Walmart Swot Analysis Paper
For as long as I can remember I have seen Wal-mart stores up in almost in every town that I have traveled through. The store started by Sam Walton was first established in Bentonville, Arkansas in 1962. Now Wal-mart has over 3,300 stores nationwide and they are the leading retail store in the country. With Wal-mart competing with Target and K-mart hold over 85 percent of the discount store market share. Although Sam Walton has passed on Wal-Mart has continued to stay successful and maintain at the top of the retail market. A new CEO took over and he has continued to maintain as the largest corporation in the nation. "Wal-mart has two objectives that they focus on: 1) Providing the customers what they want, when they want it, all at a value 2) treating each other as we would hope to be treated, acknowledging our total dependency on our
…show more content…
associate-partners to sustain our success".
A SWOT analysis consist of measuring the strength, weakness, opportunities, and threats in order to see what the company needs to work on and what it must do to succeed in the market. One of Wal-Marts biggest features is the guest relations that they teach their employees. They strive to keep their customers happy and to keep them coming back to their store. There are many other companies that see using the guest greeters that Wal-Mart uses as a waste of time and money. They say that they should have these people doing some sort of work that will actually come out as productive. That is what Wal-Mart believes they are doing. Allowing someone to be greeted at the door hopefully makes them happier to be in the store. If they come in and are made to feel better by an employee at the door then they are more likely to be a satisfied customer. Another thing that employees are taught is the Ten Foot Attitude. This is where if a customer and employee come within ten feet of each other the employee must make eye contact with the customer and ask the guest if they can help them in any way. This is to ensure that the customer gets as much attention to what they are looking for as possible. They are helped and made happy because that is what makes Wal-Mart successful and keeps the customers coming back. Many other stores that you will ask for help and they will help you out. Wal-Mart has taken it a step further and is taught to come up to you and to ask you if they can help you with anything and if there is anything that they can do for you. They are very friendly and very helpful which makes shopping at Wal-Mart more pleasant than any other retailer I have visited. Of course weakness have to come up with any business. One of the largest things that Wal-Mart has had to endure is when they come into small towns and put up a huge retail store they end up killing all the small town businesses because they are so successful. There have been many small towns that have turned down the building of a Wal-Mart because they know what it will do to the small town. They want to keep all the aspects of a large town out of their small town to keep the local businesses there. The biggest weakness Wal-Mart has to deal with competitors. With K-Mart and the largely growing Target in the same market they are daily trying to improve themselves to stay at the top of the market. They have to find all the advantages they can to be the best company they can be. They must get feedback from their customers to all themselves to learn from what they are doing.
Wal-Mart has to come up with a strategy to be successful in the next decade. They have to work on the things that they believe to be what will make them into the best and largest corporation in the retail field. They have to continue to make a mark in the market and to continue to grow. They have to deal with the other competitors in the field and are daily trying new things to take the edge out of the competition. They have to keep up with the new technology and to continue to make the customers realize how important they are to the company. The more they come to realize that they can stay and always be the largest and most successful retail corporation in the world they will make a huge mark in the world. They have to maintain profit levels and customers service. This will be what makes them to continue to excel in the market and make them the leading retail outlet in the world.
Wal-Mart does not have a formal mission statement. In fact, they did have a formal mission statement, it would be something like this: “To provide quality products at an everyday low price and with extended customer service…always.â€
The first objection is: “customers would be provided what they want, when they want, at a value.†Second: “treating each other as we would hope to be treated.†Acknowledgement our total dependency on our associates-partners to sustain our success.†Both of these strategies are a tribute to Wal-Mart’s mission to serve its customers a good value.
External analysis
Society Changes
Today’s preferred shopping site is more likely to be a shopping center with discount store such a Sam’s club. Malls are losing market share to discounters and superstores. Consumers want more convenience than malls can typically offer such parking spaces close to their destination stores and more flexibility in shopping hours. One way in which, alls are attempting to adapt is by offering by traditional entertainment, dining and shopping destination of broader appeal than that offered by traditional food counts and movie theaters adjacent to shops.
Shopping patterns and habits have and will continue to shift due to a decline in birth rates, and increased labor force participation rate-particularly among women, and an aging population. New trends include a higher demand for convenience type foods such as ready to eat meals, an increase in restaurant dining and orders for take out food, as well as a shift in peak shopping hours towards evenings and weekends. Additionally, the industry is experiencing an increasing demand for healthier and organically grown foods, such as low cholesterol and low fat items. The industry has also seen a rise in sales of ethnic and kosher foods. This is due to increased immigration and growth within ethnic groups and their disposable income.
