WAL-MART STORES, INCStep 1: Identify the Firms Existing Vision, Mission, Objectives, and Strategies.Vision and Mission: There is no formal vision and mission of Wal-Mart available in this case study. Objective:Wal-Mart is a retail store that strives to excellently serve, respect and focus on both domestic and international customer by providing every-day low prices general merchandise to satisfy customers needs and help customers to save money. Strategies:1. Forward Integration Wal-Mart acquired four stores and six sites from Makro, the Korean Club store retailer. (pg 614)2. Horizontal Integration Wal-Mart had acquired entrenched, dominant player, the Wertkauf hypermarket chain in Germany. (pg 611) Wal-Mart acquired 229 stores of Asda Group PLC, the UKs third largest supermarket chain. (pg 615)3. Product Development Wal-Mart reported experimenting internationally with new operational elements, including jewelry, one-hour photos, optical labs, and online home-delivery programs. (pg 605)4. Market penetration Wal-Mart plans to add another 50 German stores by the year 2003. (pg 614) Wal-Mart plans to open 120-130 new stores in existing international markets. (pg 616) Wal-Mart announced plans to open 44-55 new stores, 200 new Supercenters, 20-25 new Neighborhood Markets, and 40-45 new Sams Clubs. (pg 616)5. Cost Leadership Wal-Mart foresaw opportunities to serve customers in other countries, using its management and IT skills, purchasing scale, and corporate mentality of keeping costs low. (pg 607) Sams Clubs used high-volume, low-cost merchandising, minimized handling costs, leveraged their buying power, and passed the savings on the members.

Step 2: Develop Vision and Mission Statements for the OrganizationBelow is the proposed vision and mission statement for Wal-Mart:VisionTo be the best and the leader of retail store in the world. Analysis: The proposed vision statement is good as it is not vague and achievable. Wal-Mart currently has no vision statement hence it shall prompt to develop its vision statement where it may consider adopting this proposed vision as its vision statement. This is to provide a clear direction for Wal-Mart business.MissionTo be the most successful retail stores in the world (3) by delivering services and general merchandise (2) to the markets we served (1). Our excellent management team and IT skills (4) are striving to keep costs low to offer every-day low-prices products and services (7) to our customers. As a result, it improved the sales and profits (5) and add-value to the customers. 1.2.3.4.5.6.7.8.9.

CustomersProduct or servicesMarketsTechnologyConcern for survival, growth, profitabilityPhilosophySelf-ConceptConcern for Public ImageConcern for Employees

YesYesYesYesYesNoYesNoNo

Analysis: Based on the analysis above, the proposed statement of Wal-Mart had met 6 out of 9 of the elements of the mission statement. This shows that the mission statement being proposed is strong even it is lacking of philosophy, concern for public image and concern for employees elements. Wal-Mart has no mission statement currently hence it is suggested that Wal-Mart should develop a mission statement as soon as possible, where it may consider adopting this proposed mission statement as its companys mission statement and added with the elements that is lacking in the proposed mission so that the business may create their strategies more effectively.

Step 3: Identify the Organizations External Opportunities and ThreatsOpportunities1. Puerto Rico has a strong upper- and middle-class component of population and a very nature of shopping. (pg 611)2. Great Britain is a traditional, easier point-of-entry for retail stores. (pg614)3. Gross margin grow mightily when a company sent its rivals packing. (pg 614)4. The UKs healthcare chain store Boots, the French cosmetics group Sephora, and Frances Carrefour has encountered a myriad of problems in the Japanese market. (pg 615)5. Japan is the worlds second largest retail market. (pg 615)6. Many Chinese customers made repeated visits to the same store. (pg 613)7. Many customers from Mexico and Canada had crossed into the US to shop and familiar with giant retailer. (pg 611)8. The foreign urban center, China, is the best business location. (pg 607)9. One of Wal-Marts markets, South Korea is the worlds 11st largest economy and has population of 47 million. (pg 614)10. Asda Group PLC management worked well with Wal-Mart, they trading skills and technologies. (pg 615)

Threats1. Japan has high labor costs and a multi-layered distribution system. (pg 615)2. Japanese retailers were notoriously aggressive in fighting competitors. (pg 615)3. There is a cultural difference in foreign countries and they often erred in picking products. (pg 613)4. Argentina customers care less about vast selection than creatively priced and promoted specials. (pg 613)5. Buying everything under one roof seemed an anathema to the Germans. (pg 614)6. Germany is the Western Europe's largest and most price-sensitive market. (pg614)7. Germany still used an inefficient vendor drop system. (pg 614)8. Carrefour stocking a smaller selection of items than Wal-Mart, thus keeping down its overhead. (pg 612)9. International cities other than America are crowded and space-precious, and less parking lots. (pg 607)10. There is fierce competition from Carrefour in Brazil, where Carrefour already deeply entrenched in the country and offering a number of incentive promotions to fend off the American retailer. (pg 612)

