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By: Megan Dow, Kristin Belanger, and

Angèle Bourgoin
Overview of WAL-MART
Presentation
• Overview of WAL-Mart • Analysis
• History – SWOT Matrix
• Stocks – SPACE
• Stock Information – IE Matrix
• The Divisions – Grand Strategy Matrix
• BCG • Key Ratios
• Their Mission and Vision Statement • Different Strategies
• New Mission and Vision Statement – QSPM
• External Opportunities and Threats • Decisions
– CPM • EPS/EBIT Analysis
– EFE • Implementation
• Internal Strengths and Weaknesses • Evaluation
– IFE • Update!
• References
• Questions?

April 19, 2006


Overview of Wal-Mart
• There are 4 different segments
• Wal-Mart Stores- sales amounted to 64.3%
– Discount Stores- 1,568 U.S
– Supercenters- 1,258 U.S
– Neighborhood Markets- 49 stores U.S
• Sam’s Club- sales amounted to 13.0%
– 525 stores U.S
– Is a member only, cash and carry operations
• International- sales amounted to 16.7%
– Discount stores- 942 Sam’s Clubs- 71
– Supercenters- 238 Neighborhood Market- 37
• Other- amounted to 6.1%
– McLane is the nation’s largest distributor of food and merchandise to
convenience stores

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History of Wal-Mart
• In 1945 Sam Walton • 1st IPO in 1970.
opened the first Ben • Then 100 shares were
Franklin franchise in worth $1,650 dollars and
Newport Arkansas and now the same 100 shares
operated them with his are worth more than $6
wife, Helen and brother, million dollars.
Bud. • In 1999 named #1 stock
• These were small chains on the Dow.
that were very successful.
• In November of 1962
Wal-Mart was opened.
• Wasn’t until mid 1970’s
that Wal-Mart began to
grow.
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History
• 1987 • In 1992 Sam Walton Died
– 2 new concept and in 1996 Bud Walton
implemented died.
• Hypermarkets, which – In 1995 Wal-Mart’s Annual
sell everything Report was dedicated to
including food Bud.
• Supercenters which are • New president and CEO
scaled down
supermarkets H. Lee Scott states that
• Also David Glass named new “While our history is rich
CEO of Wal-Mart with success, there’s no
question that our best
years are yet to come.”
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WAL-MART

Years since started

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Important People
• Co-founders, Sam and James “Bud” Walton started 1st Wal-Mart in
Rogers, Arkansas, 1962
• David Glass was named president 1984, in 1988 he became chief
executive officer
• S. Robson Walton named chairman of the board in 1992
• President and CEO in 2000- H.Lee Scott
• Vice President- Laura Philips

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Important Facts
• In 2004, we conducted more than 15,000
factory inspections - that's an average of
more than 40 a day.
• We serve more than 138 million customers
per week.
• Wal-Mart employs 1.6 million associates
worldwide in more than 3,700 stores in
the US and more than 1,500 throughout
the rest of the world.
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WMT
• Traded on NYSE
• Symbol WMT
• Index Membership:
• Dow Jones Composite
• Dow Industrials
• S&P 100
• S&P 500
• S&P 1500 Super Comp
• Sector: Services
• Industry: Discount Variety Stores

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WMT vs Dow Jones & S&P 500

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WMT vs Industry

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WMT 5 years

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WMT 30 years

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Stock Splits
Market Price
2:1 Stock Splits Shares Cost Per Share on Split Date Record Date Distributed
May-71 200 8.25 $ 47.00 5/19/1971 6/11/1971
Mar-72 400 4.125 $ 47.50 3/22/1975 4/5/1972
Aug-75 800 2.0625 $ 23.00 8/19/1975 8/22/1975
Nov-80 1600 1.03125 $ 50.00 11/25/1980 12/16/1980
Jun-82 3200 0.515625 $ 49.88 6/21/1982 7/9/1982
Jun-83 6400 0.257813 $ 81.63 6/20/1983 7/8/1983
Sep-85 12800 0.128906 $ 49.75 9/3/1985 10/4/1985
Jun-87 25600 0.064453 $ 66.63 6/19/1987 7/10/1987
Jun-90 51200 0.032227 $ 62.50 6/15/1990 7/6/1990
Feb-93 102400 0.016113 $ 63.63 2/2/1993 2/25/1993
Mar-99 204800 0.008057 $ 89.75 3/19/1999 4/19/1999

