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Wal-Mart Case Study Analysis

Read this case and complete the following sections of the strategic audit.

1. Analysis of Strategic Factors

2. Strategic Alternatives and Recommended Strategy

3. Implementation

4. Evaluation and Control

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1. Analysis of Strategic Factors.
The environment: There was sluggish consumer spending, rising unemployment, the energy crisis and the terrorists events of September 11. Each of these factors would have the effect of decreasing the sales of Wal-Mart. Even though this environment would discourage new entrants the profit potential of Wal-Mart would go down. This gloomy condition however spawned opportunities for Wal-Mart, it was perceived as "a discount store" a store that people flocked to when they were in difficult times.
It would adversely be effected by the cost of goods, the cost of electricity and energy requirements, competitive pressures, inflation, consumer debt levels, interest rate level, and unemployment levels.
. Bigger than Carrefour, Metro AG, and Royal Ahold combined, it is the world's #1 retailer, with more than 5,700 stores, including some 1,350 discount stores, nearly 2,000 combination discount and grocery stores (Wal-Mart Supercenters in the US and ASDA in the UK), and 550 warehouse stores (SAM'S CLUB). Nearly 75% of its stores are in the US, but Wal-Mart is expanding internationally; it is the #1 retailer in Canada and Mexico. It owns 42% of Japanese supermarket chain SEIYU. Wal-Mart also has operations in Asia, Europe, and South America.
Wal-Mart strategy is for its low prices and breadth of merchandise. Another part of the retailing leviathan's appeal is its efforts to promote a small-town flavor, with friendly greeters and patriotic trappings. The chain doesn't just compete in discount staples such as food and clothing -- it is a force in many other categories including electronics, health and beauty products, sporting goods, entertainment (CDs, DVDs, and videos), and toys. Its prescription drug sales make it North America's #3 pharmacy operator (behind Walgreen and CVS). Wal-Mart also sells products online at Walmart.com and recently launched an online music store. In categories where it trails other retailers, such as apparel and home furnishings, Wal-Mart is upgrading its merchandise (offering more expensive items) to compete with rivals, including Bed Bath & Beyond. Also, the retailer is working toward saving itself some cash by establishing its own bank -- primarily to cut its costly third-party electronic payment processing agreement. (The company currently generates some 140 million debit card, credit card, and electronic check transfer payments each month.) Independent bankers and lawmakers, having held off Wal-Mart since the retailer began the effort, see Wal-Mart attempting to cross over into banking from commerce.
The merchandising strategy for the international operating segment is similar to that of the Company's operations in the United States in terms of the breadth and scope of merchandise offered for sale. While brand name merchandise accounts for a majority of sales, several store brands not found in the United States have been developed to serve customers in the different markets, in which the International segment operates.

2. Strategic Alternatives and Recommended Strategy
The big-box retailer can open 40 Supercenters in California by 2008, but to date has opened only three because of stiff resistance from residents and local governments concerned about traffic and preserving open space.
In Tampa, Florida, Wal-Mart managed to open a slimmed-down version of its massive Supercenters -- the company's most productive format. Dubbed "Urban 99," the 99,000-square-foot store is designed to come in under the ...

Solution Summary

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"In categories where it trails other retailers, such as apparel and home furnishings, Wal-Mart is upgrading its merchandise (offering more expensive items) to compete with rivals, including Bed Bath & Beyond. Also, the retailer is working toward saving..."

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