STRATEGIC HR MANAGEMENT RESEARCH PAPER OF ALPHA GROUP

(FIRST DRAFT)

HR PLANNING AND STRATEGIC CHANGE FOR WAL-MART

Bouffard, Jason F !", #a$%ar& ' ( ", C!)d!* P +!n*a", 'r s*!n S, %ar*, Jason

Southern New Hampsh re !n "ers t# Strate$ % Human Resour%e Mana$ement & Dr' Annette West O%to(er )*+ ),,-

CONTENTS

I- A.s*ra$*

II- /a"0Mar* E+1"o&!! S!"!$* on, Tra n n2, and D!)!"o1+!n*

III- /a"0Mar* Hu+an R!sour$!s P"ann n2

I3- /a"0Mar* P!rfor+an$! 4 Co+1!nsa* on Mana2!+!n*

3- /a"0Mar* 5 S*ra*!2& 4 S*ra*!2 $ C%an2!s

3I- /a"0Mar*6 A S*ra*!2 $ and F nan$ a" Su++ar&

3II- R!$o++!nda* ons

3III- Con$"us on

I7- R!f!r!n$!s

I- A.s*ra$*

The primary objective of this paper is to examine the Human Resources Planning and Strategic Change for Wal- art! the "orld#s largest retailer$ %n this context! the authors analy&e the employee selection! training and development of the company as "ell as studying the performance ' compensation management! strategy evolution and financial status of the firm$ ( SW)T (nalysis is also included in the authors# "or* in order to support their financial research of Wal- art$ This paper concludes "ith recommendations and conclusions and the article finds that the business has a huge gro"th potential and entry to iddle-+ast mar*ets such as

%srael can be ta*en into consideration$ (ccording to the authors! Wal- art has the ade,uate financial strength to ta*e ris*s on the international mar*ers arena$ (dditionally! although the company is very "ell *no"n "ith its ac,uisitions strategy! joint ventures and strategic partnerships are also recommended as alternative strategies for the firm by the authors$ -inally! despite some unethical issues and concerns about social responsibility! Wal- art still seems to be a good buy for the investors "ho are interested in the company#s stoc*s$

II- /a"0Mar* E+1"o&!! S!"!$* on, Tra n n2, and D!)!"o1+!n*

Wal- art has many *ey factors involved that ma*e it such a successful company$ Ho"ever! one element they have is one that every company has and this includes employee selection! training! and development$ These three factors together create the staff that ma*es the customers returning time and time again$ Without the selection! you "ouldn#t have the training! thus! you "ouldn#t have the development so all these things are needed to ma*e a competitive staff$ +mployee selection is an important factor to Wal- art "hen they are hiring their staff$ .iversity is the *ey thing they thin* of in hiring someone and choosing someone to join the multi-million dollar company$ /)ur commitment to diversity remains strong and as part of our continuing efforts to become a leader in diversity "e "ill! continue to ensure that our hiring represents the diversity of our communities! and gro" the percentage of "omen and minorities in our management ran*s$0 1Wal- art$com2$ This is an interesting fact because one of the main complaints "ith Wal- art today is ho" they mistreat and underpay their staff$ Wal- art also prides itself not only in diversity! but

also in young employment$ %t seems as though they li*e young eager staff$ /We engage in job fairs! college recruiting! and internships to increase the diversity of our candidate pool for open positions throughout the company$ We have increased the company3s diversity considerably through our external recruiting efforts$0 1Wal- art$com2$ That is a great opportunity for young job hunters to get their feet "et and experience in the business field$

The next step in the employment process is the employee training and development$ Training is a costly and a very time consuming process in a business$ Companies li*e Wal- art pay their employees to be trained! and they pay the person "ho is training! this is li*e paying double the staff needed$ When the hiring process starts and it comes time to pic*ing out candidates! Wal- art ma*es sure they have the right ones$ They do not "ant to "aste time and money Wal- art has just recently come up "ith a "hole ne" training and development system that is supposed to be effective and much more efficient then their old one$ /Wal- art gre" its training and development program the "ay it gre" the corporation4 from store level up$0 1Spei&er! P$ 52 Wal- art is such a large organi&ation that their training and development needs to be top notch and have great influence on their staff$ (n author of Wal- art and a "or*er said! /Their training and development is ma*ing a significant commitment and it "ill be a radar screen for all other organi&ations$0 The company is using a combination of outside vendors and

systems it has created on its o"n in the overhaul of training and development$ 1Spei&er! P$ 52 Their ne" method of training "as brought to them by 6i*e$ The process goes something li*e this! /+ach segment is three to seven minutes long and gives the associates the basic *no"ledge they need about various products$ (s ne" products are introduced each season! the training is updated and 6i*e customi&ed the program for each retailer$ (ssociates are then ,ui&&ed at the end of the training and as*ed for feedbac*! "hich gets sent bac* to managers and they are able to adjust things if needed$0 1 ar,ue&! P$ 52 This process is an outstanding format7 internet is the ne" "ay of communicating and training$ This type of training is called e-training and is definitely sho"n to be efficient$ )ther companies such as Cingular and 6i*e have ta*en part in this form of

