Business Strategies of Wal- Mart

BUSINESS STRATEGIES OF WAL-MART

Presented By- Sanjeev Kumar Nayak

CONTENT

Company Profile SWOT Analysis Cost Leadership Strategy Wal-Mart’s Aggressive Pricing Marketing Strategy Wal-Mart Customer Service Wal-Mart Growth Strategy Conclusion

COMPANY OVERVIEW

Wal-Mart was established in 1969.

Wal-Mart Stores operates retail stores in various formats across the world.

In the US, the retail formats operated by Wal-Mart include discount stores, supercentres, market side, and Sam's Clubs.

Internationally, the company operates in Argentina, Canada, China, Brazil,India,UK etc.• Currently it employs 2.1 million people in US. The company recorded revenues of $400000

million during the financial year ended 2009, an increase of 7.1% over 2008.

The operating profit of Wal-Mart during FY2009 was $22,798 million, an increase of 3.6% from 2008.

BUSINESS DESCRIPTION

Wal-Mart is the largest retail company in the world.

It operates retail stores in various formats worldwide. Wal-Mart offers a wide assortment of merchandise at every day low prices in its retail stores.

e-commerce websites services.

It has three business segments:Walmart US, Sam's Club, and the international segment.

The segment has retail operation in all the 50 states in the US.Wal-Mart operates 891 discount stores and 2,612 supercenters.

To support the retail operations of the Walmart US segment, Wal-Mart operates 121 distribution the company owns 106; the remaining are owned and operated by third parties.

2ND SEGMENT - SAM’S CLUB

Sam’s Club operates Wal-Mart’s warehouse membership clubs in the US.

Wal-Mart operates 602 Sam's Club in 48 US states.

It offers bulk displays of brand name merchandise including hard goods, some soft goods, institutional-size grocery items.

Sam's Club warehouses offer photo processing services, pharmaceuticals,optical departments and gasoline stations.

3RD SEGMENT –INTERNATIONAL SEGMENT

The international segment comprises wholly owned subsidiaries operating in Argentina, Brazil, Canada, Japan.

Wal-Mart utilizes a total of 146 distribution facilities located in Argentina, Brazil, Canada.

During FY2009, approximately 74% of the international segment’s purchases were shipped from these distribution facilities.

MAJOR PRODUCTS & SERVICES

Products: Dry and wet grocery,Beverages,Frozen foods,

Shoes, Jewellery, Toys,etc. Services: Photo processing services, Cellular service plan,

Money order services. Brands: Wal-Mart, Great Value, Sam’s Choice

COMPETITORS

Tesco PLC Metro AG Amazon.com, Inc. CVS Caremark Corporation Staples, Inc.

SWOT ANALYSIS OF WAL- MARTSTRENGTHS:

Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.

Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA).

The company has a core competence involving its use of information technology to support its international logistics system.

A focused strategy is in place for human resource management and development.

WEAKNESSES:

Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.

Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.

The company is global, but has has a presence in relatively few countries Worldwide.

OPPORTUNITIES:

To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.

The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.

New locations and store types offer Wal-Mart opportunities to exploit

market development. They diversified from large super centres, to local and mall-based sites.

Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.

THREATS:

Being number one means that they are the target of competition, locally and globally.

Being a global retailer means that they are exposed to political problems in the countries that you operate in.

The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.

COST LEADERSHIP STRATEGY It is the world's largest public corporation by revenue dominant player in the retailing industry became successful by rigorously pursuing its core

philosophy of cost leadership strategy of establishing discount stores in smaller towns

and capturing significant market share. growth in the 1980s by using information technology (IT)

to manage its supply chain and by expanding business in bigger metropolitan cities.

In the late 1980s, it ventured into food retailing by introducing Supercenters

In the late 1990s, Wal-Mart launched exclusive groceries/drug stores known as "neighborhood markets"

WAL-MART'S AGGRESSIVE PRICING Mission ” to provide a wide variety of high quality,

branded and unbranded products at the lowest possible price”.

efforts to procure products at the lowest prices possible from manufacturers.

Wal-Mart's products are usually priced 20% lower than those of its competitors

generate more profits due to larger volumes. surplus generated was reinvested in building

facilities(modern equipment, latest technology) of an efficient scale

Wal-Mart imposes a strict control on its overhead costs The stores are set up in large buildings, while ensuring

that the rent paid was minimal.

MARKETING STRATEGIES Wal-Mart's marketing strategies are based upon a set of two

main objectives The customer is featured in the first objective; "Customers

would be provided what they want, when they want it, all at a value".

Team spirit was featured in the second objective, "Treating each other as we would hope to be treated acknowledging our total dependency on our associate - partners to sustain our success".

They also tailor their merchandise assortment and store experience to meet the specific needs of a broader customer base

Currently, Wal-Mart's has created over 125,000 new jobs and the operation of over 3,000 international stores, buying products from 70 countries

CONTD.

Over sixty percent of Wal-Mart sells came from the middle income families

The use of customer data has allowed for an increase in segmentation in order to better server the customer

The use of radio frequency id tags and electronic check conversion has improved inventory management and reduced cost

Promotional strategy implementation has seen continued lowered cost and delivery of products and services with minimal difficulty or inconvenience

WAL-MART CUSTOMER SERVICE

Wal-Mart’s key to success is that it thinks like the customer, give a good value in product for the customer, sell the customer what he or she really wants to buy, exceeds the customer’s expectation and ensures that the customer enjoy themselves in the process.

Wal-Mart’s customer strategy is to have almost every aspect of their business centered on its customer

Wal-Mart handles their customer’s complaints in a fast and friendly manner.

WAL-MART GROWTH STRATEGY At present, the most important goal for Wal-Mart

is to maintain their current net sales growth of approximately 12 percent per year.

expand into international markets that have large population centers.

increasing the overall efficiency of the organization by reducing operating costs or cost of goods sold.

In the area of human capital, Wal-Mart has no unions, pays low wages, and relies heavily on part-time and temporary help.

CONCLUSION

Their strategy is to give their customers everything: a wide assortment of good quality merchandise at the lowest possible price. And their policies include guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.