A CASE STUDY ON WAL-MART

A Case Study on Wal-Mart



A Case Study on Wal-Mart

Introduction

Wal-Mart's size insulates it to some extent from many of the more serious challenges faced by its competitors. For example, no other retailer is ever going to be able to challenge Wal-Mart on prices of everyday items because its ability to negotiate a bulk discount could never be equalled. However, the group does face competition in the US for better-off shoppers from its biggest discount rival Target, which is perceived to have a more stylish image (Frazier, 2005). This paper discusses Wal-Mart in a concise and comprehensive way.

What Countries Do You Think Wal-Mart Should Consider Entering?

Wal-Mart may enter China and other developing countries in future seeing the population size of the country. As we see that Wal-Mart has begun to address this problem with more sophisticated marketing, emphasising the range and quality of "beyond basics" items. It even opened a test outlet in Texas selling only upscale products for what it calls "selective" shoppers. In fact the greatest threat facing a company of Wal-Mart's size is complacency, leading to lack of focus, but this seems unlikely to occur while the group remains under the control of the Walton family, who take very seriously indeed their responsibility as custodians of the company their father built from next to nothing (Frazier, 2005).

Meanwhile, further significant growth can only now come from the group's international operations, and this is where Wal-Mart's biggest challenges now lie. Buying local businesses is one thing. Replicating the same organic growth Wal-Mart has managed in the US is quite another thing altogether, and so far the group's performance in this areas has been patchy at best

Here are some other Wal-Mart numbers to grapple with. Currently, Wal-Mart records approximately 10.4bn transactions with customers each year, a number significantly higher than the entire world population of around 6.8bn (Frazier, 2005). Its annual revenues of $401bn in 2008 were only a little smaller than the gross domestic product of Austria, and bigger than countries including Greece, Denmark and Argentina. Wal-Mart is the world's largest employer, with more than 2.1m "associates". At least another 4m people have jobs that depend directly upon purchases by the group. It is the single biggest customer for virtually every American packaged goods manufacturer. Medium-sized corporations such as Dial, Clorox, Revlon and Hershey already derive more than a fifth of their annual revenues from Wal-Mart. In the case of many smaller companies the percentage is even higher, even as steep as 80% of revenues.

What Factors Are Important In Making This Decision?

Population size of the country matters a lot in making such decisions. Clearly, Wal-Mart's size brings with it considerable influence. Any significant change in Wal-Mart's buying patterns can make or break suppliers, and the group has for many years warned companies against becoming too dependent on its custom. In some cases it has even attempted to limit the percentage of business it gives to smaller suppliers in order to avoid turning them into ...