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Stocks
WMT COST Pvt1 TGT Industry

Market Cap: 193.36B 26.06B N/A 45.01B 1.84B


Employees: 1,800,000 60,500 133,0001 338,000 18.62K

Qtrly Rev Growth (yoy): 8.60% 11.00% N/A 11.50% 9.60%


Revenue (ttm): 312.43B 55.68B 19.70B1 52.62B 3.63B
Gross Margin (ttm): 23.06% 12.37% N/A 32.15% 28.72%
EBITDA (ttm): 23.25B 2.06B N/A 5.73B 268.09M
Oper Margins (ttm): 5.93% 2.79% N/A 8.22% 6.37%
Net Income (ttm): 11.23B 1.08B 1.11B1 2.41B 128.53M
EPS (ttm): 2.682 2.215 N/A 2.708 1.16
P/E (ttm): 17.30 24.97 N/A 19.08 17.08
PEG (5 yr expected): 0.99 1.72 N/A 0.96 1.07
P/S (ttm): 0.61 0.46 N/A 0.85 0.51

COST = Costco Wholesale Corp.


Pvt1 = Kmart Corporation (subsidiary or division)
TGT = Target Corp.
April 19, 2006 Industry = Discount, Variety Stores
1 = As of 2005
Their Mission Statement

• They don’t have a formal mission statement


• They are most interested in the customers needs
• The culture consists of
– Respect for the individual
– Service to our customers
– Strive for excellence
• If they did have a formal mission statement it would be,
“To provide quality products at an everyday low price
and with extended Customer service…always.”

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Mission Statement

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Their Vision Statement
"The secret of successful retailing is to give your
customers what they want. And really, if you
think about it from your point of view as a
customer, you want everything: a wide
assortment of good-quality merchandise; the
lowest possible prices; guaranteed satisfaction
with what you buy; friendly, knowledgeable
service; convenient hours; free parking; a
pleasant shopping experience."
- Sam Walton (1918-1992)
April 19, 2006
New Mission Statement
• Our mission is to provide goods and services for our customers at
everyday low prices. With our innovative technology we strive to
have merchandise ranging from food, clothes, music, etc. on hand
24 hours a day 7 days a week. We are committed to the growth of
Wal-Mart and challenge ourselves to be better. We strive to have the
best, be the best, and provide quality and assurance to our
customers. Our employees are a huge asset to our company, and we
would not be the company we are today without them. They have a
huge impact on what our company was, what it is, and what it will
be. We also feel it is important to give generously to those who are
less fortunate than others, which is why Wal-Mart donates
thousands of dollars a year to different organizations.

April 19, 2006


New Vision Statement
• Our vision is to provide good quality and
services to our customers while remaining
the market leader and striving daily to be
the most admired company.

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Divisions of WAL-MART
• McLane’s
• Neighborhood
Markets
• International
• Sam’s Club
• Supercenters
• Distribution Centers

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McLane’s
• Nations largest distributor of food and
merchandise to convenience stores.
• In 2003 was sold to Berkshire Hathaway,
Inc. so Wal-Mart could focus on core retail
business.

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Neighborhood Markets

• Began in 1998
• Located in market with
Wal-Mart Supercenters
• Offers customer
groceries,
pharmaceuticals &
general merchandise.
• Provides 28,000 items to
customers.

