Description
the rise and fall of WalMart as it began expanding in different countries and yearnings derived out of it.
Introduction Wal-Mart is the world’s largest retailer, operating in 15 countries with 6500 stores. As of Nov 6, 2008, net sales for the 39-week period ending Oct 31, 2008 were $291.9 billion. Founded by Sam Walton in 1962, it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the fourth largest utility or commercial employer. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables. Conducive factors Identified ? ? ? ? ? ? ? Sam Walton dream to own his own store. Wal-Mart’s vision to improve standard of living by providing quality goods at low prices in a pleasant shopping environment. Its unique company culture based on core values and beliefs that have been woven into very fabric of the company. Its genuine commitment to its associates. Its belief that every associate is vital to the success of the company. Its emphasis to satisfy every single customer every day. It recognized customer as highest authority and a drive towards excellence. Its passion for excellence in every area of business. Its ability to consistently execute programs and strategies in line with its vision, customer satisfaction, merchandising, marketing, pricing, technology, logistics and community involvement. Wal-Mart realized the importance of technology in the business early in its growth cycle. It is one of the factors which helps them provide its customer highest quality at lowest price. Reinventing the supply chain. Much of the efficiency achieved by the company in managing its supply chain is because of its proactive use of IT and Internet-enabled technologies. Its relationship with suppliers based on openness and trust. Wal-Mart collaborated with its suppliers to provide value to its customers. Its commitment to grow. Wal-Mart consistently added to its top line & bottom-line plowing in large percentage of profits back into the company to aggressively expand into new markets and to equally aggressively revitalize existing stores, clubs, and distribution centers. Its commitment to serve the community which increased its tangible and intangible returns.
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Growth of the organization Sam Walton started the retailing business always looking for deals from suppliers. Instead of pocketing the extra money, Walton realized that he could do better by passing on the savings to his customers and earning his profits through volume. This insight formed a cornerstone of Walton's business strategy when he launched Wal-Mart in 1962. Within five years, the company expanded to 24 stores and reached $12.6 million in sales. The company was incorporated as WalMart Stores, Inc. on October 31, 1969. By 1975 it had expanded with 125 stores with 7,500 employees and total sales of $340.3 million. During the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates. In 1988, the first Wal-Mart Supercenter was opened. A supercenter is a place with both food and general merchandise under the same roof opened including number of service shops up front. The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying ASDA in the UK for $10 billion. In 1998, Wal-Mart introduced the "Neighborhood Market" concept with three stores. These stores are designed to be the opposite of vastly larger superstores. These smaller stores are meant to "woo shoppers with easier parking, less crowded aisles and quicker checkout. By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business. The growth has been accompanied by two distinct kinds of perceptions among the public. On the one hand, Wal-Mart has been celebrated for its business innovations, which have set a new global standard for efficiency. On the other, it has been condemned for its hard-charging business practices particularly its effect on small towns with many "mom and pop". Identified factors that have led to its expansion and growth Vision, Culture, Values and Commitment Sam Walton’s dream to own a store gave birth to Wal-Mart in 1962 with 15 stores. He was not satisfied with this when he watched his competitors building larger stores. His vision to provide quality goods at low prices led to growth of Wal-Mart from a very humble beginning of one store to thousands of stores across various geographic locations. The evolution of Wal-Mart is depicted as below.
