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NAME: - SYED TAHIR SHAHZADREG. NO.: - 1531-302-008

SEMESTER:- M.B.A 4th

DATE:- 1st-JAN-2004

SUBMITTED TO:-MR. AHMED BUTT

PRESTON INSTITUTE OF MANAGEMENT SCIENCE &

TECHNOLOGY

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INTRODUCTIONWal-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 storesmaintain a satisfaction guaranteed program to promote customer goodwill andacceptance.

McLanes: -McLanes is the nations largest distributor of food and merchandise to

convenience stores. McLanes a wholesale distributor which sells merchandise to a varietyof 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 in1991 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 than50,000 associates and over 300 locations outside the united sates, Wal-Mart already isserving 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 rewardedsales managers handsomely. Sales figures are available to every employee at Wal-Mart.

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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 liftingtheir sales, in both dollars and units. Kmart planned to take market share from the, but wasblocked. As this escape route from direct competition with Wal-Mart closes, Kmart mustprotect 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 NAMESDISCOUNT

STORES SUPERCENTERS SAM'S CLUB

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1 Alabama 50 27 8

2 Alaska 3 0 3

3 Arizona 34 0 7

4 Arkansas 50 27 4

5 California 100 0 24

6 Colorado 31 5 107 Coonecticut 14 0 3

8 Delaware 2 1 1

9 Florida 102 33 31

10 Georgia 62 25 16

11 Hawaii 5 0 1

12 Idaho 9 0 1

13 Illinosis 95 11 24

14 Indiana 60 15 14

15 Lowa 43 2 7

16 Kansas 40 8 5

17 Kentucky 45 23 5

18 Louisiana 56 19 919 Maine 19 0 3

20 Maryland 22 1 10

21 Massachusetts 27 0 3

22 Michigan 45 0 21

23 Minnesota 34 0 9

24 Mississippi 42 14 4

25 Missouri 79 30 12

26 Montana 9 0 1

27 Nebraska 13 5 3

28 Nevada 13 0 2

29 New Hampshire 17 0 4

30 New Jersey 16 0 6

31 New Mexico 16 3 332 New York 51 5 18

33 North Carolina 78 8 14

34 North Dakota 8 0 2

35 Ohio 77 4 23

36 Oklahoma 57 21 6

37 Oregon 23 0 0

38 Pennsylvania 49 12 18

39 Rhode Island 6 0 1

40 South Carolina 41 12 9

41 South Dakota 8 0 2

42 Tennessee 57 30 11

43 Texas 169 72 52

44 Utah 14 0 5

45 Vermont 3 0 0

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46 Virginia 31 21 10

47 Washington 20 0 2

48 West Virginia 12 6 3

49 Wisconsin 55 1 11

50 Wyoming 9 0 2

U.S. Total 1,921 441 443

51 Alberta 16 0 0

52 British Columbia 12 0 0

53 Manitobn 9 0 0

54 New Burnswick 4 0 0

55 New foundland 7 0 0

56 Nova Scotia 7 0 0

57 NW Territories 1 0 0

58 Ontario 52 0 0

59 Quebec 28 0 0

60 Saskatchewan 8 0 0

Canada Total 144 0 0

61 Argentina 0 6 3

62 Brazil 0 5 3

63 Mexico 347 27 28

64 Puerto Rico 9 0 5

65 China 0 2 1

66 Germany 0 21 0

International Total 500 61 40

Grand Total 2,421 502 483

WAL MARTS ORGANIZATIONAL CHART

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WAL MART FISCAL 1998 END OF YEAR STORE COUNTS

NO.

