Case Study Solution: Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc.
1) Please describe the sources of Wal-Mart's Competitive Advantage in discount retailing!
The global player Wal-Mart operates in 14 different markets all around the world, serving 176 million customers every week. Today, the second biggest company of the world, concerning turnover which amounts to 312,427 million US-$, categorizes its operational facilities into five divisions. Among those divisions are the Wal-Mart discount stores, offering convenience and low-priced goods. Wal-Mart supercenters are the biggest stores, being open 24/7 hours and employing a workforce of 350 people, selling all kinds of groceries and general merchandise at the lowest possible price. Wal-Mart neighborhood markets are specified in offering pharmaceuticals and fresh produce groceries such as diaries and meat. The fifth category, the so called Sam's club stores are the biggest members-only stores, offering goods in large volumes.
Wal-Mart started to build up its stores in smaller cities having a population ranging from 5000-25000 inhabitants, where hardly any other competitors were located. Consequently, consumers stopped driving to other cities to do their shopping, but started to shop at Wal-Marts stores in their own towns. By the mid 80's Wal-Mart had one third of its stores in regions where no direct competitors could be found. The discount-retailer gained therefore more influence on the customer, eliminating the prejudice that discount retailing is only possible and profitable in larger cities. Sam Walton strived for his vision to offer his products and merchandise always below competition. The whole company was oriented to do so from the very beginning as well as saving costs in all business decisions and areas. As a result out of this policy, Wal-Mart was able to build up high amounts of monetary reserves to resist long-term price conflicts with other competitors.
Concerning the merchandise, Wal-Mart allowed its store managers to find out which
1) Please describe the sources of Wal-Mart's Competitive Advantage in discount retailing!
The global player Wal-Mart operates in 14 different markets all around the world, serving 176 million customers every week. Today, the second biggest company of the world, concerning turnover which amounts to 312,427 million US-$, categorizes its operational facilities into five divisions. Among those divisions are the Wal-Mart discount stores, offering convenience and low-priced goods. Wal-Mart supercenters are the biggest stores, being open 24/7 hours and employing a workforce of 350 people, selling all kinds of groceries and general merchandise at the lowest possible price. Wal-Mart neighborhood markets are specified in offering pharmaceuticals and fresh produce groceries such as diaries and meat. The fifth category, the so called Sam's club stores are the biggest members-only stores, offering goods in large volumes.
Wal-Mart started to build up its stores in smaller cities having a population ranging from 5000-25000 inhabitants, where hardly any other competitors were located. Consequently, consumers stopped driving to other cities to do their shopping, but started to shop at Wal-Marts stores in their own towns. By the mid 80's Wal-Mart had one third of its stores in regions where no direct competitors could be found. The discount-retailer gained therefore more influence on the customer, eliminating the prejudice that discount retailing is only possible and profitable in larger cities. Sam Walton strived for his vision to offer his products and merchandise always below competition. The whole company was oriented to do so from the very beginning as well as saving costs in all business decisions and areas. As a result out of this policy, Wal-Mart was able to build up high amounts of monetary reserves to resist long-term price conflicts with other competitors.
Concerning the merchandise, Wal-Mart allowed its store managers to find out which
Bibliography: http://www.walmartfacts.com/articles/2502.aspx. http://www.plunkettresearch.com. http://www.12manage.com/methods_altman_z-score_de.html. Business Finance 7th edition, McLaney, 2006, pp 51-53.