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Angle Bourgoin
Overview of WAL-MART
Presentation
Overview of WAL-Mart
History
Stocks
Stock Information
The Divisions
BCG
Their Mission and Vision Statement
New Mission and Vision Statement
External Opportunities and Threats
CPM
EFE
Internal Strengths and Weaknesses
IFE
Analysis
SWOT Matrix
SPACE
IE Matrix
Grand Strategy Matrix
Key Ratios
Different Strategies
QSPM
Decisions
EPS/EBIT Analysis
Implementation
Evaluation
Update!
References
Questions?
Overview of Wal-Mart
History of Wal-Mart
In 1945 Sam Walton
opened the first Ben
Franklin franchise in
Newport Arkansas and
operated them with his
wife, Helen and brother,
Bud.
These were small chains
that were very successful.
In November of 1962
Wal-Mart was opened.
Wasnt until mid 1970s
that Wal-Mart began to
grow.
April 19, 2006
History
1987
2 new concept
implemented
Hypermarkets, which
sell everything
including food
Supercenters which are
scaled down
supermarkets
Also David Glass named new
CEO of Wal-Mart
WAL-MART
Important People
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.
April 19, 2006
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
WMT vs Industry
WMT 5 years
WMT 30 years
Stock Splits
2:1 Stock Splits
Shares
Market Price
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
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
8.60%
11.00%
N/A
11.50%
9.60%
312.43B
55.68B
19.70B1
52.62B
3.63B
23.06%
12.37%
N/A
32.15%
28.72%
EBITDA (ttm):
23.25B
2.06B
N/A
5.73B
268.09M
5.93%
2.79%
N/A
8.22%
6.37%
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
= As of 2005
Mission Statement
Divisions of WAL-MART
McLanes
Neighborhood
Markets
International
Sams Club
Supercenters
Distribution Centers
McLanes
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.
Neighborhood Markets
Began in 1998
Located in market with
Wal-Mart Supercenters
Offers customer
groceries,
pharmaceuticals &
general merchandise.
Provides 28,000 items to
customers.
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.
April 19, 2006
Sams 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.
Worldly Stores
DISCOUNT
STORES
SUPERCENT
ERS
Argentina
11
Brazil
12
213
China
20
Germany
94
Korea
15
Mexico
472
75
50
33
United Kingdom
248
10
International
Totals
942
238
71
37
Country
Canada
Puerto Rico
SAM'S
CLUBS
NEIGHBORHOOD
MARKETS
1568
1258
525
49
Grand
Totals
2510
1496
596
86
BCG
External Factors
Threats
Buy American policy
Target
A solution to the monopoly that Wal-Mart has created
April 19, 2006
EFE
Key External Factors
Weights
Rating
0.0 to 1.0
1 to 4
Weighted Score
Opportunities
0.1
0.3
0.14
0.56
0.16
0.64
0.11
0.33
0
Threats
0.15
0.45
Target
0.14
0.42
0.2
0.8
Totals
3.5
Internal Factors
Weaknesses
IFE
Key Internal Factors
Weights
Rating
0.0 to 1.0
1 to 4
Weighted Score
Internal Strengths
Stores in all 50 states
0.09
0.36
0.1
0.3
0.1
0.3
0.08
0.24
0.13
0.52
0.09
0.27
0
Internal Weaknesses
No formal mission statement
0.1
0.3
0.13
0.39
0.08
0.16
0.1
0.3
Totals
3.14
SWOT
Increase the amount of hypermarkets, supermarkets
in 50
states as well as connect to the private satellite
systems(S2, SO)
CPM
Wal-Mart
Critical Success factors
Weights
Ratin
g
0.0 to
1.0
1 to 4
Target
Weighted
Score
Ratin
g
Kmart
Weighted
Score
1 to 4
Ratin
g
Weighted
Score
1 to 4
Market Share
0.03
0.09
0.06
0.06
Inventory System
0.02
0.06
0.06
0.04
Financial Position
0.04
0.08
0.08
0.12
Product Quality
0.05
0.15
0.15
0.1
Consumer Loyalty
0.03
0.09
0.06
0.06
Sales Distribution
0.02
0.06
0.06
0.04
Global Expansion
0.03
0.09
0.06
0.06
Organization Structure
0.02
0.06
0.06
0.04
Production Capacity
0.01
0.03
0.02
0.02
Advertising
0.25
0.75
0.5
Customer Service
0.05
0.15
0.15
0.15
Price Competition
0.4
1.2
0.8
0.8
0.05
0.15
0.1
0.15
Management Experience
Totals
3.21
2.41
2.14
SPACE
IE Matrix
Key Ratios
Last Trade:
Trade Time:
45.54
Day's Range:
4
a
y
'
s
R
a
n
g
e
:
5
.
