Walmart

Case

Wal-Mart Stores, Inc.: On Becoming the World's Largest Company (2002)

I. CASE ABSTRACT

Wal-Mart Stores, Inc., in 2002, with corporate headquarters in Bentonville, Arkansas, was not only the nation's largest discount department store chain, but also had surpassed Sears, Roebuck & Company as the largest retail organization in sales volume in the United States. It was also considered the largest retailer in the world. The firm operated stores under a variety of names and retail formats including: Wal-Mart, discount department stores; SAM'S Clubs, wholesale and retail membership warehouses; Neighborhood Markets, small grocery/drug store formats; and Supercenters, large combination general merchandise and grocery stores. In the international division, it operated stores in Canada, Mexico, Argentina, Brazil, Germany, United Kingdom, Puerto Rico, South Korea, and China. The McLane Company, a support division with over 36,000 customers, was the nation's largest distributor of food and merchandise to convenience store and selected Wal-Marts, SAM'S Clubs, and Supercenters. Sales for the year ending January 31, 2002 were approximately $218 billion, making Wal-Mart Stores, Inc. the largest company in the world as measured by annual revenue.

A major concern was Wal-Mart's spectacular growth and the dominance of the firm in the market. The firm was perceived to be in the accelerated development or growth stage of the institutional life cycle in which sales are increasing rapidly, profits are high, new stores are being opened, existing stores are being refurbished, the product line is being reevaluated, service offerings are being upgraded, automation is being introduced to store operation, and better management controls are being developed. What makes this situation unique is that the discount department store industry was perceived as being at maturity. The industry faced increased competition, leveling of sales, moderate profits by surviving firms, over-stored markets, and more complex operations problems than previously.

Senior management, including the CEO, Lee Scott, felt that the firm could continue to maintain its growth pace by "outmaneuvering the competition with innovative retailing concepts" even in the face of one of the most challenging retail environments in its history.

Decision Date: 2002 2002 FY Sales: $217,799,000,000

2002 FY Net Income: $6,671,000,000

(2001 Fiscal Year [FY] was from February 1, 2001 to January 31, 2002)

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Copyright © 2003 and 2005 by Thomas L. Wheelen and J. David Hunger. Reprinted by our permission only for the Ninth and Tenth Editions of Strategic Management and Business Policy and Cases in Strategic Management.

NOTE: Major change in this case is the emphasis of Global Expansion by Wal-Mart. Wal-Mart is very competitive in each new market it

enters.

II. CASE ISSUES AND SUBJECTS

Retailing/Discount Department Number #1 Company in Sales

Store Industry International Expansion/Growth

Industry Analysis Strategies

Executive Succession

Corporate Culture Nation's Largest Retailer and Largest Discount Store Chain

Competitive Strategy Distinctive Competencies

Strategy Formulation Impact of Founder

Mission and Objectives New Strategic Management Team

Marketing Strategies Competitive Advantage

Environmental Scanning Target Markets

Human Resources Strategy Market Segmentation

Executive Leadership "Green" Marketing

Evaluation and Control Mature Industry

Strategic Groups Stages of Development

Developing a Global Name Strategy Implementation

Concentration versus Diversification Organizational Life Cycle

III. STEPS COVERED IN STRATEGIC DECISION-MAKING PROCESS

(See Figure 1.5 on pages 20 and 21)

O = Emphasized in Case X = Covered in Case

IV. CASE OBJECTIVES

1. To discuss the strategies that made Wal-Mart number one company in sales.

2. To discuss Wal-Mart's successful international expansion.

3. To discuss Wal-Mart's successful growth strategies and

performance over the past decade.

4. To discuss Wal-Mart's entry into new retailing formats

(Supercenters, SAM'S Club). Can these new retailing formats

be as successful as the company's discount store format?

5. To discuss the concept of "green" marketing and its impact on

customers and suppliers. How does "green" marketing relate to

social responsibility?

6. To discuss the phrase, "The Wal-Mart Way" and how it relates to

Wal-Mart's strategic management.

7. To discuss Sam Walton's philosophy and its impact upon corporate

culture and daily company activities.

* To discuss how long this culture will continue after his

death.

8. To discuss what strategies Wal-Mart has in place to achieve this

objective, and/or to suggest