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3/26/2015
1
CaseAnalysis-NitrofixGhana,Inc.
Binus Business School,
MM Executive Batch 20
Presented by Group I
Alexander Ch...
Company’s Overview
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
2
Operates in
16 countries
globally
Founded in
1962 by Sam
Wal...
History of Walmart
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
3
1960s
Retail Revolution
Sam Walton's strategy was
built on a...
History of Walmart
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
4
1980s
Decade of Firsts
In the 1980s, the first Sam's Club
op...
Vision and Mission
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
5
“To improve the quality of life for everyday
people around t...
Walmart Business Challenges
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
6
01 External Factors
 Maturing market in its core b...
ExternalAnalysis
Porter Five ForcesAnalysis
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
7
Rivalry
Potential
Entrants
Customer...
ExternalAnalysis
Porter Five ForcesAnalysis
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
8
Low
Being that the retail industry ...
ExternalAnalysis
Porter Five ForcesAnalysis
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
9
High
Consumers today are searching ...
ExternalAnalysis
Porter Five ForcesAnalysis
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
10
Medium
Substitute products are pro...
ExternalAnalysis
Porter Five ForcesAnalysis
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
11
Medium-Low
Forging relationships w...
ExternalAnalysis
Knowing Walmart’s competitors
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
12
COMPETITION
Target Corporation
...
ExternalAnalysis
Knowing Walmart’s competitors
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
13
01 Retailer Industry: Target
 ...
InternalAnalysis
Combined Strategy: Cost Leadership & Differentiation Strategies
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
...
InternalAnalysis
Walmart SWOTAnalysis
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
15
S W
T
Strengths
 Customers loyalty
 Hi...
InternalAnalysis
Walmart Key Success Factor
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
16
Philosophy
 Keep prices below eve...
InternalAnalysis
Walmart Key Success Factor
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
17
Management style
 Maintain an ope...
InternalAnalysis
Walmart Key Success Factor
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
18
Tailor to individual market or ind...
InternalAnalysis
Walmart Key Success Factor
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
19
Promotional strategy
 Everyday-lo...
InternalAnalysis
Internalization as key strategy to keep growing
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
20
Why
Internali...
InternalAnalysis
Internalization as key strategy to keep growing
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
21
01
Management...
InternalAnalysis
Internalization as key strategy to keep growing
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
22
Reasons of
Fa...
Recommendation
TOWSStrategies
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
23
Recommendation
Other key proposed strategies for Walmart’s consideration
3/26/2015CaseAnalysis-NitrofixGhana,Inc.
24
Fine ...
25
CaseAnalysis-NitrofixGhana,Inc.3/26/2015
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Case analysis walmart case group i

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Strategy and Execution - MM Binus Business School

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Case analysis walmart case group i

  1. 1. 3/26/2015 1 CaseAnalysis-NitrofixGhana,Inc. Binus Business School, MM Executive Batch 20 Presented by Group I Alexander Christian Dina Sandri Fani Puntin Kulmongkon Case Study Analysis Walmart Stores Inc.