training as "ell$ )ften times "hen ne" associates learn ne" information they have to go bac* and as* a lot of ,uestions and this ta*es a"ay from getting things done$ Wal- art decided to eliminate a step and have this bro*en into the three segments in hopes of learning "hile "or*ing$ Wal- art finds that if you learn one thing at a time and you learn in correctly! you "on#t forget and you can learn at a faster rate in the end$ Wal- art has a reputation of not treating their employee#s right and not being as up to date "ith technology as they could be$ Wal- art is sho"ing improvement "ith their technology by using this e-training$ %t seems they are beginning to touch base "ith their consumers as "ell as their employees$ ( lot of businesses have gone global7 schools have started having classes online! and much more$ 8y Wal- art having one of the ne"est forms of training "ill definitely increase their *no"ledge and attract a lot of other businesses and also stresses ho" they are staying in tact "ith the latest trends! "hich is imperative in the businesses "orld$ This is a step in the right direction for Walart and may ma*e them even bigger than they already are$

III- /a"0Mar* Hu+an R!sour$!s P"ann n2

Than*s to an onslaught of class-action gender and "age-discrimination la"suits! negative press and criticism from unions! Wal- art in 599: embar*ed on a major "or*force management reorgani&ation$ Wal- art! instead of just having ;99 executives in its 8entonville head,uarters to "atch over everything! developed a plan to hire more than <99 human resources managers to "or* in the field$

/We had no more than ;99 field human resources managers "ho all "or*ed from 8entonville$ We "ere more centrali&ed in terms of HR support and "e did not have enough HR support in the field$ We have created five divisional HR leaders! 5= regional HR directors and <:5 field HR managers!0 says Sue )liver! senior vice president of the Wal- art Stores .ivision$ 1Wor*force$com2 Wal- art also created a five-person team of human resources professionals "ith legal bac*grounds "ho are available 5: hours a day seven days a "ee* to handle supervisor#s concerns regarding employment matters$ 1Wor*force$com2$ -or example! store managers can call the team if they need information on ho" to best accommodate a physically disabled "or*er$ (lthough the company#s plan to expand its HR operations loo*s li*e a step in the right direction! critics of Wal- art hope it#s just the first of more measures to come! claiming that Wal- art has needed to provide more HR support and training for its store managers for some time$ /8y not providing any guidance or HR standards! store managers "ere left to their o"n devices!0 says >ocelyn ?ar*in! an attorney representing ;$@ million "omen in a gender discrimination suit against Wal- art$ 1Wor*force$com2$ Ho"ever! Wal- art has stated the changes have not come about because of their critics! but a plan to have HR strategies integrated "ith the business strategies$ /(s "e thin* about the three- to five-year time hori&on! "e *no" "e have to be having the right talent to secure our future$ )ur business strategies "on#t be successful if "e don#t have the right talent! and the only "ay to do that is to ma*e sure that HR is more integrated$0! says )liver$

)ne of the biggest criticisms of Wal- art is that they do not pay their employees a fair "age$ ost of Wal- art#s critics say if the company paid better compensation and

benefits! they "ould have an easier job of attracting and retaining talent$ /We are doing a good job of addressing both compensation and benefits$ We "ant to be an employer of choice! and to do that you need to be mar*et-competitive "ith "ages! "hether the "or*ers are hourly or in management!0 says Sue )liver! senior vice president of the Wal- art Stores .ivision$ /-or our hourly associates "e have an annual revie" process "here "e ta*e an outside vendor! li*e He"itt (ssociates or the Hay Aroup or other compensation firms$ They help us analy&e by mar*et and by store "hether or not our start rates are mar*et-competitive$0 1Wor*force$com2$ (fter much criticism that Wal- art is *no"n for its lo" "ages! Wal- art announced in (ugust 599B they "ere raising starting pay at ;599 of its stores by an average of BC$ The increase "as instituted after conducting a "age survey that suggested increases in "ages "ere needed to remain competitive as an employer$ /These start rate changes! combined "ith our competitive benefits li*e affordable health care! :9;D and profit sharing! and annual incentives for our hourly associates! ma*e us an even more attractive employer! "hich is "hy people stand in line to apply for Wal- art jobs!0 said Susan Chambers! executive vice-president of the Peoples .ivision for Wal- art Stores$ )ne of Wal- art3s major recruitment goals is to ensure a diverse "or*force by attracting ,ualified candidates from differing$ Wal- art3s has developed a EPeople (ction PlanE! "hich sets forth policies for associates! managers! and supervisors to base all employment decisions on the principles of e,ual employment opportunity$ The plan re,uires the recruitment! hiring! training and promotions of all positions in the company!