Step 4: Construct a Competitive Profile Matrix (CPM)Wal-MartCarrefourMetro

Critical Success FactorsWeightRatingScoreRatingScoreRatingScore

Financial Position0.1530.4520.3020.30

Global Expansion0.1840.7230.5420.36

Product Line0.0940.3630.2720.18

Experience0.1030.3040.4020.20

Price competitions0.0930.2730.2720.18

Market Share0.0330.0920.0620.06

Customer Service0.0940.3630.2720.18

Customer loyalty0.0630.1840.2430.36

Product Quality0.1030.3030.3030.30

Technology0.1130.3330.3320.22

Total1.003.292.982.34

Analysis:Based on the CPM above, it shows that the weighted score of Wal-Mart is 3.29, the highest among other firms. This shows that Wal-Marts critical success factors bring it a better position as compared to its competitors, which are Carrefour (2.98) and Metro (2.34). It also indicates that Wal-Mart has dominant advantage in terms of competitiveness in the current market. Step 5: Construct an External Factor Evaluation (EFE) MatrixKey External FactorsWeightRatingWeighted score

Opportunities

1. Puerto Rico has a strong upper- and middle-class component of population and a very nature of shopping. (pg 611)0.0940.40

2. Great Britain is a traditional, easier point-of-entry for retail stores. (pg614)0.0520.10

3. Gross margin grow mightily when a company sent its rivals packing. (pg 614)0.0640.24

4. The UKs healthcare chain store Boots, the French cosmetics group Sephora, and Frances Carrefour has encountered a myriad of problems in the Japanese market. (pg 615)0.0520.10

5. Japan is the worlds second largest retail market. (pg 615)0.0240.08

6. Many Chinese customers made repeated visits to the same store. (pg 613)0.0730.21

7. Many customers from Mexico and Canada had crossed into the US to shop. (pg 611)0.0840.24

8.The foreign urban center, China, is the best business location. (pg 607)0.0540.20

9. One of Wal-Marts markets, South Korea is the worlds 11st largest economy and has population of 47 million. (pg 614)0.0540.20

10. Asda Group PLC management worked well with Wal-Mart, they trading skills and technologies. (pg 615)0.1040.4

Threats

1. Japan has high labor costs and a multi-layered distribution system. (pg 615)0.0420.08

2. Japanese retailers were notoriously aggressive in fighting competitors. (pg 615)0.0540.20

3. There is a cultural difference in foreign countries and they often erred in picking products. (pg 613)0.0620.12

4. Argentina customers care less about vast selection than creatively priced and promoted specials. (pg 613)0.0330.09

5. Buying everything under one roof seemed an anathema to the Germans. (pg 614)0.0340.12

6. Germany is the Western Europe's largest and most price-sensitive market. (pg614)0.0310.03

7. Germany still used an inefficient vendor drop system. (pg 614)0.0110.01

8. Carrefour stocking a smaller selection of items than Wal-Mart, thus keeping down its overhead. (pg 612)0.0110.01

9. International cities other than America are crowded and space-precious, and less parking lots. (pg 607)0.0520.10

10. There is fierce competition from Carrefour in Brazil, where Carrefour already deeply entrenched in the country and offering a number of inventive promotions to fend off the American retailer. (pg 612)0.0730.21

Total1.003.14

Analysis:The EFE of Wal-Mart shown weighted score of 3.14, it was significantly above the average weighted score of 2.50. This indicates that Wal-Mart had effectively make use of the opportunities it had and good in dealing with threats that are faced by it. Wal-Mart is suggested to continue utilizing the advantages it owned to further develop more strategies to improve its business performance in the future.

Step 6: Identify the Organizations Internal Strengths and WeaknessesStrengths1. In 2008, analyst predicted that Wal-Mart share could reach $35.7 billion and 5% of the China market. (pg 614)2. Wal-Mart was credited with holding down inflation in Mexico, with improving Britains cost of living, and with helping to revolutionize the distribution system in China. (pg 616)3. In the 2003 Financial Times/ PricewaterhouseCoopers annual survey of The Worlds Most Respected Companies and Most Respected Business Leaders, Wal-Mart was ranked 8th and CEO Lee Scott ranked 11th. (pg 616)4. Wal-Mart is the worlds largest retailer that still thinks of itself as a small-town outfit. (pg 605)5. The computer system developed by Wal-Mart held 3 times more data than the computers of United States Internal Revenue Service and was second only to the technology system of the Pentagon. (pg 610)6. Wal-Mart investigating the use of RFID, a state-of-the-art microchip process that had the potential to streamline and enhance inventory tracking, receiving, stocking, and scanning. (pg 616)7. By 2002, Wal-Mart was the dominant retailer in Canada. (pg 611)8. By 2002, Wal-Mart was thriving in Great Britain. (pg 613)9. Wal-Mart has a total of 1227 stores in many countries. (pg 606)10. Wal-Mart culture is widely accepted by Chinese associates in China. (pg 613)

