wal-mart strategic analysis- kevin go
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8/2/2019 Wal-Mart Strategic Analysis- Kevin Go
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Strategic Analysis of Wal-Mart
Stores, Inc.
Submitted to: Nino Romyr Saavedra, MBA
Submitted by: Kevin Alexander T. Go
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IntroductionHistory of WalHistory of Wal--MartMart
Sales & Income TrendsSales & Income Trends
Challenges of WalChallenges of Wal--MartMartProfile of the CompetitorProfile of the Competitor
Profile of the IndustryProfile of the Industry
Industry Entry & Exit BarriersIndustry Entry & Exit Barriers
Vision & Mission of WalVision & Mission of Wal--MartMart
Objectives of WalObjectives of Wal--MartMart
Strategies and MatrixesStrategies and Matrixes
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Wal-Mart at a GlanceSam Walton founded WalSam Walton founded Wal--Mart Stores, Inc.Mart Stores, Inc.
Started out first as a Ben Franklin FranchiseStarted out first as a Ben Franklin Franchise
Main headquarters stationed at Bentonville, ArkansasMain headquarters stationed at Bentonville, Arkansas
Current CEO in 2003 is Harold Lee Scott, Jr.Current CEO in 2003 is Harold Lee Scott, Jr.
Currently employs 2.1 million employees (2009)Currently employs 2.1 million employees (2009)
Serves more than 200 million customers a week in 7,800Serves more than 200 million customers a week in 7,800retail units.retail units.
Operates in 15 countries only.Operates in 15 countries only.Slogans: Save money. Live better. Always low prices.Slogans: Save money. Live better. Always low prices.
Always.Always.
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HistorySam WaltonSam WaltonThe man behind it all.The man behind it all.
Born in a farmers family in Kingfisher, Oklahoma onBorn in a farmers family in Kingfisher, Oklahoma on
March 29, 1918.March 29, 1918.
Gave up his job and operated the nations mostGave up his job and operated the nations most
successful Ben Franklin Franchise.successful Ben Franklin Franchise.
Opened the first WalOpened the first Wal--Mart in 1962 at Rogers, ArkansasMart in 1962 at Rogers, Arkansas
Achieved higher sales volume by keeping sales lowerAchieved higher sales volume by keeping sales lower
than his competitors.than his competitors.
WalWal--Marts divisions: Discount stores, supercenters,Marts divisions: Discount stores, supercenters,
Sams Clubs and neighborhood markets.Sams Clubs and neighborhood markets.
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Sales & Income Trends
$137.60
$165
$191.30
$217.80
$244.50
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
1999 2000 2001 2002 2003
$4.40
$5
$6.29$6.67
$8.00
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
1999 2000 2001 2002 2003
Sales Trends (in billions) Net Income Trends (in billions)
Sales in the fiscal year ended January 31, 2003,increased by 12% in fiscal year to $244.5 billion whencompared with fiscal 2002 as illustrated in the graph.
Net income rose from $6.7 billionto $8.0 billion during that period of time.
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Challenges of Wal-MartPeople 50% turnover rate
Legal Issues Worlds most sued entity
because of its famously deep pockets.Growth Potential Global financial slowdown
and political instability.
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Profile of the CompetitorTarget Corporation - #2 discount chain (BehindWal-Mart)
Has more than 1,750 Target and SuperTargetstores in 49 states as well as an online businessat Target.com.
Carved a niche by offering more upscale, fashion-forward merchandise.
Issues a proprietary credit card,good only at Target.
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Profile of the IndustryIndustry size Retail industry is the 2nd
largest industry in the U.S. responsiblefor 12% of all U.S. employment.
Industry Profitability Includes 5,000stores with combined annual revenue of$125 billion.
Industry Seasonability Sales in the
industry remain stable throughout theyear. Typical trends for spring apparel,back-to-school-season, and theChristmas holiday season.
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Industry Entry & Exit BarriersFranchising
Small Store Presence (SSP) -
Low entry and exit barriers.Floor space requirement -
Needs extensive floor space
* When Exiting, a companyshould be aware of things likeindebtedness and its ability tomeet those obligations.
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V
ision & MissionVISION:
To become the worldwide leader in
retailing.
MISSION:
Wal-Marts mission is to help peoplesave money so they can live better.
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Objectives of Wal-MartDominate the retail market
wherever Wal-Mart has apresence.
Growth by expansion in the U.S.and Internationally.
Create widespread namerecognition and customer
satisfaction with Wal-Martbrand.
