WalmartWalmart is one of the success stories in the retail business.  As a new entrant in the retail industry in 1960’s, the company emphasized low cost and good customer service to be the core value of its business.  It has followed this strategy of low cost and good customer service for the last 50 years. Walmart has now more revenues and employs more employees than any other company in the world including the federal government. Brief discussion on the industry outlook (Porter’s five )We conclude that for the average retailer, the industry is unattractive principally because of intense internal rivalry among principal retailers and the low switching cost for end customers.Suppliers – Weak PowerThe suppliers of consumer goods have very little power in this industry.  The availability of alternative suppliers the consumer goods are like commodities and substitutes are readily available.  Retailers have also high power of negotiation due to high volume purchased.  Company like Walmart is very important to the suppliers.Buyers – Average powerThe consumer has significant power because of the ready availability of substitutes, the ease of switching between different stores and perhaps lack of real differentiation among retailersInternal Rivalry – StrongCompetition is fierce among discount retailers.  The reason for this lack of differentiation in product offerings, low switching costs for end consumers, and other strategies that aim in increasing market share at the expense of profitability.Substitute – moderateA number of substitutes are available for consumers from retailers having different formats: food-supermarket, local grocery stores, department stores, specialty stores or direct sales channels.  Retail discounters have to track that their prices are lower than above stores to attract customers to come to their stores.
Barriers to entry – highVolume is essential to survive as a discount retailer. A new entrant must achieve substantial market share to achieve minimum efficient scaleFinancial performance of Walmart stores compared to other retailers:Walmart has implemented one of the best well managed system in the retail industry. This system has sparked one of the highest growth rates in the retail industry.  As a small unknown player in the rural Arkansas in the 1960’s, it is now the giant gorilla in the retail industry.  Walmart stores generate over $400 billion per year in sales and employ 2.2 Million personnel today. Most of the competitors of Walmart in the 80’s and 90’s went into bankruptcy or were bought out by other rivals. As figure 1 &2 indicate, Walmart had the highest revenue and the highest five year average equity return in the retail industry in 1993.
In 1993, Wal Mart lost a $500 Billion bond to Chase & Co which created a $500 billion operating loss. The same year, John Allen, president and chairman of CenturyLink, the parent company of Wal-Mart and the company which owns Wal-Mart Stores, stated: “We will always remember the impact one day on another, such is the quality and customer support of the company and its associates.” On May 16, 1996 the Wall Street Journal reported on another deal between Wal-Mart (WMS) and a subsidiary of Target (TFC) and in a similar deal Walmart (WMT) sold the rights to an original 50 million shares of its subsidiary to the Wall Street bank, the International Paper Company (PIOC) In this agreement, the two retailers agreed, as was the policy at the time: the $1.00 per share share share buyback program is for each retailer to set aside 100% of the value to Wal-Mart that is not otherwise provided for by existing sales tax. The plan was finalized around 2007. Wal-Mart paid a loss of $600 million during the period of the deal. It agreed to a $500 billion contract to pay down the principal of the $50 billion debt. According to the report, Walmart had estimated the number of shareholders at about 5,600 which was actually about 1% of all companies, including the two stores. On June 17, 2011, the Journal reported on Walmart’s agreement with Chase & Co, the parent company of Wal-Mart Stores. “When [WMT] acquired the 50 million shares of its business in June 2011, it had promised that it would cut its annual operating loss by $500 million by 2020.” The same year, Walmart reached a $500 billion financial milestone. This resulted in a 2.4% dividend over 10 years, $25 billion increase in stock prices, $100 billion decrease in dividends each year from 1992 to 2004, and a 50% increase in tax base for 2013. (The change makes it hard to compare these two periods to any other. As was the case in 1993, both periods were extremely volatile (see figures 1 & #038); and this year, it became clear that the two periods are not comparable.) During the year 2000, Walmart recorded a $500 billion write off, which is larger than any other year within the last 40 years as the company suffered a $400 billion write-down of its businesses. Wal-Mart had its share of Walmart stock held by Chase & Co. until it decided not to close its merger with Cigna and Wal-Mart Stores in 2002[6]. In September 2011, as Target reported: “In June 2010, Wal-Mart reached an agreement with Cigna to extend the existing corporate buyback program for all of its retail stores. Target declined to comment.” Target was the only retailer in history to sell 100 million shares of pre-1993 merchandise. On February 06, 2012, a major corporation that was part of the Federal Credit Union Act, the Federal Deposit Insurance Corporation (FDIC), agreed to the financial settlement with Wal-Mart Stores in exchange for a guaranteed return on its deposits that