  2. 2. Company’s Overview 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 2 Operates in 16 countries globally Founded in 1962 by Sam Walton Largest global corporation by revenues Largest market share of total global retail Ranked top 3 in Forbes and Fortune 500 for past 5 years
  3. 3. History of Walmart 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 3 1960s Retail Revolution Sam Walton's strategy was built on an unshakeable foundation: The Lowest Prices Anytime, Anywhere 1962 On July 2, 1962, the first Walmart store in Rogers, Ark. 1969 The company officially incorporated as Wal-Mart Stores, Inc. 1970s Walmart Goes National In the 1970s, a decade of incredible growth, "Mr. Sam" began to take Walmart national, proving his vision's widespread appeal. 1970 Walmart became a publicly traded company. The first stock was sold at $16.50 per share. 1971 The first distribution center and Home Office opened in Bentonville, Ark. 1972 Walmart was listed on the New York Stock Exchange (WMT). With 51 stores, Walmart recorded sales of $78 million
  4. 4. History of Walmart 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 4 1980s Decade of Firsts In the 1980s, the first Sam's Club opened, serving small businesses and individuals, and the first Walmart Supercenter opened, combining a supermarket with general 1980 Walmart reached $1 billion in annual sales 1983 The first Sam’s Club opened in Midwest City, Okla. 1990s America’s Top Retailer By 1990, Walmart was the nation's number-one retailer. As the Walmart Supercenter redefined convenience and one-stop shopping, Every Day Low Prices went international. 1991 1st international stores in Mexico City (Sam’s Club Store) 1993 Walmart celebrated its first $1 billion sales week. 2000s New Millennium Implementation of omni-channel strategy to provide seamless shopping experience for its customers 2002 Topped the Fortune 500 ranking of America's largest companies for the 1st time 2014 Doug McMillon succeeded Mike Duke as CEO. 2.2 million associates worldwide; serves >200 million customers each week at >11,000 stores in 27 countries
  5. 5. Vision and Mission 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 5 “To improve the quality of life for everyday people around the world”. “Our vision is to provide the good quality and service to our customers, while remaining the market leader and striving daily to be the most admired company”
  6. 6. Walmart Business Challenges 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 6 01 External Factors  Maturing market in its core business  Target for critics on social issues: pushing production from the U.S. to low-wage overseas producers resulted to a depressed wage growth in the U.S. 02 Internal Factors  Might reach saturation point so unable to sustain high year on year growth rate  Prodigious rate in stores growth lead to sales cannibalization  Sam’s Club warehouse stores performance is much lower than leading store “Costco”  Shifting away from its original target market, i.e. low income customer which focuses in low price  Hard time in international operations due to inability to respond local markets  Imbalanced Chinese relation • Is it possible for Walmart to sustain its accustomed high growth rates? • Is it necessary for Walmart to find new business to continue its historic success?
  7. 7. ExternalAnalysis Porter Five ForcesAnalysis 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 7 Rivalry Potential Entrants Customers Substitutes Suppliers High The retail business is a highly competitive industry. Wal-Mart faces a number of competitors in all segments of their business.  Exit barriers are high  Slow industry growth  Have excess capacity  Cost structure of firms: sensitive to cost  Buyer’s switching cost is low  Competitors have similar sizes  Price elasticity of demand Discount Store  Kmart  Target  Caldor Warehouse Clubs  Price Club  Costco  Pace Supercenter  Meijer  Fred Meyer
  8. 8. ExternalAnalysis Porter Five ForcesAnalysis 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 8 Low Being that the retail industry is a highly saturated market, new entrants would face difficulty succeeding in this industry. In fact, it is highly difficult for discount retailers to penetrate other markets as Wal-Mart tried to enter Germany and South Korea. The company was unsuccessful and had to pull out because of its unprofitability Rivalry Potential Entrants Customers Substitutes Suppliers
  9. 9. ExternalAnalysis Porter Five ForcesAnalysis 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 9 High Consumers today are searching for the best deals possible. They are waiting for discounts and sales to bulk up on products. Customers know what they want and how far they are willing to search for the item. Thus, switching cost is low. Retailers must maintain high inventory levels to retain customers and their market share. Rivalry Potential Entrants Customers Substitutes Suppliers
  10. 10. ExternalAnalysis Porter Five ForcesAnalysis 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 10 Medium Substitute products are products that can be used as replacements for other products to satisfy the same necessity. Wal-Mart benefits from this idea as discounters have lower prices than department stores and consumers go for higher quality product with the lowest prices.  Prices and quality of substitute products are very competitive.  Performance of substitute products are similar.  Consumer switching costs are low. Rivalry Potential Entrants Customers Substitutes Suppliers
  11. 11. ExternalAnalysis Porter Five ForcesAnalysis 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 11 Medium-Low Forging relationships with suppliers is essential to Wal-Mart’s business. Without timely inventory deliveries, Wal-Mart could not maintain its full shelves and would lose customers.  Wal-Mart purchases huge quantities of products from its suppliers.  Low switching costs from one supplier to another.  Products have a lot of substitutes.  Almost all the products are not critical for Wal-Mart. Rivalry Potential Entrants Customers Substitutes Suppliers
  12. 12. ExternalAnalysis Knowing Walmart’s competitors 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 12 COMPETITION Target Corporation Kmart Corporation Costco Wholesale Corporation The Kroger Co. Albertson's, Inc. Walgreen Co. CVS Corporation Carrefour SA Royal Ahold N.V. Toys 'R' Us, Inc.
