NAME: SYED TAHIR SHAHZAD REG. NO.: - 1531-302-008 SEMESTER:- M.B.A 4th DATE:1st-JAN-2004 SUBMITTED TO:- MR.

AHMED BUTT

PRESTON INSTITUTE OF MANAGEMENT SCIENCE & TECHNOLOGY

INTRODUCTION
Wal-Mart is at growth stage.

DIVISIONS: WALMART STORES:Most Wal-Mart stores are located in tones of 5,000 to 25,000. Wal-Mart opened 37-walmart share, 97 super centers, 8 Sams clubs in fiscal 98. Wal-Mart tries to meet or undersell local competition but maintains uniform prices, except when lower prices are necessary to meet local competition. Wal-Mart stores maintain a satisfaction guaranteed program to promote customer goodwill and acceptance.

McLanes: McLanes is the nations largest distributor of food and merchandise to convenience stores. McLanes a wholesale distributor which sells merchandise to a variety of retailers, including the Wal-Mart stores, SAMS Clubs, and Super centers.

SAMS CLUB: SAMS Clubs are member-ship only, cash-and-carry operations. SAMS. SAMS now has 131 clubs with fresh-food departments such as bakery, meat, and produce. SAMS is $20 billion business that is starting to grow again. SAMS attempts to maximize sales volume and inventory turnover while minimizing expenses.

SUPERCENTRES: Wal-Marts super centers combine groceries with general merchandise, giving customers one-stop shopping. The number of super centers grew from just five in 1991 to six in 1992, 30 in 1993, 68 in 199, 143 in 1995, 235 in 1996.

INTERNATIONAL: In 1994, Wal-Mart acquired 122 Canadian Woolco stores. With more than 50,000 associates and over 300 locations outside the united sates, Wal-Mart already is serving some 5 million customers every week.

DISTRIBUTION CENTRES: Wal-Mart has 30-distribution centers nationwide; Wal-Marts distribution operations are highly automated. Wal-Mart computers are linked directly with over 200 vendors, so deliveries are fast.

OPERATIONS: Wal-Marts expense structure, measured as a percentage of sales, continues to be among the lowest in the industry. Although Walton watched expenses, he rewarded sales managers handsomely. Sales figures are available to every employee at Wal-Mart.

Wal-Mart stock is still39 percent held by the Walton family. Employee Benefits: Predatory Pricing: Diversity Among Employees: Philanthropy: Marketing: Innovations:

COMPETITORS: Kmart is the second-largest U.S. retailer. However, compared to Wal-Mart, the scope of Kmarts problem becomes evident. J.C. Penny and Sears responded to the reality of retail competition several years ago by offering consumers better values than before. They have succeeded in lifting their sales, in both dollars and units. Kmart planned to take market share from the, but was blocked. As this escape route from direct competition with Wal-Mart closes, Kmart must protect itself and fight an uneven battle with Wal-Mart and with another strong firm, Target. Dayton Hudson added 60 new Target stores in 1997 alone for a total of 796 stores.

WAL MART FISCAL 1998 END OF YEAR STORE COUNTS

NO. S NAMES DISCOUNT STORES SUPERCENTERS

SAM'S CLUB

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44

Alabama Alaska Arizona Arkansas California Colorado Coonecticut Delaware Florida Georgia Hawaii Idaho Illinosis Indiana Lowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah

50 3 34 50 100 31 14 2 102 62 5 9 95 60 43 40 45 56 19 22 27 45 34 42 79 9 13 13 17 16 16 51 78 8 77 57 23 49 6 41 8 57 169 14

27 0 0 27 0 5 0 1 33 25 0 0 11 15 2 8 23 19 0 1 0 0 0 14 30 0 5 0 0 0 3 5 8 0 4 21 0 12 0 12 0 30 72 0

8 3 7 4 24 10 3 1 31 16 1 1 24 14 7 5 5 9 3 10 3 21 9 4 12 1 3 2 4 6 3 18 14 2 23 6 0 18 1 9 2 11 52 5

45

Vermont

46 47 48 49 50

Virginia Washington West Virginia Wisconsin Wyoming

31 20 12 55 9

21 0 6 1 0

10 2 3 11 2

U.S. Total
51 52 53 54 55 56 57 58 59 60 Alberta British Columbia Manitobn New Burnswick New foundland Nova Scotia NW Territories Ontario Quebec Saskatchewan

