External and Internal Audit / Assessment I/O View -Industrial Organization View -External factors are more important

RBV View -Resource Based View -Internal factors are more important

External Assessment- Porters 5 Forces Model

Potential Development of Substitute Products Bargaining Power of Suppliers

Rivalry among competing firms

Potential Entry of New Competitors Bargaining Power of Consumers

Porters 5 Forces Model- LMH and PEST

External Assessment- CPM Matrix

Critical Success Factors Market share Price Financial position Product quality Consumer loyalty Total Wal-Mart KMart JC Penny Weight Rating Weigh Rating Weigh Rating Weigh ted ted ted Score Score Score 0.20 4 0.80 1 0.20 2 0.40 0.30 0.10 0.20 0.20 1.00 3.60 1.70 3.00 4 4 2 4 1.20 0.40 0.40 0.80 2 1 2 2 0.60 0.10 0.40 0.40 3 3 4 3 0.90 0.30 0.80 0.60

External Assessment- EFE Matrix

Key External Factors Opportunities Consumers want ease of shopping Internet shopping growing Kmart and other stores struggling Similar shopping patterns worldwide Retail sales expected to increase Environment conscious consumers Elderly population growing Asian market virtually untapped by retail European market untapped by retail Threats Regulation of Wal-Mart pharmacies Small towns do not want entry of Wal-Mart Bad media exposure for Kathie Lee brand Variety of competition nationally, regionally, and locally Substitute products more easily because of intense competition TOTAL Weight 0.08 0.10 0.20 0.05 0.05 0.04 0.04 0.06 0.07 0.10 0.02 0.04 0.05 0.10 1.00 Rating 4 3 4 3 3 1 3 3 3 3 3 3 3 2 Weighted Score 0.32 0.30 0.80 0.15 0.15 0.04 0.12 0.18 0.21 0.30 0.06 0.12 0.15 0.20 3.10

Internal Assessment 1. Functional Areas (MKT, FIN, HR) 2. Core Competency 3. Value Chain Management 4. Strategic Cost Management 5. Financial Ratios

Internal Assessment- Financial Ratios

Company Valuation Ratios P/E Ratio (TTM) P/E High - Last 5 Yrs P/E Low - Last 5 Yrs Beta Price to Sales (TTM) Price to Book (MRQ) Price to Tangible Book (MRQ) Price to Cash Flow (TTM) Price to Free Cash Flow (TTM) % Owned Institutions Dividends Dividend Yield Dividend Yield - 5 Yr Avg Dividend 5 Yr Growth Rate Payout Ratio (TTM) 28.65 59.13 27.15 0.80 0.98 5.76 7.45 19.65 59.59 36.40 Industry 26.53 54.59 24.03 0.86 0.93 4.89 6.16 17.39 54.00 54.34 Sector 28.90 48.47 16.09 0.96 2.80 3.89 6.60 17.03 33.11 50.48 S&P 500 24.01 45.41 16.26 1.00 3.33 4.29 7.56 17.32 28.97 64.19

0.90 0.50 18.36 17.71

0.98 0.69 -1.81 16.24

2.14 1.43 -0.89 15.54

2.04 1.48 6.48 26.78

Internal Assessment- IFE Matrix

Key Internal Factors Strengths Customer oriented SAMS Club customers able to buy in bulk Supercenters offer one-stop shopping Satisfaction guaranteed programs promoting customer goodwill Buy from local merchants when possible Stock ownership and profit sharing with employees Leads industry in information technology Ongoing development of its employees Strong community involvement Weaknesses No formal mission statement Membership only for SAMS Club Keep poor-performing employees on hand Old-fashioned store policies Few women and minorities in top management TOTAL Weight Rating Weighted Score 1.00 0.40 0.40 0.08 0.08 0.10 0.10 0.40 0.08 0.02 0.20 0.10 0.03 0.10 3.19 0.250 0.100 0.100 0.025 0.025 0.025 0.025 0.100 0.025 0.012 0.100 0.100 0.013 0.100 1.00 4 4 4 3 3 4 4 4 3 2 2 1 2 1

STRATEGY

In the animal kingdom, the rule is, eat or be eaten; in the human kingdom, define or be defined. - Thomas Szasz

STRATEGY
Strategy is more than a science; it is the application of knowledge to practical life, the development of thought capable of modifying the original guiding idea in the light of ever-changing situations; it is the art of acting under the pressure of the most difficult conditions. - Helmuth Von

STRATEGY
The word strategy comes from the Greek word strategos, meaning literally the leader of the army. Strategy hence is the art of generalship, of commanding the entire war effort, deciding what formulations to deploy, what terrain to fight on, and what maneuvers to use. The greatest strategist was Sun-tzu; author of Chinese classic, The Art of War

STRATEGIES- 12 Moves / 4 Shakes

Forward Integration Backward Integration Horizontal Integration Market Penetration Market Development Product Development Concentric Diversification Conglomerate Diversification Horizontal Diversification Retrenchment Divestiture Liquidation
Integration Strategies

Intensive Strategies

Diversification Strategies

Defensive Strategies

TOWS Matrix (aka SWOT)

Strengths 1. Customer oriented 2. SAMs Club consumers able to buy in bulk 3. Supercenters offer one-stop shopping 4. Satisfaction guaranteed programs promoting customer goodwill 5. Buy from local merchants when possible 6. Stock ownership and profit sharing with employees 7. Leads industry in information technology 8. Ongoing development of its employees 9. Strong community involvement S-O Strategies 1. Advertise more for shopping online (S8, O2) 2. Expand internationally because of similar shopping patterns (S3, O4, O8) Weaknesses 1. No formal mission statement 2. Membership only for SAMS Club 3. Keep poor-performing employees on hand 4. Old-fashioned store policies 5. Few women and minorities in top management

Opportunities 1. Consumers want ease of shopping 2. Internet shopping growing 3. Kmart and other stores struggling 4. Similar shopping patterns worldwide 5. Retail sales expected to increase 6. Environment conscious consumers 7. Elderly population growing 8. Asian market virtually untapped by retail 9. European market untapped by retail Threats 1. Regulation of Wal-Mart pharmacies 2. Small towns do not want entry of WalMart 3. Bad media exposure for Kathie Lee brand 4. Variety of competition nationally, regionally, and locally 5. Substitute products more easily because of intense competition

W-O Strategies 1. Improve employment techniques to hire and keep the best-performing employees (W3, W5, O6)

S-T Strategies 1. Buy from local merchants to promote unity in the community (S5, T4) 2. Build more Supercenters for the increased demand for one-stop shopping (S3, T4)

W-T Strategies 1. Allow consumers to buy in smaller bulk without having membership to SAMS Club (W2, T5)

TOWS Matrix (aka SWOT)

S-O Strategies W-O Strategies 1. Advertise more for shopping 1. Improve employment online (S8, O2) techniques to hire and keep 2. Expand internationally the best-performing because of similar shopping employees (W3, W5, O6) patterns (S3, O4, O8)

S-T Strategies W-T Strategies 1. Buy from local merchants to 1.Allow consumers to buy in promote unity in the smaller bulk without having community (S5, T4) membership to SAMS 2. Build more Supercenters for Club (W2, T5) the increased demand for one-stop shopping (S3, T4)