In 1993, Wal Mart lost a $500 Billion bond to Chase & Co which created a $500 billion operating loss. The same year, John Allen, president and chairman of CenturyLink, the parent company of Wal-Mart and the company which owns Wal-Mart Stores, stated: “We will always remember the impact one day on another, such is the quality and customer support of the company and its associates.” On May 16, 1996 the Wall Street Journal reported on another deal between Wal-Mart (WMS) and a subsidiary of Target (TFC) and in a similar deal Walmart (WMT) sold the rights to an original 50 million shares of its subsidiary to the Wall Street bank, the International Paper Company (PIOC) In this agreement, the two retailers agreed, as was the policy at the time: the $1.00 per share share share buyback program is for each retailer to set aside 100% of the value to Wal-Mart that is not otherwise provided for by existing sales tax. The plan was finalized around 2007. Wal-Mart paid a loss of $600 million during the period of the deal. It agreed to a $500 billion contract to pay down the principal of the $50 billion debt. According to the report, Walmart had estimated the number of shareholders at about 5,600 which was actually about 1% of all companies, including the two stores. On June 17, 2011, the Journal reported on Walmart’s agreement with Chase & Co, the parent company of Wal-Mart Stores. “When [WMT] acquired the 50 million shares of its business in June 2011, it had promised that it would cut its annual operating loss by $500 million by 2020.” The same year, Walmart reached a $500 billion financial milestone. This resulted in a 2.4% dividend over 10 years, $25 billion increase in stock prices, $100 billion decrease in dividends each year from 1992 to 2004, and a 50% increase in tax base for 2013. (The change makes it hard to compare these two periods to any other. As was the case in 1993, both periods were extremely volatile (see figures 1 & #038); and this year, it became clear that the two periods are not comparable.) During the year 2000, Walmart recorded a $500 billion write off, which is larger than any other year within the last 40 years as the company suffered a $400 billion write-down of its businesses. Wal-Mart had its share of Walmart stock held by Chase & Co. until it decided not to close its merger with Cigna and Wal-Mart Stores in 2002[6]. In September 2011, as Target reported: “In June 2010, Wal-Mart reached an agreement with Cigna to extend the existing corporate buyback program for all of its retail stores. Target declined to comment.” Target was the only retailer in history to sell 100 million shares of pre-1993 merchandise. On February 06, 2012, a major corporation that was part of the Federal Credit Union Act, the Federal Deposit Insurance Corporation (FDIC), agreed to the financial settlement with Wal-Mart Stores in exchange for a guaranteed return on its deposits that
In 1993, Wal Mart lost a $500 Billion bond to Chase & Co which created a $500 billion operating loss. The same year, John Allen, president and chairman of CenturyLink, the parent company of Wal-Mart and the company which owns Wal-Mart Stores, stated: “We will always remember the impact one day on another, such is the quality and customer support of the company and its associates.” On May 16, 1996 the Wall Street Journal reported on another deal between Wal-Mart (WMS) and a subsidiary of Target (TFC) and in a similar deal Walmart (WMT) sold the rights to an original 50 million shares of its subsidiary to the Wall Street bank, the International Paper Company (PIOC) In this agreement, the two retailers agreed, as was the policy at the time: the $1.00 per share share share buyback program is for each retailer to set aside 100% of the value to Wal-Mart that is not otherwise provided for by existing sales tax. The plan was finalized around 2007. Wal-Mart paid a loss of $600 million during the period of the deal. It agreed to a $500 billion contract to pay down the principal of the $50 billion debt. According to the report, Walmart had estimated the number of shareholders at about 5,600 which was actually about 1% of all companies, including the two stores. On June 17, 2011, the Journal reported on Walmart’s agreement with Chase & Co, the parent company of Wal-Mart Stores. “When [WMT] acquired the 50 million shares of its business in June 2011, it had promised that it would cut its annual operating loss by $500 million by 2020.” The same year, Walmart reached a $500 billion financial milestone. This resulted in a 2.4% dividend over 10 years, $25 billion increase in stock prices, $100 billion decrease in dividends each year from 1992 to 2004, and a 50% increase in tax base for 2013. (The change makes it hard to compare these two periods to any other. As was the case in 1993, both periods were extremely volatile (see figures 1 & #038); and this year, it became clear that the two periods are not comparable.) During the year 2000, Walmart recorded a $500 billion write off, which is larger than any other year within the last 40 years as the company suffered a $400 billion write-down of its businesses. Wal-Mart had its share of Walmart stock held by Chase & Co. until it decided not to close its merger with Cigna and Wal-Mart Stores in 2002[6]. In September 2011, as Target reported: “In June 2010, Wal-Mart reached an agreement with Cigna to extend the existing corporate buyback program for all of its retail stores. Target declined to comment.” Target was the only retailer in history to sell 100 million shares of pre-1993 merchandise. On February 06, 2012, a major corporation that was part of the Federal Credit Union Act, the Federal Deposit Insurance Corporation (FDIC), agreed to the financial settlement with Wal-Mart Stores in exchange for a guaranteed return on its deposits that