1,921
16 12 9 4 7 7 1 52 28 8

441
0 0 0 0 0 0 0 0 0 0

443
0 0 0 0 0 0 0 0 0 0

Canada Total
61 62 63 64 65 66 Argentina Brazil Mexico Puerto Rico China Germany

144
0 0 347 9 0 0

0
6 5 27 0 2 21

0
3 3 28 5 1 0

International Total Grand Total

500 2,421

61 502

40 483

WAL MARTS ORGANIZATIONAL CHART

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WAL MART FISCAL 1998 END OF YEAR STORE COUNTS

NO. S NAMES
1 Alabama

DISCOUNT STORES SUPERCENTERS SAM'S CLUB

50 27 8

2 Alaska 3 Arizona 4 Arkansas 5 California 6 Colorado 7 Coonecticut 8 Delaware 9 Florida 10 Georgia 11 Hawaii 12 Idaho 13 Illinosis 14 Indiana 15 Lowa 16 Kansas 17 Kentucky 18 Louisiana 19 Maine 20 Maryland 21 Massachusetts 22 Michigan 23 Minnesota 24 Mississippi 25 Missouri 26 Montana 27 Nebraska 28 Nevada 29 New Hampshire 30 New Jersey 31 New Mexico 32 New York 33 North Carolina 34 North Dakota 35 Ohio 36 Oklahoma 37 Oregon 38 Pennsylvania 39 Rhode Island 40 South Carolina 41 South Dakota 42 Tennessee

3 34 50 100 31 14 2 102 62 5 9 95 60 43 40 45 56 19 22 27 45 34 42 79 9 13 13 17 16 16 51 78 8 77 57 23 49 6 41 8 57

0 0 27 0 5 0 1 33 25 0 0 11 15 2 8 23 19 0 1 0 0 0 14 30 0 5 0 0 0 3 5 8 0 4 21 0 12 0 12 0 30

3 7 4 24 10 3 1 31 16 1 1 24 14 7 5 5 9 3 10 3 21 9 4 12 1 3 2 4 6 3 18 14 2 23 6 0 18 1 9 2 11

43 Texas

169

72

52

44 Utah

14

45 Vermont 46 Virginia 47 Washington 48 West Virginia 49 Wisconsin 50 Wyoming

3 31 20 12 55 9

0 21 0 6 1 0

0 10 2 3 11 2

U.S. Total
51 Alberta British 52 Columbia 53 Manitobn 54 New Burnswick 55 New foundland 56 Nova Scotia 57 NW Territories 58 Ontario 59 Quebec 60 Saskatchewan

1,921
16 12 9 4 7 7 1 52 28 8

441
0 0 0 0 0 0 0 0 0 0

443
0 0 0 0 0 0 0 0 0 0

Canada Total
61 Argentina 62 Brazil 63 Mexico 64 Puerto Rico 65 China 66 Germany

144
0 0 347 9 0 0

0
6 5 27 0 2 21

0
3 3 28 5 1 0

International Total Grand Total

500 2,421

61 502

40 483

TOWS MATRIX

STRENGTHS---S
1. Largest Wal-Mart stores are in USA. 2. Present channel of distribution is reliable 3. Labors & employees are skilled. 4. Annual growth sales are high in 1998 as in 1997. 5. Customers are loyal. 6. The competition is moderately weak.

WEAKNESSES---W
1. Women in management positions are rare. 2. Sam Walton was old fashioned in many respects. 3. Internationally Sams clubs are very less. 4. Total current liabilities are high in year 1998. 5. Mission Statement needs Improvement.

OPPORTUNITIES----O
1. 2.

SO STRATEGY

WO STRATEGY
1. Mergers with other stores in Canada.(O4,W3)

S. N 3. O
4. 5.

1. Introduce new products By focusing target customers as forward Launching of new product integration.(S2,O1,O5) as product development 2. Market development Heavy promotion as Market (O4, CRITICAL SUCCESS FACTOR O3, O1, S5, S2, AS WEIG Penetration. S3). HT Wal-Mart is fully equipped to Internationalized the Social shift. Extend the stores globally. Political Environment is Conduces. ST STRATEGY 1. Horizontal diversification strategy (T5, S4). 2. Concentric diversification. (S3, S5, T3, T2).