Economic factors: high unemployment rates and a weak economy have lead to deflation in industry prices, but at the same time have offered a larger pool of cheap full and part time labor. Increased efficiencies due to advanced technology have also reduced labor expenses. Globally, competition is fierce and markets are saturated. Liberalization of store hours in Germany and the Netherlands may boost sales, thus making these countries more attractive for the industry. Overall, global conditions mirror those of the U.S. industry.
Technology changes: Due to the continuous increase of the internet usage and acceptance, many discount retailers have established an internet presence. The sales for internet e-tailing increased from $103.1 million in 1997 to $641.5 million in 2000. It is expected to increase to $2, 84435 in 2005. The reason and motives are varied, but typically include a desire to reinforce the brand and company image as well as to sell merchandises directly to consumers. However, the impact of the internet on retailing in general is that consumers tend to be more informed and can more readily comparison shop before they purchase a product.
Technical advancements have also taken place in the areas of inventory management, forecasting and replenishment. Quick response programs make use of computers and networks to speed the flow of goods, services and information. Retailers now have the ability to gain quicker access to point of sale data on consumer purchases and therefore make more inform stocking and ordering decisions. In spring of 1999, Wal-Mart not only wanted to gain customers, they also wanted to disprove the false myth that they only attract low income clientele. According to the report “approximately 100 million transactions occur in a Wal-Mart store every week. The reality is that the Wal-Mart demographic looks exactly like the U.S. population demographicâ€. Walmart.com achieved this by offering a wide array of products at a low price. Accessibility and simplicity of the Walmart.com site was another source of value. Moreover, through bundling techniques, Walmart.com offered special deals where customers could but totally different items on one single site.
Internal Analysis
Wal-Mart has been able to build a total of forty three distribution centers nationwide. These include nine grocery distribution centers and two import distribution centers. The vast number of items and the need to frequently order perishable items at its stores makes it necessary to have its distribution operations highly automated. Wal-Mart uses computers to directly link to all its venders for faster delivery time.
They also have their own company owned trucks and trailers that enable them to have goods delivered to any of its stores within thirty eight to forty hours after orders are placed. One of the ways that Wal-Mart has successfully been able to cut costs is to have these trucks pick up goods from nearby manufactures on their way back to the distribution centers. This is one of the trends that many trucking companies have found to save on costs.
One of Wal-Mart’s suppliers includes McLane, the nation’s largest distributor of food and merchandise to convenience stores. They sell merchandise to Wal-Mart as a wholesale distributor. They offer a wide variety of grocery and non grocery products.
Operations at Wal-Mart are built on the premise that they can offer every day low prices. This has been the main competitive area that Wal-Mart has been able to have success where many retailers usually find difficult to execute. Wal-Mart has been able to build consumer trust by delivering the promise of low price day in and day out. They have built success into their business strategy by driving down costs in all aspects of their business. This all encompassing goal as the low cost provider in the market has many operational advantages comes from more accurate data forecasting due to POS data sharing with their suppliers. This ultimately helps to develop inventory efficiencies throughout the supply chain between Wal-Mart and their suppliers.
Wal-Mart’s development of its retail link expands on the productivity loop that has proven to be highly successful. They are working with global suppliers to implement their retail link systems that they hope to completely implement in the near future. One of the successful stories behind the retail link is the introduction of pampers disposable diapers. Wal-Mart turned an item that had a turnover rate of 25 times per year to 125 times per year. This success translated into dramatically lower inventory productivity costs for Wal-Mart and its suppliers. The retail link works because it is built on just in time concepts and methods that have enabled Wal-Mart to work directly with its suppliers. Key to the retail link is working directly with suppliers. Success in inventory control has helped to further increase the gap between Wal-Mart and its competitors.
Saving on advertising another cost advantage of every day low prices is that it does not depend on the kind of advertising that most retailers find hard to control. There advertising strategy has become a competitive cost advantage. It spends less than one percent of sales on advertising which is only about on sixth that of its main competitors. Wal-Mart recognizes the importance every day low prices over excessive promotional spending. For example, there no flyers that specifically promotes an item. This ultimately reduces costs in other areas such as its logistical and distribution systems.
