Way back in the early 90’s as set by the founder Sam Walton it was to “become a $125 billion company by the year 2000”
Wal-Mart Stores, Inc., branded as Walmart is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. Headquartered in Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and incorporated on October 31, 1969. It has over 11,000 stores in 27 countries, under a total 55 different names. The company operates under the Walmart name in the US and Puerto Rico. It operates in Mexico as Walmart de México y Centroamérica, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada.
The company is the world’s largest public corporation, according to the Fortune Global 500 list in 2014, the biggest private employer in the world with over two million employees, and the largest retailer in the world. Walmart is a family-owned business, as the company is controlled by the Walton family, who own over 50 percent of Walmart through their holding company, Walton Enterprises. It is also one of the world’s most valuable companies (in terms of market value) (“Market Cap Rankings”.
Ycharts. Zacks Investment Research. April 8, 2012.), and is also the largest groceryretailer in the US. In 2009, it generated 51 percent of its US$258 billion (equivalent to $284 billion in 2014) sales in the US from grocery business. It also owns and operates the Sam’s Club retail warehouses in North America. Walmart is a leader in sustainability, corporate philanthropy and employment opportunity. David Glass, the CEO of Walmart, states out the two objectives that they focus on: I. Providing the customers what they want, when they want it, all at a value.
II. Treating each other as we would hope to be treated, acknowledging our total dependency on our associate-partners to sustain our success. Strengths In one store they offer a huge selection of goods at very competitive,if not the best, prices in a one stop store. Because of their size they can get huge discounts from suppliers and so pass these savings on to the customers. They manufacture they own branded goods as well as supply goods from local suppliers and other major brands. Their size and buying power is a great strength. They also are frugal in their management style…very careful with how they spend their money and manage their resources. Weaknesses
Just controlling such a huge organisation is a huge untertaking and in particular managing the employees. Suppliers are always under pressure with regard to price and their ability to supply when required. Becuase of the low prices customers often question and are concerned at the quality of the goods.This is offset to some extent by the satisfaction guarantees offered. Opportunities
Expansion into other countries and forming partnerships to enter these countries is probably the main opportunity…employing ‘more of the same’ strategy. Taking over companies overseas is also possible. e.g. ASDA in the UK Home delivery of orders placed through the internet is a big opportunity. Most stores are on the edge of town and as fuel costs rise people are less likely to want to travel. Creation of Walmart convenience stores is a strong possiblity. This overcomes local objections and increased travel costs. In recessionary times…people are looking to save money.
ThreatsLocal competing vendors hate the possible arrival of Walmart and a lot opposition is likely. Also competition from local convenience stores is likely to increase as travel costs to Walmart increase. In Europe the expansion of the German retailers, Aldi and Lidl, is growing fast.
These companies offer limited stock but are local and are cheap. Although Walmart is huge, competition from similar companies is also likely. Being successful, they are open to attack on any ethical stance – low pay and poor work conditions, supply of goods from ‘poor’ cheap labour countries, and environmental issues. When you drop by Walmart, you are witnessing one of history’s greatest logistical and operational triumphs.
According to Supply Chain Digest, this retail giant stocks products made in more than 70 countries and at any given time, operates more than 11,000 stores in 27 countries around the world, and manages an average of $32 billion in inventory. With these kinds of numbers, having an effective and efficient supply chain management strategy and system is imperative. The entire organisation is committed to a business model of driving costs out of supply chains to enable consumers to save money and live better.
Over the past ten years, Walmart has become the world’s largest and arguably most powerful retailer with the highest sales per square foot, inventory turnover, and operating profit of any discount retailer. In its transition from regional retailer to global powerhouse, the organisation has become synonymous with the concept of successful supply chain management. “I don’t believe there is a university in the world that doesn’t talk about Walmart and the supply chain,” said James Crowell, director of the Supply Chain Management Research Center at the Walton College of Business.
“They are just so well respected because they do it so well.” Walmart began with the goal to provide customers with the goods they wanted whenever and wherever they wanted them. The company then focused on developing cost structures that allowed it to offer low everyday pricing. Walmart then concentrated on developing a more highly structured and advanced supply chain management strategy to exploit and enhance this competitive advantage and assume market leadership position. Fewer Links In The Supply Chain
Even in its early years, Walmart’s supply chain management contributed to its success. Founder Sam Walton, who owned several Ben Franklin franchise stores before opening the first Walmart in Rogers, Ark in 1962, selectively purchased bulk merchandise and transported it directly to his stores. Walmart’s supply chain innovation began with the company removing a few of the chain’s links. In the 1980s, Walmart began working directly with manufacturers to cut costs and more efficiently manage the supply chain.
Under a Walmart’s supply chain initiative called Vendor Managed Inventory (VMI), manufacturers became responsible for managing their products in Walmart’s warehouses. As a result, Walmart was able to expect close to 100% order fulfilment on merchandise. In 1989, Wal-Mart was named Retailer of the Decade, with distribution costs estimated at a mere 1.7% of its cost of sales – far superior to competitors like Kmart (3.5%) and Sears (5%). The company’s supply chain has only become more effective since then.