S NAMES

DISCOUNT

STORES SUPERCENTERS SAM'S CLUB

1 Alabama 50 27 8

E x e

P r e

R e

T r e

C h i

r e a

P r e

I n t e

E x e

S p e

S e

G e

E x e

O p

P r e

S A

E x e

M e

E x e

S u

C h i e

C E

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2 Alaska 3 0 3

3 Arizona 34 0 7

4 Arkansas 50 27 4

5 California 100 0 24

6 Colorado 31 5 10

7 Coonecticut 14 0 3

8 Delaware 2 1 19 Florida 102 33 31

10 Georgia 62 25 16

11 Hawaii 5 0 1

12 Idaho 9 0 1

13 Illinosis 95 11 24

14 Indiana 60 15 14

15 Lowa 43 2 7

16 Kansas 40 8 5

17 Kentucky 45 23 5

18 Louisiana 56 19 9

19 Maine 19 0 3

20 Maryland 22 1 10

21 Massachusetts 27 0 3

22 Michigan 45 0 21

23 Minnesota 34 0 9

24 Mississippi 42 14 4

25 Missouri 79 30 12

26 Montana 9 0 1

27 Nebraska 13 5 3

28 Nevada 13 0 2

29 New Hampshire 17 0 4

30 New Jersey 16 0 6

31 New Mexico 16 3 3

32 New York 51 5 18

33 North Carolina 78 8 14

34 North Dakota 8 0 2

35 Ohio 77 4 23

36 Oklahoma 57 21 6

37 Oregon 23 0 0

38 Pennsylvania 49 12 18

39 Rhode Island 6 0 1

40 South Carolina 41 12 9

41 South Dakota 8 0 2

42 Tennessee 57 30 11

43 Texas 169 72 52

44 Utah 14 0 5

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45 Vermont 3 0 0

46 Virginia 31 21 10

47 Washington 20 0 2

48 West Virginia 12 6 3

49 Wisconsin 55 1 1150 Wyoming 9 0 2

U.S. Total 1,921 441 443

51 Alberta 16 0 0

52BritishColumbia 12 0 0

53 Manitobn 9 0 0

54 New Burnswick 4 0 0

55 New foundland 7 0 0

56 Nova Scotia 7 0 0

57 NW Territories 1 0 058 Ontario 52 0 0

59 Quebec 28 0 0

60 Saskatchewan 8 0 0

Canada Total 144 0 0

61 Argentina 0 6 3

62 Brazil 0 5 3

63 Mexico 347 27 28

64 Puerto Rico 9 0 5

65 China 0 2 1

66 Germany 0 21 0

International Total 500 61 40

Grand Total 2,421 502 483

TOWS MATRIX

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STRENGTHS---S1. Largest Wal-Mart

stores are in USA.2. Present channel of

distribution is reliable

3. Labors & employeesare skilled.

4. Annual growth salesare high in 1998 as in1997.

5. Customers are loyal.6. The competition is

moderately weak.

WEAKNESSES----

W1. Women in management

positions are rare.

2. Sam Walton was oldfashioned in manyrespects.

3. Internationally Samsclubs are very less.

4. Total current liabilitiesare high in year 1998.

5. Mission Statementneeds Improvement.

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OPPORTUNITIES----

-O

1. Launching of new product

as product development2. Heavy promotion as MarketPenetration.

3. Wal-Mart is fully equippedto Internationalized theSocial shift.

4. Extend the stores globally.5. Political Environment is

Conduces.

SO STRATEGY1. Introduce new products

By focusing targetcustomers as forwardintegration.(S2,O1,O5)

2. Market development(O4, O3, O1, S5, S2,S3).

WO STRATEGY1. Mergers with otherstores in Canada.(O4,W3)

THREATS------T1. Market Development

Strategies followed.2. Strong media exposure of

comparators.3. New Strategies are being

implemented.4. Comparators come in front

with new & freshmanagement.

5. There is Legislationfocusing on predatory

prices/ anti trust law.

ST STRATEGY

1. Horizontaldiversification strategy(T5, S4).

2. Concentricdiversification.(S3, S5, T3, T2).

WT STRATEGY1. Horizontal

diversification.(T1, T2, W2, W3).

2. Conglomeratediversification.(T5, W4).

3. Conglomeratediversification.

(W5, T3,T4).

A QSPM FOR WAL-MART

STRATEGIC ALTERNATIVES

MARKET DEVELOPMENTAL STRATEGIESIN CHINA IN EUROPE

OPPORTUNITIES:-

1. Launching of new product as productdevelopment

0.15 3 0.45 4 0.60

2. Political Environment isConduces.

0.05 4 0.2 4 0.2

3. Wal-Mart is fully equipped to Internationalized 0.05 3 0.15 1 0.05

S.