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International
• Wal-Mart expanded so
that customers
everywhere would
associate its name with
low cost, best value,
greatest selection of
quality merchandise and
highest standards of
customer service.
• Wal-Mart focused on
Global Positioning.

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Sam’s Club
• Membership-only, cash-and-carry operations.
• Financial service credit card program (Discover
Card) available at all clubs.
• Annual membership fee is $35; the Elite
Membership is $100.
– Elite membership has additional benefits like
automotive service contracts, roadside assistance,
home improvement, auto brokering and pharmacy
discounts.
• Bulk displays and name brand merchandise.
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Worldly Stores
DISCOUNT SUPERCENT SAM'S NEIGHBORHOOD
Country STORES ERS CLUBS MARKETS
Argentina 0 11 0 0
Brazil 0 12 8 2
Canada 213 0 0 0
China 0 20 4 2
Germany 0 94 0 0
Korea 0 15 0 0
Mexico 472 75 50 0
Puerto Rico 9 1 9 33
United Kingdom 248 10 0 0
International
Totals 942 238 71 37

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Stores in US and World

U.S. Totals 1568 1258 525 49


Grand
Totals 2510 1496 596 86

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BCG

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External Factors

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Key External Factors
• Opportunities
– Agreement with Berkshire Hathaway, Inc. acquired
McLane Company, Inc.
– Fortune’s number one Most Admired Company and
largest company in nation
– World’s largest private satellite communication
systems
– Ron Brown Corporate Leadership Award
• Threats
– “Buy American” policy
– Target
– A solution to the monopoly that Wal-Mart has created

April 19, 2006


EFE
Key External Factors Weights Rating Weighted Score

0.0 to 1.0 1 to 4

Opportunities

Agreement with Berkshire Hathaway, Inc.


acquired McLane Company, Inc. 0.1 3 0.3

Fortune’s number one Most Admired Company


and largest company in nation 0.14 4 0.56

World’s largest private satellite communication systems 0.16 4 0.64

Ron Brown Corporate Leadership Award 0.11 3 0.33

Threats

“Buy American” policy 0.15 3 0.45

Target 0.14 3 0.42

A solution to breaking the monopoly Wal-Mart has created 0.2 4 0.8

Totals 1 3.5

April 19, 2006


Internal Factors

April 19, 2006


Key Internal Factors
• Strengths
– Stores in all 50 states
– New concepts:
• Hypermarkets, supermarkets
– Wide variety of merchandise
– Nationally advertised merchandise
– Limited lines of merchandise – made in USA
– Point-of-sale bar code scanning
– Great employee benefits
• Weaknesses
– No formal mission statement
– Management resisted putting women on board of directors
– Hiring illegal minorities to clean
– Growth for employees only in division

April 19, 2006


IFE
Key Internal Factors Weights Rating Weighted Score
0.0 to 1.0 1 to 4
Internal Strengths
Stores in all 50 states 0.09 4 0.36
New Concepts - Hypermarkets, supermarkets 0.1 3 0.3
Wide variety of merchandise 0.1 3 0.3
Nationally advertised merchandise 0.08 3 0.24
Point-of-sale bar code scanning 0.13 4 0.52
Great Employee Benefits 0.09 3 0.27
0
Internal Weaknesses
No formal mission statement 0.1 3 0.3
Management resisted putting women on board of directors 0.13 3 0.39
Hiring illegal minorities 0.08 2 0.16
Growth for employees only in its division 0.1 3 0.3
0
Totals 1 3.14

April 19, 2006


SWOT
Increase the amount of hypermarkets, supermarkets
in 50 Create mission statements for all of the acquired
states as well as connect to the private satellite companies and the different divisions of Wal-Mart
systems(S2, SO) (O1, W1)

Use the Most Admired Company award as leverage


to advertise the wide variety of merchandise (S3, O2)

