Wal-Mart Case Study

Wal-Mart Case Study

Introduction

Wal-Mart was started by Sam Walton in 1962; the first store was in Rogers Arkansas. By the beginning of the 1970's, Wal-Mart had grown to 1,500 employees and 44.2 million dollars in sales. The company also went public in 1970. The company's growth continued throughout the decade, with the employee count reaching 21,000 by 1980 with $1.2 billion dollars in sales. Wal-Mart made its first acquisition, buying 16 Mohr-Value stores. In 1983, the first Sam's Club warehouse opened followed by the first Wal-Mart Supercenter in 1988. By the end of the decade, the company had over 1,402 Wal-Mart and 123 Sam's Club locations and $26 billion dollars in sales - an increase of 2,600% over the decade. Today, Wal-Mart is the world's largest retailer, with $405 billion in sales, over 4,300 stores, and 2.1 million employees (Duke, 2010, p. 0). One hundred shares of Wal-Mart stock purchased for $1,650 when the company went public would have grown to 204,800 shares worth over $10.1 million as of July 9, 2010 for a return of 613,431% (“Dividends & stock splits”, 2010, July 9) (“Wal-Mart (WMT) stock quote” 2010, July 9).

Case Analysis

Wal-Mart operates an efficient and effective organization within its operational model. The company's goals, according to its 2010 Financial Statement, include “growth, leverage and returns” (Duke, 2010, p. 2). Growth is expansion around the world. Leverage is reducing expenses and improving productivity. The term “returns” is in reference the returns given to the Wal-Mart stockholders. It is large, mature, and oriented to mass sales efforts. The Wal-Mart organization is divided into three divisions: Wal-Mart US, Wal-Mart International and Sam's Club. Wal-Mart US commands approximately 64 percent of the business while Wal-Mart International and Sam's Club hold 25 and 11 percent respectively (Duke, 2010 p. 55). Wal-Mart lists a number of changes throughout the last five years or so; however, most are related to continual expansion and growth. During FY 2010, Wal-Mart announced that it would be subdividing Wal-Mart US into “three business units, Wal-Mart West, Wal-Mart North and Wal-Mart South; creating e-commerce through a global.com organization and combining logistics, real estate and operations under the same leadership.” (”Wal-Mart changes structure”, 2010). The internal changes to keep costs down have been detrimental to its employees. Pay bands that limit cost-of-living raises have many long-time Wal-Mart employees with no foreseeable pay increases. Wal-Mart has converted to paying for insurance premiums ...