Sam Walton

Sam Walton, the retailing maverick and founder of the now largest company in the world, started his career with a small investment, a small loan from his family and a lot of determination.

Walton had a dream to grow his small discount store, Wal-Mart, at a relentless pace that would increase his sales high enough that he could drive all costs out of merchandising. Walton believed that finding costs wherever they lay вЂ" in the stores, in the manufacturers’ profit margins and with the middleman вЂ" and eliminating them, he could drive the prices of his goods down and make Wal-Mart a competitive force in discounting (Huey, par.4).

Walton, through his vision, determination, ability to motivate people and to build a culture within his organization in line with his ideals, has secured himself a title of one of the greatest business leaders of all time.

SAM: THE MAN

Samuel Moore Walton was born March 29, 1918 in Kingfisher, Oklahoma. He later moved to Missouri where he attended and was elected the class president at the University of Missouri. To pay the tuition bill, he worked as a lifeguard, waiter, and maintained a newspaper delivery route of one hundred sixty customers (Kennon, par. 4). After graduation he aspired to attend graduate school, but found he couldn’t afford it and instead took a position with J.C. Penny in their management trainee program.

The seeds of Wal-Mart were planted in the Ben Franklin variety store chain (Friedman, par. 9). Walton opened a Ben Franklin franchise store in Newport, Arkansas in 1945. He quickly grew it to become the top performing Ben Franklin franchise with $250,000 in sales. When his lease was up in 1950, it had become so successful that his landlord, P.K. Holmes thought running a retail store must be a piece of cake (Friedman, par. 10). He refused to renew Walton’s lease forcing Walton to turn the business over to him.

Walton didn’t relinquish his franchise easily. Only after a trip to an attorney was he convinced that there was nothing he could do to save his business. Attorney Fred Pickens Jr. described Walton’s reaction: After clenching and unclenching his fists, Walton stood up and said, “I’m not whipped. I found Newport, and I found the store. I can find another good town and another Ben Franklin. Just wait and see” (Friedman, par. 12).

In 1950, Walton purchased another Ben Franklin franchise, this time in Bentonville, Arkansas. This store he immediately changed the name to Walton’s 5 & 10. Today this store is a Wal-Mart visitor’s center serving as a museum of sorts of Wal-Mart’s historical founding.

It wasn’t until 12 years later that the first Wal-Mart opened its doors. Early on, operations were somewhat chaotic. Walton had merchandise stacked to the ceiling with promotions always running in every aisle. Accounting was based on the ESP method: if the books did not balance, there must be an Error Some Place (Economist, par. 4). Right off the bat, Wal-Mart was a success because of Walton’s devotion to keeping prices down. Later this shambles grew into one of the world’s best-managed companies, with the most sophisticated distribution system in the business.

THE WAL-MART VISION

Wal-Mart began with the dream of one man, Sam Walton, to own his own store. He cherished and nurtured that dream in such a way-with a sense of sacred duty and a willingness to let the dream enable him to grow personally-that the dream itself grew into something beyond his or anyone else’s wildest imagination (Soderquist, p.xvi).

Walton had 10 rules for building a business that he shared with all of his employees (Bickford, par. 2):

1. Commit to your business

2. Share your profits with your associates and treat them as partners

3. Motivate your partners

4. Communicate everything you possibly can to your partners

5. Appreciate everything your associates do for the business

6. Celebrate your success

7. Listen to everyone in your company

8. Exceed your customers’ expectations

9. Control your expenses better than your competition

10. Swim upstream

Walton saw the future of his industry in discounting, which was actually very new at the time. In 1962, companies of the likes of K-Mart, Target and Woolco also opened their doors for the first time. Walton knew that in order for him to stay ahead of his competition he needed to sell his goods at the lowest possible prices. He never compromised on his commitment to do so. Wal-Mart’s markup was never more than 30 percent (Friedman, par. 17).

Clarence Leis, the second manager of the first Wal-Mart, described Walton’s method for keeping his prices low in the book “Wal-Mart: A History of Sam Walton’s Retail Phenomnon” by Sandra S. Vance and Roy V. Scott. Leis said, “Merchandise would come in and we would just lay it down on the floor and get out the invoice. Sam wouldn’t let us hedge on a price at all. Say the list price was $1.98, but we had only paid 50 cents. Initially, I would say, вЂ?Well, it’s originally $1.98, so why don’t we sell it for $1.25?’ and he’d say, вЂ?Now we paid 50 cents for it. Mark it up 30 percent, and that’s it. No matter what you pay for it, if we get a great deal, pass it on to the customer.”

According to the company’s 2003 annual report, “Our job is to see how little we can charge for a product, not how much” (Friedman, par. 40).

The low-price policy has been so consistent and so well communicated that Wal-Mart has been able to forego much of the advertising expense that eats into other retailersвЂ™Ð²Ð‚™ profits (Friedman, par. 19).

Don Soderquist, former Vice Chairman and Chief Operating Officer of Wal-Mart, says in his book The Wal-Mart Way, “Wal-Mart was built on (and maintains) an exciting vision of what we could become, which was not based on financial goals, but on serving others. No matter what the challenge or decision in front of us, we refused to depart from that vision.”

While Wal-Mart grew, Walton was developing