Weaknesses1. Wal-Mart President and CEO Lee Scott claimed no firm blueprint or timeline in international expansion. (pg 607)2. Wal-Mart had abandoned efforts to establish a presence in Indonesia and Hong Kong. (pg 607)3. Wal-Mart did not own its own distribution system in Brazil, it was dependent on distributors to get goods to the store in a timely fashion. (pg 612)4. Wal-Marts stock-handling equipment didnt work with the standardized local pallet designs, and its computerized bookkeeping system did not fit the Brazilian system. (pg 612)5. Sams Clubs were less than successful in Brazil because the concepts of a membership fee and bulk buying were foreign to customers. (pg 612)6. Wal-Mart closed 2 stores due to clash of shopping culture in German. (pg 614)7. Wal-Mart lost some top-management talent, faced contentious vendor relations. (pg 614)8. In Germany, Wal-Mart could not stay open 24 hours and could not open in Sunday due to German law. (pg 614)9. Sam Waltons 10-Foot Rule was distasteful to Germans. (pg 614)10. The Japanese, who fastidiousness in product quality, rejected what they considered the inferior quality of Wal-Mart products. (pg 615)

Step 7: Construct an Internal Factor Evaluation (IFE) MatrixKey Internal FactorsWeightRatingWeighted Score

Strengths

1. In 2008, analyst predicted that Wal-Mart share could reach $35.7 billion and 5% of the China market. (pg 614)0.0440.16

1. Wal-Mart was credited with holding down inflation in Mexico, with improving Britains cost of living, and with helping to revolutionize the distribution system in China. (pg 616)0.0640.24

3. In the 2003 Financial Times/ PricewaterhouseCoopers annual survey of The Worlds Most Respected Companies and Most Respected Business Leaders, Wal-Mart was ranked 8th and CEO Lee Scott ranked 11th. (pg 616)0.0540.2

4. Wal-Mart is the worlds largest retailer that still thinks of itself as a small-town outfit. (pg 605)0.1240.48

5. The computer system developed by Wal-Mart held 3 times more data than the computers of United States Internal Revenue Service and was second only to the technology system of the Pentagon. (pg 610)0.1040.40

6. Wal-Mart investigating the use of RFID, a state-of-the-art microchip process that had the potential to streamline and enhance inventory tracking, receiving, stocking, and scanning. (pg 616)0.0940.32

7. By 2002, Wal-Mart was the dominant retailer in Canada. (pg 611)0.0540.20

8. By 2002, Wal-Mart was thriving in Great Britain. (pg 613)0.0540.20

9. Wal-Mart has a total of 1227 stores in many countries. (pg 606)0.0230.06

10. Wal-Mart culture is widely accepted by Chinese associates in China. (pg 613)0.0440.16

Weaknesses

1. Wal-Mart President and CEO Lee Scott claimed no firm blueprint or timeline in international expansion. (pg 607)0.0810.08

2. Wal-Mart had abandoned efforts to establish a presence in Indonesia and Hong Kong. (pg 607)0.0620.12

3. Wal-Mart did not own its own distribution system in Brazil, it was dependent on distributors to get goods to the store in a timely fashion. (pg 612)0.0320.06

4. Wal-Marts stock-handling equipment didnt work with the standardized local pallet designs, and its computerized bookkeeping system did not fit the Brazilian system. (pg 612)0.0420.08

5. Sams Clubs were less than successful in Brazil because the concepts of a membership fee and bulk buying were foreign to customers. (pg 612)0.0120.02

6. Wal-Mart closed 2 stores due to clash of shopping culture in German. (pg 614)0.0320.06

7. Wal-Mart lost some top-management talent, faced contentious vendor relations. (pg 614)0.0610.06

8. In Germany, Wal-Mart could not stay open 24 hours and could not open in Sunday due to German law. (pg 614)0.0120.02

9. Sam Waltons 10-Foot Rule was distasteful to Germans. (pg 614)0.0120.02

10. The Japanese, who fastidiousness in product quality, rejected what they considered the inferior quality of Wal-Mart products. (pg 615)0.0520.10

Total1.003.04

Analysis:Based on the Internal Factor Evaluation (IFE) analysis of Wal-Mart above, the weighted score is 3.04, significantly above the average weighted score of 2.50. This indicates that the internal position of Wal-Mart is strong. Wal-Mart may continue emphasize on its main success factor which is considering itself as a small-town outfit to develop appropriate strategy that may remain or further improve its internal position.

