GROUP-05

THE JOURNEY
1962 -Founded by Sam Walton , headquartered in Bentonville, Arkansas. 1969 - Incorporated on October 31. 2009- It generated 51% of its US$258 billion sales in the U.S. from grocery business. 2010 -The world's largest public corporation by revenue. Wal-Mart has 8500 stores in 15 countries, with 55 different names . Each week, about 100 million customers, nearly one-third of the U.S. population, visit Walmart's U.S. stores.

PROBLEM STATEMENT

The size of the corporation has grown to epic proportions.

ISSUE ANALYSIS
Company is treated on exception rather than aspiration. They are moving into new market and competition in those markets are moving to new segments. Gained bargaining power over suppliers. It is violating partnership between itself and suppliers. Scale , scope, speed in creating monopoly environment.

ISSUE ANALYSIS

† Expose

company to regulation from government (sanction and taxes). the company at risk of class actions suit.

† Puts

DISCUSSION OF ALTERNATIVES
1.
† † † †

Create SBU¶s
Logistics Division Retail Division Food Division Entertainment Division.

DISCUSSION OF ALTERNATIVES
Advantage:
†

Company can grow as a whole with out any perceivable threat from the government or competition due to hegemony.

Disadvantages: Rely on effective communication between SBUs and corporate level. Extra cost associated with creating SBUs.

DISCUSSION OF ALTERNATIVES
2. Public

private partnerships.

†

Describes a government service or private business venture which is funded and operated through a partnership of government and one or more private companies.

DISCUSSION OF ALTERNATIVES
Advantage: Protection from being regulated by government. Disadvantages: Possible retribution from competitors in terms of legal action.

DISCUSSION OF ALTERNATIVES
3. †

Relax the merger policy of the company.
Mergers should be done to prevent competition from filing suits.

DISCUSSION OF ALTERNATIVES
Advantage: Preserve the economy . Disadvantages: High cost of merger The cost structure has to be restructured to match Wal-Mart.

PLAN OF ACTION
Implementation of a hybrid of alternatives 1 and 3 Divide the company based on the various functional areas that the company has a presence in. Once individual SBU¶s are competing in a particular market, go in for mergers with competitors to continue growth trajectory. Introduce private labels in consultation with manufacturers who might have competing brands in the same market.

KEY CONCEPTS
Structural advantages
† Reducing

the costs to such a level that they become a category killer in every segment that they compete in. † Achieved by investing in processes such as ³crossdocking´ wherein inventory is rarely stored in a single place but is always on the move in the supply chain.

KEY CONCEPTS
Private label
† Situation

occurs where the private label starts introducing products that compete in the same market segment as products that it procures from other large scale manufacturers. partnership/understanding with suppliers.

† Violates

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