Part of Wal-Mart everyday low prices strategy is to be able to price the same product according to store area. This means that although Wal-Mart tries to offer low prices, they do not necessarily offer the lowest price on every store item. Their strategy is to use the information provided by the retail link system to be aware of customer demands on every store. In this way, Wal-Mart can offer a basket of goods at any particular store according to such factors as demographics, local competition, or local economies. This strategy has enabled them to price products differently from store to store, but at the same time meet customer expectations of the store. Each store is thus focused on meeting consumers in Japan will come to expect as Wal-Mart hopes to expand in the Asian market.
Swot Analysis
Strengths
Some of Wal-Mart’s strength’s are shown in Figure 2. These strengths include every day low price, efficient IT infrastructure, distribution efficiencies, good product mix, and geographic presence. By offering every day low prices, Wal-Mart does not rely on sales specials in order lower its prices. The company has been able to keep the prices of its products below that of its competitors every single day. By having a good product mix to go along with low prices, consumers find it more enticing to go to a store with such characteristics. They can get more of what they need at prices they can afford to pay. Wal-Mart is able to offer an array of affordable products because of its highly efficient IT infrastructure and distribution efficiencies. The company makes sure that it is using the best technology available to control the distribution of its products worldwide. This ultimately enables operation activities to fit well together to achieve maximal efficiency and lower cost.
Weaknesses
Some of Wal-Mart’s weaknesses are shown in Figure 2. These weaknesses include the possible portrayal of a cheap image, strategy of direct-supplier system, store zoning problems, and store real estate problems. There is the possibility that some consumers will unknowingly associate a discount store such as Wal-Mart with cheap quality products. It is one thing to have cheap products and another to have products made of cheap quality materials. Wal-Mart must be careful to ensure that consumers are aware they their products are offered at low prices due to system efficiencies. Within some neighborhoods, it would not be possible to have any type Wal-Mart’s store platforms. For example, their supercenters would certainly not fit in many small neighborhoods. Wal-Mart may need to scale-down its store platform if it wants to serve in busy and crowded cities or smaller neighborhoods. Further related to zoning issues are the store real estate problems. Just because a company has the ability to build a huge store anywhere it wants to, it does not necessarily mean that it is possible to build one anywhere it wants to. The real estate issue becomes more evident in crowded cities such as Japan where there is a major concern over the availability of real estate.
Opportunities
Some of Wal-Mart’s opportunities are shown in Figure 2. These opportunities include entering existing markets, entering emerging markets, expanding into the urban marketplace, offering new products, and flexibility in store design. The opportunity to enter existing markets is wide open. There are at least two ways to do so. Wal-Mart can either build a new store or buy an existing retailer. The method of choice may be determined by such factors as the availability of real estate or the cost of building and buying out an existing retailer. Emerging markets are a very good place to get a foothold in some regions. By being the first mover into an emerging market, the advantageous are numerous. There are possibilities for branding and building relationships with the communities in the long run, which will prove valuable to deterring competition. Wal-Mart has had some success in the urban marketplace and should look more into that market place to place its smaller scale stores. These smaller stores will likely be more neighborhoods friendly and more efficient than having a huge store. This can help the company in its efforts to find the appropriate store design for a given neighborhood size. As with all stores, success is really about what you have to offer to your customers. A successful store must offer basic consumer needs and wants. However, it is also important to have a good product mix. Wal-Mart has had success in introducing new products such as electronics and jewelry, and can build on that product mix as they begin to offer different apparel as well.
Threats
Some of Wal-Mart’s threats are shown in Figure 2.
Although it seems that Wal-Mart has few threats to consider, it must still consider them in order to remain one of the best in the industry. These threats include increased competition, economic uncertainty, unions, and government regulation. The discount variety store industry is a fiercely competing marketplace and the big players are always strategically placed to gain new customers from the competition. Wal-Mart must keep an eye on its competitors, such as Kmart, Costco, and Target. Economic uncertainty, threat of unions, and government regulation can all be found in regions such as Germany. Germany has one of the highest degrees of unions and this has a profound effect on hiring, retaining, and laying off employees. Unions make it hard for a company to decide on its labor force requirements because once an employee is hired, it costs more in Germany to keep the employee on payroll and to lay off the employee. German workers are one of the highest paid workers in the world. A country that has had stagnant sales for the past four years also compounds these
problems.
