I. Executive Summary Walmart, biggest retail discounted store established by Sam Walton in 1950 has mark a remarkable success in the US. His strategy of purchasing in high volume while selling low and still gain a mark up made it more popular that made it enviable to competition. Secret to his concept is high volume purchases, efficient logistics, and advanced supply chain technology, which significantly reduced cost and maximize economies of scale.
From its first store in 1950s to supercenter in ’88, to great expansion in ’95, spread in 15 countries in ’05, and global reach for 50th anniversary in 2012. Under new leadership of CEO Mike Duke, the ambitious plan of expansion comes to play given the greatest challenges in legal, economic and political issues.
II. Statement of the Problem While Walmart made a tremendous success in the retail stores, how can they support and carry out the plan of global expansion given the political and economic challenges.
III. Case Objective To suggest tangible strategic plans towards the realization of the dream of having a global reach in 2012.
IV. Case Analysis SWOT Analysis External Factors Opportunities| Threats| * Global Expansion * Newly Opened Stores in US * Strong per capita income * Big money spending of consumers * Larger market reach thru online access| * Competition * Political issues and govt positions * Govt regulations * Market saturation * Economic reccesion| Strengths| Weakness|
* Big/ large discount offers * International advantage * Interstate reach * Leverage on suppliers * Brand Loyalty and name recall * Wide variety of choices: house brands and signature brands * Extensive choices of goods| * No standard store layout * No big parking spaces to accommodate multitudes especially over the weekends * |
V. Altenative Courses of Action
Alternative no.1- To intensify store operations of existing stores, improve on costs and enjoy the large margins like Mr. Sam Walton days.
Alternative no.2– To expand in territories that is within the acceptable profitability margin of Walmart
Alternative no.3- To go all the way to global expansionand support the humanitarian thrust of Walmart of “Save Money. Live Better” creating additional jobs, create industry benchmarks, improve working conditions of workers, and strengthen competitive prices that will be enjoyed by global consumers
VI. Decision Criteria Criteria Quantitative a. Sales: The impact of alternative in the sales performance of the business b. Productivity: The effect of alternative to employee’s sales performance Qualitative: a. Corporate Image b. Competitive Advantage c. Goodwill d. Employee Morale e. Ease of implementation
Analysis/ Evaluation of Criteria Decision Criteria| Alternative 1| Alternative 2| Alternative 3| Quantitative- Cost-ROI-Business Risk-ProductivityGrowth Rate| LowHighLowHighlow| highhighlowhighlow| highlowhighhighlow| Qualitative-Corporate Image-Competitive -Advantage-Goodwill-Cultural Sensitivity| HighHighHighHighHighHigh| HighHighHighHighHighHigh| HighLowLowHighLowHigh|
Walmart can push for global expansion provided all the political, social and economic forces are addressed. Given the company’s business volume would put forward to a global reach; however margins must be given due importance so as not to suffer given a 10yr period. Expansion would definitely improve lives of the families nearby the store locations, improve the economy, strengthen the buying power of consumers, and would stir competition. Knowing Walmart’s prestige of selling low at its best would surely make competition roll.
Walmart has to innovatively introduce new plans to capture a buying market (consumers) and specifically target the segment with the highest expenditure. Walmart can also leverage on the burst of online shopping where their products can easily be reached even to those home based or with limited access t their stores.