Report On Wal Mart
Wal Mart Report Transcript:By 2007, Wal-Mart (WM) is not only the world’s biggest retailer; it was also (in terms of sales revenue) the world’s largest corporation. In an industry characterized by intense competition and thin margins, WM has experienced 40 years of continuous growth and consistently high profitability since Sam Walton opened his first store in Arkansas. During this period, WM has transformed itself from a discount retailer serving small towns in Arkansas and Oklahoma to, first, a national discount chain and, subsequently, to an international retailer with multiple retail formats (discount stores, warehouse clubs, supercenters, and neighbourhood stores). The case offers insight into the basis of WM’s phenomenal success by reviewing WM’s main functions and major operating activities, including: purchasing, distribution and warehousing, in-store operations, marketing, information technology, human resource management, and management decision processes. These descriptions offer a basis for analyzing the resources and capabilities that form the foundation of WM’s competitive advantage.
The case describes WM’s development under Sam Walton’s leadership, shows how WM retained Walton’s values and principles after his death in 1992, and indicates how these values are critical to WM’s exceptional organizational capabilities. Looking to the future, the case question’s WM’s ability to sustain its competitive advantage in the face of increasing size, continued success, internationalization, and hostility from a variety of interest groups. The mixed performance of WM’s overseas businesses raises important questions about WM’s ability to transfer its retailing capabilities from the US to countries with very different cultures, retailing conditions, and economic systems. Parallel issues arise in relation to the diversification of WM’s retail formats. In addition to its discount stores, WM has become a successful operator of warehouse clubs and superstores (hypermarkets) that sell food as well as hard and soft goods.
What are the limits to WM’s ability to diversify its retail activities? The issue of WM’s ability to sustain its success relates not only to its expansion into new countries and new retail markets, but also the continued success of its core US discount retailing operations. To what extent is WM’s competitive advantage sustainable against (a) imitation by competitors, (b) innovation by competitors (e.g., new approaches to retailing), (c) the depreciation/obsolescence of its core resources and capabilities (e.g., will the WM culture, values, employee loyalty, and managerial drive erode over time?). A central issue in the case is the analysis of sustainability. In a competitive industry such as discount retailing, where imitation is apparently easy, which of WM’s resources and capabilities offer the basis for sustainable success? The case allows some interesting extensions into the role of resources and capabilities in international strategy and diversification strategy.