Académique Documents
Professionnel Documents
Culture Documents
Sam Walton began his career in retailing as a a bias for action in managers and associates
J.C. Penney management trainee. He later leased alike. Store change is constant, as opportunities for
a five-and-dime store in the rural community of improvement were constantly being sought. Within
Newport, Arkansas, in 1945. Five years later, he each store, department managers act as entrepre-
launched Walton 5 & 10, and by 1962, Walton neurs and are encouraged to innovate. CEO David
owned fifteen Ben Franklin stores under the Glass continued Walton's commitment to cost con-
Walton name. Walton envisioned a rapid expan- trol, innovation, greater emphasis on the upscale
sion of chain discount stores in small towns, a con- market, and a customer-centered culture until the
cept rejected by Ben Franklin. As a result, Sam and top job was handed to Lee Scott in 2000. Following
his brother James "Bud" Walton opened the first an incessant stream of criticism alleging such prac-
Wal-Mart Discount City in 1962. Wal-Mart Stores tices as unfair price competition and-employment
reached eighteen stores with sales of $44 million in discrimination, Scott launched a concerted effort
1970, and the company went public. in late 2004 to defend Wal-Mart's record, both as
The company continued to avoid the competition
a successful retailer and a good corporate citizen.
by opening stores in small and midsized towns. The
Wal-Mart is under constant pressure from environ-
company amassed 276 of its own stores with annual
sales in excess of $1 billion by 1980. Three years mental groups and organized labor, and defends
later, the first Sam's Wholesale Club was opened, itself against the most lawsuits of any firm in the
touting a cash-and-carry, membership-only ware- United States.
house format. Rapid growth continued through the Wal-Mart made an interesting move in 2006, low-
1980s and 1990s. ering the prices of 300 generic prescription drugs to
Today, the Bentonville, Arkansas-based firm four dollars for a thirty-day supply. Continued growth
operates almost 7,000 stores—about 60 percent in efforts—especially in international markets—
the United States—including traditional discount are anticipated. A smaller, neighborhood store
stores, supercenters that also sell groceries, and format that carries both grocery and household
Sam's Wholesale Clubs, as well as some Internet items and sales of major appliances such as LCD
sales. Wal-Mart has stores in all fifty states and is the televisions is also in the strategic mix.
leading retailer in Canada and Mexico (through Perspectives
its Wal-Mart de Mexico division). Wal-Mart also
• Zimmerlin, A., "Defending Wal-Mart," Wall Street
operates stores in Germany, Korea, Japan, and Journal, 6 October 2004, B1, B10. CEO Lee Scott vig-
China, as well as other nations in Asia, Europe, and orously defends Wal-Mart against its critics and offers
South America. The heirs of the late Sam Walton insight into the company's philosophy of business.
(Wal-Mart's founder) own about 38 percent of the
• Buckley, N., "Wal-Mart in offensive to boost image,"
company. Financial Times, 9 September 2004, 30. Wal-Mart
It is almost impossible to separate Wal-Mart from has been the brunt of criticism alleging unfair business
its founder. The flamboyant leader was known for and labor practices. CEO Lee Scott announced that the
his charismatic style, emphasis on customer service, company will embark on a concerted effort to put its
and high esteem for Wal-Mart employees. In fact, story across.
Walton is responsible for the first widespread use • Stringer, K., "Wal-Mart's growth surge leaves dead stores
of "associates," a term which connotes more respect behind," Wall Street Journal Online, 15 September
for those who work for the large retailer. This com- 2004. Wal-Mart's success in many cities has resulted
mitment is seen in Wal-Mart's contribution of about in moves to larger stores, often leaving "dead" ones that
6 percent of each associate's salary to the company's used to anchor strip malls unoccupied. This has created
a growing problem for local economic developers.
profit sharing plan. Associates can take their share
in cash or stock when they leave the company. It is • Sandoval, R., "Mexican retailers fight for survival
not unusual for 20-year employees to accumulate against Wal-Mart," Dallas Morning News, 13 March
$500,000 or more in company stock.
More than anything, however, Walton instilled
1
2004. Three large Mexican grocery chains—Gigante, about the cost of medicine and microwaves than the cul-
Comercial Mexicana, and Soriana—attempted to fuse tural incursions of a multinational corporation."
their purchasing units to challenge Wal-Mart's clout, but
Mexico's competition commission rejected their plan.
The stores are appealing the decision. Case Challenges
• Culp, E., "Juggernaut Wal-Mart goes slow in Germany," • It is easy to become enamored with a company when it
Sunday Business (London), 26 September 2004, has enjoyed so much success over the years. What are
Germany is the only company in the world where Wal- Wal-Mart's weaknesses?
Mart is not profitable. Strategists are speaking more of
adapting Wal-Mart's offerings to German consumers • Does Wal-Mart's new neighborhood store format run
in an effort to revive the company's ninety-two stores counter to the cost-cutting emphasis that is at least par-
there. tially responsible for the success of its traditional stores?
Explain.
• Dunn, J., and Vuong, A., "Growth of big-box retailers • What challenges can Wal-Mart expect with its interna-
leads to increase in discrimination lawsuits," Tribune tional expansion efforts?
Business News, 21 September 2004. During the last
decade, Costco, Home Depot, and Wal-Mart expanded
vigorously and hired tens of thousands of hourly employ- Internet Sites of Interest
ees, many of whom later became managers. All three
• Corporate Web site: www.walmart.com
firms, however, have been the targets of class action
lawsuits alleging race and sex discrimination. • Web site of a key competitor: www.target.com
• Lyons, J., "In Mexico, Wal-Mart is defying its critics," • National Retail Federation: www.nrf.com
Wall Street Journal, 5 March 2007. Wal-Mart is per- • DSN Retailing Today: www.dsnretailingtoday.com
forming well in Mexico. Like many of their rural American
counterparts, Mexican shoppers are "more concerned