WAL-MART CASE ANALYSIS

Wal-Mart Case Analysis

Wal-Mart Case Analysis

Introduction

In the retail sector, performance is influenced by factors such as cost of goods, the level of consumer debt, economic conditions, customer preferences, the level of employment, inflation, fluctuations in exchange rates, oil prices and climate trends. In 2003, the world economy has experienced its strongest growth since 2000, from which the retail sector has benefited. In 2004, most distributors end up the year with a solid growth rate rising to 6.7%. Retail sales are around $ 8 billion, of which 2.6 billion were made by the 250 largest companies. North American distributors dominate the market, both in number of companies (41.6%) than turnover. However, the strongest growth prospects are now outside the USA. Economic recovery, coupled with productivity gains related to investments in technology, which enabled a satisfactory level of profitability (Bolen and Davis, 2007). The market situation is rather good: there is indeed, as the first 250 groups, only 15 recorded a net loss in 2003. Similarly, the rate of average net profit rises to 3.3%, but besides all these growth factors Wal-Mart had to reshape its strategy in the year of 2005, as the largest grocery giant had to keep offering lowest price. In this paper, the case of Wal-Mart would be analyzed in order to assess its present strength, weaknesses, opportunities and threats in the present environment and to what extent the company had achieved from its strategy to cut the non-cash benefits of employees. (Berry, 2011)

Wal-Mart: Strategic History

When self-service and discounts have become big business in the 60's, Sam Walton defined the rules and explained them incessantly to his employees, called associates and it established a new paradigm so powerful that only a few years in its early stages, the average discount stores were nearly doubled and tripled their sales. In 1992, the year of the death of Sam Walton, Wal-Mart had 1,900 superstores with more than 430,000 employees. Sales reached USD $55 billion with earnings of close to two billion, thus formed the world's largest hypermarket. In 1985, Forbes revealed that Sam Walton was the richest man in America and Wal-Mart won praise for being one of the best-managed companies in the U.S. with Wal-Mart the power shifted from manufacturers to distribution channels. Then the same pattern was seen in Home Depot and Toys. A similar change could be to CarMax or Amazon.com in the near future and like McDonald's, Toyota and others have become inefficient competitive advantage by repairing weak links in their value chain, Wal-Mart fixed the link forming a partnership with its largest supplier, "Procter & Gamble to align objectives coordinate and share information. No supplier could do business with those companies, unless they wanted to become a strong link and for some competitors it represented as an opportunity to fill the space. Firms that wanted to do business with Wal-Mart had to change their business models instrumentation improvements in systems, electronic data interchange and just-in time (Bell and Feiner, ...