Simple Vision to own a store Price Club Supercenters International Division Neighborhood Market
Culture is the personality of an organization and its reflection can be its leaders. Sam Walton and other Wal-Mart leaders have always stressed an attitude that we can get the job done, no matter how great the task. Over the last 40 years this fundamental culture has not changed with growth or time. Its commitment to serve its employees well has indeed led to the growth of Wal-Mart. It considered every associate vital to the success of the company and that is why it could get best ideas and best practices in the front lines of its stores. Technology Wal-Mart has always focused its technological efforts on the areas of the business where they could make the greatest impact. They started with automation of store operations i.e. improve service to its stores and therefore to its customers. Wal-Mart has been forefront of almost all technological innovation in the retail industry. It was the first retailer to effectively use electronic scanners for point-of-sale (POS) capture of item movement at the cash register. It was the leader in the development of the Universal Product Code (UPC) and its placement on all merchandise, a process in which manufacturers assigns a unique but standardized code to each individual item. The method revolutionized order processing, scanning customers’ merchandise at the front registers, data collection, replenishment, and other aspects of business for every retailer and every manufacturer in the world. Wal-Mart was also the first retailer to extensively use Electronic Data Interchange (EDI) for transmission of purchase orders for merchandise directly to manufacturers, and then receive their confirmation and invoices back from them electronically. The process considerably reduced time errors and costs. In 1987, Wal-Mart developed a satellite communications network that extended to every store, every club and every distribution center. This network speeded the distribution; shipping and inventory system of Wal-Mart. Satellites were also used for credit card approval and transactions for the stores and clubs. Wal-Mart’s computer houses the largest commercial or private database in the world. This database captures 104 weeks of sales history by week for every item in every store in the world. This information is very powerful and useful in determining merchandise sales trends, forecasting individual item sales, capturing seasonality of many items, and managing the replenishment of each store’s inventory. Logistics and Supplier Relationships Wal-Mart has become a model of vertically integrated supply chain, complete with automatic replenishment of our stores, inventories as well as co managed inventories with many of its suppliers. In 1991, Information Systems Division of Wal-Mart developed a next generation database system called Retail-Link. Retail Link gives its suppliers access to the Wal-Mart database from their own offices and on their own PCs. They can pull up any item they sell to Wal-Mart and monitor retail sales of that item by day, by week, by month, or by year. They have further capability of seeing any of their items’ sales by store, by district, by state, by region or by
entire company. The data is updated eight times a day, making the information current and accurate whenever they look at it. Its store associates, buyers, suppliers share exactly the same data and that makes it possible to maximize the overall performance. The coordination, collaboration and flexibility with its suppliers helps Wal-Mart provide cheapest price to its customers. Decline of Wal-Mart While Wal-Mart had considerable success in Mexico, Canada, UK, its expansion overseas came with few stumbles. The chain entered Hongkong in the early 90s and within two years folded the operation. In the mid-90s it entered Indonesia but soon exited there as well after rioters damaged a unit in the capital city of Jakarta. Wal-Mart majorly failed to position itself in markets such as Germany and South Korea. It had to retreat from Korea by selling its 16 stores to a major local discount chain, Shinsegae Co. at $882 millions in May 2006, and exit from Germany in July 2006. Wal-Mart's stores in Korea lost about $10 million in 2005 on sales of $720 million (Ramstad, 2006a). Wal-Mart’s exit from these markets showed that the American Way of marketing did not translate well in every market. Various factors that led to decline of Wal-Mart in Korea are: ? ? ? ? ? Wal-Mart failed to capture logistically efficient locations that could help its efficient distribution system. Wal-Mart failed to attract Korean consumers as their locations were not strategically well positioned to create sufficient customer traffic. The Korean retail market was already saturated by the time Wal-Mart made an entry. Lack of Wal-Mart’s EDLP (Every Day Low Price) strategy as a strategic fit to the nature of Korean consumers. The mismatch of the Korean consumers’ shopping behavior and their preference with the Wal-Mart’s retail format which was set up to serve consumers’ infrequent large bulk shopping. Wal-Mart entered the Korean market without any local partner, and implemented its original merchandise mix from the US model, which did not elicit sufficient responsiveness from the Korean consumers. Wal-Mart lacked understanding of Korean consumers’ taste and preference and hence mismatch of the definition of “value” between the Korean consumers and Wal-Mart resulted in insufficient value exchange. Wal-Mart’s business model for the Korean market lacked effective channel mix organization as an important part of the competitive advantage.
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Various factors that led to decline of Wal-Mart in Germany are: ? ? ? ? ? Wal-Mart had cultural issues with workers which led to frequent strikes. It had problems with the implementation of its “standardized” distribution system, rebadging of stores, and the adaptation of the assortment and logistics systems. Germany’s regulatory policies to forbid goods pricing below cost. Wal-Mart’s poor acquisitions, for e.g. The Interspar chain. Germany’s regulations curtailing weekend hours.
