IMSP Project On Strategic Management

Submitted by-

Nipun Sharma

Priyank Sharma

Introduction• Sam Walton, began his retail career when he started work on June 3,

1940.• On July 2, 1962, Walton opened the first Wal-Mart Discount City

store.• The company was incorporated as Wal-Mart Stores, Inc. on October 31,

1969. • 1987 there were 1,198 stores with sales of $15.9 billion and 200,000

associates.• At that time, it has the largest private satellite network, allowing the

corporate office to track inventory and sales and to instantly communicate to stores.

• In 1988, the first Walmart Supercenter opened in Washington.• In 1998, Walmart introduced the "Neighborhood Market" concept

• 2002, it was listed for the first time as America's largest corporation on the Fortune 500 list, with revenues of $219.8 billion and profits of $6.7 billion. It has remained there every year, except for 2006.

• Currently they are into 9 different retail formats— 1. Supercenters, 2. Food and drugs, 3. General merchandise stores, 4. Bodegas (small markets), 5. Cash and carry stores, 6. Membership warehouse clubs, 7. Apparel stores, 8. Soft discount stores, 9. Restaurants.

Vision

Do it, try it, fix it.

To become the worldwide leader in retailing.

Sam Walton’s vision “If we work together, we’ll lower the cost of living for

everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life.”

Mission

"Our mission is to enhance and integrate our supplier diversity programs into all of our procurement practices and to be an advocate for minority- and women-owned businesses.“

'To give ordinary folk the chance to buy the same thing as rich people'

WAL-MART’SINTERNATIONAL EXPANSION STRATEGY

Wal-Mart’s strategy has been to acquire companies and convert them into the Wal-Mart way stores. It could achieve competitive advantage abroad by applying its combination of technology, logistics and human resources with its tremendous buying power with multinational consumer goods suppliers.

SWOT Analysis

STRENGTH

• They have a strong IT system as implemented EDI, Information system, Satellite system, Pick to light system, Vendor management inventory system which was not implemented by any other competitor.

• Supply Chain (Strong)- long term relationship with the supplier as there was no non sense negotiator as they eliminated the manufacture representative from negotiation with the suppliers.

Weaknesses

• 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.

• It is the World's They are facing competition in local markets.• Competitors may imitate their strategy.• Intense Price Competition• Legal and political issues• largest retailer so control of its empire, despite its IT

advantages, could be weak in some areas due to the huge span of control.

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 and India.

Threats• They are facing competition in local markets.

• Competitors may imitate their strategy.

• Intense Price Competition

• Legal and political issues

PEST Analysis

Political Influences a) E.U. custom regulations.

b) F.D.I. restrictions in retail.

c) Political Ideology.

Economic Influences a) Recession, Inflation.

b) Exchange Rates.

c) Low per capita income in developing countries.

Social Influences

a) Marketing strategies ineffective

b) Language and Cultural barriers.

c) Anti- Globalization Movements.

Technological Influences a) Advances in technological and satellite systems.

b) Lack of basic infrastructure in ASIAN countries.

Porter’s 5 Forces Model• Bargaining power of suppliers – LOW – Size of WALMART

Entirely dependent on WALMART for sales

• Bargaining power of buyers-

LOW- Best pricing

Proactive customer service

• Threat of entry- MEDIUM- High Investment cost.

Extensive distribution network.

Scale and Scope of operations is high

• Threat of substitute-

MEDIUM- Mom and pop stores charge higher

It serves to nearly all consumer needs

Loyalty Schemes run by other companies

• Intensity of Competitive Rivalry-MEDIUM- Price wars have reduced margins from 6% to 1%

in USA.

Competition from existing Retail chains.

Value Chain Analysis

Inbound LogisticsWal-Mart’s primary activity of receiving inventory is planned right from the point of production.

Operations A leaner approach to inventory.

Wal-Mart innovated a technique of replenishment called the Cross-Docking

Outbound Logistics Goods are transferred within 48 hours of receipt from suppliers.

Marketing and SalesWal-Mart maintains a simple and effective marketing strategy which it has managed to replicate globally.

Service Wal-Mart is aggressive yet subtle ‘People Greeters’ and in its

own fashionable and proud way ‘Aggressive Hospitality’.Infrastructure

It maintains its own fleet of trucks. Human Resource Management

Wal-Mart is the only retailer to be in Fortune’s 100 Best Places to Work.

Technology DevelopmentIt’s technology and inventory management systems and software are better than the best in the world and also the lifeline of the organization.

Procurement It’s satellite communication and EDI links all its stores to over 4000 suppliers creating the finest procurement co-ordinated scenario.

CORE COMPETENCES

• Inventory management skills with its supply chain management.

• Innovations like the cross-docking techniques and IT.

• Relationship strategy maintained with its customers, suppliers, and associates.

• Low cost Leadership through scale of operation.

WAL-MART AND INDIA

1. India is an appealing market for Wal-Mart with its growing middle class of 250 million and an economic growth rate of nearly 9% .

2. In November 2006, Wal-Mart beat out Tesco for a joint venture opportunity with Indian mobile services leader, Bharti.

3. Bharti is managing the front-end of the business, while Wal-Mart is taking care of the supply chain, logistics and other back-end operations.

4. The proposed Bharti venture seeks to serve the retail market by supplying it with goods directly from producers such as agriculturists, craftsmen and artisans.

THREATS • The leaders of the retail market are the 12-40 million tiny mom-and-pop

retail shops which are predominantly run by small family businesses. • The mom-and-pops have an advantage as they are conveniently located on

street corners.• Existing Retail Chains like Rel. Fresh, Subhiksha, Spenccers, Big Bazaar, Vishal Megamart, Salasar.

References:

• Wal mart’s corporate website

• Oppapers.com

• Wikipedia

• Wikianswers.com

Thank You……..