N

O

CRITICAL SUCCESS FACTOR WEIG

HT

AS TAS AS TAS

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the Social shift.

5.4. Private satellite communication system fordelivery network.

0.10 2 0.20 4 0.4

5. Extend the stores globally. 0.15 2 0.3 4 0.6

THREATS

1. Lead efforts in china. 0.10 3 0.3 4 0.4

2. Strong media exposure of comparators. 0.05 3 0.15 4 0.2

3. New Strategies are being implemented. 0.15 4 0.6 4 0.6

4. Comparators come in front with new & freshmanagement.

0.15 - - - -

5. There is Legislation focusing on predatoryprices/ anti trust law.

0.05 3 0.45 2 0.3

TOTAL 1.00

STRATEGIC ALTERNATIVES

MARKET DEVELOPMENTAL STRATEGIESIN CHINA IN EUROPE

STRENGTHS

1. Largest Wal-Mart stores are in USA. 0.10 3 0.27 4 0.36

2. Labors & employees are skilled. 0.10 4 0.36 4 0.36

3. Annual growth sales are high in 1998 as in 1997. 0.10 3 0.3 4 0.4

4. Customers are loyal. 0.10 3 0.3 4 0.4

5. The competition is moderately weak. 0.06 4 0.12 4 0.12

S.N

O

CRITICAL SUCCESS FACTOR WEIGHT

AS TAS AS TAS

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6. Present channel of distribution is reliable 0.04 - - - -

WEAKNESSES

1. Women in management positions are rare. 0.08 3 0.24 4 0.32

2. Sam Walton was old fashioned in many respects. 0.08 2 0.16 3 0.24

3. Internationally Sams clubs are very less. 0.10 3 0.3 3 0.3

4. Total current liabilities are high in year1998 0.08 4 0.32 4 0.32

5. Mission Statement needs Improvement 0.10 4 0.4 4 0.4

TOTAL 1.0 5.57 6.57

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,

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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 Wal-

Marts board of directors. Wal-Mart constructed a second environmental

demonstration stored in Moore, Oklahoma Company wide; Wal-Mart recycles over700,000 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 OFWALMART INCORPORATION:

There is only one analytical technique in the literature designed to determine therelative attractiveness of feasible alternative actions.

This technique is the Quantitative Strategic Planning Matrix (QSPM), whichcomprises strategy formulation analytical framework.

After analyzing the EFE, IFE, CPM that coupled with the TOWS Matrix, IEMatrix, 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 isso aggressive, their comparators are somehow weak, the customers of Wal-Mart areloyal thats why Wal-Mart can and must be use the developmental strategies.

I compare Market developmental strategies in china and in Europe .The totalattractive 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 developmentalstrategy in Europe is a more attractive strategy when compared to china.

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I recommended that if Wal-Mart use market developmental strategy in Europe andexpand 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, thenanalyzed the matching stage matrixes which are TOWS MATRIX, SPACE MATRIX, IEMATRIX 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 internalstrengths to (1) take advantage of external opportunities (2) overcome internal weaknesses,(3) and avoid external threats.

Therefore I suggestMarket developmental strategy--------Wal-Mart introduces

new product into new geographic areas .The climate for international marketdeveloping is more suitable because their distribution system is reliable and costeffective and their customers are very much loyal of them.

Forward integration strategy-----------------By looking the political environmentlaunch new product because distribution is reliable and cost effective.

Mergers ------------------------Internationally Sams clubs are very less so extendingthe superstores globally by merging.

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Concentric diversification----------------adding new but related products orservices because labors and employees are skilled and customers are loyal.

Conglomerate diversification----------------adding new, unrelated productsthere 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 toovercome on liabilities by making consolidated balance sheet for Wal-Mart.

WAL-MART ANALYSIS:

THE EXTERNAL FACTOR EVALUATION MATRIX

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EFE MATRIX

S.

NO

CRITICAL SUCCESS

FACTOR

WEIGHT RATING WEIGHTED

SCORE

OPPORTUNITIES: -

1. Launching of new product as productdevelopment

0.09 4 0.36

2. Lower prices to meet local

competition.