Further Expansion Plans Wal-Mart is all set to enter Indian market with equal joint venture with Bharti enterprises. The wholesale retailing venture, Bharti Wal-Mart Private Ltd, is a wholesale cash-and-carry and back-end supply chain management. The JV will open 10 to 15 cash-and-carry facilities over seven years. Wholesale cash-and-carry operations will provide small retailers and business owners a wide range of quality products at competitive wholesale prices that will help them enhance their businesses and profitability. The Bharti Wal-Mart business-to-business (B2B) wholesale cash-and-carry joint venture will serve kirana (grocery shops) stores, fruit and vegetable resellers, restaurants and other business owners. The wholesale cash-and-carry venture will invest in setting up an efficient supply chain and link farmers and small manufacturers directly to retailers, thereby maximizing value for farmers and manufacturers on the one end and retailers, and in turn, consumers on the other. Conclusion ? ? ? The success of Wal-Mart shows that an organization will continue to achieve success as long as its leadership and employees remain true to the vision. To be competitive in the long the long run, an organization has to continuously innovate and adapt to continuously evolving technology. Success of Wal-Mart proves that. Wal-Mart was a stupendous success because it never deviated from its vision of serving others.
Learning ? ? ? ? You maximize your potential for growth when you create win-win relationships with your business partnerships based on trust and open communication. You will succeed when you make a commitment to help your customers succeed first. Technology is powerful tool in building successful organization but we can’t accomplish great without the commitment of our associates and employees. The success of an organization is directly proportion to employee’s commitment to grow.
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The basic operations in the company represent tremendous opportunities for improvement, growth, and savings.
Referenceshttp://ezinearticles.com/?Logistics-At-Wal-Mart&id=295852http://www.studentwebstuff.com/mis/showthread.php?t=3066http://www.wikepedia.orghttp://www. economics.missouri.edu/working-papers/2006/wp0611_basker.pdf www.atypon-link.com/doi/abs/10.1257/jep.21.3.177http://www business.mapsofindia.com/india-retail-industry/growth-factors-in-indian-organizedretail-sector.htmlhttp://walmartwatch.com/blog/archives/the_end_of_an_era_wal_marts_decline/ The Wal-Mart World- Stanley D. Brunn
doc_269689962.docx
the rise and fall of WalMart as it began expanding in different countries and yearnings derived out of it.
Introduction Wal-Mart is the world’s largest retailer, operating in 15 countries with 6500 stores. As of Nov 6, 2008, net sales for the 39-week period ending Oct 31, 2008 were $291.9 billion. Founded by Sam Walton in 1962, it was incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the fourth largest utility or commercial employer. Wal-Mart is the largest grocery retailer in the United States, with an estimated 20% of the retail grocery and consumables. Conducive factors Identified ? ? ? ? ? ? ? Sam Walton dream to own his own store. Wal-Mart’s vision to improve standard of living by providing quality goods at low prices in a pleasant shopping environment. Its unique company culture based on core values and beliefs that have been woven into very fabric of the company. Its genuine commitment to its associates. Its belief that every associate is vital to the success of the company. Its emphasis to satisfy every single customer every day. It recognized customer as highest authority and a drive towards excellence. Its passion for excellence in every area of business. Its ability to consistently execute programs and strategies in line with its vision, customer satisfaction, merchandising, marketing, pricing, technology, logistics and community involvement. Wal-Mart realized the importance of technology in the business early in its growth cycle. It is one of the factors which helps them provide its customer highest quality at lowest price. Reinventing the supply chain. Much of the efficiency achieved by the company in managing its supply chain is because of its proactive use of IT and Internet-enabled technologies. Its relationship with suppliers based on openness and trust. Wal-Mart collaborated with its suppliers to provide value to its customers. Its commitment to grow. Wal-Mart consistently added to its top line & bottom-line plowing in large percentage of profits back into the company to aggressively expand into new markets and to equally aggressively revitalize existing stores, clubs, and distribution centers. Its commitment to serve the community which increased its tangible and intangible returns.
?
?
? ?
?