Branching out into new sectorsof retailing such as pharmacies,automotive repair, and grocery
sales.
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Strategies & MatrixesCPM
Wal-Mart
Target Kmart
Critical SuccessFactors
W R WS R WS R WS
Market Share 0.03 3 0.09 2 0.06 2 0.06
Inventory System 0.02 3 0.06 3 0.06 2 0.04
Financial Position 0.04 3 0.12 2 0.08 3 0.12
Product Quality 0.05 3 0.15 3 0.15 2 0.10
Consumer Loyalty 0.03 3 0.09 2 0.06 2 0.06
Sales Distribution 0.02 4 0.08 3 0.06 2 0.04
Global Expansion 0.03 2 0.06 2 0.06 2 0.06
Organizational
Structure
0.03 3 0.09 3 0.06 2 0.04
Production Capacity 0.01 4 0.04 2 0.02 2 0.02
Advertising 0.25 4 1.00 3 0.75 2 0.50
Customer Service 0.05 3 0.15 3 0.15 3 0.15
Price Competition 0.40 4 1.60 2 0.80 2 0.80
Management Expertise 0.05 3 0.15 2 0.10 3 0.15
Totals 1.00 3.65 2.41 2.14
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EFE Matrix
Key External Factors W R WS
OPPORTUNITIES
Acquisitions & Joint Ventureswith other global retailers
0.08 4 0.32
Merging markets in China,India, Brazil
0.12 4 0.48
Expanding Web Presence 0.10 3 0.30
Increase Online Sales 0.08 3 0.24
Acquiring rival firms 0.12 3 0.36
THREATS
Emerging competition, globallyand locally
0.10 4 0.40
Economic conditions,worldwide recession
0.15 4 0.60
Governmental regulation
0.05 3 0.15
Perceived company image 0.08 3 0.24
Slow market growth 0.12 3 0.36
Total 1.00 3.45
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IFE Matrix
Key Internal Factors W R WS
STRENGTHS
Low priced products 0.15 4 0.60
Powerful retail brand 0.11 4 0.44
One-stop shopping 0.11 4 0.44
Aid the economy by buyinglocally
0.08 4 0.32
Stock ownership and profitsharing for employees
0.05 3 0.15
Strong global supply chain 0.10 4 0.40
WEAKNESSES
Global company, only in 14countries
0.07 3 0.21
Standardized approach for everycountry
0.08 3 0.24
Lack of market research in othercountries
0.08 2 0.16
High turnover rate 0.12 2 0.24
Anti-union 0.05 2 0.10
Total
1.00 3.30
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SWOT MatrixSWOT Matrix Strengths:-Low priced products-Powerful retail brand
-One-stop shopping
-Aid the economy by buying locally
-Stock ownership and profit sharing foremployees
-Strong global supply chain
Weaknesses:
-Global company, only in 14countries
-Standardized approach for everycountry
-Lack of market research in othercountries
-High turnover rate
-Anti-union
Opportunities:
-Acquisitions & Joint Ventures
with other global retailers-Merging markets in China, India,Brazil
-Expanding Web Presence
-Increase Online Sales
-Acquiring rival firms
SO Strategies:
1.) Promote low priced products
internationally and through theinternet. (S1,S2,S6,O1,O2,O3,O4)
2.) Acquire competitors and establishjoint ventures in other countries.(S6,O1,O2,O5)
WO Strategies:
1.) Develop more market in other
countries.(W1,W2,W3,O1,O2,O3,O5)
2.) Give more benefits and perksfor employees to increaseemployee satisfaction globally.(W4,W5,O2)
3.) Be flexible when penetratingand developing in othercountriesmarkets.(W1,W2,W3,O1,O2,O5)
Threats:-Emerging competition, globallyand locally
-Economic conditions, worldwiderecession
-Governmental regulation
-Perceived company image
-Slow market growth
ST Strategies:1.) Use retail brand and supply chain tocompete globally.(S1,S2,S3,S6,T1,T2,T3,T5)
2.) Improve company image throughenvironmental awareness and improvebenefits for employees. (S2,S5,T2,T3,T4)
WT Strategies:1.) Establish more branches andfranchises outside the country.(W1,W2,W3,T1,T2)
2.) Improve compensation foremployees and management.(W4,W5,T2,T4)
3.) Control retailing marketsinternationally.(W1,W2,W3,T1,T2,T4,T5)
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Space Matrix
Financial Strength (FS) Ratings
-Liquidity
-Leverage
-Profitability
-Inventory Turnover
4
4
5
6
