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Wal-Mart Stores Inc Ratio Analysis, Common-Size Income, Pro

Walmart Stores, Inc: On Becoming the World's Largest Company (2002) I am doing a strategic audit on this case. I have done the EFAS, IFAS, and a partial TOWS Matrix that needs a couple of additions. I'd really appreciate it if someone could help me with the write up of the case. The strategic audit needs to be written in outline form. We are also required to have as Exhibits: Ratio Analysis for 5 years, Common-Size Income Statements for last 5 years, SFAS Matrix, and Pro forma Income Statements for each strategic alternative for the next 5 years.

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Executive Summary - give an overview of the company, history and future goals

Sam Walton's first venture as a milk boy is when he understood the value of a dollar and the knowledge of how far a dollar could take one in life. From Sam's first five and dime stores in the 1950's to his opening of the first Wal-Mart in Rogers, Arkansas in 1962, no one could have predicted the enormous success of this small-town merchant. Today, fourteen years after his death, Wal-Mart continues to grow and leadership of this company continues to rely on many of the traditional goals and philosophies that Mr. Walton left behind. In keeping one step ahead of the competition Wal-Mart has had to add to Mr. Walton philosophies by implementing state of the art technology and methods of today's fast-paced business environment.

Currently, Wal-Mart's has created over 125,000 new jobs and the operation of over 3,000 international stores, buying products from 70 countries. Sharing of sales data with suppliers has seen increase in overall sales and continuous full stock shelves. Customers believe Wal-Mart plays an important role in the community and in doing so continue to benefit working families far more than any special interest group. Over sixty percent of Wal-Mart sells came from the middle income families that frequent stores 50 to 60 times a year. 84 percent of Americans have shopped Wal-Mart with a 2 to 3 percent increase yearly. The use of customer data has allowed for an increase in segmentation in order to better server the customer. The use of radio frequency id tags and electronic check conversion has improved inventory management and reduced cost and boosted operation efficiency. Promotional strategy implementation has seen continued lowered cost and delivery of products and services with minimal difficulty or inconvenience. Continued international growth in China and Europe has distributors forecasting a 13 percent increase in Wal-Mart in the next five years. With a continued increase in promotional and advertisement, Wal-Mart can easily see double digit growth in the next several years. The revamping and synchronizing of the marketing information system has allowed for successful store segmentation of local area cultures and ethnicities.

Wal-Mart's tendency to overstock on merchandise has reduced gross margins by several percentage points on a yearly basis. Ethical shoppers are frustrated at Wal-Mart's tactics of forcing low prices causing smaller competitors out of business. The growing concern of employee benefits such as wages and health care and environmental concerns has caused negative publicity for Wal-Mart. The continued growth of the smaller dollar stores has caused problems because of shortness of consumer checkout lines and the ability to open stores in areas to small for Wal-Mart super centers. Internationally, the closing of stores in South East Asia and Germany was seen as a failure in the eyes of many analysts. The recent scale back of the new trendy lines have caused a slight set back in Wal-Mart's quest to obtain a stronger share of the upper middle class market. The Neighborhood Market product line should be discontinued, since Wal-Mart already has full service grocery stores within their super centers and the Neighborhood Market account for only 10 percent of fiscal net sales. The recent third quarter slump in sales has forced a cutting in price of over 10,000 products. Future reduction in prices could cause a reduction in value for a share of Wal-Mart. If current PR campaigns are not reorganized and restructured to focus more on employees' benefits Wal-Mart will continually receive negative press.

Table of Contents

How to... On the Insert menu, point to Reference, and then click Index and Tables. Click the Table of Contents tab. If you want a TOC in the default style, just click OK. Once the text is marked, it's time to collect it all together in the TOC. This is where Word does the work for you. First place the insertion point where you want the TOC to appear, usually at the beginning of the document. Then, on the Insert menu, point to Reference and click Index and Tables, then click the Table of Contents tab. If you want to use the default options, click OK to create the TOC. Always update a TOC as the last thing you do to a document before printing or sending it out; that way you'll always include any last minute changes.

