Walmart Revenue Strategy Paper Example

Wal-Mart is one of the largest retail markets in the world and continues to increase its revenue because of its products and services that are provided. I have to admit Wal-Mart has made a lot of money from me because it’s my one stop supermarket. I can go to Wal-Mart and find just about any and everything I’m looking for which makes my shopping experience just that much more supreme.

Let me share some of the businesses history with you and its timeline. The very first store to open was in Rogers, Arkansas in 1962 its founder was Sam Walton. In 1970 Wal-Mart opened its first distribution center and home office in Bentonville, Ark.1972 Wal-Mart was approved and listed on the New York Stock Exchange.1983 First SAM’S CLUB opened in April in Midwest City, Oklahoma. 1988 First Super center opened in Washington, Missouri. . 1990 Wal-Mart becomes nation’s No. 1 retailer. 1991 International market entered for first time with the opening of a unit in Mexico City.

1992 Sam Walton passes away on April 5. 1992 Wal-Mart enters Puerto Rico. 1993 First billion-dollar sales week in December. 1997 Wal-Mart becomes the No. 1 employer in the United States, 1997 Wal-Mart has 680,000 associates worldwide, including 115,000 associates internationally, 1997 Wal-Mart has first $100 billion sales year, with sales totaling US$105 billion. 1999 Wal-Mart has 1,140,000 associates, making the company the largest private employer in the world. 1999 Wal-Mart acquires the ASDA Group the United Kingdom (229 stores).1999 Wal-Mart acquires 374 Interspa units in Germany.

2001 Wal-Mart topped Fortune’s Global500 and ranked third among the “Most Admired Companies in America”. 2002 Wal-Mart entered the Japanese market through the acquisition of interest in Seryu. 2005 Wal-Mart’s ownership stake in Japanese Seiyu increased to 56.56% in November.2005 Wal-Mart buys Sonae’s Brazil operations including 140 hypermarkets, supermarkets and wholesale units for $764 million in December.

The main strategy Wal-Mart used for Globalization is acquisition of other stores in different markets. In Canada Wal-Mart purchased 122 Woolco stores to enter that market and in Germany got a hold of 21 Wertkauf hypermarkets and then added 74 Interspar stores. Wal-mart achieved a grand success in U.K. with the $10.7 billion acquisition of ASDA. The Firm integrated all these purchased stores and changed the names, renewed the facilities and used store mangers that were trained in the US and they also changed the product mix.

Because of their increased presence in the global arena they impacted both the societies and the small businesses. Wal-mart strategy of acquisition in international markets was not very appropriate, as it wiped out small businesses everywhere and with it their unique local cultures. Wal-mart chains are everywhere, and without exception the local communities and the small businesses are ruined and Wal-mart is the only one which benefits.


The different products and services you will find at Wal-Mart range from food, auto parts, toys, armory, electronics, home improvement, cosmetics, jewelry, clothing, banking institution, and maybe a restaurant. Coincidentally there is a McDonalds in the one I visit. So it’s nice to always stop there for French fries and a milkshake. I go to Wal-Mart for just about everything. It’s convenient and I like to utilize the self check out lines as I am very impatient person. I believe that would be my only qualm is the large customer base it has and waiting in check out lines can be taxing at times especially during tax season.

Check out lines was the best thing they could’ve invested in. You’d be amazed at the number of people who will not go through the self check out lines but would rather wait in line for 30 minutes to do have the clerk do the same thing they themselves could’ve done in 5 minutes. I don’t understand that. Again it just goes to show I don’t have the patience. When I’m ready to go, I’m ready!

Wal-Mart has become more convenient now that I can go to the website and do my shopping and this worked out best for me when we hit the Christmas season. Again, I’m impatient and I don’t do crowds or long lines too well so I fired up their website and went shopping and everything that I needed to get took me 1 hour. Now imagine if I’d gone into the store. I would’ve seen how crowded it was and turned around and walked out. I guess if I ever wanted to find a way to work on being patient, Wal-Mart would be the biggest test. I’m not quite there yet! Speaking of internet sales half-dozen major multichannel retailers, including Toys “R” Us, Wal-Mart (NYSE: WMT) and Target, began collecting sales tax on online purchases.