Industry Strength (IS)
-Financial Stability
-Productivity-Growth Potential
-Profit Potential
4
55
5
Environmental Stability (ES)
-Price range of major competitors
-Technological Changes
-Barriers of entry in international markets
-2
-4
-4
Competitive Advantage (CA)
-Market Share
-Product Quality
-Customer Loyalty
-Low prices of products
-2
-3
-3
-1
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ES Average -3.33 IS Average 4.75
CA Average -2.25 FS Average 4.75
Directional VectorCoordinates:
X Axis = CA+ IS = -2.25 + 4.75 = 2.5
Y Axis = ES+ FS = -3.33 + 4.75 = 1.42 (2.5 , 1.42)Aggressive
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BCG MatrixDivision Revenues ($) Profits ($) Relative Market
Share PositionIndustry Growth
Rate (%)
Wal-Mart Stores $ 157,121 $ 5,049 64.26 7.6%
Sams Clubs $ 31,702 $ 1,031 12.96 3.2%
International $ 40,794 $ 1,152 16.68 5%
Other $ 14,907 $ 807 6.1 8.7%
Total $ 244,524 $ 8,039 100 24.5%
Relative Market Share Position
Cash Cows III
Stars II64.26%
Question Marks I6.1%
Cash Cows III
12.96%16.68%
Dogs IV
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IE Matrix
I
WAL-MART
IIIII
IVIV VV VI
VII VIII IX
4.0 3.0 2.0 1.0
3.0
2.0
1.0
Total IFE Weighted scores
Total
EFE
Weighted
Scores
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Grand Strategy Matrix
Quadrant I Quadrant II
WAL-MART
1. Market Development
2. Market Penetration
3. Product Development
4. Forward Integration
5. Backward Integration
6. Horizontal Integration
7. Concentric Diversification
Quadrant III Quadrant IV
StrongCompetitivePosition
WeakCompetitivePositio
n
Slow Market Growth
Rapid Market Growth
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Key Factors Wal-mart JointVentur
e inEurope
JointVentur
e inAsia
External Weight AS TAS AS TAS AS TAS
Acquisitions & Joint Ventures with other globalretailers
0.08 4 0.32 4 0.32 4 0.32
Merging markets in China, India, Brazil 0.12 4 0.48 1 0.12 4 0.48
Expanding Web Presence 0.10 3 0.30 4 0.40 4 0.40
Increase Online Sales 0.08 3 0.24 3 0.24 3 0.24
Acquiring Rival firms 0.12 3 0.36 3 0.36 4 0.48
Emerging competition, globally & locally 0.10 4 0.40 3 0.30 2 0.20
Economic conditions, worldwide recession 0.15 4 0.60 3 0.45 3 0.45
Governmental regulation 0.05 3 0.15 3 0.15 2 0.10
Perceived company image 0.08 3 0.24 2 0.16 2 0.16
Slow market growth 0.12 3 0.36 2 0.24 3 0.36
Internal
Low priced products 0.15 4 0.60 4 0.60 4 0.60
Powerful retail Brand 0.11 4 0.44 4 0.44 4 0.44
One-stop Shopping 0.11 4 0.44 4 0.44 4 0.44
Aid the economy by buying locally 0.08 4 0.32 2 0.16 2 0.16
Stock ownership and profit sharing foremployees
0.05 3 0.15 3 0.15 3 0.15
Strong global supply chain 0.10 4 0.40 4 0.40 4 0.40
Global company, only 14 countries 0.07 3 0.21 4 0.28 4 0.28
Standardized approach for every country 0.08 3 0.24 2 0.16 2 0.16
Lack of market research in other countries 0.08 2 0.16 2 0.16 2 0.16
High turnover rate 0.12 2 0.24 2 0.12 2 0.12
Anti-union 0.05 2 0.10 2 0.05 2 0.10
TOTAL 1.00 6.75 5.87 6.32
*The firm should decide to go with joint ventures in Asia based on its attractiveness score of 6.32 which issignificantly higher than a joint venture in Europe of 5.87.
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RecommendedStrat
egies Market Development
- Increase market share into foreign countries
- Expand more into Europe and South America
BackwardI
ntegration- In order to keep prices low, cut costs in other areas
Concentric Diversification
- Improve grocery and food retailing section
- Introduce higher end products concerning technology and othergadgets like computers.
HorizontalIntegration
- Acquire competitors to increase market share
Market Penetration
- Keep low prices as its own marketing efforts in enticing priceconscious customers
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