Walmart

Based on your review and analysis of the annual report, prepare a ten to twelve (10-12) page report in which you:

In order to understand why Walmart has been so successful in implementing their strategies, you have to first understand the man behind the vision. Sam Walton came from humble beginnings. Sam grew up on a farm and because his father learned that there was not enough profit in being a farmer he decided to pursue a career in the mortgage. He grew up during the Great Depression and was responsible for financially contributing ranging from selling bottled milk and newspapers to magazine subscriptions.

Sam Walton graduated from the University of Missouri with an economics degree in 1940. His first job was as a management trainee at Penny’s. Here he learned the basics of business management. His stay at Penny’s was short lived as he was called to active duty for World War II.

Once the war ended, he purchased a franchise and opened a Ben Franklin retail variety store in Newport, Arkansas. Soon after he opened his own store called Walton’s 5 and 10 and operated it as Ben Franklin affiliated store. Shortly thereafter, Walton became the largest Ben Franklin franchise owner, with nine stores. He became concerned about the competitive threat that discount stores were having on variety stores and so he decided to study the changes in retail stores and there trends. He wanted to develop a discount store of his own.

He had a strong desire to offer significantly discounted prices in order to expand sales volume in order to increase overall profits. On July 2, 1962, Sam Walton started his own discount store in Rogers, Arkansas. It was hugely successful and Walton wanted to expand into smaller markets and get the talent he needed to grow the company. Analyze the company’s mission and vision statements against the performance of the organization.

Then, evaluate how well the company lives out its mission and vision statement. Provide support from the organization’s performance in your evaluation. Walton was always an effective visionary leader and learned from the success and failures of others. He knew that he wanted to create an empire that would reshape the way people lived. He is known as the “entrepreneur of the century” and a genuine American folk hero. The company has grown from 44.2 million dollar in sales in 1970 to 400 billion in sales in 2010, the company’s mission and vision are a reality. The mission and vision of Walmart is Wal-Mart’s mission statement is, “We save people money so they can live better.”

The company’s vision statement is “to become the worldwide leader in retailing.” When we look at the overall success of this organization we realize that Wal- Mart is saving people money so that so they can live better lives. “From its earliest days and continuing to the present, top executives at Wal-Mart had vigorously and successfully pursued a low cost leadership strategy. This strategy has allowed the company to achieve the following: * 1967 - 24 stores totaling 12.7 million in sales

* 1970 - Walmart becomes a publicly traded company * 1972 - 51 stores totaling sales of 78 million * 1980 - Walmart reaches 1billion in annual sales * 1983 - Walmart opens the first Sam’s Club * 1988 - Walmart opens the first supercenter which incorporates general merchandising and a full scale supermarket * 1991 - Walmart expands internationally * 1993 - Walmart experiences it first 1 billion in sales in 1 week * 1996 - Walmart opens in China * 2009- Walmart exceeds 400 billion in sales * 2011- Walmart reaches over 10,000 retail unit centers

According to the above information, Walmart has done a tremendous job in becoming the leader in the retail industry. No other company can compare to the growth, sales and sustainability of the organization. Once, Kmart was a competitor, however, they filed bankruptcy and slowly began disappear on January 22, 2002. Assess how the organization’s strategic goals link to the company’s mission and vision.

The company’s strategy has allowed it to set itself so far above the competition that, “None of the world’s major retailers could match Walmart’s zeal and competence in ferretting out cost savings and finding new and better ways to operate cost-efficiency” (Thompson, gamble, 2010). Walmart’s low cost strategy is extended throughout its entire value chain, such as obtaining merchandise from suppliers, distribution related activities, construction of facilities, operating its retail stores. Walmart keeps a tight watch on their costs of selling, their general costs, and administrative activities.

These strategies enable Walmart to sell their products at very low prices. An independently certified study showed that Walmart saved the average U.S. household more than 2500.00 annually. The study included the direct effect on the purchases made by customers and the indirect effect stemming from lower prices from nearby retailers.

Walmart typically offers customers products at least 5 to 25 percent lower than traditional supermarkets. (cite) “You add it all up and they have contributed to the financial well being of the American public more than any other institution I can think of.” Warren Buffett Walmart also utilizes multiple store formats; Supercenters, Walmart discount centers, Neighborhood markets and Sam’s clubs. Discount stores allow consumers obviously to get quality namebrand products at a deeper discount.