4
0
-
52wk Range:
4:00PM ET
45.40 - 45.74
4
5
.
7
4
42.31 - 50.87
4
5
Change:
Prev Close:
45.82
Open:
45.62
Bid:
Ask:
1y Target Est:
2
w
k
0.28 (0.61%)
56.47
Volume:
12,143,600
11,944,400
Market Cap:
189.78B
R
a
n
g
e
:
5
0
.
8
7
o
l
u
m
e
:
v
g
V
o
l
N/A
N/A
2
.
3
1
2
,
1
4
3
,
6
0
0
1
,
9
4
4
,
4
0
0
P/E (ttm):
(
3
m
)
a
r
k
e
t
EPS (ttm):
1
C
a
p
:
P/
8
9
.
7
8
B
E
(
t
t
m
)
6
.
9
8
E
2.
P
S
(
t
t
m
)
6
8
Di
0.
v
6
7
&
Y
i
e
l
d
:
16.98
(
1
.
5
0
%
)
2.68
0.67 (1.50%)
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
QSPM
More hypermarkets/
supermark
et
Wal-Mart
Key factors
Weight
External
AS
TAS
1 to 4
AS
TAS
Buy American
AS
1 to 4
TAS
1 to 4
0.3
0.2
0.2
0.14
0.56
0.56
0.42
0.16
0.64
0.48
0.48
0.11
0.33
0.33
0.22
0.15
0.45
0.45
0.6
Target
0.14
0.56
0.56
0.42
0.2
0.8
Fortune's number one Most Admired Company and largest company in nation
N/A
Internal
1 to 4
N/A
1 to 4
1 to 4
0.09
0.36
0.36
0.36
0.1
0.3
0.4
0.3
0.1
0.3
0.4
0.3
0.08
0.24
0.32
0.24
0.13
0.52
0.52
0.39
0.09
0.27
0.27
0.18
0.1
0.3
0.3
0.3
0.13
0.39
0.39
0.39
0.08
0.16
0.16
0.16
0.1
0.3
0.3
0.3
1
6.78
5.26
Decisions
We decided to add more hypermarkets
based on the QSPM even though the
numbers were close for both strategies
EPS/EBIT Analysis
EPS/EBIT
In $Millions
Common Stock
Financing
High
EBIT (12,719,000 in 2003)
Debt Financing
Low
High
Low
635,950
435,950
635,950
435,950
31,798
21,798
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
4,453,000
4,453,000
13,964,000
13,964,000
5.68
5.64
3.65
3.65
Interest 5%
EBT
# Shares Outstanding
EPS
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
Evaluation
Quarterly Reports
Yearly Reports
Store growth report
Annual Sales report
Key Ratios
Stock prices in comparison to competitors
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 didnt want to
lose a case for discrimination because would hurt WalMarts bottom line. But as the judge rightly ruled,
companies that do business on as large a scale as WalMart 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.
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 Hs
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.
In the News
Military Families Outreach Project
Partnership with Sesame Workshop to
support children of military families.
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.
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 Gauvins presentation on Krogers
http://www.target.com
April 19, 2006
Questions?