Business Strategy Retail Wal Mart
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- Pages: 15
Industry Analysis - Retail Company – Wal-Mart Save money. Live better. Group 1 Kalpesh Agarwal Chetan Mahindra
- PGPM508_01 - PGPM508_23
Sivaram Gunavel Jaspal Singh
- PGPM508_12 - PGPM508_47
Overview of Retail Industry
80% 14%
6%
Speciality Retail Multiline Retail Catalog and Internet Retail
Retail is sale of goods to end user, not for resale but for use and consumption Global Retail Industry – Revenue $11,326.8 billion (2008), CAGR – 4.1% (2004-2008) Global Retail Industry – Revenue Forecast (2013) $14,347.3 billion – Increase of 26.7% over 2008 Industry Group Segmentation Specialty Retail Multiline Retail Catalog and Internet Retail
Overview of Retail Industry Global Retail Industry Group Value
Global Retail Industry Group Value - Forecast
Global Retail Industry Group Value
Global Retail Industry Group Value Forecast
12000
0.07 11395
11500
0.05
10794.2 10199.5
0.03
9646.1
0.02
9500
0.01
6.00%
14000
0.04
10500 10000
16000
0.06
12000 $ billion
$ billion
11000
11326.8
11326.8
11708.6
12284.6
12944.4
13648
14347.3
5.00% 4.00% 3.00%
10000
2.00% 8000
1.00%
9000
0
6000
0.00%
8500
-0.01
4000
-1.00%
2004
2005
2006
2007
2008
2008
2009
2010
Year
$ billion
2011
2012
Year
% Growth
$ billion
% Growth
2013
Global Retail Market Segmentation Global Top 10 Retailers
Global Market Segmentation Rest of World 6.90% Asia Pacific 26.50%
North & South America 32.60%
Europe 34.00%
Top 10 Global Retailers Rank Name of Company Country of Origin 1 Wal-Mart US 2 Carrefour S.A France 3 The Home Depot US 4 Tesco UK 5 Metro AG Germany 6 The Kroger Co. US 7 Target Corp. US 8 Costco Wholesale Corp. US 9 Sears Holding Corp. US 10 Schwarz Unternehmens Germany Source: 2008 Global Power of Retailing (Deloitte)
Porter’s Five Force Analysis
Less
SUPPLIERS POWER Highly dependent on the Industry
Very High Varies from Low to High based on Geography
NEW ENTRANTS Diversification/ M&A . Easy to Enter but tough to survive
COMPETITION Major Player: WalMart, Costco, Carre four, Home Depot
SUBSTITUTES Departmental Store /General Merchandising Store
Moderate
CUSTOMERS POWER Less bargaining Power but No Switching Cost
Moderate
Retail Opportunities
Opening: Market is just beginning its Retail story Peaking: Market is developing quickly Declining: Market is big, new entrants getting tighter Closing: Market have high penetration
Company Over view – Wal-Mart Mission of Wal-Mart SAVING PEOPLE MONEY SO THEY CAN LIVE BETTER Largest Retailer – Revenue $405,607 million Business Segment Wal Mart Stores Sam’s Club International Segment
SWOT • • • •
STRENGTHS Powerful Retail Brand, Large scale of operations worldwide One Stop Retail destination Strategic business programs Efficient working capital Management
OPPORTUNITY Global Food Safety Initiative Standard Increasing demand of Online sales Increasing opportunity in Growing economy
• • • •
WEAKNESS Self Cannibalization Involvement in numerous legal issues Continuous Product Recall Community Relations Problem
THREATS Intense competition Price matching program by Target Foreign currency fluctuation
Value Chain
Salient Features – Wal-Mart Winning Strategy
Strong Distribution, Inventory Management System Differentiated Pricing Cost Advantage Strategy IT Advantage
3 Basics beliefs of the Company Respect for the Individual Service to the Customer Striving for Excellence
Corporate Strategy
Dominance in Retail Market Expansion in US and International Market Creation of Positive Brand and Company Recognition Branching into new sectors of Retail
Key Strategic Moves by Wal-Mart
Acquisition of McLane Company in year 1990 Diversification in Grocery and Food Retailing Razor thin margin – provides Great Value to customer Acquiring of PACE club of K Mart
Sustainability of Wal-Mart Strategy
Leader in discount Retailing Size and Volume of Wal-Mart gives itself advantage over its suppliers and competitors Extensive distribution and network Discounting Retailing format to work in International Market as not much competition Extensive IT infrastructure provides leverage over competitors
Recommendation
Must adopt a friendlier corporate attitude It needs to relax its anti-unionization policy Improve public perception that Wal-Mart can destroy communities International expansion should be done with the help of Local retailers
