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Wal Mart

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Wal Mart
Wal-Mart: An American Original
- Agenda
1. A Retrospective on its Growth
2. Innovative Business Model


How Did Sam Walton Get These Ideas?

3. Wal-Mart Today: The Challenges




Retreat from Germany in 2006
Sluggish Growth in the US Market
Clamour at Home: The Price of Becoming Big

4. Wal-Mart’s Response




Dr. Lakshmi Mohan

Global Ambitions
Re-thinking “One-Size-Fits-All” Approach
Flexible Workforce
1

How Wal-Mart Got There
- A Retrospective on Its Growth

 The Numbers: How “Big” is Big?
 IT: The Driver of the EDLP strategy
 Management Process
… Partnership with Suppliers
… Partnership with Employees
… Obsessive Focus on Costs

Dr. Lakshmi Mohan

2

Wal-Mart: A Behemoth …
 1962

: Sam Walton launched his first store

 Location : Bentonville, a backwater in Arkansas,
“a state where chickens outnumber people”  Today : World’s Largest Retailer
 Four times as big as #2 Retailer, Carrefour
 5,482 stores in 14 countries as of Oct 31, 2005
 Revenues: 285B vs GE: $152B
 Second-largest Company after ExxonMobil ($298B)
 Workforce: 1.3 M
Dr. Lakshmi Mohan

3

Walton’s Business Model was Different…
 Located stores in small towns since big retailers such as Kmart and Sears dominated large towns
 Kept overhead low
 Offered incentives - Profit-sharing for staff
 Partnerships for suppliers
 Large investment in IT … To keep inventory low
 Customers got friendly service

AND, “Everyday Low Price”
Dr. Lakshmi Mohan

4

Wal-Mart after 40 years …….
Lord of the Things
•

Annual 2001 sales: $220 billion – Pre-text Profits: $9.3 Million
….. 60% of U. S. Retail Sales
• #1 Food Retailer in the U.S.: $56 billion in 2001
….. Opened since 1985 over 1000 massive dept./grocery supercenters, at 200,000 sq. ft., bigger than 4 football fields
• # of employees worldwide: 1.28 million
….. More than the US Postal service ; # in China : 4,000
• # of Suppliers : 30,000 ….. In every continent but Antarctica
• Value of 100 shares bought in 1970 @ $16.50 per share: $11.5
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