According to COM Score/Media Metrix, online sales in the first two months of 2003, when tax collection began, rose 26 percent overall compared with the same time period last year, reaching US$13.9 billion. For nontravel spending, the category of sales most likely to be newly taxed, growth amounted to 19 percent, to a total of $7.8 billion. As I stated earlier, it’s not about lower prices it’s about convenience. As far as online tax is concerned A University of Tennessee study estimated states lost some $13 billion in tax revenue in 2001 because no online taxes were levied. That figure was questioned when The Direct Marketing Association recently released its own study suggesting the figure is probably closer to $2.5 billion and is unlikely to exceed $4.5 billion until 2011.

EBay was formed as a sole proprietorship by Silicon Valley software engineer Pierre Omidyar on Labor Day Weekend in 1995. Omidyar’s purpose was to establish a self-regulating online marketplace. A central premise of Omidyar’s online marketplace was the belief that people are essentially honest (eBay, 2005).

Reporting on a recent 10-year anniversary “fireside chat” with Omidyar and eBay’s first president Jeff Skoll, an eBay staffer explained that, “the site was based on a relatively simple idea: given the opportunity, people would do the right thing such as sending money to strangers to buy items online. Named “Auction Web”, the sites initially function like an online flea market, with buyers and sellers trading collectibles, garage sale items, and assorted junk.

Omidyar encouraged organic growth of the company which continues to this day allowing sellers to decide what items to list and shaping the direction of the company through buyer and seller demand and feedback. The business which offered a free service to both buyers and sellers was initially operated out of Omidyar’s living room. The site began to make a name for itself through word of mouth and the number of registered users at the site grew rapidly in late 1995/early 1996. Auction Web was incorporated in California in May of 1996, with Omidyar serving as CEO and his friend Jeff Skoll as President. To cover the costs of operating the business, Auction Web also began to charge a fee to auction items online.

That same year (1996), as part of an effort to address quality complaints and maintain the “community basis” of the site, Auction Web launched Feedback Forum (buyer and seller ratings) (Hoover’s, 2005; EBay, 2005). In 1997 Auction Web changed its name to eBay – “the online marketplace”. 1998 was a watershed year for eBay. In early 1998, former Hasbro executive Meg Whitman replaced Omidyar as CEO (Omidyar stayed on as Chairman) (Meg and the power of many, 2005). In April of 1998, eBay reincorporated in Delaware and moved its main headquarters into a new San Jose office (eBay, 2005). Three years after it was founded, eBay completed its IPO in September of 1998 (eBay, 2005).

The next few years saw more of the “organic growth” championed by eBay’s founder, as well as company directed growth through an acquisitions, alliance and international expansion strategy. In 1999, eBay purchased German online auction site Alando along with Billpoint, a person-to-person credit card technology. Other acquisitions that year included a 6% interest in (online seller of corporate surplus materials). In 2000, eBay entered into an agreement with Disney’s GO Network to develop auction sites and joined in an alliance with Wells Fargo to offer eBay sellers the option of accepting online checks.

A key acquisition in 2000 was eBay’s equity stake in the online used car dealer; eBay then launched a co-branded used car auction site. The company also bought, a discount online trading community. Significant international expansion occurred in 2000 with the launch of Canadian and Austrian sites and a joint venture with NEC to form eBay Japan. In 2001, eBay launched sites in France, Ireland, New Zealand and Switzerland. EBay also expanded its core

business that year by adding business-to-business auctions as well as virtual storefronts for retailers to sell fixed-price items. EBay’s 2001 purchase of Homes Direct, an auctioneer of foreclosed property, gave the company a foothold in the housing market. One of eBay’s most important acquisitions was its 2002 purchase of Papal for $1.5 billion. The online payment system was already in wide use on eBay at the time of the acquisition and today, 75% of the goods and services sold on eBay’s U.S. site are paid for with Pay Pal. Pay Pal is more than just an enhancement to eBay’s services, however. It also represents a way for eBay, Inc. to extend its interests beyond its own marketplace site.

