Narrated Walmart Introduction

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Founded in 1962 in Rogers, Arkansas by Sam Walton Today there are more than 8,692 stores and Sam’s Club locations in 15 countries which employ more than 2.1 million people. The company serves more than 176 million customers. In 2010, Fortune Magazine listed Walmart as the number one Most Admired Company in North America for its growth and ability to produce profits.

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Walmart History

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The five-year financial summary of Walmart (net sales/net sales increase):   2010: $405 Billion/1% increase from previous year 2009: $401 Billion/7.3% 2008: $373 Billion/8.4% 2007: $344 Billion/11.6% 2006: $308 Billion/9.8% Financial Performance Trends

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The Values of Walmart: Value Proposition Value Chain Value Net Core Values

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Walmart Business Model Eliminate the middle man and pass the savings onto the customer. Provide everything that the consumer needs under one roof. Shut down the competition. Aggressive Growth.

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Michael Porter’s Five Forces Model

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Walmart’s Complementors Force:   A complementor provides mutually beneficial support to another company through adding value to mutual consumers. With Walmart being a both a leader and industry giant, it primarily works alone. Its main complementor is Sam’s Club which offers some similar products as wholesale and adds dollars to the bottom line of the Walmart.

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Walmart has been on an aggressive growth pattern is now bigger than its competitors Target, Kmart, Sears, Home Depot and Costco combined. Its two biggest rivals are Target and Costco. Comparing the 2009 revenue of top retailers: Walmart $404 Billion Target $63.4 Billion Costco $71.3 Billion Sears/Kmart $44 Billion

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Tangible: Infrastructure, distribution network, financial assets Intangible: Information technology, brand, reputation, image, company culture Human: Intellectual capital, talent, knowledge, skills, communication, teamwork Organization: Core competencies, value proposition, capabilities, leverage Resource Based View of Walmart:

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Strategic Intent:   The strategic intent of Walmart is to diversify markets and be able to buffer economic and currency changes. The goal is to also to continue bringing their products and services to the areas with the highest population densities and to be positioned in emerging economies. Core Competencies   Walmart’s core competencies are using its economies of scale to procure large volumes of deeply discounted products while eliminating the middle man and sharing part of the savings with its customers. Value Migration   The value migration of Walmart is the blueprint of where the value is today and for the future of the organization. Walmart operates within a very mature industry sector. Today, the company dominates with its size and it’s pricing. Tomorrow, the company needs to continue with its differentiation (new markets, new services, and new products) and to develop buffers with the changes in the economy.

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Business Strategy and Design With globalization, the market has become highly competitive and has eliminated many of the weaker players. The tactics of retailers have become much more cutthroat to eliminate the opposition. Walmart operates with size and volume discounts which enable the retailer to offer a pleasurable and financially beneficial shopping experience for their customers. However, one revenue stream is not sufficient to maintain the lead position. Market segmentation and differentiation is the strategy that Walmart is using to increase its revenue streams and to buffer these profitable venues. The business design is the blueprint that Walmart uses to create the profit. For Walmart, the design is to buy in volume cheap and to sell in volume cheap to insure that their customers are able to “save money, live better.”

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Blue Ocean Strategy Perspective: Walmart operates within the Red Ocean. Its perspective is based on competition in an existing market space. The company makes a value/cost tradeoff and the strategic choice is based off of low cost. Black Swan Perspective: Walmart is not driven to make changes based upon negative events but rather to make changes driven by profit.

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What % of sales is devoted to R & D and innovations: The research and development is pushed down the supply chain to the supplier level. The investment dollars spent by Walmart are for marketing research for the continued development of the infrastructure. Total capital spending is projected to be $12.5 to $13.1 Billion for the year 2011. The goal of Walmart is to have a return-on-investment of every dollar spent.

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Marketing Strategy Is to guarantee “every day low prices” as a way to pull in customers compared to traditional discount retailers who rely on advertised sales

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Recommendations: Acquire smaller retail chains that are established in international markets. Acquisitions eliminate competition and reduce the risk of failure in new markets. When the business matures, grow the company’s presence organically with new stores and rebranding.   Improve the brands of some of the product offerings especially apparel, household and the jewelry departments. Entice customers with mid-level products and brands that follow the trends. Bring back American made products into the stores and showcase these items. Feature and present these companies with their products. Give U.S. shoppers a chance to support American businesses and jobs. Team up with schools to fund the teaching of financial literacy programs. Provide instructional materials with the Walmart logos. The literacy programs can teach about budgeting, saving and stretching household dollars. Provide grants for inventors to patent new technologies and products that improve the lifestyle of the consumers. Help fund innovation in the U.S. Invest in early technology such as wind or solar. The power of Walmart can impact and provide a better life for society.