March 19

WAL-MART
IRSA JAVED 08
SHUMILA ALI 02
RABIA MEHMOOD 33
BS 8TH
HINA BASHIR 15 (2008-2012)
SABBA ABBAS 27
 PESTLE ANALYSIS OF WAL-MART STORES, Inc.

POLITICAL:

Wal-Mart has response to the hurricane was lauded even by its critics: it donated more than
$20million worth of merchandise, including food for 100,000 meals, and it promised jobs for all
of its displaced workers. The first supply truck to arrive at the Superdome after the hurricane
came from Walmart, not from FEMA.
The administrative particulars of Wal-Mart has response to the hurricane, detailed in a study
by Steven Horwitz, are both fascinating and inspiring.
Wal-Mart has existing distribution chain was ± and is ± able to deliver needed goods faster and
more efficiently than a government agency, which (besides being inept) had no existing
infrastructure to respond to the disaster. Regardless of its reputation or its value to society,
Walmart is here to stay. Consumption drives our daily lives and accounts for some 70% of
America’s GDP. As long as Walmart continues to increase the accessibility and quality of
consumption, it will remain America’s top retailer and continue to grow. Whether or not you
choose to shop at Walmart , everyone should appreciate it.

Wal-Mart is the leader in retailing industry with fiscal revenue of $244.52 billion in 2003 making
it the world's largest corporation. Mike reports that Wal-Mart as of 2002 had 1,283,000
employees growing at 11.2%. The above data explains that strategy of Wal-Mart is
extraordinary which manages and operates over 4150 retail facilities globally. The key
components of Wal-Mart (The Value Chain), which offers cheap prices than its competitors
includes firm infrastructure like frugal culture, no regional offices and pleasant environment to
work.

ECONOMIC:

An opportunity available to the industry is the free trade zone. When the government enters
into new trade agreements with foreign countries, businesses in the United States have the
ability to offer products from these countries in their stores. This simply increases the markets
available to retailers. In 2009, Walmart awarded approximately $2 billion to U.S. hourly
associates through financial incentives, including bonuses, profit sharing and
401(k) contributions, and hundreds of millions of dollars in merchandise discounts and
contributions to the associate stock purchase plan.

Walmart is the world’s largest retailer with $405 billion in sales for the fiscal year ending Jan.
31, 2010. In the U.S., Wal-Mart Stores, Inc. operates more than 4,300 facilities including
Walmart supercenters, discount stores, Neighborhood Markets and Sam’s Club warehouses.
Despite the general weakness in the world economy and the uncertain environment that
prevailed, Walmart had reported sales growth of 11%, amounting to $6.4 billion. The
company's associates were indeed doing the Walmart cheer in faraway places like Germany,
South Korea, China and United Kingdom. In three decades, it had grown from its rural Arkansas
roots to become the world's largest company, and quite possibly the most powerful retailer

.
SOCIO-CULTURAL:

Walmart stores were geared toward the low-income customer segment; headquarters were
reflective of the company's tendency to be tightfisted as they were housed in warehouse style
buildings with minimalist decor. Frugality was a central tenet at the company, and every
associate was expected to fully adopt this value in all its manifestations. It was also said that the
company is homogenizing the marketplace by letting smaller towns dictate popular culture.

TECHNOLOGICAL:

Walmart was a leader in the use of technology to maximize operational efficiency. Very early
on, the company realized the value of proactive investments in technology and deployed a
private satellite network. Walmart also managed much of its own logistics through a central
hub-and-spoke system of warehouses and distribution centers. It was estimated that the
corporate logistics handled over million loads each year. The company has a core competence
involving its use of information technology to support its international logistics system. For
example, it can see how individual products are performing country-wide, store-by-store at a
glance. IT also supports Wal-Mart's efficient procurement. Customers shop at Walmart to get
the best value for their money. When it comes to sustainability, they are dedicated to providing
them with that same value. For Walmart, selling sustainable merchandise involves examining
the entire life span of the product from the materials used in making them, to the factories or
farms where they were made, to how they are used as an end-product. By bringing products
like affordable organic produce, fair trade coffee, Seventh Generation, and compact fluorescent
light bulbs within their each of the 176 million customers who shop in Walmart stores, It
believes that it can play a powerful role in protecting our environment and our earth’s natural
resources - and in shifting the behavior of the marketplace.