Step 8: Prepare SWOT Matrix, SPACE Matrix, QSPM. Give advantages and disadvantages of alternative strategies.i. Strengths-Weaknesses-Opportunities-Threats (SWOT) MatrixStrengthsWeaknesses

1. In 2008, analyst predicted that Wal-Mart share could reach $35.7 billion and 5% of the China market. (pg 614)2. Wal-Mart was credited with holding down inflation in Mexico, with improving Britains cost of living, and with helping to revolutionize the distribution system in China. (pg 616)3. In the 2003 Financial Times/ PricewaterhouseCoopers annual survey of The Worlds Most Respected Companies and Most Respected Business Leaders, Wal-Mart was ranked 8th and CEO Lee Scott ranked 11th. (pg 616)4. Wal-Mart is the worlds largest retailer that still thinks of itself as a small-town outfit. (pg 605)5. The computer system developed by Wal-Mart held 3 times more data than the computers of United States Internal Revenue Service and was second only to the technology system of the Pentagon. (pg 610)6. Wal-Mart investigating the use of RFID, a state-of-the-art microchip process that had the potential to streamline and enhance inventory tracking, receiving, stocking, and scanning. (pg 616)7. By 2002, Wal-Mart was the dominant retailer in Canada. (pg 611)8. By 2002, Wal-Mart was thriving in Great Britain. (pg 613)9. Wal-Mart has a total of 1227 stores in many countries. (pg 606)10. Wal-Mart culture is widely accepted by Chinese associates in China. (pg 613)

1. Wal-Mart President and CEO Lee Scott claimed no firm blueprint or timeline in international expansion. (pg 607)2. Wal-Mart had abandoned efforts to establish a presence in Indonesia and Hong Kong. (pg 607)3. Wal-Mart did not own its own distribution system in Brazil, it was dependent on distributors to get goods to the store in a timely fashion. (pg 612)4. Wal-Marts stock-handling equipment didnt work with the standardized local pallet designs, and its computerized bookkeeping system did not fit the Brazilian system. (pg 612)5. Sams Clubs were less than successful in Brazil because the concepts of a membership fee and bulk buying were foreign to customers. (pg 612)6. Wal-Mart closed 2 stores due to clash of shopping culture in German. (pg 614)7. Wal-Mart lost some top-management talent, faced contentious vendor relations. (pg 614)8. In Germany, Wal-Mart could not stay open 24 hours and could not open in Sunday due to German law. (pg 614)9. Sam Waltons 10-Foot Rule was distasteful to Germans. (pg 614)10. The Japanese, who fastidiousness in product quality, rejected what they considered the inferior quality of Wal-Mart products. (pg 615)

OpportunitiesSO strategiesWO strategies

1. Puerto Rico has a strong upper- and middle-class component of population and a very nature of shopping. (pg 611)2. Great Britain is a traditional, easier point-of-entry for retail stores. (pg614)3. Gross margin grow mightily when a company sent its rivals packing. (pg 614)4. The UKs healthcare chain store Boots, the French cosmetics group Sephora, and Frances Carrefour has encountered a myriad of problems in the Japanese market. (pg 615)5. Japan is the worlds second largest retail market. (pg 615)6. Many Chinese customers made repeated visits to the same store. (pg 613)7. Many customers from Mexico and Canada had crossed into the US to shop and familiar with giant retailer. (pg 611)8. The foreign urban center, China, is the best business location. (pg 607)9. One of Wal-Marts markets, South Korea is the worlds 11st largest economy and has population of 47 million. (pg 614)10. Asda Group PLC management worked well with Wal-Mart, they trading skills and technologies. (pg 615)

1. Open more stores in China market. (S2, S10, O8, O5)2. Manufacture and develop own brand products to customers. (S3, O6)3. Tapping into Great Britain by opening stores there. (S3, S8, O2)1. Expand presence in South Korea by opening more stores. (W1, O9)2. Acquire quality merchandise from foreign suppliers to offer more variety of quality products to customers. (W10, O5, O1)3. Send manager to training to understand different cultures and buying habits in different countries. (W5, W6, W9, O2, O5, O8)

ThreatsST strategiesWT strategies

1. Japan has high labor costs and a multi-layered distribution system. (pg 615)2. Japanese retailers were notoriously aggressive in fighting competitors. (pg 615)3. There is a cultural difference in foreign countries and they often erred in picking products. (pg 613)4. Argentina customers care less about vast selection than creatively priced and promoted specials. (pg 613)5. Buying everything under one roof seemed an anathema to the Germans. (pg 614)6. Germany is the Western Europe's largest and most price-sensitive market. (pg614)7. Germany still used an inefficient vendor drop system. (pg 614)8. Carrefour stocking a smaller selection of items than Wal-Mart, thus keeping down its overhead. (pg 612)9. International cities other than America are crowded and space-precious, and less parking lots. (pg 607)10. There is fierce competition from Carrefour in Brazil, where Carrefour already deeply entrenched in the country and offering a number of inventive promotions to fend off the American retailer. (pg 612)1. Replace vender drop system of Wal-Mart stores in Germany with RFID. (S6, T9)2. Pursue partnership with Japanese retailer to reduce competition & improve market share. (S3, T1, T2, T3)3. Introduce new products and services in supercenters such as pharmacy to attract more customers. (S7, S8, S10, T10)