- PGPM508_01 - PGPM508_23
Sivaram Gunavel Jaspal Singh
- PGPM508_12 - PGPM508_47
Overview of Retail Industry
80% 14%
6%
Speciality Retail Multiline Retail Catalog and Internet Retail
Retail is sale of goods to end user, not for resale but for use and consumption Global Retail Industry – Revenue $11,326.8 billion (2008), CAGR – 4.1% (2004-2008) Global Retail Industry – Revenue Forecast (2013) $14,347.3 billion – Increase of 26.7% over 2008 Industry Group Segmentation Specialty Retail Multiline Retail Catalog and Internet Retail
Overview of Retail Industry Global Retail Industry Group Value
Global Retail Industry Group Value - Forecast
Global Retail Industry Group Value
Global Retail Industry Group Value Forecast
12000
0.07 11395
11500
0.05
10794.2 10199.5
0.03
9646.1
0.02
9500
0.01
6.00%
14000
0.04
10500 10000
16000
0.06
12000 $ billion
$ billion
11000
11326.8
11326.8
11708.6
12284.6
12944.4
13648
14347.3
5.00% 4.00% 3.00%
10000
2.00% 8000
1.00%
9000
0
6000
0.00%
8500
-0.01
4000
-1.00%
2004
2005
2006
2007
2008
2008
2009
2010
Year
$ billion
2011
2012
Year
% Growth
$ billion
% Growth
2013
Global Retail Market Segmentation Global Top 10 Retailers
Global Market Segmentation Rest of World 6.90% Asia Pacific 26.50%
North & South America 32.60%
Europe 34.00%
Top 10 Global Retailers Rank Name of Company Country of Origin 1 Wal-Mart US 2 Carrefour S.A France 3 The Home Depot US 4 Tesco UK 5 Metro AG Germany 6 The Kroger Co. US 7 Target Corp. US 8 Costco Wholesale Corp. US 9 Sears Holding Corp. US 10 Schwarz Unternehmens Germany Source: 2008 Global Power of Retailing (Deloitte)
Porter’s Five Force Analysis
Less
SUPPLIERS POWER Highly dependent on the Industry
Very High Varies from Low to High based on Geography
NEW ENTRANTS Diversification/ M&A . Easy to Enter but tough to survive
COMPETITION Major Player: WalMart, Costco, Carre four, Home Depot
SUBSTITUTES Departmental Store /General Merchandising Store
Moderate
CUSTOMERS POWER Less bargaining Power but No Switching Cost
Moderate
Retail Opportunities
Opening: Market is just beginning its Retail story Peaking: Market is developing quickly Declining: Market is big, new entrants getting tighter Closing: Market have high penetration
Company Over view – Wal-Mart Mission of Wal-Mart SAVING PEOPLE MONEY SO THEY CAN LIVE BETTER Largest Retailer – Revenue $405,607 million Business Segment Wal Mart Stores Sam’s Club International Segment
SWOT • • • •
STRENGTHS Powerful Retail Brand, Large scale of operations worldwide One Stop Retail destination Strategic business programs Efficient working capital Management
OPPORTUNITY Global Food Safety Initiative Standard Increasing demand of Online sales Increasing opportunity in Growing economy
• • • •
WEAKNESS Self Cannibalization Involvement in numerous legal issues Continuous Product Recall Community Relations Problem
THREATS Intense competition Price matching program by Target Foreign currency fluctuation
Value Chain
Salient Features – Wal-Mart Winning Strategy
Strong Distribution, Inventory Management System Differentiated Pricing Cost Advantage Strategy IT Advantage
3 Basics beliefs of the Company Respect for the Individual Service to the Customer Striving for Excellence
Corporate Strategy
Dominance in Retail Market Expansion in US and International Market Creation of Positive Brand and Company Recognition Branching into new sectors of Retail
Key Strategic Moves by Wal-Mart
Acquisition of McLane Company in year 1990 Diversification in Grocery and Food Retailing Razor thin margin – provides Great Value to customer Acquiring of PACE club of K Mart
Sustainability of Wal-Mart Strategy
Leader in discount Retailing Size and Volume of Wal-Mart gives itself advantage over its suppliers and competitors Extensive distribution and network Discounting Retailing format to work in International Market as not much competition Extensive IT infrastructure provides leverage over competitors
Recommendation
Must adopt a friendlier corporate attitude It needs to relax its anti-unionization policy Improve public perception that Wal-Mart can destroy communities International expansion should be done with the help of Local retailers
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