along "ith all personnel decisions such as compensation! benefits! training! demotion and termination! "ill be done "ithout regard to race! color! religion! gender! national origin! age! or disability$ 1Wor*force$com2$ Fnderstanding that recruiting ne" talent is vital to meeting the demands of continuous gro"th! Wal- art conducts job fairs! college recruiting! and internships to increase the candidate pool for open positions throughout the company$ To help "ith recruiting for management positions! Wal- art directs t"o internship programs designed for year 8( students$ )ne is a ;5-"ee* internship for first-

8( students that assign the intern a specific project related to the needs of the 8(

company$ The other is a six-month internship that is intended for second-year

students$ The program consists of one-month rotations through various divisions that "ill prepare student for management positions "ithin Wal- art stores$ Wal- art believes that promoting from "ithin is more effective because internal candidates have higher success rates in their ne" positions due to familiarity "ith the corporate culture$ 8ecause of this! Wal- art has ta*en up a promote from "ithin philosophy! citing seventy-six percent of Wal- art store management team started at Wal- art in hourly positions$ 1+sight$org2$

I3- /a"0Mar* P!rfor+an$! 4 Co+1!nsa* on Mana2!+!n*

Performance management and compensation management have been the center of controversy for Wal- art associates and critics ali*e$ The issue seems to stem from the large and diverse pool of associates themselves$ There are so many stores located

throughout the country and so many employees 1an estimated ;$< million in-store2$ The vast range of re,uirements for pay and benefits is inevitable$ Wal- art itself reali&es the need for a comprehensive list of options for its employees$ Fnder the Career G 8enefits section of its "ebsite! the company boasts having a /"ide range of choices in our benefits pac*age0$ 1Wal- artstores$com2$ To more easily navigate through these choices! they have divided the benefits into four categories4 y Health$ y oney! y Career! and y Home focus on pay! compensation! incentives! y oney! y Career! y Home! and

living expenses! education and advancement opportunities "ithin the organi&ation as managed through performance and compensation$ Historically! there has been some dispute regarding the level of pay in "hich Wal- art starts off its ne" hires$ The range starting pay is H= to H;5 an hour for store associates! averaging around H;9 an hour$ The company does ac*no"ledge the base pay may not be high! but it declares its incentive programs can offset "ith financial compensation and recognition of high performance$ 1Wal- artstores$com2$ There are incentive programs that recogni&e and pay for team players based on the performance of the company$ They offer discount cards and free membership to Sam#s Club$ The company even provides financial education to its employees to help manage their money! debt! credit! and budgets$ (nother positive compensation is vacation pay! "hich can accumulate for associates based on ho" long they have been employed "ith Wal- art$ This is also an example of the company promoting itself as a career opportunity! not just a temporary job$ The y Career

category describes advancement opportunities "ithin Wal- art and describes ho" they promote development through training programs! internships! and even shareholders#

meetings and company functions$ 1Wal- artstores$com2$ The latter t"o are "ays for associates to learn more about the company and industry! something that goes beyond a single store location! product! and pricing$ Self development is also important to the company as they promote their employees continuing "ith their educations$ y Home

describes benefits as including scholarship programs! education reimbursement! and even a program "hich partners Wal- art Stores! %nc "ith colleges and universities offering on-line courses$ 1Wal- artstores$com2$ The company also offers programs to assist "ith dealing "ith personal or "or* related issues for employees and their family members! child care discounts! and a program for long-term service in "hich tenured associates "ho leave the company can still be eligible to continue receiving some benefits$ (ll in all! the company seems to reali&e the diverse needs of its associates! ne" hires! and possible applicants$ %t outlines and promotes 1though! "ith little detail2 ho" it recogni&es performance and provides financial compensation to those "ho are eligible either by need or via an a"ard program$ Recently! one set of associates rallied against increasingly strict penalties for individuals "ho did not follo" the scheduled shifts$ +mployees at a Wal- art Super Center in -lorida protested outside of the store claiming the establishment "as /cutting bac* on full-time hours! capping "ages and forcing them to "or* increasingly irregular schedules0$ 1Wall Street >ournal2$ The policy itself penali&es employees per number of unexcused absences and further re,uires individuals to call a ;-I99 hotline if the absence is due to illness$ Critics believe this is another attempt by the company to deter individuals "ith chronic health conditions from applying or further push currently employed associates out of the company$ This situation