1. Acquire the remaining 66.7% in Seiyu with RM2 billion. (W1, T1, T2)2. Create a joint-venture with local retailer in Germany. (T5, T6, W6, W8)3. Hire new foreign manager instead of sending local manager to foreign markets stores. (W7, T3, T4, T5)

ii. Strategic Position and Action Evaluation (SPACE) MatrixFinancial Position (FP)Ratings

1. Wal-Marts both net sales and net income increased 6% from 2001 to 2002. 5.0

2. Wal-Marts EPS increased from $1.41 in 2001 to $1.49 in 2002. 5.0

3. Wal-Marts current ratio improved from 0.9:1 in 2001 to 1.0:1 in 2002. 4.0

14.0

Industry Position (IP)

1. Wal-Mart is the largest retailer in the world. 2. Germany laws and regulations interfere the retailer setting of product cost and limiting stores opening time. 6.0

2.0

8.0

Stability Position (SP)

1. Wal-Mart had a 20-year average return on equity of 33% and compound average sales growth of 35%. - 1.0

2. Japan is currently suffering economic weakness and price deflation. -5.0

- 6.0

Competitive Position (CP)

1. Wal-Mart has large number of stores located worldwide.2. Wal-Mart key values are every-day low prices and the focus on the customer. -3.0-1.0

- 4.0

Conclusion

SP Average is -6.0 2 = -3.0CP Average is -4.0 2 = -2.0IP Average is +8.0 2 = 4.0FP Average is +14.0 3 = 4.7

Directional Vector Coordinates: x-axis: -2.0 + (+4.0) = +2.0 y-axis: -3.0 + (+4.7) = 1.7BMS should pursue Aggressive Strategies.

As referring to the SPACE Matrix above, Wal-Marts directional vector is fall on the upper-right quadrant, indicating that aggressive strategy is the most suitable strategy that Wal-Mart should pursue. Hence, Wal-Wart is recommended to use backward, forward, horizontal integration, market penetration, market development, product development and/or related and unrelated diversification in its strategys decision making process.

iii. Quantitative Strategic Planning Matrix (QSPM)Strategy 1 Open more stores in existing potential market AdvantagesDisadvantages

1. May raise the awareness of customers on Wal-Mart as the number of store is increasing. 2. Improved sales thus profits of Wal-Mart.3. Increased Wal-Marts presence in market hence increased market share.

1. Need either hire new staff and manager or transfer existing staff and manager to foreign countries for handling new stores.2. Selection of location need to be carefully planned. 3. Cost to set up new stores. 4. Need to investigate and understand cultures of foreign country before setting up new stores.

Strategy 2 Create joint-venture with existing retailerAdvantagesDisadvantages

1. Easier to enter market and accept by customers. 2. Eliminate or less competition. 3. Improved profits.4. Could get access to managerial talent from new partner.

1. Existing retailer might not interested with Wal-Mart offers.2. Profits gain needed to be share. 3. Less freedom in terms of operational management.

STRATEGIC ALTERNATIVES

Strategy 1Strategy 2

Key FactorsWeightASTASASTAS

Opportunities

1. Puerto Rico has a strong upper- and middle-class component of population and a very nature of shopping. (pg 611)0.0940.3610.09

2. Great Britain is a traditional, easier point-of-entry for retail stores. (pg614)0.0540.2020.10

3. Gross margin grow mightily when a company sent its rivals packing. (pg 614)0.0620.1230.18

4. The UKs healthcare chain store Boots, the French cosmetics group Sephora, and Frances Carrefour has encountered a myriad of problems in the Japanese market. (pg 615)0.05

5. Japan is the worlds second largest retail market. (pg 615)0.0230.0640.08

6. Many Chinese customers made repeated visits to the same store. (pg 613)0.07

7. Many customers from Mexico and Canada had crossed into the US to shop. (pg 611)0.08

8.The foreign urban center, China, is the best business location. (pg 607)0.0540.2020.10

9. One of Wal-Marts markets, South Korea is the worlds 11st largest economy and has population of 47 million. (pg 614)0.0540.2030.15