Supercenters meet the demand for one stop shopping which saves consumers time and money which helps to contribute to their overall well being. Sam’s clubs allow consumers to save even more money by buying name brand and popular products in bulk products at a deep discount. This store was specifically designed to meet the needs of religious organizations, small businesses, families, barber and beauty salons, motels and restaurants. Neighborhood stores allow Walmart to sell pharmaceuticals, groceries and general merchandise at a deep discount. Carrying a wide variety of name brand products allows consumers to get “much of what they want at affordable prices.” (cite)

These strategies allowed Walmart to achieve their mission of providing low cost prices to enable customers to live better lives. In all of their strategies, Walmart keeps their costs low so that they can keep their customers cost low. “In the advent of advertising, Walmart relies less on this medium than most other discount chains.”(cite) Most of the traffic comes from word of mouth. Walmart’s advertising expenditure ran about 0.3 percent of sales revenues, versus 1.5 percent for Kmart and 2.3 percent for Target. Analyze the company’s financial performance to determine the link between the company’s strategic goals, strategy, and its financial performance. Detail your findings.

Conduct a competitive and marketing analysis of the organization to determine strengths and opportunities.

Apply the appropriate strategy (low cost, differentiation, or niche) that will maximize the organization’s return to shareholders. Provide a detailed rationale for the reason you chose this strategy and state the expected outcome(s).

Walmart utilizes a low cost strategy to maximize shareholder value. A low cost strategy is one in which an organization offers low pricing to stimulate demand and gain market share. This process and their success in implementing this strategy has placed Walmart as the retail industry leader as the lowest cost provider. As a result, Walmart has such a strong competitive advantage against all other retailers. “A company achieves low cost leadership when it becomes the industry’s lowest cost provider rather than just being one of perhaps several competitors with comparatively low costs (Thompon, Strickland & Gamble, 2010).

Walmart is able to execute value chain activities more cost efficiently than rivals which enables. Walmart’s Everyday Low Cost/ Everday low price business model is an approach that wins both with customers and shareholders. (annual report. Com) in 2012, Walmart delivered net sales growth in all operating segments. They were able to reduce operating expenses as a percentage of sales. Because of this, Walmart was able to deliver “strong returns through shareholder dividends and share repurchases. Earnings have increased during the last decade at a compound annual growth rate of nearly 12 percent.

Walmart also has AA credit rating which is the highest rating in the industry. This reflects their strong cash flows, efficient use of working capital, and sound financial management. During the last five years, Walmart has returned 61 billion using this strategy. (annualreport) This strategy has worked and will continue to work to produce positive returns for shareholders. “Through disciplined execution of our key priorities, we are working to ensure that Walmart remains the world’s best positioned retailer for both consumers and share holders alike.”

Create a detailed scenario in which a merger or acquisition would be a viable strategy to implement. Consider who the merger or acquisition would involve, the market conditions making it a good choice, and the type of strategy that would make it a success.

If you were a leader in this organization, determine the appropriate rewards that would best motivate employees toward achieving the desired strategy. Review the financial performance of the company to ensure the rewards are appropriate. Justify your selection.

If I was a leader at Walmart, I would institute employee discount programs. One thing I would implement is first making employees feel that they are a part of the Walmart family. This would be incorporated in a variety of different ways.

Evaluate how the company’s current strategy supports or discourages ethical business behaviors (or perhaps both). Discuss how you arrived at your assessment. Walmarts current strategy supports ethical business practices. This is a result of the negative press that Walmart received throughout the years, ranging from customers, employees to grass root organizations. Several incidents have occurred in the past few years that made consumers raise their eyebrows at the practices of Walmart. Walmart has shifted their focus to helping people live better and saving them money.

One way Walnart has encouraged ethical business behaviors is by implementing ethical practices within their organizations and the community. In this process they have launched a “zero waste campaign” and increased “green” merchandise offerings.

