Walmart Stores, Inc.: On Becoming the World's Largest Company (2002)

Wal-Mart Stores, Inc.: On Becoming the World's Largest Company (2002)

I. CASE ABSTRACT

Wal-Mart Stores, Inc. is an American-based discount retailing concern headquartered in Bentonville, Arkansas. In 2002, Wal-Mart Stores, Inc., of Bentonville, Arkansas, operated mass merchandising retail stored under a variety of names and retail formats, including Wal-Mart discount department stores; Sam's Wholesale Clubs, wholesale/retail membership warehouses; Neighborhood Markets, small grocery/drug store formats; and Wal-Mart Supercenters, large combination grocery and general merchandise stores in all 50 states. It was not only the nation's largest discount department store chain but also had surpassed the retail division of Sears, Roebuck and Co. in sales volume as the largest retail firm in the United States. Much of the success of Wal-Mart was attributed to the entrepreneurial spirit of its founder, Sam Walton. Sam Walton built the company from the ground up. Many considered him one of the most influential retailers of the century.

In the International Division, it operated its own stores in Canada, Mexico, Argentina, Brazil, Germany, South Korea, United Kingdom, and Puerto Rico, plus stores in China operated through joint ventures. It was also considered the largest retailer in the world, as measured by annual revenue, with sales for the year ending January 31, 2002 of approximately $217.8 billion.

Kmart Wal-Mart______ Sales Net Income Sales Net Income

FY 1990 $32,070,000, $756,000 $32,601,594 $1,291,000

FY 2000 $37,028,000 ($244,000) $191,329,000 $6,295,000

FY 2001 $36,151,000 ($2,418,000) $217,799,000 $6,671,000

Wal-Mart experienced sales growth of 20% in the fiscal year 2000. This impressive increase is a direct result of the company's expansion program.

Kmart shows an increase of $4,081,000,000 or 12.72% while Wal-Mart's sales increased to $217,799,000,000 (an increase of $185,197,000,000 or 568.1%), in fiscal year 2001.

Decision Date: 2002 2002 Sales: $219,812,000,000

2002 Gross Profit: $10,751,000,000

(2002 Fiscal Year was February 2001 to January 31, 2002)

II. CASE ISSUES AND SUBJECTS

Mass Merchandising Industry

Corporate Governance

The Marketing Concept

* Genesis of an Idea

* Foundations of Growth

* Becoming National

The External Environment

Domestic Corporate Strategies

International Corporate Strategies

Decision-Making in a Market-Orientated Firm

The Growth Challenge

III. STEPS COVERED IN STRATEGIC DECISION-MAKING PROCESS

Strategy Formulation Strategy Implementation Evaluation & Control

1A 1B 2 3 4 5A 5B 6 7 8

Ш Ш X Ш X X X X Ш X

Ш = Emphasized in Case X = Covered in Case

IV. CASE OBJECTIVES

1. To discuss Company Philosophy

2. To discuss Products and Services

3. To discuss Marketing Strategies and Distribution Methods

4. To discuss Facilities and Operations

5. To discuss the company's competitors

6. To discuss the company's market segments

7. To discuss Patents, Trademarks, and Licenses

8. To discuss the Finance issues

VI. DISCUSSION QUESTIONS

1. What are the strengths and weaknesses of Wal-Mart Stores, Inc.?

2. What are the opportunities and threats facing Wal-Mart?

3. What are the strategic factors in Wal-Mart situation?

4. What are Wal-Mart core competencies?

5. Does Wal-Mart have distinctive competency?

6. What has been the secret of the success of Wal-Mart?

7. What competitive strategy has Wal-Mart developed?

8. What industry is Wal-Mart a part of?

9. What are the other current industry forces, such as power of suppliers, distributors, etc.?

10. How is Wal-Mart industry changing?

11. What is the impact of the Internet on the company's future financial success?

12. What types of strategies must the company develop and implement?

I. CURRENT SITUATION

A. Performance

The combination of growth and acquisition had caused revenue increases every year. In 2001, it increased 14%, from $191 billion in 2000 to $218 billion. Earnings also increased in 2001 by 9%, to nearly $6.67 billion. Industry analysts noted that this growth was on top of an 18% compound annual growth rate over the past decade.

B. Strategic Posture

1. Mission

* Not explicitly stated. Sam Walton's personal goal for Wal-Mart "...has always been in our business to be the very best...and, along with that, we believe that in order to do that, you've got to make a good situation and put the interests of your associates first. If we really do that consistently, they in turn will cause... our business to