10. Asda Group PLC management worked well with Wal-Mart, they trading skills and technologies. (pg 615)0.10

Threats

1. Japan has high labor costs and a multi-layered distribution system. (pg 615)0.0410.0440.16

2. Japanese retailers were notoriously aggressive in fighting competitors. (pg 615)0.0520.140.20

3. There is a cultural difference in foreign countries and they often erred in picking products. (pg 613)0.0620.1240.12

4. Argentina customers care less about vast selection than creatively priced and promoted specials. (pg 613)0.03

5. Buying everything under one roof seemed an anathema to the Germans. (pg 614)0.03

6. Germany is the Western Europe's largest and most price-sensitive market. (pg614)0.03

7. Germany still used an inefficient vendor drop system. (pg 614)0.01

8. Carrefour stocking a smaller selection of items than Wal-Mart, thus keeping down its overhead. (pg 612)0.01

9. International cities other than America are crowded and space-precious, and less parking lots. (pg 607)0.05

10. There is fierce competition from Carrefour in Brazil, where Carrefour already deeply entrenched in the country and offering a number of inventive promotions to fend off the American retailer. (pg 612)0.0730.1440.28

Total1.00

Strengths

1. In 2008, analyst predicted that Wal-Mart share could reach $35.7 billion and 5% of the China market. (pg 614)0.0440.1610.04

1. Wal-Mart was credited with holding down inflation in Mexico, with improving Britains cost of living, and with helping to revolutionize the distribution system in China. (pg 616)0.0640.2430.18

3. In the 2003 Financial Times/ PricewaterhouseCoopers annual survey of The Worlds Most Respected Companies and Most Respected Business Leaders, Wal-Mart was ranked 8th and CEO Lee Scott ranked 11th. (pg 616)0.0530.1540.20

4. Wal-Mart is the worlds largest retailer that still thinks of itself as a small-town outfit. (pg 605)0.1240.4810.12

5. The computer system developed by Wal-Mart held 3 times more data than the computers of United States Internal Revenue Service and was second only to the technology system of the Pentagon. (pg 610)0.1030.340.4

6. Wal-Mart investigating the use of RFID, a state-of-the-art microchip process that had the potential to streamline and enhance inventory tracking, receiving, stocking, and scanning. (pg 616)0.0920.1840.36

7. By 2002, Wal-Mart was the dominant retailer in Canada. (pg 611)0.0540.2030.15

8. By 2002, Wal-Mart was thriving in Great Britain. (pg 613)0.0540.2030.15

9. Wal-Mart has a total of 1227 stores in many countries. (pg 606)0.02

10. Wal-Mart culture is widely accepted by Chinese associates in China. (pg 613)0.0440.2410.04

Weaknesses

1. Wal-Mart President and CEO Lee Scott claimed no firm blueprint or timeline in international expansion. (pg 607)0.0830.1640.32

2. Wal-Mart had abandoned efforts to establish a presence in Indonesia and Hong Kong. (pg 607)0.06

3. Wal-Mart did not own its own distribution system in Brazil, it was dependent on distributors to get goods to the store in a timely fashion. (pg 612)0.03

4. Wal-Marts stock-handling equipment didnt work with the standardized local pallet designs, and its computerized bookkeeping system did not fit the Brazilian system. (pg 612)0.04

5. Sams Clubs were less than successful in Brazil because the concepts of a membership fee and bulk buying were foreign to customers. (pg 612)0.01

6. Wal-Mart closed 2 stores due to clash of shopping culture in German. (pg 614)0.0340.1220.06

7. Wal-Mart lost some top-management talent, faced contentious vendor relations. (pg 614)0.0610.0630.18

8. In Germany, Wal-Mart could not stay open 24 hours and could not open in Sunday due to German law. (pg 614)0.0110.0130.03

9. Sam Waltons 10-Foot Rule was distasteful to Germans. (pg 614)0.01

10. The Japanese, who fastidiousness in product quality, rejected what they considered the inferior quality of Wal-Mart products. (pg 615)0.0510.0540.20

Total1.004.093.89

Comments:Based on the QSPM for Wal-Mart above, the total attractiveness score for open more stores is 4.09; while acquire existing retailer in competitive market is 3.89. It can be see that the attractive score for first strategy is higher than the second. Hence, Wal-Mart may choose to open more stores in existing potential market as its business strategy.

Step 9: Recommend specific strategies and long term objectives. Show how much your recommendations will cost. Clearly itemize these costs for each projected year.Specific Strategy RecommendedOpen more stores in existing potential market to expand presence in international market. The potential market includes:a. Main city of Shanghai, Guangzhou and BeijingIt is suggested that Wal-Mart may open 1 supercenter in Shanghai, 1 supercenter in Guangzhou, and 1 supercenter in Beijing. Shanghai, Guangzhou, and Beijing are the richest cities of China. Shanghai has more than 16 million of population; Beijing has more than 14 million of population; while Guangzhou has more than 10 million of population. It is believed that Wal-Mart may attract more customers to visit its stores where Wal-Mart culture is widely accepted by Chinese associates. b. Main city of San JuanIt is suggested that Wal-Mart may open 1 supercenter in the main city of San Juan. San Juan is the capital of Puerto Rico where it has a population of 395, 326, composed of strong upper- and middle class population. It is also the 46th largest-city under the jurisdiction of the United States. It is believed that Wal-Mart may attract many customers as San Juan citizens have a very nature of shopping.