exemplifies a public impression of Wal- art#s performance management tactics$

The final category listed under benefits is

y Health$ This describes the common

array of health benefits such as medical! dental! life! (.'. 1(ccidental .eath and .ismemberment2! and disability insurance$ %t also offers a fe" not-so-common benefits such as business travel accident insurance! Starbridge! "hich is a medical plan available to employees "ho are "aiting on their eligibility for coverage or "ho are temporary employees! and (flac Cancer %nsurance$ 1Wal- artstores$com2 .espite "hat seems to be a some"hat normal if not diverse collection of healthcare benefits! this category tends to be at the center of the Wal- art compensation controversy$ The company is currently under scrutiny for its ne" /Jalue Plan0 healthcare pac*age "hich promotes lo"er premiums! but much higher deductibles$ 1Wall Street >ournal2$ (gain! critics of the company feel this program is a "ay to cut health-care related expenses as "ell as repress sic*ly individuals from applying$ Wal- art#s retort to this criticism is that it is an option to benefit those associates "ith fe" medical needs by enabling them to save money through lo"er premiums$

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-irst of all! "e have to mention in the beginning that Wal- art implements several strategies to succeed in today#s competitive business "orld$ %n other "ords! Walart has a "ide range of strategies "hich "ere analy&ed by us in detail$ )ne of them is that! Wal- art has established a strong retail brand and a reputation for value of money as a component of its strategies$ oreover! it has

convenience and a "ide range of products all in one store$ 1 ar*etingteacher$com2$

Then! Wal- art implements the strategy of aggressive gro"th$ The company has gro"n a lot in the recent years and has even experienced global expansion$ -or instance! if you can remember the Wal- art#s purchase of the Fnited Dingdom based retailer (S.(! you "ill see that our argument is proved$ (fter that! Wal- art involves its use of information technology to support the international logistics system$ This "ay! the firm can observe ho" individual products are performing country-"ide! store-by-store at a glance$ 8y the "ay! %T is also advantageous for Wal- art#s efficient procurement$ (dditionally! Wal- art implements a focused strategy for human resource management and development$ The employees are really a *ey factor for Wal- art#s business and the company invests time and money in training the "or*ers! as "ell as retaining a development team$ -ollo"ing that! Wal- art has a strategy of selling products across many sectors such as clothing! food and stationary$ This strategy of Wal- art is also sometimes critici&ed by stating that it decreases the flexibility of the company$ oreover! Wal- art has a strategy of *eeping the manufacturing costs lo" in order to decrease the cost of producing many consumer products$ %n relation "ith this strategy! Wal- art implements the outsourcing to lo" cost regions of the "orld$ -urthermore! Wal- art implements the strategy of cutting "ages! cutting health benefits and cutting pension benefits in order to remain competitive$ -or example! it "as stated in an article 1599@2 that Wal- art#s health insurance plans "ere only covering :IC of their employees$ 1>oesschool$blogs$com2$ .efinitely! this implementation is another Wal- art strategy "hich is "idely critici&ed$

(nother Wal- art strategy "as moving to small to"ns and setting stores in these lo" populated places$ This strategy "as implemented by establishing stores so that the distribution centers or "arehouses could ta*e care of the customers$ This strategy "as really very effective in reducing mar*eting and advertising costs$ %t#s also a good idea to mention the distribution strategy of Wal- art$ The distribution systems of Wal- art did seriously provide one of the greatest competitive advantages to the company$ -lexibility of controlling the distribution is also an important strategy here$ (lso! the large-scale of Wal- art#s distribution centers and the technology implementations should also be mentioned here$ 6ext! Wal- art also has a strategy of targeting the lo" and middle-income consumers$ To reali&e this strategy! the prices of goods are al"ays tried to be *ept at minimum and lo"er than the competitors$ %n other "ords! the Wal- art model "or*s aggressively to have the lo"est cost product available to the customer$ 1Kando$net2$ %n addition! it#s a *no"n fact that Wal- art also uses non-(merican "or*ers in order to minimi&e the costs$ .efinitely! this is considered to be very unethical and "rong both "orld"ide and in the F$S$ since Wal- art is ta*ing advantage of foreign "or*ers in s"eatshop conditions$ 1Wal- art"atch$com2$ (lthough this implementation is

prohibited! Wal- art "as detected to employ these employee in some investigations$ Plus! another strategy of Wal- art is that it doesn#t see* to create mar*ets by introducing ne" products$ 1Plastic$com2$ %nstead of that! Wal- art is *no"n to be a mar*et follo"er$ (ccording to some authorities! this is an intelligent strategy of Walart since it minimi&es the ris* of failure$