Use the Buy American policy to advertise Increase minority sales through buying minority
nationally how American Wal-Mart is (S3, T1) products and selling them in discount stores (T1, W3)
Use point-of-sale bar code scanning as
leverage over competitors like Target (S5, T2)
Offer more merchandise that is not apart of the
"Buy American" policy to attract more customers (S3,
T1)
Find a solution to the monopoly that has been created
and come up with a new concept to beat the problem.
(S2, T3)

April 19, 2006


CPM
Wal-Mart Target Kmart
Ratin Weighted Ratin Weighted Ratin Weighted
Critical Success factors Weights g Score g Score g Score
0.0 to
1.0 1 to 4 1 to 4 1 to 4
Market Share 0.03 3 0.09 2 0.06 2 0.06
Inventory System 0.02 3 0.06 3 0.06 2 0.04
Financial Position 0.04 2 0.08 2 0.08 3 0.12
Product Quality 0.05 3 0.15 3 0.15 2 0.1
Consumer Loyalty 0.03 3 0.09 2 0.06 2 0.06
Sales Distribution 0.02 3 0.06 3 0.06 2 0.04
Global Expansion 0.03 3 0.09 2 0.06 2 0.06
Organization Structure 0.02 3 0.06 3 0.06 2 0.04
Production Capacity 0.01 3 0.03 2 0.02 2 0.02
Advertising 0.25 4 1 3 0.75 2 0.5
Customer Service 0.05 3 0.15 3 0.15 3 0.15
Price Competition 0.4 3 1.2 2 0.8 2 0.8
Management Experience 0.05 3 0.15 2 0.1 3 0.15
Totals 1 3.21 2.41 2.14

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SPACE

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IE Matrix

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Grand Strategy Matrix

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Key Ratios
Day's Range: 45.40 - 45.74
Last Trade: 45.54
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April 19, 2006


Different Strategies
• Add more hypermarkets and
supermarkets to establish more growth
• Buy products from other countries to have
more of a variety of merchandise and
better quality merchandise for customers

April 19, 2006


QSPM
More hypermarkets/
supermark
Wal-Mart et Buy American

Key factors Weight AS TAS AS TAS AS TAS

External 1 to 4 1 to 4 1 to 4

Agreement with Berkshire Hathaway, Inc. acquired McLane's Company, Inc.


0.1 3 0.3 2 0.2 2 0.2

Fortune's number one Most Admired Company and largest company in nation
0.14 4 0.56 4 0.56 3 0.42

World largest private satellight communication systems 0.16 4 0.64 3 0.48 3 0.48

Ron Brown Corporate Leadership Award


0.11 3 0.33 3 0.33 2 0.22

"Buy American" policy 0.15 3 0.45 3 0.45 4 0.6

Target 0.14 4 0.56 4 0.56 3 0.42

A solution to breaking the monopoly that Wal-Mart has created


0.2 4 0.8 N/A 0 N/A 0

total should be 1.0 1

Internal 1 to 4 1 to 4 1 to 4

Stores in all 50 states 0.09 4 0.36 4 0.36 4 0.36

New Concepts - hypermarkets and supermarkets 0.1 3 0.3 4 0.4 3 0.3

Wide variety of merchandise 0.1 3 0.3 4 0.4 3 0.3

Nationally advertised merchandise 0.08 3 0.24 4 0.32 3 0.24

Point-of-sale bar code scanning 0.13 4 0.52 4 0.52 3 0.39

Great Employee Benefits 0.09 3 0.27 3 0.27 2 0.18

No formal mission statement 0.1 3 0.3 3 0.3 3 0.3

Management resisted putting women on board of directors 0.13 3 0.39 3 0.39 3 0.39

Hiring illegal minorities 0.08 2 0.16 2 0.16 2 0.16

Growth for employees only in its division 0.1 3 0.3 3 0.3 3 0.3

total should be 1.0 1


April 19, 2006 6.78 6 5.26
Decisions
• We decided to add more hypermarkets
based on the QSPM even though the
numbers were close for both strategies