LEGAL:

Wal-Mart faces 38 state and federal lawsuits filed by hourly workers in 30 states, accusing the
company of systematically forcing them to work long hours off the clock. A
July 2000 internal audit of 128 Wal-Mart stores found 127 was "not in compliance" with
company policies concerning workers not taking breaks.
Another common complaint among corporate watch dog organizations and social responsibility
organizations is that Wal-Mart discriminates against women employees. It has been reported
that 65% of the company's hourly employees are women, but these workers earn 37 cents an
hour less than male hourly employees for the same work. Women working at Wal-Mart make
on average 4.5 to 5.6 percent less than men for the same work. Male management trainees
make an average of $23,175 a year, compared with $22,371 for women trainees. The average
male senior vice president at Wal-Mart makes$419,435 a year, while the four women senior
vice presidents earn an average of $279,772.Wal-Mart was ordered to pay $765,000 in fines for
violating state petroleum storage tank laws at its automobile service centers in Florida. The
Florida Department of Environmental Protection said Wednesday that the world's largest
retailer failed to register its aboveground fuel tanks with the state and didn't install devices that
prevent overflows, among other problems.

ENVIRONMENTAL:

An opportunity facing the industry is that customers want ease of shopping. To provide the
ease of shopping the industry is guaranteeing that the customers will find what they want when
they want it. This is supported by convenient presentation and the right level of service every
time the customer shops. A threat is customer theft. Manufacturers are fighting back against
customer theft by embedding paper clip sized antitheft tags, called electronic article
surveillance labels, inside products and packaging called source tagging, the process offers
several major benefits .For one, merchandise tagged on the factory floor during manufacture or
packaging lets retail employees spend less time in the storeroom applying labels and more time
on the show floor helping customers. Also, high-theft merchandise previously displayed behind
glass can now sit out in the open, boosting sales significantly.
Another social, cultural, demographic, and environmental threat is employee theft. Along with
antitheft labels there are radio-frequency circuits that are hidden in packages and go un
noticed. The only time they will go off is when the bar code scanner does not deactivate the
circuit, which means they stole it. This helps to prevent the two forms of employee theft, which
are sweat hearting and sliding. Sweat hearting is when the employee charges the customer less
than the actual price and sliding is when the employee covers the barcode at the point of sale.
Wal-Mart has been known for their customer oriented approach. Wal-Mart maintains one of
the best satisfaction guaranteed programs, which promotes customer goodwill. One can return
virtually any product to Wal-Mart without any problems. They simply take the product back and
promptly refund the price of the product, nearly no questions asked. Perhaps the strongest
aspect of Wal-Mart is in its access to distribution networks. Wal-Mart uses a system known as
cross-docking. This is simply the process of continuously delivering goods to warehouses where
they are sorted and distributed to their stores within one day. This enables Wal-Mart to take
advantage of economies of scale with shipping trucks with full loads. This also gives Wal-Mart
the ability to increase the speed of deliveries, a faster response to market demands, and a low
inventory. This system has allowed Wal-Mart to decrease its sales cost by 2 to 3 percent over
the industry.
  It is very aggressive with respect to technology (one of the support activities) and was
the first retailer to use bar codes. It uses satellite linkages to communicate with all its
stores. It has integrated its POS, inventory-control, RFID, and other logistical
technologies to speed product delivery, improve security (including merchandise
shrinkage), and reduce costs.
 It has developed regional procurement centers in addition to its legendary center in
Bentonville, Arkansas (known as ‘‘Vendor Ville’’). It even has one just outside Shenzhen,
China. Suppliers set up satellite offices next door to the most convenient procurement
center. For example, Procter and Gamble, Wal-Mart’s largest supplier, has 300
employees fulltime in Bentonville.
 It focuses on the complete ‘‘customer experience’’ – having someone welcome each
customer to the store, helping them find what they are looking for, taking returns, and
carrying merchandise to the customer’s car.

Because Wal-Mart is a retailer, not a manufacturer, its external value chain is extremely
simple. It deals with a variety of vendors and sells to customers. But the secret to discovering
what makes Wal-Mart great lies in examining its internal value chain.

What is Wal-Mart’s strategy? It is the low-cost leader among mass merchandisers and operates
on a scale that dwarfs its competitors. It continues to expand internationally. Its strategic
activities include (1) aggressive deployment of systems and technologies that help it reduce
shrinkage and internal costs, (2) its relationships with suppliers and the enormous economies of
scale it achieves through hard bargaining and purchasing in large quantities, and (3) enhancing
its customers’ experience in the store.