WALMART BUSINESS PLAN

WALMART

BUSINESS PLAN

MANA 210

Sistema Universitario Ana G Mendez

School of Professional Studies

Orlando Campus

Universidad del Turabo

Immediately following his military service, Sam Walton gained early retail experience at JC Penney in Iowa and operated his own variety store in Newport, Arkansas. Eventually, with the influence and encouragement of Helen his wife and the help of his brother, Sam opened the landmark Walton’s Five and Dime in Bentonville, Arkansas, in 1951. When Sam Walton opened his first Wal-Mart store no one imagined he was introducing a retailing formula that within a generation would impact the lives of millions of people.

"The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience."

- Sam Walton (1918-1992)

With vision he accomplished to create the number one retailer of the United States.

Wal-Mart push the retail industry with technology establishing the universal bar code, which forced manufacturers to adopt common labeling. The bar allowed retailers to generate all kinds of information -- creating a subtle shift of power from manufacturers to retailers. Wal-Mart became especially good at exploiting the information behind the bar code and is considered a pioneer in developing sophisticated technology to track its inventory and cut the fat out of its supply chain.

Recently, Wal-Mart became the first major retailer to demand manufacturers use radio frequency identification technology) RFID. The principle to sell same goods for less( charges 2-5% lower price) & still earns profit.

Very good operational efficiency. When Walmart store is in place, their gold is to dominate the local competition in the market to become the number one retailer in that sector.

Use of IT in all verticals of business, first in technology. Effective use of logistics management, Wal-Mart created significant advantage through the systems it developed to manage its warehouses and stores.

Growth by expansion in USA and International global expansion for new market opportunity. Networked to HQ via private satellite in 1983 up to day. Data used to “profile” each market. Bargaining power over suppliers, they predict demand, optimizes stock . With only 10% (vs. 25% of industry stud) of space for storage (relying on logistical superiority).

Initially Wal-Mart chooses locations without direct competitions from large chains (rural areas). Steadily builds new stores doesn’t buy other chains. Builds stores in cheap locations with room for expansion from standard, efficient design (no acquisitions). Created a widespread name recognition and customer recognition and satisfaction with the Wal-Mart brand and associated the retailer with the reputation of offering the best prices.

Branching out in to new sectors of retailing such as Healthy and beauty aids, Electronics, Toys Lawn and garden items, Jewelry, Automotive products, Home furnishings, Hardware, Sporting goods, Pet supplies, Housewares, etc. Wal-Mart created a culture of supporting values, skills, technologies, and supplier –customer relationship, HR and approaches to motivation that could not be easily copied by other firms.

STRENGHS

-Loyal customers

-Great pricing

- Stock ownership and profit-sharing with employees

-Good locations

-Good benefits for full time employees

- Ongoing development of its employees

-SAM’S Club customers able to buy in bulk

-Leads industry in information technology

WEAKNESES

-Suppliers are always under pressure with regard to price and their ability to supply when required.

-Membership only for SAM’S Club

-Old fashioned store policies

-Few women and minorities in top management

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

OPORTUNITIES

-Supercenters offer one stop shopping

-Internet shopping growing

-Dollar value increasing

-Similar shopping patterns worldwide

-Retail sales expected to increase

-Environment conscious consumers

-Elderly population growing

THREAT

-Regulation of Wal-Mart pharmacies

-Small towns do not want entry of Wal-Mart

because of the variety of competition nationally, regionally and locally

-Substitute products more easily because of intense competition

- Being number one in its market, some of Walmart's proven strategies are being imitated, to various degrees, by other large retailers. This will likely make the market for the "big box" retailers more competitive over time.

Organization

As an organization Walmart has a divisional structure, Walmart Stores, Sam’s Club and Walmart International. This type of organizational structure is quite common for companies as large as Walmart and having several divisions allows the company to operate efficiently and effectively. Each division is responsible for its growth or failures. Each division is responsible for informing through the chain of command

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