)ne other strategy of Wal- art is to never depend on a single supplier$ -rom Wal- art#s point of vie"! depending on a single supplier "ould be a very dangerous strategy since it "ould limit the freedom and flexibility of the business$ -or sure! this action "ould also be dangerous because if that supplier becomes unsuccessful! it "ould absolutely affect Wal- art$ 8esides! it#s said that Wal- art successfully navigated changes in store formats! product tastes and the ma*e-up of the "or*force! and it assembled management talent over time in its shift to mass mar*et retailing$ 1Aeorgia State Fniversity! Robinson College of 8usiness! The State of 8usiness aga&ine2$ Thus! "e can also emphasi&e

these actions as a part of Wal- art#s overall strategy$ To continue "ith our list of Wal- art strategies! "e should also stress that the company has an effective use of logistics management as "ell as having an effective inventory control$ (lso it has the bargaining po"er over suppliers$ Then! Wal- art focuses on operations and execution by providing an overaverage ,uality at a very lo"er price$ Here! the company gives importance to efficiency! streamlining operations and supply-chain management$ (fter that! Wal- art also implements the strategy of analy&ing customers in great detail$ The match the inventory of the store "ith the preferences of the clients by analy&ing all sales and they loo* at sales volume! inventory turnover! pac*aging! price points and many other variables by product or group of products in order to create a profile of the buying habits of the customers at the storeGsite level$ 1 ar*etingprofs$com2$ 8y the "ay! Wal- art is careful about *eeping the employee turnover ratio at very lo" levels$ (ccording to the company! a high employee turnover ratio "ould

seriously harm efficiency so they try to *eep it in minimum as much as they can$ -or example! Wal- art#s driver turnover is only @C a year! compared "ith an industry average of ;5@C$ 1The +conomist 6e"spaper L +conomist$com2$ Aoing on "ith Wal- art#s strategies! the firm has a strategy based on having all items in stoc* and providing a very good customer service$ -or example! their regime of customer service re,uires them to spea* to any customer "ho comes "ithin a defined distance$ 1Auardian 6e"s L Auardian$co$u*2$ -inally! in regards to Wal- art#s international strategy! the company usually prefers ac,uisitions "hen going overseas$ -or example! the ac,uisitions in +ngland and exico are very good examples for this statement$ (t last! the firm#s appreciated "ebsite is also used as an effective tool to gain advantage in the international arena$ Spea*ing for the strategic changes of Wal- art! "e can say that some strategic changes for the company are observed both in the domestic F$S$ mar*et and in the international mar*ets$ Concerning Wal- art#s strategic changes in the international arena! "e can say that the company is trying to ma*e a more significant entry into the Chinese mar*etplace through the ac,uisition of a Tai"anese-o"ned supermar*et chain called Trust- art$ 1-astcompany$com2$ -or this ac,uisition! Wal- art "ill compete against the -rench giant Carrefour S($ .efinitely! there are some clear reasons for Wal- art#s mentioned strategic change$ China#s economy is gro"ing more than ;9 percent a year! retail sales surged ;5$M percent in 599@ over the year before! to B$= trillion yuan 1HI:= billion2 and by 5995! it#s predicted that the mar*et could expand to about H5$: trillion$ 1Signonsandiego$com2$ (s you *no"! Wal- art has been successful in Canada! exico

and +ngland until this date$ Ho"ever! they did fail in Hong Dong! South Dorea! >apan! %ndonesia and Aermany since they could not analy&e the culture of these countries as "ell as the particular mar*et characteristics$ (ccording to some authorities! Wal- art#s this strategic change of strictly going into the Chinese mar*et "ill bring success "hile it#s just the reverse for some other authorities$ -ollo"ing that! another strategic change by Wal- art is that the company executives announced this year they "ould greatly increase the number of organic products on their shelves$ 1Westernfarmers$com2$ The firm#s recent introduction of private labeled organic mil* can be provided as an example here$ Then! as another strategic change of Wal- art! "e can say that the company has announced environmentally friendly policies$ Critici&ed intensively for violating the Clean Water (ct and causing air pollution! perhaps "e should thin* that this should not be a surprise strategic change for Wal- art$ -or example! selling clothing made from organic cotton! cutting energy use at ne" stores! offering cheaper health insurances to its employees and promising fuel efficiency "ere only some of the actions ta*en by the company$ 1(lternet$org2$ +specially! "e must consider the healthcare terms for employees as a significant strategic change$ These changes include reduction in the "aiting period for firm health insurance from t"o years of employment to one year! helping part-time employees "ith the ability to cover their children and offering employees a discount on healthy foods sold at company stores$ 1%nsidervie"$com2$ (s a result! you can clearly reali&e that the strategic changes for Wal- art are also numerous "hich can never be underestimated by the company#s competitors$

