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Wal-Mart The Unstoppable Case Summary November 17, 2006

Posted by Laxmi Goutham Vulpala in case studies, MBA.
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Background
 Sam Walton founded Wal-Mart in 1962, when he opened a store in Rogers Arkansas after a disagreement with the board of Ben Franklin about their discounting strategy. Since then Wal-Mart has had a phenomenal growth to become the biggest retailer in the world, As of October 31, 2006, the Company had 1,100 Wal-Mart discount stores, 2,176 Supercenters, 574 Sam’s Clubs and 110 Neighborhood Markets in the United States. It also has expanded globally to almost every part of the world, and had  sales of  $316 billion and net income of  $11.2 billion for year ending January 2006.

Successes and Mistakes
Sam Walton’s Management style of treating employee’s as partners and associates; sharing profits and providing free flow of ideas in the initial years set the base for the growth of Wal-Mart in the later years.

Their State of the art of the supply chain management system tied to all their suppliers and instant tracking of all their sales allowed them replenish the goods quickly on their shelves. By passing middlemen to allowed them to lower their cost structure, and help gain a competitive advantage.

In their initial years after inception, Sam’s strategy of expanding in small towns largely ignored by the big-retailers allowed them to gain a foothold and gained market share and eventually made them unbeatable even in the big cities

In spite of all the huge success in the domestic market, their international expansion has not been as good. Due to the cultural differences they could not successfully replicate their successes. In addition the negative publicity generated because of the jobs losses caused by expansion of Wal-Mart and their lower pay structures for their employees are causing communities to oppose their further expansion.

Lessons Learnt
 

Taking good care of the employees, and passing the value back to customers with cost-savings achieved by being frugal, will help a company immensely.

Looking for and identifying underserved markets, which ignored by major companies provide new entrants with a strategy to get a foot hold in the market it provides breathing space before taking the competition to the bigger and more lucrative markets.

Bad public image can create backlash against the company and even more so against the larger ones, so care needs to be taken in the initial stages and enough money spent on creating a positive image.

Source (Marketing Mistakes and Successes)

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