Wal-Mart Stores, Inc.

Team BMichelle BarnesSharl FlowersAlex Layton

Andrew MillerAnh Linh Tran

STRATEGIC AUDITI. CURRENT SITUATIONII. STRATEGIC MANAGERSIII. EXTERNAL ENVIRONMENTIV. INTERNAL ENVIRONMENTV. ANALYSIS OF STRATEGIC FACTORS VI. ALTERNATIVE AND RECOMMENDATIONVII. IMPLEMENTATIONVIII.EVALUATION AND CONTROL

I. Current SituationA. Current Performance

• Continuous growth in sales and earnings• Declining share prices• Great international expansion

B. Strategic Posture1. Mission

• Saving people money so they can live better regardless of background or where they may live and to build a better life.

2. Objectives• “Increasing sales with low prices under one roof. “• “To be the very best in the business by putting the associates

first.”• “Emphasis on everyday low prices, corporate growth, concern

for people, and loyalty to the company.”• “To increase

3. Strategies4. Policies

Strategic Managers1. Board of Directors

A. 13 members, eleven are outsiders. B. 2 board members controlled close to 41% of the

shares outstanding. C. Outstanding diversityD. Each director attended at least 75% of meetings.

2. Top ManagementE. Lee Scott was only the third CEO in the entire

history of Wal-Mart when he was selected to the position.

F. During the 12 years David Glass, the previous CEO held the position, sales grew from 16 billion to 16.5 billion annually.

G. Uniquely qualified individuals

III. External Environment (EFAS) Opportunities and Threats (SWOT)A. Natural Environment

1. One of the first retailers to embrace the idea of “green” marketing.

B. Societal Environmenta) Economic

1. With quarterly losses in 2006, things still looked impressive for Wal-Mart stores as international growth increased.

2. Rising fuel prices and terrorist attacks have cut into profits for the global giant.

3. Global Markets continue to combine into the U.S. domestic market, giving Wal-Mart a variety of options to carry out overseas activities.

b) Technological1. Most sophisticated inventory control system2. Carefully selected distribution centers that were also used as a network

to carefully analyze buying trends.

External Environment Cont. c. Political-Legal

1. Increasing tension between employees and Wal-Marts low pay and stingy benefits has created an uproar among former employees.

2. In 2003, raids on stores around the country found illegal immigrants working in their factories and stores. 3. Outsourcing has also been a key factor of concern between employees and customers in the U.S.4. Customers were found to no longer pleased with the way Wal-Mart was conducting their business abroad

and in the U.S.

d. Sociocultural5. Geared towards the low-income customer.

C. Task Environment (Industry Analysis)a) Wal-Mart has significant influence over its suppliers, therefore they are ready to supply.b) Threat of substitutes is high and entry barriers are highc) With companies such as Target, Costco, and other retail giants nipping at their heels, the rivalry

in such a business is tough at the top.d) Specialty companies are cutting into Wal-Marts share of profits by providing specialized

products, such as companies like Burlington Coat Factory and Bass Shoes. e) Bargaining power of buyers is high.f) Relative power of other stakeholders is medium: Many groups and local communities have

begun to oppose the groups entry into markets where they have not been. Many organizations have been active promoting fair labor and union laws for the companies employees.

IV. Internal Environment (IFAS): Strengths and Weaknesses (SWOT) A. Corporate Structure

1. Structured into three business units, Wal-Mart Stores USA, Sam’s Club, and Wal-Mart International.

B. Corporate Culture1. Down to earth, and committed to being the very best there is from top to bottom2. Culture comes from the Sam Walton spirit, or known as the philosophy that people are the

way to success from top to bottom.3. Buying out companies overseas seems to be a way into international markets for Wal-Mart.

C. Resources1. Financially Stable and buying power2. Organizational Structure3. Logistics, inventory management, trucking fleet4. Innovation and expansion strategy5. Reputation and Brand name6. Store location7. Distribution Centers

Internal Environment Cont…D. Capabilities

1. Distribution centers and logistics2. Point of Sales data through management3. Production of products4. Research and innovation5. Exploits opportunities

E. Core Competencies6. Ability to exploit opportunities7. Distribution and logistics management

V. Analysis of Strategic Factor (SFAS)

A. Key Internal and External Strategic Factors (SWOT)1. Strengths

a. Management of distribution and logisticsb. Exploitation of opportunities

2. Weaknessesa. Cultural roots in large cities and other countries

b. Customer satisfaction 3. Opportunities

a. Inventory control system

b. International Growth4. Treats

a. Low pay and stingy benefits for employees

b. Specialty companies and rivals

B. Review of Mission and Objective1. Mission is appropriate 2. The objectives are too vague and focus on what is/has taken place. They need to be

more specific, quantified and met in a specified amount of time.

VI. Alternatives and RecommendationsA. Strategic Alternatives – pros and cons

1. Horizontal Growth: expand operations into more international locations and offer more fashionable merchandise both domestically and internationally.

a. Pros: Joint Ventures and acquisitions offer greater opportunity into the international market.

b. Cons: Wal-Mart has already entered quite a few international markets and some of them have failed due to inadequate geographical and demographical research.

Alternatives/Recommendation Cont.2. Pause/Proceed-with-caution strategy: Wal-

Mart’s current strategies work but the result is less than expectation. Therefore a pause strategy may be appropriate.Pros: this give a temporary break (with a set

time) to review, make adjustment, and then proceed with all the necessary tools.

Cons: it may set performance activities in limbo (especially with new hired managers) and may be freeze (if sitting idling longer the needed time) or fall into the wrong direction.

Alternatives/Recommendation Cont.B. Recommended Strategy

1. a pause/proceed with caution strategy for a short time (6 months or less)

2. Proceed with horizontal growth strategy

VII. ImplementationA. The way to increase profit further is to expand into

international markets.B. Wal-Mart needs to enter into an agreement and enter

into the Australian market, which in turn could result into a 15% increase in revenue for the company.

C. With the logistics system Wal-Mart has, implementing this program would be very smooth for the company.

D. Wages and job relocation are delicate subjects to consider for this move.

Implementation ContinuedA. Acquisitions may be key to entering this

venture into Australia. B. Developing a standard operating procedure

will be essential to making the joint venture work.

Evaluation and ControlA.B.C. Continuing check and balance system, updating information system and security software, preparing for horizontal growth strategy.