3I- /a"0Mar*6 A S*ra*!2 $ and F nan$ a" Su++ar&

Wal- art "as founded "ith the opening of its first store in Rogers! (r*ansas! in ;MB5$ Wal- art ,uic*ly began to expand and had t"enty-four stores reaching H;5$B million in sales in ;MB=$ %n the ;M=9s! Wal- art opened its first distribution center and home office in 8entonville! (r*ansas$ This distribution center "ould be one of many that "ould help ma*e Wal- art the retailing giant that it is today$ 8y ;M=@! Wal- art had ;=@ stores in operation$ %n ;MI<! Sam#s Club opened it doors$ The chain consists of more than @=9 clubs in the FS and ;99 %nternational locations$ %n ;MMI! Wal- art reali&ed that the retailing environment "as becoming ever competitive! and they "ould need to respond ,uic*ly$ They began opening Wal- art Super Centers as "ell as Wal- art 6eighborhood ar*ets! both of these! "hich creates a

one stop shopping experience for customers! "hich they love$ .uring the ;MM9s! Walart became the number one retailer in the "orld through its aggressive store opening and pricing strategies$ +arly in ;MM@! Wal- art started its international division and began opening stores internationally$ Wal- art dos not have a formal mission statement! but their philosophy is! /to provide everyday lo" prices "ith exceptional customer service0 1Wal- art! 599B2$ Currently the company is doing extremely "ell in comparison to the retail industry as a "hole$ Today Wal- art has ;!;99 discount stores! ;!M99 Super Centers M@ 6eighborhood ar*ets! and @@9 Sam#s Club locations$ Wal- art is continuing its

strategy of opening many ne" stores! "hich allo"s it to remain extremely competitive$ %n )ctober 599B alone! Wal- art has one Super Center scheduled to open as "ell as

three Sam#s Clubs$ The follo"ing "ill give the reader a brief financial analysis of Walart for fiscal year 599B 1-ebruary <9! 599@ through >anuary ;! 599B2$

S/OT Ana"&s s

( SW)T analysis is a very po"erful tool that can help a company uncover strengths! "ea*nesses! opportunities! and threats that may not be obvious until the analysis is completed$ The follo"ing is the SW)T (nalysis for Wal- art$

S*r!n2*%s ;$ Wal- art is a po"erful retail brand$ %t has a very good reputation for the lo" prices it offers! convenience and the "ide variety of products in offers in its stores$ 5$ The company has gro"n at a fast pace over the past fe" years in the Fnited States "hile expanding globally as "ell$ <$ The company can see ho" individual products are performing at any given moment store-by-store using efficient %nformation Technology$ This allo"s for the >ust in Time delivery system to "or* so "ell for Wal- art$ /!a8n!ss!s ;$ Wal- art is the World#s largest grocery retailer! "hich could cause it to become "ea* in some areas due to the huge span of control$ 5$ Since Wal- art sells a huge variety of products across many sectors! it may not have the flexibility that some of its more focused competitors have$ <$ The company is global! but it only has a presence in a fe" countries$

O11or*un * !s ;$ Wal- art could merge or form strategic alliances "ith other global retailers$ This "ould allo" them to penetrate other countries$ 5$ 6e" locations and store types offer Wal- art the opportunity for further mar*et penetration$ They could develop mall sites or mom and pop li*e operations <$ They could still further expand their Super Centers T%r!a*s ;$ 8ecause Wal- art is a retail leader! the are constantly the target of competition! locally and globally 5$ 8eing a global leader means that you are exposed to political problems in the countries! you operate in$ <$ %ntense price competition is a constant threat for the company$

1 ar*etingTeacher! 599B2

F nan$ a" Ana"&s s Wal- art ratios from a five-year average in comparison to the %ndustry mean4 Ratios Beta Quick Ratio Current Ratio ROA - 5yr. Avg. RO - 5yr. Avg. Revenue! "#$oyee &et 'nco"e! "#$oyee 'nventory (urnover *! Ratio +Reuter,% 2))6Wal-Mart .61 .26 .85 8.94 21.27 184%158 6%647 8.)3 17.37 Industry Mean .77 .31 1.18 6.84 16.39 216%978 9%751 6.27 18.72

Wal- art#s beta is lo"er than the industry average$ This means that there is less ris* in investing in this company than the industry$ The beta is a measure of a stoc*#s price volatility in relation to the rest of the mar*et$ %n other "ords! ho" does the stoc*#s price move relative to the overall mar*etN The closer the beta value is greater to one! the greater the ris*$ The Return on +,uity 1R)+2 has a high return on e,uity$ This means it is capable of generating cash internally$ The higher a company#s return on e,uity compared to its industry! the better! "hich is the case "ith Wal- art$ The Return on (ssets 1R)(2 tells an investor ho" much profit a company generated for each H; in assets$ %n Wal- art#s case! they are generating HI$M: in profit for every H; invested in assets$ While the industry is only generating HB$I: in assets for every H; invested in assets$ Their Price to +arnings Ratio gives an investor an idea of ho" much the mar*et is "illing to pay for a stoc* depending on its earnings$ The higher the PG+ the more the mar*et is "illing to pay for the company#s earnings$ The lo"er the PG+ the less the mar*et is "illing to pay for the company#s earnings$ %n Wal- art#s case! for every H;=$<= the investor pays for the company! they can expect to earn H;$99 in return$ The ,uic* ratio "as designed to measure a company#s immediate assets against its current liabilities$ This measure gives financial institutions an idea of ho" much cash can be created against the current liabilities$ Wal- art#s Kuic* Ratio is lo"er than the industry$ -or every H; in liabilities! Wal- art is able to produce H$5B in cash$ The Current Ratio! is another test of a company#s financial strength$ This method calculates ho" many dollars in assets are li*ely to be converted to cash in a given year in order to pay debts that may come due during the same year$ Wal- art#s li,uidity issue is belo" ;! "hich under normal circumstances "ould be a concern$ 8ecause Wal- art is in the retail