  13. 13. ExternalAnalysis Knowing Walmart’s competitors 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 13 01 Retailer Industry: Target  Ranked #33 in the Fortune 500.  Target offers very similar products.  Target went abroad in January 2011 02 Supermarket Industry: Dollar General  One of the main competitors, pursuing low prices.  Good location in smaller communities is the main competence advantage.  Strategy: Save time, save money  Many items per $1
  14. 14. InternalAnalysis Combined Strategy: Cost Leadership & Differentiation Strategies 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 14  Allowed to achieve a large scale and an efficient supply chain.  Has its own low-cost brands, like Great Value.  A unique cost structure that allows Walmart to establish the lowest prices and achieve competitive advantage. (best value/price combination )  Present in many different industries and markets with efficient distribution channels.  Very difficult strategy to imitate by offering a broad quantity of products at a low price.
  15. 15. InternalAnalysis Walmart SWOTAnalysis 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 15 S W T Strengths  Customers loyalty  High Brand value  Good inventory control system  Good reputation on quality and low price  Emphasis in Human Resource management and development Opportunities  Strategic Alliances and merger  Increase Demand  Technological developments  New retail formats  Customers concern about environment Threats  Cultural differences in new markets  Countries economic problems  Local regulations  Antitrust issues  Intense competitive conditions O Weaknesses  Much of the same merchandise  Low reaction to changes in market  Insistence on doing things “the Wal-mart way”  Low current ratio  Low market research in foreign countrie
  16. 16. InternalAnalysis Walmart Key Success Factor 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 16 Philosophy  Keep prices below everybody else  Trip expenses can’t exceed 1% of the purchases Spent lots of time in his own store and observe competitors Culture  Do not show off buying luxury goods Success  The way it treated its associates
  17. 17. InternalAnalysis Walmart Key Success Factor 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 17 Management style  Maintain an open-door policy  Empowering associates  Maintain technology superiority  Build loyalty among associates, customers, and suppliers
  18. 18. InternalAnalysis Walmart Key Success Factor 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 18 Tailor to individual market or individual store Information system  A process which indexed product movements in the store to over a thousand store and market traits  Using inventory and sales data
  19. 19. InternalAnalysis Walmart Key Success Factor 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 19 Promotional strategy  Everyday-low-prices Few promotions  13 major circulars per year Satisfaction guaranteed policy Marketing slogan  Lower price Store managers set up prices 2-4% pricing differential between Wal*Mart and its best competitors in most markets in early 1990s Lower price Maximize sales volume and industry turnover Minimize expenses
  20. 20. InternalAnalysis Internalization as key strategy to keep growing 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 20 Why Internalization? 01 Saturated domestic market 02 United States represents only 4% of world’s population (missing of 96% of potential customers) Emerging Markets with lower disposable income offer huge platforms for growth in discount retailer. 03 To keep growth in revenues by creating economies of scale04
  21. 21. InternalAnalysis Internalization as key strategy to keep growing 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 21 01 Management Risk (culture, language, customer preferences, distribution systems) 02 High investment Political and Economic risks03 Exchange Rates risk04 Risk Factors?
  22. 22. InternalAnalysis Internalization as key strategy to keep growing 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 22 Reasons of Failure? 01 Not able to benefit from economies of scale, e.g. Germany 02 Unable to become cost leader Culture differences03 Low profitability market04 Political & legal barriers (India) Foreign companies are not allowed to set up big stores 05 Fail to understand the market (South Korea) Very demanding customers and did not customize to market 05
  23. 23. Recommendation TOWSStrategies 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 23
  24. 24. Recommendation Other key proposed strategies for Walmart’s consideration 3/26/2015CaseAnalysis-NitrofixGhana,Inc. 24 Fine tuning business Strategies  Back to basic and shifting position back to price leader to gain customer trust  Consider to sell Sam’s Club warehouse store business as no clear selling point  Consider to raise employee wage to reduce turnover rate Continue Internalization with a better approaches  Consider to expand to developing countries as most people will go for a cheaper product. Potential countries to be considered include Indonesia, Vietnam, & Philippines  Adjust international business strategy to match with local condition Refresh its supply chain strategies  Reduce dependent level of production from China especially garment products. Such as: Bangladesh
  25. 25. 25 CaseAnalysis-NitrofixGhana,Inc.3/26/2015

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