Walmart - a Case Study in Managing Technical Transitions

WAL-MART.COM:

A Case Study in Managing Technical Transitions

Managing Technical Transitions

Prof. Michael Lawless

February 24, 2001

Prepared by:

Andrew Bender

Ann Howell

Amy Lavin

David Torgerson

Founded in 1962 by Sam Walton, Wal-Mart followed an amazing pattern of success and growth, eclipsing all other U.S. department store retailers by the early 1990's. In early spring 2001, Wal-Mart enjoyed a huge market capitalization of over $230B, which was down from highs of nearly $300B in early 2000. Over the last year, however, Wal-Mart had suffered a number of failures in its Internet-based operations, as it tried feverishly, along with many other traditionally "bricks-and-mortar" companies, to make a transition to the Internet. As much of the commotion in the markets relative to the Internet subsided due to a slowing economy and a number of high-profile "dot-com" failures, Wal-Mart continued to experiment with it's Internet presence and corporate strategy. In this paper, we discuss Wal-Mart and its technical transition to the Internet. First, we examine the company from a value chain and core competency perspective, to gain insight on what value the company brings to the table, both in its traditional and Internet operations. We give a synopsis of Wal-Mart's recent and current online philosophies, and then turn to Wal-Mart's strategy as it relates to the transition. Finally, we provide an analysis of Wal-Mart's prospects and recommendations for the future.

Sources of Value

Wal-Mart had always invested heavily in infrastructure. They were among the first to use point-of-sale Uniform Product Codes (UPC) scanning, and intra-store radio frequency (RF) transmission of product UPC and pricing information between central store inventory systems and personnel with scanners on