TAS

AS

TAS

THREATS------T
1. Market Development Strategies followed. 2. Strong media exposure of comparators. 3. New Strategies are being implemented. 4. Comparators come in front with new & fresh management. 5. There is Legislation focusing on predatory prices/ anti trust law.

WT STRATEGY
1. Horizontal diversification. (T1, T2, W2, W3). 2. Conglomerate diversification. (T5, W4). 3. Conglomerate diversification. (W5, T3,T4).

A QSPM FOR WAL-MART

STRATEGIC ALTERNATIVES MARKET DEVELOPMENTAL STRATEGIES IN CHINA IN EUROPE

OPPORTUNITIES:1. 2. 3. Launching of new product as product development Political Environment is Conduces. Wal-Mart is fully equipped to Internationalized 0.15 0.05 0.05 3 4 3 0.45 0.2 0.15 4 4 1 0.60 0.2 0.05

the Social shift. 5.4. Private satellite communication system for delivery network. 5. 0.10 0.15 2 2 0.20 0.3 4 4 0.4 0.6

S. N O

Extend the stores globally.

CRITICAL SUCCESS FACTOR

WEIG HT

AS

TAS

AS

TAS

THREATS
1. 2. 3. 4. Lead efforts in china. Strong media exposure of comparators. New Strategies are being implemented. Comparators come in front with new & fresh management. 0.10 0.05 0.15 0.15 3 3 4 0.3 0.15 0.6 4 4 4 0.4 0.2 0.6 -

5.

There is Legislation focusing on predatory prices/ anti trust law. TOTAL

0.05 1.00

0.45

0.3

STRATEGIC ALTERNATIVES MARKET DEVELOPMENTAL STRATEGIES IN CHINA IN EUROPE

STRENGTHS
1. 2. 3. 4. 5. Largest Wal-Mart stores are in USA. Labors & employees are skilled. Annual growth sales are high in 1998 as in 1997. Customers are loyal. The competition is moderately weak. 0.10 0.10 0.10 0.10 0.06 3 4 3 3 4 0.27 0.36 0.3 0.3 0.12 4 4 4 4 4 0.36 0.36 0.4 0.4 0.12

6.

Present channel of distribution is reliable

0.04

WEAKNESSES
1. 2. 3. 4. 5. Women in management positions are rare. 0.08 3 2 3 4 4 0.24 0.16 0.3 0.32 0.4 5.57 4 3 3 4 4 0.32 0.24 0.3 0.32 0.4 6.57 Sam Walton was old fashioned in many respects. 0.08 Internationally Sams clubs are very less. Total current liabilities are high in year1998 Mission Statement needs Improvement TOTAL 0.10 0.08 0.10 1.0

HISTORY
In 1945,Sam Walton opened his first Ben Franklin franchise in Newport, Arkansas. Based in rural Bentonville, Arkansas, Walton; his wife, Helen and his brother, Bud, operated the nations most successful Ben Franklin franchises. Sam and bud Walton could see that the variety store was dying gradually because supermarkets and discounters were developing. He decided to counter attack. He first tried to convince the top management of Ben Franklin to enter discounting. After their refusal, Sam Walton made a quick trip around the country in search of ideas. He then began opening his own discount stores in such small Arkansas towns as Bentonville and Rogers. The company opened its first discount department store, Wal-Mart, in November 1962. The early stores had bare title floors and pipe racks. Wal-Mart did not begin to revamp its image significantly until the mid-1970, and growth in the early years was slow. However, once the company went public in 1970s, sales began to increase rapidly. Wal-Marts stock doubled in value in 1997 alone. The old Wal-Mart store colors, dark blue and white (too harsh), were dumped in faro of a three-tone combination of light beige, soft blue, and burnt orange. Carpeting, which long had been discarded on apparel sales floors, was put back, New racks were put into use that displayed the entire garment instead of only an edge. In 1987, Wal-Mart implemented two new concepts: (1) hypermarkets, 200,00 square-foot stores that sell every thing, including food, and (2) super centers,