business most of its inventory could easily be sold and converted to cash$ The Revenue per employees is lo"er than industry average and the net employee income is lo"er "hen compared to the industry average$ The inventory turnover is above industry average! "hich means Wal- art is turning there inventory over I$9< times "hile the industry is turning theirs over only at B$5= times in the same time period$ 3II- R!$o++!nda* ons Wal- art has a big future in terms of gro"th potential$ They could extend their global presence by entering the iddle +ast$ %n its earlier expansion into international

mar*ets! Wal- art follo"ed the strategy of ac,uiring a chain in the particular country or setting up a joint venture$ This strategy is "or*ing very "ell for them! and they should continue to pursue it$ Wal- art#s concept of purchasing an existing chain has proved very successful$ %n 599B! Wal- art#s international operations had retail sales of HB5!=;M an ;;$<C increase over the previous year 1Wal- art Stores 599B2$ Wal- art has the resources and finances in place to increase their international presence$ They could penetrate %srael by ac,uiring 8lue S,uare! "hich has a corporate culture similar to Wal- art$ Wal- art needs to continue penetrating mar*ets by creating joint ventures or ac,uiring retail companies that have already established themselves$ )nce they do this! they can implement their advanced %T systems do continue to deliver their products just in time to local tastes of the customers$

3III- Con$"us on Wal- art is a huge presence globally$ With their current international September 599B month end reporting gro"th of <5C increase from the previous year! there is still plenty of mar*ets for them to penetrate! thus! increasing shareholder value$ This is an excellent company to invest in$ (t this point! % "ould invest in the company aggressively due to their current expansion and earning per share over the next year$ any analysts

predict that Wal- art "ill have earnings of H<$5B per share 1Oahoo 599B2$ %n -iscal Oear 599B! Wal- art reported sales of H<;5!:5= million dollars$ (fter revie"ing the financial statements of the company! as an investor! % "ould not hesitate to immediate purchase their stoc*$

I7- REFERENCES Ceniceros! R$ 1599:2$ /8ias suit against Wal- art gets class action status0$ 8usiness %nsurance! Jol$ <I! %ssue 5B$ -eatherstone! ?$ 1599@2$ /%s Wal- art Really Aoing AreenN0 The Website of (lter6et$ http4GG"""$alternet$orgGenvirohealthG5III5G Harris! .$S$ 159952$ /(gility in (ction$0 Aeorgia State Fniversity! Robinson College of 8usiness$ The State of 8usiness aga&ine$ Jol$ PJ$ 6o$5 http4GG"""$robinson$gsu$eduGmaga&ineGsummer5995Gagility$html Hudson! D$ 1599B2$ /Wal- art to Trim )ptions for Health Coverage$0 Wall Street >ournal! +astern +dition! 6e" Oor*! 6O$ %nsiderJie"$ 1599:2$ /Wal- art changes its healthcare terms for employees$0 The Website of %nsiderJie"$ http4GG"""$insidervie"$comGvie"G"almartQemployeeQhealthcare$html >ohnson! ?$.$ 1599B2$ /Wal- art#s China +xpansion Strategy0$ The Website of -astCompany$ http4GGblog$fastcompany$comGarchivesG599BG;9G;=G"almartsQchinaQexpansionQstrategy$ht mlNpartnerRrss ?a"s!$-$ 1599B2$ /Wal- art Sustainability Strategy .ra"ing The Website of Western -arm Press$ http4GG"esternfarmpress$comGne"sG;99@9B-"almart-strategyG ore Crossfire0$

