Outline

• History Overview
- Vision, Mission and Goals

• Interna & ExternalAnalysis

-Value Chain
-SWOT & Pestel Analysis
-5 Forces Model
-Main Competitors

•Internationalization
-Driving Forces
-Entry decisions
-Examples of success and failure

•Suggestions
 History Overview
• 1962: Walten Brothers opened fist Walmart in
Arkansas
• 1970: Walmart became public
• 1990: 1st Nationalretailer
• 1991: International Expansion
• 1993: Creation of “Great Value”
• 2003: Largest corporation in the world
• 2012: 50th Anniversary
Mission Statement, Vision, Goals, & Purpose
Mission Statement:
To help people save money so they can
live better

Goal:
Becoming in an international brand

Vision:
“If we work together, we’ll lower the Advertising slogans:
cost of living for everyone…we’ll give
Save Money. Live better
the world an opportunity to see what
it’s like to save and have a better life.
 Customer Target
• “Wal-Mart's targeted demographic:
– Modest incomes
– Shoppers interested in prices
• But the customer base is changing
Internal & External
Analysis
 Firms’ Value Chain

General administration

Human resource management

Technology development

Procurement

Inbound Outbound Marketing

Operations Service
logistics logistics and sales
 Support Activities
Firms infrasctructure: close connection between headquarter and localstores.

Human resources:
- Based on Interaction practices between company andemployees
-Low pay but other benefits (health care plans, retirement plans, or promotion opportunities)
-2.2 million associatesglobally.
-Every time we open a supercenter, we provide roughly 300jobs
-Women57% of our U.S. workforce, 27% of corporate officers, and 20% of our Board of directors.

Techonology development: It is the key factor of the company. It constitutes a competitiveadvantage against
competitors.
- Computer-based technology
POS(Point of sales) system
Satellite System
Procurement:
-Wal-Mart deals directly with manufacturers, by passing all intermediaries.
- EDI : Electronic data interchange

MANUFACTURER – WALMART - CUSTOMERS

 Primary Activities
Inboun Operations Outboun Marketing and Service
d d sales
Logisti Logistics
cs
-VMI system 3 business segments: -Hub and spoke - Word ofmouth -accepting returned
distribution system. communication. goods
(Vendor managed
a)WalMart stores
inventory) - Super centers - CROSSDOCKING: -focuses on everyday -Satisfaction
- Discount centers logistic technique to low prices guarantee
continuous make the
- Neighborhoo
replenishment d markets distribution process “Save money, live - Opening
more efficient better” hours(24/7)
b) SAM’SClub
-EDI(Electronic
-Sales are on a self-
Data Interchange c)WalMart service, cash-and-carry
international basis.
 Business Formats
1) Walmart Stores
• Walmart Discount Stores 629 in theUS

• Walmart Supercenter: Walmart Discount Stores + Full Service

Supermarket. 3,029 in the US.

• Walmart Market: Previously branded as Walmart Neighborhood

Market. 199 in the US.

2) Sam’s Club. Buy in large quantities. 611 opened

in the US.
Walmart in the US
 Distribution Channels
• “Saturation Strategy”
• The company owns a fleet of more than 3,000 trucksand
12,000 trailers.
• The Wal-Mart Way – CrossDocking.
 Resource - Based View Of The Firm
Difficultto Difficultto
Competency Valuable Rare imitate substitute Conclusion

Integrated technology of supplychain Yes Yes Yes Yes Sustainable Compt. adv

Ability to generate large salesvolume Yes No No Yes Comp. Parity

Superior logistics system Yes Yes Yes Yes Sustainable comp. adv

Operation decentralization Yes Yes Yes No Temp. comp. adv

Strong culture Yes Yes Yes Yes Sustainable comp. adv

Human resources (management team and

employee autonomy) Yes Yes Yes No Temp. comp. adv
 SW
Helpful Harmful
INTERNALFACTORS

STRENGTHS WEAKNESSES
• Diversity in products & services
•Brand image-weak
• Convenient prices & locations
reputation
• Strong market presence
•Low global presence
• Customer loyalty
•Behind rivals in e-
• Strong financial performance
commerce
• Cost and pricing advantages over
rivals
• Good supply chain
EXTERNALFACTORS

• Global Expansion: new geographic • Intense Competition

areas • Laws and Regulations:
• Increasing online sales Trade policy
• Strategic alliances • Cultural barriers
Acquiring rival firms • Current economy
• Slow market growth
• Transport of distinctive
comptency
OPPORTUNITIES THREATS
 PESTELAnalysis
• Political: Policies on economy, trading
agreements (NAFTA…).
• Economical: Unemployment Rate, slightly
increase in consumption.
• Socio Cultural: Faster pace of live- Efficiencyis
key.
• Technological: Use of IT technologies. Online
shopping.
• Environmental: Recycling, Contamination issues.
• Legal: More laws and more complex.
The Five Forces Model
1. Bargaining Power of
Customers: Low
I. Customers usually make small purchases.
II. A large number of customers.
III. Wal-Mart’s main customers are
individuals.
2. Bargaining Power of Suppliers:
Medium-Low
I. Wal-Mart purchases huge quantitiesof
products from itssuppliers.
II. Low switching costs from one supplierto
another.
III. Products have a lot of substitutes.
IV. Almost all the products are not critical for
Wal-Mart.
 The Five Forces Model
3. Potential entrants / Barriers toentry:
Medium-High
I. Economies of scale.
II. High capital requirements.
III. Customers mainly look for products with low prices and
standard quality.
IV. Low switching costs among companies for customers.
V. Requires a precise distribution system.
4. Power of Substitutes: High
I. Prices and quality of substitute products are very competitive.
II. Performance of substituteproducts are similar.
III. Consumer switching costs are low.
 The Five Forces Model
• 5. Potential Competitors/ Rivalry: High
I. Wal-Mart represents the 25% share of the U.S. Supermarket
business.
II. Competitors have similar sizes.
III. Industry growth isslow.
IV. Exit barriers arehigh.
V. There is a high production capacity