scaled down supermarkets. Also in 1987, Walton named David Glass as the new chief executive officer while he remained chair of the board. In 1990, Wal-Mart completed the acquisition of 14 centers of McLanes company, a national distribution system in 11 states providing over 12,500 types of grocery and non-grocery products. Also in 1990, Wal-Mart sold it 14 dot discount drug stores. Sam club that year integrated the 28 whole sale clubs of the whole club , inc. , of Indianapolis, Indiana into its operations. Wal-Mart unveiled in mid 1993 its first environmental demonstration store, a 121, 294 square foot facility in Lawrence, Kansas, this store is design so that a second afford could be edit to allow conversion to apartments. If Wal-Mart vacates the store is externally energy efficient but cost 20%. More than the average Wal-Mart which costs about $2.4 million a square fit. The environmental store features on site recycling, native plants that make up a land scrapping and solar powered lights. Planning for this store begin in Hillary Rodham Clinton server on WalMarts board of directors. Wal-Mart constructed a second environmental demonstration stored in Moore, Oklahoma Company wide; Wal-Mart recycles over 700,000 tones of cardboard, paper, and plastic each year. Sam Walton died in 1992. Bud Walton died in 1945.Wal-Marts 1995 annual report was dedicated to bus. Sam Walton once said about bud Of course, my number one retailed partner has been my brother, Buds ice counsel and guidance kept us from many mistake. Often, Bud would advise taken a different direction or may be changing the timing. I soon learn to listen to him because he has exceptional judgment and a great deal and a great deal of common sense.

RECOMMENDATIONS TO THE MANAGEMENT OF WALMART INCORPORATION:

There is only one analytical technique in the literature designed to determine the relative attractiveness of feasible alternative actions. This technique is the Quantitative Strategic Planning Matrix (QSPM), which comprises strategy formulation analytical framework. After analyzing the EFE, IFE, CPM that coupled with the TOWS Matrix, IE Matrix, SPACE Matrix, it can be make a decision by using this QSPM tool. The QSPM requires good intuitive judgment. The strategy which I choose is market developmental strategy because Wal-Mart is so aggressive, their comparators are somehow weak, the customers of Wal-Mart are loyal thats why Wal-Mart can and must be use the developmental strategies. I compare Market developmental strategies in china and in Europe .The total attractive score in china is less that is 5.57 as compare to in Europe, which is 6.57. The sum total attractiveness score of 6.57 indicates that the market developmental strategy in Europe is a more attractive strategy when compared to china.

I recommended that if Wal-Mart use market developmental strategy in Europe and expand their business in Europe they would earn more revenues and success.

DETAILS OF SELECTED STRATEGIES AND THE WAY WHICH I LIKE TO IMPLEMENT

Wal-Mart is a successful company doing their business globally, it is an international firm. I analyze all the matrixes e.g.: - EFE MATRIX, IFE MATRIX, CPM MATRIX, then analyzed the matching stage matrixes which are TOWS MATRIX, SPACE MATRIX, IE MATRIX and then at the decision stage QSPM MATRIX. Wal-Mart is an aggressive firm its mean it is in an excellent position to use its internal strengths to (1) take advantage of external opportunities (2) overcome internal weaknesses, (3) and avoid external threats. Therefore I suggest Market developmental strategy--------Wal-Mart introduces new product into new geographic areas .The climate for international market developing is more suitable because their distribution system is reliable and cost effective and their customers are very much loyal of them. Forward integration strategy-----------------By looking the political environment launch new product because distribution is reliable and cost effective. Mergers ------------------------Internationally Sams clubs are very less so extending the superstores globally by merging.

Concentric diversification----------------adding new but related products or services because labors and employees are skilled and customers are loyal. Conglomerate diversification----------------adding new, unrelated products there is no mission statement that is weakness and the comparators come in front with new and fresh management so its very necessary to make a proper mission statement and liabilities are high, comparators using new strategies so its very necessary to overcome on liabilities by making consolidated balance sheet for Wal-Mart.

WAL-MART ANALYSIS: THE EXTERNAL FACTOR EVALUATION MATRIX

EFE MATRIX

S. NO

CRITICAL SUCCESS FACTOR OPPORTUNITIES: -

WEIGHT

RATING

WEIGHTED SCORE

1. 2. 3. 4. 5. 6.

Launching of new product as product development Lower prices to meet local competition. Heavy promotion as Market Penetration. Introduce new Technologies. Extend the stores globally. Wal-Mart is fully equipped to Internationalized the Social shift. Interest rate is low than purchasing power increases Political Environment is conduces.