While the 2002 Pay Pal acquisition was widely heralded as a smart move, other signs emerged that year indicating that eBay had a less than perfect track record. In 2003, eBay acquired Each Net, FairMarket, and Internet Auction acquisitions which boosted eBay’s already dominate share of the U.S. online auction market. In its 2005 annual report, EBay (2005) reported that “our eBay Marketplace mission is to create the world’s online marketplace”. This is quite obviously a very far-reaching mission and strategic objective.

In stating that it wants to create the world’s online marketplace, eBay clearly aims at being the dominant player in all markets around the world. Moreover, although eBay has had trouble moving some very high end items eBay specifically does not want to set any limits on the scope of its online trading business so long as the goods and services are legal, presumably.

EBay’s mission for its Pay Pal business, while more narrowly focused on the online payments business, is also quite ambitious. As stated in the company’s 2004 annual report: “Our Pay Pal mission is to create the new global standard for online payments.” Thus, as is the case with its business, EBay aims for global market leadership. At the time that eBay acquired Pay Pal in 2002 it was already the leading online payment system in the United States.

Over past few years, Pay Pal’s market dominance in the United States has actually increased and the system is making inroads in foreign markets. While Pay Pal is the overwhelming market leader in the U.S., eBay is likely to face stiff challenges in the future. Search engine giant Google is preparing to launch its own online-payment system that will directly compete with Pay Pal. EBay Inc.’s core business is, its online marketplace. EBay’s CEO Meg Whitman has described as a “dynamic self-regulating economy” (Meg Whitman CEO eBay, p. 257).

As previously noted, is no longer focused on collectibles which currently account for only about 25% of items traded on the site. There are more than 18,000 categories of items on the site with major categories including computers, consumer electronics, dolls and figures, books, coins and stamps, antiques, photo, pottery, sports memorabilia, toys, jewelry, and automobiles. EBay has been surprised by the success of some categories such as used cars. Currently, more automobiles are sold on eBay than are sold by Auto Nation, the leading volume car dealer in the U.S. Auto and auto parts sales are handled on a sub-site called eBay Motors.

There are also separate sub-sites for other leading or specialty categories like industrial products (eBay’s B-to-B marketplace). In addition to listings of different individual items within categories, features entire “online stores” including milling machines.

While eBay is known as the online auction house, a growing percentage of eBay transactions are non-auction or “buy now” transactions. It has been speculated that about 30% of the gross merchandise volume traded on eBay was exchanged at a fixed price, rather than through bidding and auction.

While it is believed that many eBay users enjoy the “entertainment” of the auction as well as believing that this is the best way to get a good bargain on the site, there also appears to be a substantial percentage of eBay users who prefer the expediency and certainty of the “buy it now” fixed price option. From the seller’s perspective, the auction option is probably most effective and lucrative for unique items or items of unknown value, where bidding wars are more likely. For moving multiple commodity-grade items, sellers might prefer the certainty of the fixed price. Competitive Comparison

Indicator eBay Amazon Yahoo Annual Sales ($mil.) 3,271.3 6,921.1 3,574.5 Employees 8,100 9,000 7,600 Market Cap ($ mil.) 54,528.6 15,507 47,406 Gross Profit Margin 88.23% 25.04% 70.70% Net Profit Margin 24.24% 7.26% 35.93% Return on Equity 12.9% — 22.0% Return on Assets 10.9% 21.4% 17.0% ROIC 12.9% 37.8% 19.9% Revenue per share ($) 2.86 17.75 3.08 Earnings per share 0.69 1.25 1.07 12 month revenue growth 42.5% 27.7% 69.0% 12 month net income growth 45.8% 238.2% 347.6%

McDonalds, the leading fast food industry nowadays, as well as a Trans National Cooperation. Due to the lower production cost and potential market, McDonalds has been expanding its production and selling line in China. It is seen to bring a positive consequence to China. Economically the existence of McDonalds in China’s soil increases the employment rate (though the Central Government keeps claming that the unemployment rate is 0). According to the official report, there are nearly 50000 citizens employed in the “McDonalds’ sector” in more than 680 branches in China.