The green merchandise offerings such as selling the compact fluorescent light bulbs which helped save customers an estimate of 6 billion in electricity savings and is better for the environment. This also eliminated the need to build the equivalent of 3 power plants which helped reduce carbon dioxide in the environment. Another strategy involved increasing organic food selections that were not produced using pesticides and chemical fertilizers and offering ecofriendly products help to promote a healthier environment. The “zero waste” campaign focused on partnering with schools to begin recycling plastic bags.

Walmart also introduced reusable bags that eliminated the need for 400 million plastic bags. Walmart also pushed its suppliers to use biodegradable packaging by making a standard that the suppliers must follow. In addition, Walmart decided to build new structures that would reduce energy usage, pollution and conserve natural energy. Walmart instituted new practices by allowing their employees their families eligible health benefits, increasing wages, and creating disaster distribution centers in areas that were badly affected by natural disasters. Walmart also created standards for suppliers in countries where wages and slave labor issues were a concern.

They created an internal group of individuals to ensure that the companies were conforming to the labor laws. In this effort, Wal-Mart began to ovesea foreign factory audits. Training and compliance was a must in all foreign factories. “Walmart worked closely with suppliers to correct any violations and supplier factories that failed to correct serious violations were permanently banned from producing merchandise sold by Walmart.

Our Company was founded on the belief that open communications and the highest standards of ethics are necessary to be successful. Our longstanding “Open Door” communication policy helps management be aware of and address issues in a timely and effective manner. Through the open door policy all associates are encouraged to inform management at the appropriate level when they are concerned about any matter pertaining to Walmart.

Walmart has adopted a Statement of Ethics to guide our associates in the continued observance of high ethical standards such as honesty, integrity and compliance with the law in the conduct of Walmart’s business. Familiarity and compliance with the Statement of Ethics is required of all associates who are part of management. The Company also maintains a separate Code of Ethics for our senior financial officers. Walmart also has in place a Related- Party Transaction Policy.

This policy applies to Walmart’s senior officers and directors and requires material related-party transactions to be reviewed by the Audit Committee. The senior officers and directors are required to report material related-party transactions to Walmart. We maintain a global ethics office which oversees and administers an ethics helpline. The ethics  helpline provides a channel for associates to make confidential and anonymous complaints regarding potential violations of our statements of ethics, including violations related to financial or accounting matters.

Company received a grand jury subpoena from the United States Attorney’s Office for the Central District of California, seeking documents and information relating to the Company’s receipt, transportation, handling, identification, recycling, treatment, storage and disposal of certain merchandise that constitutes hazardous materials or hazardous waste. The Company has been informed by the U.S. Attorney’s Office for the Central District of California that it is a target of a criminal investigation into potential violations of the Resource Conservation and Recovery Act (“RCRA”), the Clean Water Act and the Hazardous Materials Transportation Statute.

This U.S. Attorney’s Office contends, among other things, that the use of Company trucks to transport certain returned merchandise from the Company’s stores to its return centers is prohibited by RCRA because those materials may be considered hazardous waste. The government

alleges that, to comply with RCRA, the Company must ship from the store certain materials as “hazardous waste” directly to a certified disposal facility using a certified hazardous waste carrier. The U.S. Attorney’s Office in the Northern District of California and the U.S. Environmental Protection Agency subsequently joined in this investigation. The Company contends that the practice of transporting returned merchandise to its return centers for subsequent disposition, including disposal by certified facilities, is compliant with applicable laws and regulations. While management

cannot predict the ultimate outcome of this matter, management does not believe the outcome will have a material effect on the Company’s financial condition or results

1. Use at least six (6) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources. Facts:

1962 – 30,000.00/ 2012 15.8 billion earnings Walmart returned 101 billion to shareholders through dividends and share repurchases Net Sales: 1962: 250,000; 1972: 78million; 1982: 2.4 billion; 1992: 43.9 billion; 2002: 201.2 billion; 2012 443.9 billion “Customers are the reason why we’re in business. And when we exceed their expectations, we’re at our best.”

http://retailindustry.about.com/od/retailbestpractices/ig/Company-Mission-Statements/Wal-Mart-Mission-Statement.htm http://www.walmartstores.com/sites/annual-report/2012/WalMart_AR.pdf http://www.walmartstores.com/sites/annual-report/2012/

http://www.forbes.com/lists/2006/18/06f2000_The-Forbes-2000_Rank.html