Finance
Corporate Listings and Industry Group
Wal-Mart’s stock symbol is WMT. The company is listed on the New York Stock Exchange and the Pacific Stock Exchange.
Industry Group: Retail-Discount
Rank In Industry: 3 of 32
Market Risk
Investment strategies need to take into account a number of market risks. Wal-Mart is aware of a number of market risks relating to their operations. These risks include changes in interest rates and changes in foreign exchange rates. These risks are especially important as the company expands globally. In order to minimize risk and costs, Wal-Mart performs interest rate swaps. This also helps them to find a balance between fixed and floating rate debt. Over the life of their financial instruments, these swap agreements (contracts) are utilized to exchange fixed or variable rates for variable or fixed interest rate payments.
Top Ten Competitors
Listed in the figure below are a number of Wal-Marts main competitors. This listing also includes the corresponding market capital that each competitor has relative to that of Wal-Mart. As can be seen, Wal-Marts market capital is way beyond those of its competitors.
Company Name SymbolMkt Cap (000's)
WAL-MART STORES INCWMT $247,627,849
TARGET CORPORATIONTGT $35,191,619
COSTCO WHOLESALE CORPCOST $16,912,487
TJX COMPANIES INCTJX $9,556,647
FAMILY DOLLAR STORES INCFDO $6,664,064
DOLLAR GENERAL CORPDG $6,314,399
COLES MYER LTDCM $5,723,002
DOLLAR TREE STORES INCDLTR $3,930,637
99 CENTS ONLY STORESNDN $2,509,982
KMART HOLDING CORPKMRT $2,315,473
Figure 4. Wal-Mart’s Top Ten Competitors
Wal-Mart and Competitor Stock Prices
Wal-Mart’s 5-year stock closing prices are indicated in figure 5. Some of Wal-Marts top competitors are also indicated for comparison purposes. The data is as of Monday, July 07, 2003 04:01 PM EDT. The Quote is delayed fifteen minutes on the NASDAQ. As we can see from the figure, Wal-Mart’s stock prices have consistently bee very competitive when compared to those of their competitors. It has also remained relatively stable since year 2000.
Figure 5. Wal-Mart Competitor 5-yr Stock Closing prices Comparison
Work Cite
http://www.walmartstores.com/Files/AR_2003_Report.pdf
http://www.csmonitor.com/2002/0219/p01s04-usec.html
http://www.alternet.org/story/12962
http://www.flagstaffactivist.org/campaigns/study.html
www.accd.edu/sac/mgt/1303.090/chapter8.htm
http://finance.yahoo.com/
associate-partners to sustain our success".
A SWOT analysis consist of measuring the strength, weakness, opportunities, and threats in order to see what the company needs to work on and what it must do to succeed in the market. One of Wal-Marts biggest features is the guest relations that they teach their employees. They strive to keep their customers happy and to keep them coming back to their store. There are many other companies that see using the guest greeters that Wal-Mart uses as a waste of time and money. They say that they should have these people doing some sort of work that will actually come out as productive. That is what Wal-Mart believes they are doing. Allowing someone to be greeted at the door hopefully makes them happier to be in the store. If they come in and are made to feel better by an employee at the door then they are more likely to be a satisfied customer. Another thing that employees are taught is the Ten Foot Attitude. This is where if a customer and employee come within ten feet of each other the employee must make eye contact with the customer and ask the guest if they can help them in any way. This is to ensure that the customer gets as much attention to what they are looking for as possible. They are helped and made happy because that is what makes Wal-Mart successful and keeps the customers coming back. Many other stores that you will ask for help and they will help you out. Wal-Mart has taken it a step further and is taught to come up to you and to ask you if they can help you with anything and if there is anything that they can do for you. They are very friendly and very helpful which makes shopping at Wal-Mart more pleasant than any other retailer I have visited. Of course weakness have to come up with any business. One of the largest things that Wal-Mart has had to endure is when they come into small towns and put up a huge retail store they end up killing all the small town businesses because they are so successful. There have been many small towns that have turned down the building of a Wal-Mart because they know what it will do to the small town. They want to keep all the aspects of a large town out of their small town to keep the local businesses there. The biggest weakness Wal-Mart has to deal with competitors. With K-Mart and the largely growing Target in the same market they are daily trying to improve themselves to stay at the top of the market. They have to find all the advantages they can to be the best company they can be. They must get feedback from their customers to all themselves to learn from what they are doing.