Growth of the organization Sam Walton started the retailing business always looking for deals from suppliers. Instead of pocketing the extra money, Walton realized that he could do better by passing on the savings to his customers and earning his profits through volume. This insight formed a cornerstone of Walton's business strategy when he launched Wal-Mart in 1962. Within five years, the company expanded to 24 stores and reached $12.6 million in sales. The company was incorporated as WalMart Stores, Inc. on October 31, 1969. By 1975 it had expanded with 125 stores with 7,500 employees and total sales of $340.3 million. During the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates. In 1988, the first Wal-Mart Supercenter was opened. A supercenter is a place with both food and general merchandise under the same roof opened including number of service shops up front. The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying ASDA in the UK for $10 billion. In 1998, Wal-Mart introduced the "Neighborhood Market" concept with three stores. These stores are designed to be the opposite of vastly larger superstores. These smaller stores are meant to "woo shoppers with easier parking, less crowded aisles and quicker checkout. By 2005, estimates indicate that the company controlled about 20% of the retail grocery and consumables business. The growth has been accompanied by two distinct kinds of perceptions among the public. On the one hand, Wal-Mart has been celebrated for its business innovations, which have set a new global standard for efficiency. On the other, it has been condemned for its hard-charging business practices particularly its effect on small towns with many "mom and pop". Identified factors that have led to its expansion and growth Vision, Culture, Values and Commitment Sam Walton’s dream to own a store gave birth to Wal-Mart in 1962 with 15 stores. He was not satisfied with this when he watched his competitors building larger stores. His vision to provide quality goods at low prices led to growth of Wal-Mart from a very humble beginning of one store to thousands of stores across various geographic locations. The evolution of Wal-Mart is depicted as below.
Simple Vision to own a store Price Club Supercenters International Division Neighborhood Market
Culture is the personality of an organization and its reflection can be its leaders. Sam Walton and other Wal-Mart leaders have always stressed an attitude that we can get the job done, no matter how great the task. Over the last 40 years this fundamental culture has not changed with growth or time. Its commitment to serve its employees well has indeed led to the growth of Wal-Mart. It considered every associate vital to the success of the company and that is why it could get best ideas and best practices in the front lines of its stores. Technology Wal-Mart has always focused its technological efforts on the areas of the business where they could make the greatest impact. They started with automation of store operations i.e. improve service to its stores and therefore to its customers. Wal-Mart has been forefront of almost all technological innovation in the retail industry. It was the first retailer to effectively use electronic scanners for point-of-sale (POS) capture of item movement at the cash register. It was the leader in the development of the Universal Product Code (UPC) and its placement on all merchandise, a process in which manufacturers assigns a unique but standardized code to each individual item. The method revolutionized order processing, scanning customers’ merchandise at the front registers, data collection, replenishment, and other aspects of business for every retailer and every manufacturer in the world. Wal-Mart was also the first retailer to extensively use Electronic Data Interchange (EDI) for transmission of purchase orders for merchandise directly to manufacturers, and then receive their confirmation and invoices back from them electronically. The process considerably reduced time errors and costs. In 1987, Wal-Mart developed a satellite communications network that extended to every store, every club and every distribution center. This network speeded the distribution; shipping and inventory system of Wal-Mart. Satellites were also used for credit card approval and transactions for the stores and clubs. Wal-Mart’s computer houses the largest commercial or private database in the world. This database captures 104 weeks of sales history by week for every item in every store in the world. This information is very powerful and useful in determining merchandise sales trends, forecasting individual item sales, capturing seasonality of many items, and managing the replenishment of each store’s inventory. Logistics and Supplier Relationships Wal-Mart has become a model of vertically integrated supply chain, complete with automatic replenishment of our stores, inventories as well as co managed inventories with many of its suppliers. In 1991, Information Systems Division of Wal-Mart developed a next generation database system called Retail-Link. Retail Link gives its suppliers access to the Wal-Mart database from their own offices and on their own PCs. They can pull up any item they sell to Wal-Mart and monitor retail sales of that item by day, by week, by month, or by year. They have further capability of seeing any of their items’ sales by store, by district, by state, by region or by
