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Case
Wal-Mart Stores, Inc.: On Becoming the Worlds Largest Company (2002)
CASE ABSTRACT
Wal-Mart Stores, Inc., in 2002, with corporate headquarters in Bentonville, Arkansas, was not only the nations 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; SAMS 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 nations largest distributor of food and merchandise to convenience store and selected Wal-Marts, SAMS 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-Marts 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 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
Nations 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
To discuss the strategies that made Wal-Mart number one company in sales.
2. To discuss Wal-Marts successful international expansion.
To discuss Wal-Marts successful growth strategies and
performance over the past decade.
To discuss Wal-Marts entry into new retailing formats
(Supercenters, SAMS Club). Can these new retailing formats
be as successful as the companys 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?
To discuss the phrase, “The Wal-Mart Way” and how it relates to
Wal-Marts strategic management.
7. To discuss Sam Waltons 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