Wal-Mart has to come up with a strategy to be successful in the next decade. They have to work on the things that they believe to be what will make them into the best and largest corporation in the retail field. They have to continue to make a mark in the market and to continue to grow. They have to deal with the other competitors in the field and are daily trying new things to take the edge out of the competition. They have to keep up with the new technology and to continue to make the customers realize how important they are to the company. The more they come to realize that they can stay and always be the largest and most successful retail corporation in the world they will make a huge mark in the world. They have to maintain profit levels and customers service. This will be what makes them to continue to excel in the market and make them the leading retail outlet in the world.
Wal-Mart does not have a formal mission statement. In fact, they did have a formal mission statement, it would be something like this: “To provide quality products at an everyday low price and with extended customer service…always.â€
The first objection is: “customers would be provided what they want, when they want, at a value.†Second: “treating each other as we would hope to be treated.†Acknowledgement our total dependency on our associates-partners to sustain our success.†Both of these strategies are a tribute to Wal-Mart’s mission to serve its customers a good value.
External analysis
Society Changes
Today’s preferred shopping site is more likely to be a shopping center with discount store such a Sam’s club. Malls are losing market share to discounters and superstores. Consumers want more convenience than malls can typically offer such parking spaces close to their destination stores and more flexibility in shopping hours. One way in which, alls are attempting to adapt is by offering by traditional entertainment, dining and shopping destination of broader appeal than that offered by traditional food counts and movie theaters adjacent to shops.
Shopping patterns and habits have and will continue to shift due to a decline in birth rates, and increased labor force participation rate-particularly among women, and an aging population. New trends include a higher demand for convenience type foods such as ready to eat meals, an increase in restaurant dining and orders for take out food, as well as a shift in peak shopping hours towards evenings and weekends. Additionally, the industry is experiencing an increasing demand for healthier and organically grown foods, such as low cholesterol and low fat items. The industry has also seen a rise in sales of ethnic and kosher foods. This is due to increased immigration and growth within ethnic groups and their disposable income.
Economic factors: high unemployment rates and a weak economy have lead to deflation in industry prices, but at the same time have offered a larger pool of cheap full and part time labor. Increased efficiencies due to advanced technology have also reduced labor expenses. Globally, competition is fierce and markets are saturated. Liberalization of store hours in Germany and the Netherlands may boost sales, thus making these countries more attractive for the industry. Overall, global conditions mirror those of the U.S. industry.
Technology changes: Due to the continuous increase of the internet usage and acceptance, many discount retailers have established an internet presence. The sales for internet e-tailing increased from $103.1 million in 1997 to $641.5 million in 2000. It is expected to increase to $2, 84435 in 2005. The reason and motives are varied, but typically include a desire to reinforce the brand and company image as well as to sell merchandises directly to consumers. However, the impact of the internet on retailing in general is that consumers tend to be more informed and can more readily comparison shop before they purchase a product.
Technical advancements have also taken place in the areas of inventory management, forecasting and replenishment. Quick response programs make use of computers and networks to speed the flow of goods, services and information. Retailers now have the ability to gain quicker access to point of sale data on consumer purchases and therefore make more inform stocking and ordering decisions. In spring of 1999, Wal-Mart not only wanted to gain customers, they also wanted to disprove the false myth that they only attract low income clientele. According to the report “approximately 100 million transactions occur in a Wal-Mart store every week. The reality is that the Wal-Mart demographic looks exactly like the U.S. population demographicâ€. Walmart.com achieved this by offering a wide array of products at a low price. Accessibility and simplicity of the Walmart.com site was another source of value. Moreover, through bundling techniques, Walmart.com offered special deals where customers could but totally different items on one single site.
Internal Analysis
Wal-Mart has been able to build a total of forty three distribution centers nationwide. These include nine grocery distribution centers and two import distribution centers. The vast number of items and the need to frequently order perishable items at its stores makes it necessary to have its distribution operations highly automated. Wal-Mart uses computers to directly link to all its venders for faster delivery time.
They also have their own company owned trucks and trailers that enable them to have goods delivered to any of its stores within thirty eight to forty hours after orders are placed. One of the ways that Wal-Mart has successfully been able to cut costs is to have these trucks pick up goods from nearby manufactures on their way back to the distribution centers. This is one of the trends that many trucking companies have found to save on costs.