WAL-MART main competitors:

Retailer Industry: Supermarket Industry:

• Target • Dollar General
• K-Mart • Lowe’s Food.
 Strategic Group Map
High
Customer service/Price

Low

Low Number of ProductCategories High

 Main Competitors
Retailer Industry: Target Supermarket Industry:
Dollar General
I. Target is the main competitor of Walmart I. One of the main competitors, pursuing
low prices.
II. ranked #33 in the Fortune 500.
II. Good location in smaller communities is
III. Target offers very similar products.
the main competence advantage.
IV. Target went abroad in January2011.
III. Strategy: Save time, save money
IV. Many items per $1

Mission: to Make Target your preferred

shopping destination in all channels by
delivering outstanding value, continuous Mission: to best serve others by keeping it real
innovation and exceptional guest experiences. and simple.
 Business-Level Strategy:
Combined Strategy
Walmart combines a Cost-Leadership
and Differentiation strategiesbecause:

I. Allowed to achieve a large scale and an

efficient supply chain.
II. Has its own low-cost brands, like Great Value.
III. A unique cost structure that allows Walmart to
establish the lowest prices and achieve
competitive advantage. (best value/price
combination )
IV. Present in many different industries and
markets with efficient distribution channels.
V. Very difficult strategy to imitate by offeringa
broad quantity of products at a lowprice.
Internationalization
 Internationalization
• Reasons for expanding abroad
• Risks
• International Strategy
• Success
• Key issues
 Forces Favoring Globalization
• 3 main reasons
– Saturated domestic market
– United States represents only 4% of world’s
population (missing of 96% of potentialcustomers)
– Emerging Markets with lower disposable incomeoffer
huge platforms for growth indiscount retailer.
• Economies of Scale
• Growth
• Revenues
• Reduce political risk
 Risks of Expanding Abroad
• Management Risk
– Culture, language, customer
preferences, distribution systems.
• High investment

• Political and Economic risks

• Exchange Rates risk

 Entry Decisions
• Important decisions any company needs to
face when going international:

– What markets to enter, when and whatsize.

– What strategy to follow.
– What mode of entry.
 What markets to enter?

Europe:
•Mature Markets

•High Rivalry

•Lack of strong
costumer relationship
What markets to enter?
Asia:
•Most distant
geographically

•Most different culturally

and logistically

•Required high financial

and managerial resources
 What markets to enter?
LatinAmerica:
• Closest markets

• Large population

•Emerging Markets
Walmart International
What Strategy to follow

Trans
Global
National

Inter Multi
national domestic

Low High
Local Responsiveness
Mode of entry of International Expansion
 Mode of entry of International Expansion
Year Country Mode of Entry
1991 Mexico 50% Joint Venture Cifra
1994 Brazil 60% Joint Venture Lojas Americana
1994 Canada Acquisition Woolco (weak player)
1995 Argentina Wholly owned Susbidiary
1996 China New opening, JV, Acquisition
1998 South Korea Adquisition
1999 U.K. Acquisition of ASDA
2002 Japan Acquisition Seiyu
2002 Germany Acquisition of Wertkauf andSpar
2007 India Joint Venture
2011 Southern African Countries Acquisition of Massmart HoldingLimited
 Examples of International Success
• Mexico:
– Largest Walmart’s foreign presence (68%)
– 38% Retail Market Share in Mexico
• Canada
– One of the most successful international expansion
– Acquired Woolco Stores and changed structure

• Both countries are close and were exposedto

Walmart.
 Examples of International Success
• China:
– Most populous country
– Lower income in middle-class families
– Adaptation to market
– 85% of products from local suppliers.
 Examples of International Failure
• Germany
– Walmart was not able to benefit from economies of scale
– Unable to become costleader
– Mode of entry:
• Wertkauf (right move)
• Spar (wrongmove)
– Culture differences
– Low profitability market
– Lost $1 Billion
 Examples of International Failure
• India
– Political and legal barriers:
• Foreign companies are not allowed toset up big stores
unless they sell only one brand.

• South Korea
– Very demanding customers
– Did not customized to market
– Big companies also fail in South Korea
 Key Success Factors
• A supply chain with integrated technology

• An ability to generate large sales volume (economies of scale)

• Every Day Low Prices

• Superior logistics systems

• Decentralized operations

• A strong and unique culture (in U.S.)

Suggestions
 “Think local, act global”
• Locally leveraged:
– Shared knowledge between units.

• Worldwide learning:
– Advantages of interconnected economies.

• Adaptation:
– To locally customize processes and services