Section Headings Page

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Weakness. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Threat. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Demographics. . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Strategies. . . . . . . . . .. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Tactics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Product. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Place. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Promotion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Marketing Information Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Conclusion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Reference Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Wal-Mart Marketing Audit

Sam Walton founded Wal-Mart in 1962 when he and his brother James "Bud" Walton opened the first Wal-Mart Discount City in Rogers, Arkansas. Since then, Wal-Mart has grown to become the largest company in the world. In the United States, the company includes Wal-Mart discount stores, Super-centers, Neighborhood Markets, and Sam's Club warehouse membership clubs. The company also has many international operations. Wal-Mart is considered a variety store, which focuses on low prices featuring apparel as well as hard goods, and has been committed to upholding their basic value of customer service.

Wal-Mart has a reputation for value for money, convenience and a wide range of products all in one store. Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA and recent acquisition of Trust-Mart in China). The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing countrywide, store-by-store at a glance. IT also supports Wal-Mart's efficient procurement. A focused strategy is in place for human resource management and development. The confines of this paper will give a SWOT analysis of Wal-Mart, three environmental aspects of the company and examine different marketing areas.

SWOT Analysis

Strengths

Currently, Wal-Mart has net sales of $312.4 billion, which is a 9.5% increase over net sales of the similar period last year. Business decisions such as closing stores that were not profitable, and expanding during recessions when consumers were looking to discount stores to save money, have made Wal-Mart's undeniable success all the more obtainable. Wal-Mart has an abundance of strengths, which is obvious due to its incredible success. Wal-Mart is the largest employer in the United States and the company is one of the few places left for people to get a decent job without a college education. Wal-Mart also has the second largest net sales in the world. Their incredible number of sales is due significantly to Wal-Mart's aggressive growth strategy. In 2006 Wal-Mart created 125,000 new jobs in the United States and operated 2,285 international stores, buying products from 70 countries. One of Wal-Mart's competitive advantages is their remarkable logistics system. They are able to ship merchandise from any of there numerous distribution centers in order to provide the cheapest and most efficient route. They even have their own distribution center for their online orders. The invention of sharing sales data with suppliers through computer programs has allowed Wal-Mart to consistently keep their shelves stocked with popular items. Technology in general is an unbelievable strength that Wal-Mart is able to invest in to improve their company. By having on-line shopping, Wal-Mart has allowed for increased sales all over the world. This not only provides convenience for customers, but also with a logistics system like the one Wal-Mart has in place; online orders have become a breeze to fill.

Weakness

Wal-Mart has weaknesses that affect not only their image, but also the lives of other people. Some view Wal-Mart as a retailing giant that has taken over the retail industry. Because of Wal-Mart's low prices and well-known name, they have been able to capture the sales of an unbelievable number of consumers, and have therefore made it extremely difficult for small retailers to survive. Ethical shoppers, those, who are concerned with the well being of small retailers, are angry at the monopolizing power Wal-Mart has been able to gain in the past few decades. Most small shops have been forced to close due to lack of sales. Some people refuse to shop at Wal-Mart because of these issues. Price deflation is a serious dilemma that Wal-Mart faces. They often buy too much of one product and then have to put it on sale or clearance in order to turnover the merchandise. Consumers will only buy so much of a particular product, even if it is priced low. Wal-Mart has a tendency to overstock and therefore reduce gross margins when they sell products for reduced prices. By Wal-Mart selling products across many sectors they may not have the flexibility of some of their more focused competitors. These competitors have the ability to make changes and improve on a certain product lines when the needs of their customers change. Wal-Mart, however, may have too much merchandise and not be able to focus in on sectors that need to be improved. There are negative feelings towards Wal-Mart as a retailing-giant because of issues concerning wages, heath care and the environment.