One of Wal-Mart’s suppliers includes McLane, the nation’s largest distributor of food and merchandise to convenience stores. They sell merchandise to Wal-Mart as a wholesale distributor. They offer a wide variety of grocery and non grocery products.
Operations at Wal-Mart are built on the premise that they can offer every day low prices. This has been the main competitive area that Wal-Mart has been able to have success where many retailers usually find difficult to execute. Wal-Mart has been able to build consumer trust by delivering the promise of low price day in and day out. They have built success into their business strategy by driving down costs in all aspects of their business. This all encompassing goal as the low cost provider in the market has many operational advantages comes from more accurate data forecasting due to POS data sharing with their suppliers. This ultimately helps to develop inventory efficiencies throughout the supply chain between Wal-Mart and their suppliers.
Wal-Mart’s development of its retail link expands on the productivity loop that has proven to be highly successful. They are working with global suppliers to implement their retail link systems that they hope to completely implement in the near future. One of the successful stories behind the retail link is the introduction of pampers disposable diapers. Wal-Mart turned an item that had a turnover rate of 25 times per year to 125 times per year. This success translated into dramatically lower inventory productivity costs for Wal-Mart and its suppliers. The retail link works because it is built on just in time concepts and methods that have enabled Wal-Mart to work directly with its suppliers. Key to the retail link is working directly with suppliers. Success in inventory control has helped to further increase the gap between Wal-Mart and its competitors.
Saving on advertising another cost advantage of every day low prices is that it does not depend on the kind of advertising that most retailers find hard to control. There advertising strategy has become a competitive cost advantage. It spends less than one percent of sales on advertising which is only about on sixth that of its main competitors. Wal-Mart recognizes the importance every day low prices over excessive promotional spending. For example, there no flyers that specifically promotes an item. This ultimately reduces costs in other areas such as its logistical and distribution systems.
Part of Wal-Mart everyday low prices strategy is to be able to price the same product according to store area. This means that although Wal-Mart tries to offer low prices, they do not necessarily offer the lowest price on every store item. Their strategy is to use the information provided by the retail link system to be aware of customer demands on every store. In this way, Wal-Mart can offer a basket of goods at any particular store according to such factors as demographics, local competition, or local economies. This strategy has enabled them to price products differently from store to store, but at the same time meet customer expectations of the store. Each store is thus focused on meeting consumers in Japan will come to expect as Wal-Mart hopes to expand in the Asian market.
Swot Analysis
Strengths
Some of Wal-Mart’s strength’s are shown in Figure 2. These strengths include every day low price, efficient IT infrastructure, distribution efficiencies, good product mix, and geographic presence. By offering every day low prices, Wal-Mart does not rely on sales specials in order lower its prices. The company has been able to keep the prices of its products below that of its competitors every single day. By having a good product mix to go along with low prices, consumers find it more enticing to go to a store with such characteristics. They can get more of what they need at prices they can afford to pay. Wal-Mart is able to offer an array of affordable products because of its highly efficient IT infrastructure and distribution efficiencies. The company makes sure that it is using the best technology available to control the distribution of its products worldwide. This ultimately enables operation activities to fit well together to achieve maximal efficiency and lower cost.
Weaknesses
Some of Wal-Mart’s weaknesses are shown in Figure 2. These weaknesses include the possible portrayal of a cheap image, strategy of direct-supplier system, store zoning problems, and store real estate problems. There is the possibility that some consumers will unknowingly associate a discount store such as Wal-Mart with cheap quality products. It is one thing to have cheap products and another to have products made of cheap quality materials. Wal-Mart must be careful to ensure that consumers are aware they their products are offered at low prices due to system efficiencies. Within some neighborhoods, it would not be possible to have any type Wal-Mart’s store platforms. For example, their supercenters would certainly not fit in many small neighborhoods. Wal-Mart may need to scale-down its store platform if it wants to serve in busy and crowded cities or smaller neighborhoods. Further related to zoning issues are the store real estate problems. Just because a company has the ability to build a huge store anywhere it wants to, it does not necessarily mean that it is possible to build one anywhere it wants to. The real estate issue becomes more evident in crowded cities such as Japan where there is a major concern over the availability of real estate.