Besides, the tax income from the incoming industry directly spurs up the Government revenue, solely in year 2000, McDonalds had already paid over one hundred million RMB to the Central Government . These two benefits can directly increase the national GDP and the Government then can reinvest the capital into the public sectors such as education and medical care and therefore to push the economy to move further.

Nonetheless, to look behind the fancy benefits, there may have a heavier weight of defects to China’s economy. From employment perspective, since most of the McDonalds staffs are teenagers and students, who successfully competed with the elder group, may lead to an unemployment of elderly, and since the old folks didn’t have chance to receive high education, they lose the competitive ability. Plus the “no pension” system in China, elder people may probably be forced to commit poor jobs such as to collect cans in streets and sell them for living. Besides, due to the low wages and short working hours in McDonalds, (probably under 13 hours a week), people may not sufficient to feed their own families.

And as they counted the “under-employed” inside the “employed” group, the huge number of employment rate could be just a meaningless figure. From the capital-flow perspective, McDonalds seems to boost China economy by investing. Yet, most of the income gained by McDonalds in China is sent back to its original country, America. If the Chinese’s consumption (import) in this fast food company is higher than the company’s investment (export), China will then suffer a trade deficit and furthermore, the entire economy’s health will be worsen.

Second, the incoming company may bring a positive education to the Chinese locals: commerce students may get a practical opportunity to explore what they had learnt from textbooks and business men may perceive a brand new idea of managing a business from a western perspective. Nevertheless, most of the highest positions in McDonalds such as the chief managers, are occupied by American since they are more trusted by headquarter. Therefore, the genuine, actual business techniques might not been passed down to Chinese.

Moreover, on account of the huge investment, McDonalds is able to rent the best positions in the city, such as in dominant shopping malls (Two McDonalds in New Oriental Plaza, Wang Fu Jing, Beijing) and convenient sites (sides on the main streets), plus the incredible amount of branches, people can easy to be attracted to walk inside. According to statistics, one of the four citizens in the streets stepped into

McDonalds. Thanks to this trend, the local fast food industry is going to be taken over. Socially, McDonalds helps spread the western dining culture to China, further to accelerate the harmony of various cultures. Yet it may be unappealing for the last generation and thus the generation gap gets widen. Arguments may exists and break the families’ affinity.

Besides, as the fast-food-dining trend is scaling up, child obesity is boosting at the same time. Parents claimed that McDonalds particularly, promotes their foods to children by offering happy meals with attractive toys, holding birthday parties, creating funny characters such as the Ronald McDonald, making comedic cartoons on TV and having playgrounds in most of the McDonalds stores.

These bring their children love this fantasy land so much and ask them to bring them there more than once a week, and it made the number of times kids consumed in fired food a week doubled in those three years . The community stated that McDonalds is in a maximally-profitable manner by offering cheap, ubiquitous products targeting to the young class.

Thanks to McDonalds, China has more and more chubby children. Apart from these, working in McDonalds doesn’t require professional techniques; therefore the staffs’ skills will always stay the same, as they don’t have incentive to improve. Also, people are taken by McDonalds and work for a foreign company; China’s economy may be slowed down as fewer people are in industrial or other development sectors. Environmentally, as we can see, McDonalds is not using plastic or foam to be vessels (except for soups), however, only 10% of the total waste can be reused and the rest will be contributed to the China soil. So where will they go? Who will deal with the waste? McDonalds? Or the Chinese Government?