Long-term Objectives Recommended i. To dominate the market of China and Puerto Rico in retail store sector.ii. To provides better services that adapted to customers culture and that exceed customers expectation. iii. To strengthen the Wal-Mart image of Everyday Low Price in customers mind.

Budget of Recommended Strategy No.ItemsProjected Costs ($)

1Market research and survey1,000,000

2Acquire buildings for set up new stores10,000,000

3Staff recruitment for new stores3,000,000

4Staff training200,000

5Acquire products from appropriate suppliers22,000,000

6Marketing5,000,000

7Gather customers feedback600,000

Total41,800,000

Step 10: Specify how your recommendations can be implemented and what results you can expect. Prepare forecasted ratios and projected financial statements. Present a timetable or agenda for action. Recommendation Implementation1. Market Research Wal-Mart may assign few experienced employees to do paperwork research and carry out site visit to identify the appropriate location in each countrys capital to open up a new store. This market research also includes the research regarding the current culture practices of the citizens, any specific rules and regulations regarding new store opening, as well as the major competitor in the market. These research can be done through survey, questionnaire, or acquire information from third parties by paying a fees needed. 2. Acquire buildings for set up new stores After market research regarding location is completed, Wal-Mart may either rent or purchase that particular location to build and renovate it to become Wal-Mart supercenter. 3. Staff recruitment for new storesWal-Mart may transfer existing manager and staff to the new stores if there are any additional employees available. Wal-Mart may also hire new manager and staff, either local (send to new stores oversea) or foreign, to work in the new stores. The human resource department shall select suitable candidates that willing and have ability to work under the foreign environment. Besides that, the candidates that can understand foreign country language will have better chances of being selected. 4. Staff trainingThe staff that is selected to be work in the new store shall be trained with Wal-Mart own Three Basic Beliefs which are respect for the individual, service to our customers, and to strive for excellent, as well as the culture of foreign country. This is to equip them with the right knowledge to serve the customers and thus enhance the stability of the store in the foreign market. Human resource department shall select the best training courses from the course offeror with good quality and reasonable fees. This training course shall also be approved by each new store manager to ensure that the course is desirable and is appropriate and adapted to both culture of Wal-Mart and foreign countries. 5. Acquire products from appropriate suppliersAfter identify the demands of foreign market consumers through research, Wal-Mart shall acquire products from appropriate suppliers, including both local and foreign suppliers. The lowest-cost possible products with attributes that may satisfy customers needs will be place in a priority position. 6. MarketingWal-Mart may provide promotion or special offers for the opening day of each new store to attract customers interest and attention. It may approach to newspaper firm, such as Peoples Daily from China, and El Vocero from Puerto Rico, to distribute its flyer to as many household as possible. 7. Gather customers feedbackThis can be implemented through interview or questionnaire survey where the respondent will be Wal-Mart new stores customers. This is to investigate their satisfaction level and seek for area that needed to be improved to build a better image in consumers mind.

Forecasted Statement of Profit & Loss and Other Comprehensive IncomeWal-Mart Stores, Inc.

Budgeted Statement of Profit & Loss and Other Comprehensive Income

as at 31 Dec 2003, 2004 & 2005

200320042005

$million$million$million

Sales258,723327,351381,068

Cost of Sales201,344232,843250,811

Gross Profit57,37994,508130,257

Operating Expenses:

Selling and Administrative Expenses40,14243,98346,133

Interest Costs:

Debt9801,011994

Capital Leases256271244

Profit before Interest and Taxes16,00149,24382,886

Provision for income taxes-4,012-4,266-4,681

Profit before Interest11,98944,97778,205

Minority interest and equity in unconsolidated subsidiaries-192-187-200

Net Income11,79744,79078,005

Forecasted Statement of Financial PositionWal-Mart Stores, Inc.

