EBIT analysis

April 19, 2006

Evaluation

Quarterly Reports
Yearly Reports
Store growth report
Annual Sales report
Key Ratios
Stock prices in comparison to competitors

April 19, 2006

In the News
In 2003 managed to get action lawsuit against Wal-Mart
based on so few women being among its managers given
that a majority of its workforce is female and also for
equal pay. Ended up settling case because didnt want to
lose a case for discrimination because would hurt WalMarts bottom line. But as the judge rightly ruled,
companies that do business on as large a scale as WalMart have to be prepared to answer for their actions on
an equally large scale. Case settled in June 2004 and
began in September of 2003.

April 19, 2006

In the News
In June 2005 Oklahoma grocer Super H filed lawsuit
against Wal-Mart Stores for using a scanner to collect
barcode data from the products on the Super Hs
Shelves. Wal-Mart allegedly sent workers into Super H
to check prices close to the time a Supercenter was
opening in August. Super H wants the scanner back, not
because of the price information but to make sure that
there is not inventory and wholesale prices in the
scanner. The real question in this case was not the price
scanning but can the scanner capture other information
from the scanning tag then just the price. The suit was
dismissed per news reports.
April 19, 2006

In the News
In April 2006 a suit was filed against a Wal-Mart in Maryland to
ensure that larger employers pay up to a percentage toward health
care for employees. ERISA is there to establish a uniform national
framework for sponsoring, administering, protecting, and regulating
employee benefit plans, including pension plans, and health and
welfare plans. ERISA has a broad clause that pre-empts states and
municipalities from enacting laws that relate to employee benefits
plans. In this case it is not sure if the Maryland law or bills in other
states violates the ERISA previsions. In February Wal-Mart
announced plans to upgrade its health care benefits. This was
decided in the middle of the uproar in this Maryland case.
Here are a few cases about Wal-Mart. There were 52 pages of cases
if you would like to see more go to Business & Company Resource
Center, News/Magazines.

April 19, 2006

In the News
Military Families Outreach Project
Partnership with Sesame Workshop to
support children of military families.

Children's Miracle Network

Buy a balloon, save a child's life.
April 19, 2006

Update!
International Division
2005 was a busy year for Wal-Mart
International. In December alone, the
company acquired 545 new stores and gained
more than 50,000 new associates in Japan
and South America, capping a year of robust
growth.

Now have 13 divisions within the company

April 19, 2006

References

http://www.walmart.com
http://finance.yahoo.com
Strategic Management Concepts and Cases
http://galenet.galegroup.com.prxy6.ursus.
maine.edu/servlet/BCRC?locID=maine_f
ortkent
Tony Gauvins presentation on Krogers
http://www.target.com
April 19, 2006

Questions?

Thank you for shopping at WAL-MART

April 19, 2006