As McDonald’s states, various environmentally friendly activities were held over time each year such as “campus-cleaning day”, “trees-planting day” and so. It can raise the citizens’ awareness of environment indeed. Whereas, how does it deal with its huge amount of trash? In resource perspective, McDonalds have been taking advantages by having low-cost resources like land rent and electricity. At the same time, it is even competing the scarce water with the Chinese local. As 70% of water in China is completely useless, ground water is being extracted, and as the existence of McDonalds, the water table is going further low and the last hope of water that can provide to Chinese is being threatened to fade out. Full year 2006 highlights include:

•Global comparable sales rose 5.7%•Revenues and operating income reached record highs of $21.6 billion and $4.4 billion, respectively •The Company returned nearly $5 billion to shareholders through shares acquired and dividends paid

Skinner continued, “McDonald’s U.S. business marked its fourth consecutive year of comparable sales increases and higher profitability

plan to invest about $1.9 billion of capital to open about 800 new McDonald’s restaurants and to reinvest in existing locations. Intent on optimizing restaurant ownership mix by continuing to pursue developmental license strategy and by reducing the percentage of Company-operated restaurants in certain major markets increased annual dividend by nearly 50% to $1.00 per share returned nearly $5 billion to shareholders through dividends and shares acquired, and completed the disposition of ownership interest in Chipotle Mexican Grill. In addition, fulfilled commitment to reduce shares outstanding by about 5% by the end of 2006.

KEY HIGHLIGHTS – CONSOLIDATEDDollars in millions, except per share data% Inc Currency Excluding Quarters ended Translation Currency December 31, 2006 2005 %Inc Benefit Translation————————————————————————- Revenues $5,633.9 $5,061.2 11 $200.0 7 Operating income 1,124.6 927.6 21 36.9 17 Income from continuing

Operations 761.2 604.8 26 21.7 22 Net income* 1,241.5 608.5 n/m 21.7 n/m Earnings per share fromContinuing operations-diluted 0.61 0.47 30 0.01 28 Earnings perShare-diluted* 1.00 0.48 n/m 0.01 n/m

n/m Not meaningful

%Inc Currency Excluding Years ended Translation Currency December 31, 2006 2005 %Inc Benefit Translation ————————————————————————- Revenues $21,586.4 $19,832.5 9 $271.5 7

Operating income 4,445.1 3,992.5 11 28.5 11 Income from continuingOperations 2,873.0 2,586.4 11 17.9 10 Net income* 3,544.2 2,602.2 36 17.9 36 Earnings per share fromContinuing operations-diluted** 2.30 2.03 13 0.02 12 Earnings per

Share-diluted* 2.83 2.04 39 0.01 38

Sources: Retrieved March 7, 2007 Retrieved March 7, 2007 Retrieved March 7, 2007 Retrieved March 7, 2007

“(Meg Whitman CEO eBay, p. 257). Retrieved March 7, 2007

Annual Report, EBay (2005) Retrieved March 7, 2007

(Hoover’s, 2005; EBay, 2005). Retrieved March 7, 2007

( Retrieved March 7, 2007

EBay Inc.: Managing Success in a Dynamic Online Market Place (2005). Introduction to Information Systems Real World Case 1 (page 257) Retrieved March 8, 2007 EBay (2005). Company information, investor data on eBay, annual reports. Corporate website. Retrieved March 8, 2007 from, Hoover’s (2005). EBay Inc. – Company Profile. Hoover’s Online. Retrieved March 8, 2007 Retrieved March 8, 2007″So far, we have around 50000 employees here in China, and 99.7% are China locals.”–McDonalds official web site, Retrieved March 8, 2007 []

“Only in one year, in 2000, we had already paid the PRC Government tax of over one-fifth billion RMB.”–McDonalds official web site, Retrieved March 8, 2007 []

Data from the film, “Super Size Me” 2004. Retrieved March 8, 2007 “The researchers interviewed more than 14,000 children between the ages of 9 and 14 for the study, over the course of three years. What they found was that the number of times these kids consumed fried foods a week doubled in those three years.”– Blogging Baby Online, Retrieved March 8, 2007 []

“10% of the total waste will go to the local treatment plants to transform them into animals’ feed or other byproducts.”– McDonalds official web site, Retrieved March 8, 2007 []

Data from McDonalds official web site, Retrieved March 8, 2007 []