Budgeted Statement of Financial Position

As at 31 Dec 2003, 2004, 2005

200320042005

$million$million$million

Assets

Current Assets

Cash & cash equivalents2,4552,6712,941

Receivables2,2002,4002,600

Inventories24,13326,52227,166

Prepaid expenses and other1,5611,6771,723

Total Current Assets30,34933,27034,430

Property, Plant & Equipment, at Cost

Land13,24115,62417,924

Building and improvements30,71232,54535,155

Fixtures and equipment16,43317,98819,326

Transportation equipment1,2111,4521,533

61,59767,60973,938

Less accumulated depreciation-15033-17299-19233

Net property, plant and equipment46,56450,31054,705

Property under Capital Lease

Property under capital lease4,6314,6774,698

Less accumulated amortization-1,522-1,613-1,743

Net property under capital leases3,1093,0642,955

Other Assets and Deferred Charges

Net goodwill and other acquired intangible assets8,7238,9559,340

other assets and deferred charges720650587

9,4439,6059,927

Total Assets89,46596,249102,017

Liabilities and Shareholders' Equity

Current Liabilities

Commercial paper823765788

Accounts payable17,93219,24419,532

Accrued liabilities7,3227,5337,633

Accrued income taxes1,4221,5711,682

Long-term debt due within one year2,0661,7221,523

Obligations under capital leases due within one year151154158

Total Current Liabilities29,71630,98931,316

Long-term debt due within one year17,67719,65121,344

Long-Term Obligations Under Capital Leases2,9652,7112,699

Deferred Income Taxes and Other1,2341,3111,471

Minority Interest1,3211,4521,618

Shareholders' Equity

Share Capital445445445

Capital in excess of par value1,4981,5211,528

Retained Earnings34,60938,16941,596

Total Shareholders' Equity36,55240,13543,569

Total Liabilities and Shareholders' Equity89,46596,249102,017

Forecasted RatioWal-Mart Stores, Inc.

Forcasted Ratio Analysis For the Year Ended 31 Dec 2003, 2004, 2005

Formula:

1. Current RatioCurrent Assets/Current Liabilities

2. Net Profit Margin(Net Income/Sales) x 100%

3. Return on Stockholder's Equity[(Profit After Tax- Preferred Dividends)/ Ordinary Shareholders Equity] x 100%

4. Return on Asset[(Profit before Interest & Tax + Income Tax + Interest)/ Total Asset] x 100%

Amount in $'million

Current Ratio

2003:30,349/ 29,716= 1.02: 1

2004:33,270/ 20,989= 1.07: 1

2005:34,430/ 31,136=1.10: 1

Net Profit Margin

2003:11,797 / 258,723 *100% = 4.6%

2004:44,790 / 327,351 * 100% = 13.7%

2005:78,005 / 381,068 * 100% = 20.4%

Return on Stockholder's Equity

2003:11,797 / 36,552*100% = 32%

2004:24,790 / 40,135*100% = 62%

2005:38,005 / 43,569 *100% = 87%

Return on Asset

2003:( 16,001 + 4,012 + 192 ) / 89,465 = 0.23*100%= 23%

2004:( 29,243 + 4,266 + 187 ) / 96,249 = 0.35*100%= 35%

2005:( 42,886 + 4,681 + 200 ) / 102,017 = 0.47* 100%= 47%

Timetable or Agenda for Action Work Plan2003

JanFebMarAprMayJunJulAugSeptNovDec

Market Research

Acquire locations for new stores

Staff recruitment for new stores

Staff training

Acquire products from appropriate suppliers

Marketing

Opening of new stores

Gather customers feedback

Step 11: Recommend specific annual objectives and policiesAnnual Objectives1. To increased market share by 5%.2. To increased profits of Wal-Mart by 15%.3. To expand sales in China and Puerto Rico by 20%. Policies1. Staff Working Hours PolicyEach staff shall work for 6 days a week, 12 hours per day. There will be two shifts which are 7am-7pm and 7pm-7am. Every staff is fixed to a shift and is entitled to freely select a day in a week as leave, but subject to supervisor approval to prevent duplication with other staffs selection of leave day who in a similar position. 2. Staff Attendance PolicyEvery staff shall punch-in and out in every working day using punch card to prove for attendance. He/she shall not absence without valid reason for 6 times in a year or will be punished by deduction of bonus in the year end. The staff shall contact the supervisor if there is a possible late to work or absence to avoid being punished. 3. Staff Resignation PolicyEach staff shall at least provide three months notice in writing to the responsible party and inform the supervisor prior to his/her resignation.

Step 12: Recommend procedures for strategy review and evaluationThe recommended strategy for review and evaluation is by following the strategy evaluation framework below:Do significant differences occur?YESACTIVITY THREE:TAKE CORRECTIVE ACTIONSNOACTIVITY ONE: REVIEW UNDERLYING BASES OF STRATEGYPrepare revised InternalPrepare revised ExternalFactor Evaluation (IFE) MatrixFactor Evaluation (EFE) MatrixCompare revised to existingCompare revised to existingInternal Factor Evaluation (IFE) MatrixExternal Factor Evaluation (EFE) Matrix

ACTIVITY TWO: MEASURE ORGANIZATIONAL PERFORMANCECompare planned to actual progress toward meeting stated objectives

YESDo significant differences occur?

NO

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