ar*etingProfs ??C$ 1599:2$ /Wal- art ar*eting Strategy Through Time$0 The Website of ar*etingProfs ??C$ http4GG"""$mar*etingprofs$comGeaG,stQ,uestion$aspN,stidR;:M= ar*eting Teacher ?td$ 1599B2$ /SW)T (nalysis Wal- art$0 The Website of ar*eting Teacher ?td$ http4GG"""$mar*etingteacher$comGSW)TG"almartQs"ot$htm ar,ue&! >essica$ 1599B2$ /Critics Remain Wary of Wal- art3s Plans0$ The Website of Wor*force anagement http4GG"""$"or*force$comGsectionG9MGfeatureG5:G:=G=9Gindex$html ar,ue&! >$ 1599B2$ /-aced "ith high turnover! retailers boot up e-learning programs for ,uic* training$0 http4GG"eb$ebscohost$com

ar,ue&! >$ 1599B2$ / ore HR in Store at Wal- art4 ( K'( With Sue )liver0$ The Website of Wor*force anagement http4GG"""$"or*force$comGsectionG9MGfeatureG5:G:=GB@Gindex$html ar,ue&! >$ 1599@2$ /Wal- art Thro"s ?ifeline to anagers0$ The Website of Wor*force anagement http4GG"""$"or*force$comGsectionG99GarticleG5:G99GM:$html )lson! T$ 1599@2$ /What#s good for Wal- art is good for Wall Street$0 )lson )nline$ http4GGjoesschool$blogs$comGolsononlineG599@G9=Gindex$html Plastic$ 1599@2$ /The Worries of Wal- art0$ The "ebsite of Plastic! plastic$com$ http4GG"""$plastic$comGcomments$html7sidR9:G;5G9<G9M55@55M7cidR=@ Reuters$ 1599B2$ The Website of Reuters - Reuters$com$ http4GGreuters$com Sams Club$ 1599B2$ The Website of Sams Club - SamsClub$com http4GGsamsclub$com Seth! ($ 1599<2$ /Safe"ayN %t#s a "ee*#s ta*ings for Wal- art$0 The Website of Auardian 6e"s and edia ?imited$ http4GG"""$guardian$co$u*GprintG9!<I@I!:@IB:B;-;955=;!99$html Sign)nSan.iego! ($ 1599B2$ /Wal- art to buy retail chain "ith ;99 hypermar*ets in China for H; billion$$0 The Website of Sign)nSan.iego$ http4GG"""$signonsandiego$comGne"sG"orldG599B;9;=-9@5B-"al-mart-china$html Spei&er! %$ 1599B2$ /Wal- art http4GG"eb$ebscohost$com training goes into "holesale overhaul$0

The +conomist 6e"spaper ?imited$ 1599;2$ /Wal around the "orld0$ The Website of +conomist 6e"spaper ?imited$ http4GG"""$economist$comGbusinessGdisplayStory$cfmNStoryQ%.RIM@III The Kand) 8log$ 1599B2$ /The ne" claim4 Wal- art monopsony bad for economy$0 The Kand ) 8log4 -ree ar*ets! -ree People$ http4GG"""$,ando$netGdetails$aspxNentryR::I; Wal- art$ 1599B2$ The Website of Wal- art - Wal- art$com http4GG"almart$com Wal- art -acts$ 1599:2$ /Wal- art .etails Progress To"ard 8ecoming a ?eader in +mployment Practices0$ The "ebsite of Wal- artfacts$com http4GG"""$Wal- artfacts$comGarticlesG<=::$aspx

Wal- art Stores$ 1599B2$ /8enefits! y Career$0 The Website of Wal- art Stores$ http4GG"almartstores$comGAlobalW StoresWebGnavigate$doNcatgRB9M Wal- art Stores$ 1599B2$ /8enefits! y Health0 The Website of Wal- art Stores$ http4GG"almartstores$comGAlobalW StoresWebGnavigate$doNcatgRB9B Wal- art Stores$ 1599B2$ /8enefits! y Home$0 The Website of Wal- art Stores$ http4GG"almartstores$comGAlobalW StoresWebGnavigate$doNcatgRB9I Wal- art Stores$ 1599B2$ /8enefits! y oney$0 The Website of Wal- art Stores$ http4GG"almartstores$comGAlobalW StoresWebGnavigate$doNcatgRB9= Wal- art Stores$ 1599B2$ /eSight .irectory of .isability-friendly Companies0$ The Website of eSight Careers 6et"or*$ http4GG"""$esight$orgG)vervie"8yType$cfmN roomRn'idR9$9'ovidR;<;9'typeRprofile'ovrmRnB Wal- art Watch$ 1599@2$ /Person of the Wee*4 Stephan Aoet& and Hema S"aminathan$0 The Website of Wal- art Watch$ http4GG"almart"atch$comGblogGarchivesG personQofQtheQ"ee*QstephanQgoet&QandQhemaQs"aminathanG Wall Street >ournal$ 1599B2$ /Wal- art +mployees Protest )utside Store$0 Wall Street >ournal! +astern +dition! 6e" Oor*! 6O$ Oahoo -inance$ 1599B2$ The Website of Oahoo -inance$ http4GGfinance$yahoo$com