0.09 0.05 0.08 0.05 0.06 0.04

4 4 3 3 3 2

0.36 0.2 0.24 0.15 0.18 0.08

7.

0.07

0.07

8.

0.05

0.05

9.

International Component are favorable.

0.01

0.01

S. NO
1. 2. 3. 4. 5. 6. 7. 8. 9.

CRITICAL SUCCESS FACTOR THREATS: Strong media exposure of comparators. Market Development Strategies followed. Comparators come in front with new & fresh management. New Strategies are being implemented. There is Legislation focusing on predatory prices/ anti trust law. More highly skilled sales person higher by competitor. Attitude towards saving. There is a social shift in USA. Interest rate high, income fall demand fall

WEIGHT

RATING

WEIGHTED SCORE
0.15 0.15 0.15 0.12 0.18 0.08 0.08 0.01 0.07 2.33

0.05 0.05 0.05 0.06 0.09 0.04 0.08 0.01 0.07 1.00

3 3 3 2 2 2 1 1 1

TOTAL OPPORTUNITIES & THREATS

WAL-MART ANALYSIS: THE internal FACTOR EVALUATION MATRIX

IFE MATRIX

S. NO
1. 2. 3.

CRITICAL SUCCESS WEIGHT FACTOR

STRENGTHS Largest Wal-Mart stores are in USA. Customers are loyal. Wal-Mart is maintaining good Co-relationship with suppliers. Labors & employees are skilled Wal-Mart has an effective promotion. Present channel of distribution is cost effective & reliable The competition is moderately weak. Wal-Mart has reasonably good human resource management systems. Annual growth sales are high in 1998 as in 1997. 0.09 0.05 0.08

RATING
4 4 4

WEIGHTED SCORE
0.36 0.2 0.32

4. 5. 6. 7. 8.

0.05 0.06 0.04 0.07 0.05

4 4 4 3 3

0.2 0.24 0.16 0.21 0.15

9.

0.01

0.03

S.NO

CRITICAL SUCCESS FACTOR

WEAKNESSES Mission Statement of WalMart needs Improvement and should be in written form. Wal-Mart is not using contemporary strategic management Total current liabilities are high in year 1998. Wal-Mart experiencing image difficulties related to equal opportunity employment. Women in management positions are rare. Sam Walton was old fashioned in many respects. Internationally Sams clubs are very less. Wal-Mart doesnt have well defined long-term objectives. Employees owe only 8% of Wal-Mart stock.

WEIGHT

RATIN G
1

WEIGHTED SCORE
0.05

1.

0.05

2.

0.05

0.05

3. 4.

0.05 0.06

1 2

0.05 0.12

5. 6. 7. 8. 9.

0.09 0.04 0.08 0.01 0.07

2 2 2 2 2

0.18 0.08 0.16 0.02 0.14

TOTAL STRENGTHS & WEAKNESSES

1.00

2.72

THE SPACE MATRIX

INTERNAL STRATEGIC POSITION

FINANCIAL STRENGTH (FS) Return on investment Leverage Liquidity Cash flow Ease of exit from market Risk involved in business 4 3 3 4 1 3

TOTAL (FS) COMPETITIVE ADVANTAGE (CA)

Market share Product quality Product life cycle Customer loyalty Competitions capacity utilization Technological know-how Control over suppliers and distributors -2 -2 -2 -1 -3 -2 -1

+18.0

TOTAL (CA) EXTERNAL STRATEGIC POSITION

ENVIRONMENTAL STABILITY (ES) Technological changes Demand variability Price range of competing products Barriers to entry into MARKETING Competitive Pressure Price elasticity of Demand -2 -3 -3 -2 -4 -3

-13.0

TOTAL (ES)
INDUSTRY STRENGTH (IS) Growth Potential Profit Potential Financial Stability Technological know how Ease of entry into market Productivity, capacity utilization. 5 3 4 4 5 5

-17.0

TOTAL (ES)
CONCLUSION: ES Average is 17.0/6 = -2.88 IS Average is 26.0/6 = 4.33 CA Average is 13.0/7 = -1.85 FS Average is 18.0/6 = 3.00 Directional Vector Co-ordinates: - x-axis: -1.85 + (4.33) = 2.48 Y-axis: -2.83 + (3.00) = 0.17

-26.0