Opportunities
Some of Wal-Mart’s opportunities are shown in Figure 2. These opportunities include entering existing markets, entering emerging markets, expanding into the urban marketplace, offering new products, and flexibility in store design. The opportunity to enter existing markets is wide open. There are at least two ways to do so. Wal-Mart can either build a new store or buy an existing retailer. The method of choice may be determined by such factors as the availability of real estate or the cost of building and buying out an existing retailer. Emerging markets are a very good place to get a foothold in some regions. By being the first mover into an emerging market, the advantageous are numerous. There are possibilities for branding and building relationships with the communities in the long run, which will prove valuable to deterring competition. Wal-Mart has had some success in the urban marketplace and should look more into that market place to place its smaller scale stores. These smaller stores will likely be more neighborhoods friendly and more efficient than having a huge store. This can help the company in its efforts to find the appropriate store design for a given neighborhood size. As with all stores, success is really about what you have to offer to your customers. A successful store must offer basic consumer needs and wants. However, it is also important to have a good product mix. Wal-Mart has had success in introducing new products such as electronics and jewelry, and can build on that product mix as they begin to offer different apparel as well.
Threats
Some of Wal-Mart’s threats are shown in Figure 2.
Although it seems that Wal-Mart has few threats to consider, it must still consider them in order to remain one of the best in the industry. These threats include increased competition, economic uncertainty, unions, and government regulation. The discount variety store industry is a fiercely competing marketplace and the big players are always strategically placed to gain new customers from the competition. Wal-Mart must keep an eye on its competitors, such as Kmart, Costco, and Target. Economic uncertainty, threat of unions, and government regulation can all be found in regions such as Germany. Germany has one of the highest degrees of unions and this has a profound effect on hiring, retaining, and laying off employees. Unions make it hard for a company to decide on its labor force requirements because once an employee is hired, it costs more in Germany to keep the employee on payroll and to lay off the employee. German workers are one of the highest paid workers in the world. A country that has had stagnant sales for the past four years also compounds these
problems.
Finance
Corporate Listings and Industry Group
Wal-Mart’s stock symbol is WMT. The company is listed on the New York Stock Exchange and the Pacific Stock Exchange.
Industry Group: Retail-Discount
Rank In Industry: 3 of 32
Market Risk
Investment strategies need to take into account a number of market risks. Wal-Mart is aware of a number of market risks relating to their operations. These risks include changes in interest rates and changes in foreign exchange rates. These risks are especially important as the company expands globally. In order to minimize risk and costs, Wal-Mart performs interest rate swaps. This also helps them to find a balance between fixed and floating rate debt. Over the life of their financial instruments, these swap agreements (contracts) are utilized to exchange fixed or variable rates for variable or fixed interest rate payments.
Top Ten Competitors
Listed in the figure below are a number of Wal-Marts main competitors. This listing also includes the corresponding market capital that each competitor has relative to that of Wal-Mart. As can be seen, Wal-Marts market capital is way beyond those of its competitors.
Company Name SymbolMkt Cap (000's)
WAL-MART STORES INCWMT $247,627,849
TARGET CORPORATIONTGT $35,191,619
COSTCO WHOLESALE CORPCOST $16,912,487
TJX COMPANIES INCTJX $9,556,647
FAMILY DOLLAR STORES INCFDO $6,664,064
DOLLAR GENERAL CORPDG $6,314,399
COLES MYER LTDCM $5,723,002
DOLLAR TREE STORES INCDLTR $3,930,637
99 CENTS ONLY STORESNDN $2,509,982
KMART HOLDING CORPKMRT $2,315,473
Figure 4. Wal-Mart’s Top Ten Competitors
Wal-Mart and Competitor Stock Prices
Wal-Mart’s 5-year stock closing prices are indicated in figure 5. Some of Wal-Marts top competitors are also indicated for comparison purposes. The data is as of Monday, July 07, 2003 04:01 PM EDT. The Quote is delayed fifteen minutes on the NASDAQ. As we can see from the figure, Wal-Mart’s stock prices have consistently bee very competitive when compared to those of their competitors. It has also remained relatively stable since year 2000.
Figure 5. Wal-Mart Competitor 5-yr Stock Closing prices Comparison
Work Cite
http://www.walmartstores.com/Files/AR_2003_Report.pdf
http://www.csmonitor.com/2002/0219/p01s04-usec.html
http://www.alternet.org/story/12962
http://www.flagstaffactivist.org/campaigns/study.html
www.accd.edu/sac/mgt/1303.090/chapter8.htm
http://finance.yahoo.com/