0.05 4 0.2

3. Heavy promotion as MarketPenetration.

0.08 3 0.24

4. Introduce new Technologies. 0.05 3 0.15

5. Extend the stores globally. 0.06 3 0.18

6. Wal-Mart is fully equipped to

Internationalized the Social shift.

0.04 2 0.08

7. Interest rate is low than purchasingpower increases

0.07 1 0.07

8. Political Environment is conduces. 0.05 1 0.05

9. International Component arefavorable.

0.01 1 0.01

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S.

NO

CRITICAL SUCCESS

FACTOR

WEIGHT RATING WEIGHTED

SCORE

THREATS: -

1. Strong media exposure of

comparators.

0.05 3 0.15

2. Market Development Strategiesfollowed.

0.05 3 0.15

3. Comparators come in front with new& fresh management.

0.05 3 0.15

4. New Strategies are beingimplemented.

0.06 2 0.12

5. There is Legislation focusing onpredatory prices/ anti trust law.

0.09 2 0.18

6. More highly skilled sales personhigher by competitor.

0.04 2 0.08

7. Attitude towards saving. 0.08 1 0.08

8. There is a social shift in USA. 0.01 1 0.01

9. Interest rate high, income falldemand fall

0.07 1 0.07

TOTAL OPPORTUNITIES &

THREATS1.00 2.33

WAL-MART ANALYSIS:

THE internal FACTOR EVALUATION MATRIX

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IFE MATRIX

S.

NO

CRITICAL SUCCESS

FACTOR

WEIGHT RATING WEIGHTED

SCORESTRENGTHS

1. Largest Wal-Mart stores are inUSA.

0.09 4 0.36

2. Customers are loyal. 0.05 4 0.2

3. Wal-Mart is maintaininggood Co-relationship with

suppliers.

0.08 4 0.32

4. Labors & employees are skilled 0.05 4 0.2

5. Wal-Mart has an effectivepromotion.

0.06 4 0.24

6. Present channel of distributionis cost effective & reliable

0.04 4 0.16

7. The competition is moderatelyweak.

0.07 3 0.21

8. Wal-Mart has reasonably goodhuman resource managementsystems.

0.05 3 0.15

9. Annual growth sales are high in1998 as in 1997.

0.01 3 0.03

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S.NO CRITICAL SUCCESS

FACTOR

WEIGHT RATIN

G

WEIGHTED

SCOREWEAKNESSES

1. Mission Statement of Wal-

Mart needs Improvement andshould be in written form.

0.05 1 0.05

2. Wal-Mart is not usingcontemporary strategicmanagement

0.05 1 0.05

3. Total current liabilities arehigh in year 1998.

0.05 1 0.05

4. Wal-Mart experiencing image

difficulties related to equalopportunity employment.

0.06 2 0.12

5. Women in managementpositions are rare.

0.09 2 0.18

6. Sam Walton was old fashionedin many respects.

0.04 2 0.08

7. Internationally Sams clubs arevery less.

0.08 2 0.16

8. Wal-Mart doesnt have welldefined long-term objectives.

0.01 2 0.02

9. Employees owe only 8% of Wal-Mart stock.

0.07 2 0.14

TOTAL STRENGTHS &WEAKNESSES

1.00 2.72

THE SPACE MATRIX

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INTERNAL STRATEGIC POSITIONFINANCIAL STRENGTH (FS)Return on investment 4Leverage 3Liquidity 3

Cash flow 4Ease of exit from market 1Risk involved in business 3

TOTAL (FS) +18.0

COMPETITIVE ADVANTAGE (CA)Market share -2Product quality -2Product life cycle -2Customer loyalty -1Competitions capacity utilization -3Technological know-how -2

Control over suppliers and distributors -1TOTAL (CA) -13.0

EXTERNAL STRATEGIC POSITIONENVIRONMENTAL STABILITY (ES)

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

TOTAL (ES) -17.0INDUSTRY STRENGTH (IS)

Growth Potential 5Profit Potential 3Financial Stability 4Technological know how 4Ease of entry into market 5Productivity, capacity utilization. 5

TOTAL (ES) -26.0

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

Y-axis: - -2.83 + (3.00) = 0.17

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