entire company. The data is updated eight times a day, making the information current and accurate whenever they look at it. Its store associates, buyers, suppliers share exactly the same data and that makes it possible to maximize the overall performance. The coordination, collaboration and flexibility with its suppliers helps Wal-Mart provide cheapest price to its customers. Decline of Wal-Mart While Wal-Mart had considerable success in Mexico, Canada, UK, its expansion overseas came with few stumbles. The chain entered Hongkong in the early 90s and within two years folded the operation. In the mid-90s it entered Indonesia but soon exited there as well after rioters damaged a unit in the capital city of Jakarta. Wal-Mart majorly failed to position itself in markets such as Germany and South Korea. It had to retreat from Korea by selling its 16 stores to a major local discount chain, Shinsegae Co. at $882 millions in May 2006, and exit from Germany in July 2006. Wal-Mart's stores in Korea lost about $10 million in 2005 on sales of $720 million (Ramstad, 2006a). Wal-Mart’s exit from these markets showed that the American Way of marketing did not translate well in every market. Various factors that led to decline of Wal-Mart in Korea are: ? ? ? ? ? Wal-Mart failed to capture logistically efficient locations that could help its efficient distribution system. Wal-Mart failed to attract Korean consumers as their locations were not strategically well positioned to create sufficient customer traffic. The Korean retail market was already saturated by the time Wal-Mart made an entry. Lack of Wal-Mart’s EDLP (Every Day Low Price) strategy as a strategic fit to the nature of Korean consumers. The mismatch of the Korean consumers’ shopping behavior and their preference with the Wal-Mart’s retail format which was set up to serve consumers’ infrequent large bulk shopping. Wal-Mart entered the Korean market without any local partner, and implemented its original merchandise mix from the US model, which did not elicit sufficient responsiveness from the Korean consumers. Wal-Mart lacked understanding of Korean consumers’ taste and preference and hence mismatch of the definition of “value” between the Korean consumers and Wal-Mart resulted in insufficient value exchange. Wal-Mart’s business model for the Korean market lacked effective channel mix organization as an important part of the competitive advantage.
?
?
?
Various factors that led to decline of Wal-Mart in Germany are: ? ? ? ? ? Wal-Mart had cultural issues with workers which led to frequent strikes. It had problems with the implementation of its “standardized” distribution system, rebadging of stores, and the adaptation of the assortment and logistics systems. Germany’s regulatory policies to forbid goods pricing below cost. Wal-Mart’s poor acquisitions, for e.g. The Interspar chain. Germany’s regulations curtailing weekend hours.
Further Expansion Plans Wal-Mart is all set to enter Indian market with equal joint venture with Bharti enterprises. The wholesale retailing venture, Bharti Wal-Mart Private Ltd, is a wholesale cash-and-carry and back-end supply chain management. The JV will open 10 to 15 cash-and-carry facilities over seven years. Wholesale cash-and-carry operations will provide small retailers and business owners a wide range of quality products at competitive wholesale prices that will help them enhance their businesses and profitability. The Bharti Wal-Mart business-to-business (B2B) wholesale cash-and-carry joint venture will serve kirana (grocery shops) stores, fruit and vegetable resellers, restaurants and other business owners. The wholesale cash-and-carry venture will invest in setting up an efficient supply chain and link farmers and small manufacturers directly to retailers, thereby maximizing value for farmers and manufacturers on the one end and retailers, and in turn, consumers on the other. Conclusion ? ? ? The success of Wal-Mart shows that an organization will continue to achieve success as long as its leadership and employees remain true to the vision. To be competitive in the long the long run, an organization has to continuously innovate and adapt to continuously evolving technology. Success of Wal-Mart proves that. Wal-Mart was a stupendous success because it never deviated from its vision of serving others.
Learning ? ? ? ? You maximize your potential for growth when you create win-win relationships with your business partnerships based on trust and open communication. You will succeed when you make a commitment to help your customers succeed first. Technology is powerful tool in building successful organization but we can’t accomplish great without the commitment of our associates and employees. The success of an organization is directly proportion to employee’s commitment to grow.
?
The basic operations in the company represent tremendous opportunities for improvement, growth, and savings.
Referenceshttp://ezinearticles.com/?Logistics-At-Wal-Mart&id=295852http://www.studentwebstuff.com/mis/showthread.php?t=3066http://www.wikepedia.orghttp://www. economics.missouri.edu/working-papers/2006/wp0611_basker.pdf www.atypon-link.com/doi/abs/10.1257/jep.21.3.177http://www business.mapsofindia.com/india-retail-industry/growth-factors-in-indian-organizedretail-sector.htmlhttp://walmartwatch.com/blog/archives/the_end_of_an_era_wal_marts_decline/ The Wal-Mart World- Stanley D. Brunn
doc_269689962.docx