April 19, 2006


EPS/EBIT Analysis
• Amount needed = $1 Billion
• Stock Price = $45.54
• EBIT Range = 435,950 - 635,950
• Tax Rate = 26%
• Interest rate = 5%
• # Shares Outstanding = 4,453,000

April 19, 2006


EPS/EBIT
Common Stock
In $Millions Financing Debt Financing

High Low High Low

EBIT (12,719,000 in 2003) 635,950 435,950 635,950 435,950

Interest 5% 0 0 31,798 21,798

EBT 938,900 638,900 604,153 414,153

Taxes 26% 165,347 113,347 165,347 113,347

EAT 773,553 525,553 438,806 300,806

# Shares Outstanding 4,453,000 4,453,000 13,964,000 13,964,000

EPS 5.68 5.64 3.65 3.65

April 19, 2006


Implementation
• Begin adding more hypermarkets to towns
with populations large enough to support
them.
• Increase the amount of hypermarkets by
one in every state (50 stores)
• Increase revenue by Debt Financing per
EPS/EBIT analysis

April 19, 2006


Evaluation
• Quarterly Reports
• Yearly Reports
• Store growth report
• Annual Sales report
• Key Ratios
• Stock prices in comparison to competitors

April 19, 2006


In the News…
• In 2003 managed to get action lawsuit against Wal-Mart
based on so few women being among its managers given
that a majority of its workforce is female and also for
equal pay. Ended up settling case because didn’t want to
lose a case for discrimination because would hurt Wal-
Mart’s bottom line. But as the judge rightly ruled,
companies that do business on as large a scale as Wal-
Mart have to be prepared to answer for their actions on
an equally large scale. Case settled in June 2004 and
began in September of 2003.

April 19, 2006


In the News…
• In June 2005 Oklahoma grocer Super H filed lawsuit
against Wal-Mart Stores for using a scanner to collect
barcode data from the products on the Super H’s
Shelves. Wal-Mart allegedly sent workers into Super H
to check prices close to the time a Supercenter was
opening in August. Super H wants the scanner back, not
because of the price information but to make sure that
there is not inventory and wholesale prices in the
scanner. The real question in this case was not the price
scanning but can the scanner capture other information
from the scanning tag then just the price. The suit was
dismissed per news reports.

April 19, 2006


In the News…
• In April 2006 a suit was filed against a Wal-Mart in Maryland to
ensure that larger employers pay up to a percentage toward health
care for employees. ERISA is there to establish a uniform national
framework for sponsoring, administering, protecting, and regulating
employee benefit plans, including pension plans, and health and
welfare plans. ERISA has a broad clause that pre-empts states and
municipalities from enacting laws that relate to employee benefits
plans. In this case it is not sure if the Maryland law or bills in other
states violates the ERISA previsions. In February Wal-Mart
announced plans to upgrade its health care benefits. This was
decided in the middle of the uproar in this Maryland case.
• Here are a few cases about Wal-Mart. There were 52 pages of cases
if you would like to see more go to Business & Company Resource
Center, News/Magazines.

April 19, 2006


In the News…
• Military Families Outreach Project
Partnership with Sesame Workshop to
support children of military families.

• Children's Miracle Network


Buy a balloon, save a child's life.

April 19, 2006


Update!
• International Division
– 2005 was a busy year for Wal-Mart
International. In December alone, the
company acquired 545 new stores and gained
more than 50,000 new associates in Japan
and South America, capping a year of robust
growth.
• Now have 13 divisions within the company

April 19, 2006


References
• http://www.walmart.com
• http://finance.yahoo.com
• Strategic Management Concepts and Cases
• http://galenet.galegroup.com.prxy6.ursus.
maine.edu/servlet/BCRC?locID=maine_f
ortkent
• Tony Gauvin’s presentation on Kroger’s
• http://www.target.com
April 19, 2006
Questions?

Thank you for shopping at WAL-MART

April 19, 2006