Opportunity

Wal-Mart has an opportunity to diversify their store types. They have been successful with implementing Penny and cent stores, and have even tried value banking in malls. By focusing on a specific target market in a specific area, Wal-Mart has become the number one retailer for everyone. They already have the available resources to try new store types in new segments. Another great opportunity for Wal-Mart is to improve on their areas of criticism. Wal-Mart has already announced a new health care plan, which would increase benefits to employees. They are very concerned with child labor laws, and have said they will pay especially close attention to their overseas suppliers and their labor practices. Also, Wal-Mart has the opportunity to work on improving the environment. They have such a large image that any programs they support have the ability to produce tremendous results. By working on solutions to these concerns they can help improve their image and increase their market share. Other growth opportunities include area specific and culture specific stores via the Internet and improved supply chain management through radio-frequency identification (RFID).

Threat

A threat to Wal-Mart is the image they portray to some small areas. Once a new Wal-Mart has open in a small area, the wage of that county fall by three to five percent. Another threat is the rapidly growing chain of Dollar General discount stores. These stores are able to open in smaller areas where there are not enough customers to support Wal-Mart. The deep discount that is offered at Dollar stores competes greatly with Wal-Mart. Another threat is expansion in the international arena. Expansion in this area may create slow or rough short-term growth. The international market is predicted to have excellent long-term growth success, but these earnings may not be seen in the near future. For example, Wal-Mart has discontinued business operations in the countries of Germany and Southeast Asia because of local competition.

Environmental Aspect

Customers

Every week, more than 110 million shoppers walk through the doors of Wal-Mart's 3,200 stores across the United States. Wal-Mart's customer view is different in whom you ask and what area the country you ask them. People in some areas believe that Wal-Mart, by providing goods to shoppers at the lowest possible price are playing a positive role in the community, has benefited working families far more than any special interest group. On the other hand, some customers view Wal-Mart as a firm that purposefully undercuts prices of local merchants thereby destroying local economies and communities. These advocates of Wal-Mart believe that Wal-Mart's desire for lower prices has single handedly lowered worker condition for individuals all over the United States. Wal-Mart's chief competitors are K-Mart and Target with Kroger, Albertson's, Publix, Giant Eagle, Safeway and Winn-Dixie being competitors to of their grocery business. Wal-Mart customers' view Wal-Mart competition as very competitive when it comes to brand name products but mediocre when it comes to pricing. The competition has brand name products and when customers find that exact same product at Wal-Mart for a lower price, they tend to shop Wal-Mart for all their needs. With a continued increase in net sales over the past decade and more openings of Super centers nationwide; one can see not only an increase in the middle and lower income individuals shopping Wal-Mart but an increase in the upper-middle class shopping Wal-Mart. Wal-Mart has a clear understanding of the customer's wants and needs. They make it a top priority in satisfying their customers' wants and needs. "Wal-Mart customers demand low prices and value for their money and that's our promise here at Wal-Mart." (Scott, 2006, p.14) Sam Walton's adherence to being a lower price leader was unshakable. No matter what we pay for it, if we get a great deal, it only makes sense to pass it on to the customer. Not surprisingly, all Wal-Mart shoppers are not the same. Wal-Mart has customers that spend a great deal through out a month and some that only spend at the start of each month. These consumers range from lower income to lower-upper income Americans. Wal-Mart has classified these shoppers from top shoppers, heavy spenders, to low shoppers, light spenders. "66% of Wal-Mart's sales come from their top shoppers." (Hale, 2006 para 3) Top shoppers are extremely important to Wal-Mart because of the number of shopping trips they make to Wal-Mart between 50 and 60 ...

Solution Summary

MS Word Document - Ratio Analysis for 5 years, Common-Size Income Statements for last 5 years, SFAS Matrix, and Pro forma Income Statements for each strategic alternative for the next 5 years - 24 Pages
11,002 Words
240 Paragraphs
14 References

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