Company Introduction And Analysis Paper

Company Introduction and Analysis Paper

on

Wal-Mart

By: Team A

ECONOMICS FOR BUSINESS I - ECO/360

June 13, 2005

Abstract

Wal-Mart has grown to be one of the biggest corporations in the world, employing 1.3 million workers worldwide in 2003 in over 4,300 stores with sales around $256 billion. They sell everything from clothing, tools, toys, electronic goods, appliances and groceries. A major force behind its success was the vision, enterprise and daring of its founder, Sam Walton. He was the one who started the "super center" retail event. He also implemented a supply chain strategy that required stores to reorder stocks only as needed instead of keeping huge amounts of merchandise in warehouses. Mr. Walton also mastered the art of low pricing that attracted millions of customers. Through the years, this company has employed more than 1.5 million associates worldwide through more than 3,600 facilities in the United States and more than 1,570 units in Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany and the United Kingdom. More than 138 million customers per week visit Wal-Mart stores worldwide.

In this paper, Team A will introduce Wal-Mart and give a little background on its history. We will discuss in detail, the analysis and cost structure of the company. We will also discuss the primary economic variables that will impact the long-run profitability of Wal-mart.

INTRODUCTION TO OUR COMPANY (WAL-MART)

The company that Team A has selected to discuss is Wal-Mart. Wal-Mart has become one of the biggest discount retailers in America and they strive on providing low prices and high service. They have come a long way from their beginnings in Bentonville, Arkansas. Sam Walton, the founder of Wal-Mart, Inc. had visions of service excellence when creating his stores. Mr. Walton is often quoted as stating that, "The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything; a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience." (www.walmart.com) Wal-Mart takes pride in providing the highest quality of service possible, evident when you walk in through the door. There is always a greeter to welcome you both on your way in and out of the store. Recently, Wal-Mart has begun the transformation from discount store to neighborhood supermarket by adding full-service gas stations, deli, and meat/seafood counters to their already regular services such as layaway, one-hour photo, ophthalmology services and car servicing; creating a one-stop shopping environment, as their commercials claim. You can purchase everything from tires and car batteries to groceries and everything in between. Mr. Walton would be proud of how popular his stores have become and how they affect the communities they represent.

The Wal-Mart family of stores also includes members only Sam's Club which adheres to Sam Walton's philosophy of providing great service at a discounted price. These warehouse stores offer the opportunity to purchase products in bulk, thus making this a small business owner's supplier by allowing them to select their own products without having to pay someone else to deliver them.

By the turn of the century Wal-Mart had been named "Retailer of the Century" by Discount Store News; made FORTUNE magazine's list of the "100 Best Companies To Work For;" and was ranked on Financial Times' "Most Respected in the World" list. In 2002, Wal-Mart became No. 1 on both the FORTUNE 500 list and FORTUNE magazine's "Most Admired Company in America". In addition, Wal-Mart was presented with the Ron Brown Award for Corporate Leadership, a presidential award that recognizes companies for outstanding achievement in employee relations and community initiatives.

ANALYSIS FOR THE DEMAND FOR THE MAIN PRODUCT OF WAL-MART

The main goal for Wal-Mart is their ability to keep prices low. Many stores are open twenty-four hours a day and remain busy a majority of the time. Like most retailers, the Christmas season is their busiest. The advantage they have over many retailers is that they offer layaway services to those who choose to prepare ahead of time for the holiday season, allowing many customers the opportunity to begin making payments several months in advance of the season. They often alternate their product selections by limiting the brands used and brand selection available in their stores. Only the most popular brands and selections are available for each market, as is the case for their Sam's Clubs. Many times, you will not find the same products available from week to week, because they rotate the products available based on availability and season. Say you go in to Sam's and they have a Capri-Sun four (4) case pack available for $6.99. Two weeks later, you go and now they have a Kool-Aid Coolers four (4) case pack available for $6.99.

The product selection has varied based on the availability of similar products that they were able to get at the lowest price. They strive on providing the lowest possible price, which means a variance in the product (brand) selection available. Product selection availability is their bread and butter. They have their own clothing line, Faded Glory and product line, Sam's Choice. Their fresh meat selections are of the highest quality and the prices are comparable, if not lower than other grocers. Again, the focus is low priced, quality products. They would sell a product or put their name on a product that was not of the highest quality possible. It is no wonder that they are the leading discount retailer in the U. S. Everyone should use the Wal-Mart philosophy when creating products and services that will appeal to the masses.

ANALYSIS OF THE COST STRUCTURE OF THE WAL-MART

There are many reasons account for Wal-Mart's financial success and growth. While its "everyday low prices" shopper-centric business model makes Wal-Mart an attractive