By: Megan Dow, Kristin Belanger, and Angèle Bourgoin.
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Transcript of By: Megan Dow, Kristin Belanger, and Angèle Bourgoin.
By: Megan Dow, Kristin Belanger, and Angèle Bourgoin
April 19, 2006
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?
April 19, 2006
Overview of Wal-Mart• There are 4 different segments• Wal-Mart Stores- sales amounted to 64.3%
– Discount Stores- 1,568 U.S– Supercenters- 1,258 U.S– Neighborhood Markets- 49 stores U.S
• Sam’s Club- sales amounted to 13.0%– 525 stores U.S– Is a member only, cash and carry operations
• International- sales amounted to 16.7%– Discount stores- 942 Sam’s Clubs- 71– Supercenters- 238 Neighborhood Market- 37
• Other- amounted to 6.1%– McLane is the nation’s largest distributor of food and merchandise to
convenience stores
April 19, 2006
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.
• Wasn’t until mid 1970’s that Wal-Mart began to grow.
• 1st IPO in 1970. • Then 100 shares were
worth $1,650 dollars and now the same 100 shares are worth more than $6 million dollars.
• In 1999 named #1 stock on the Dow.
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
• In 1992 Sam Walton Died and in 1996 Bud Walton died. – In 1995 Wal-Mart’s
Annual Report was dedicated to Bud.
• New president and CEO H. Lee Scott states that “While our history is rich with success, there’s no question that our best years are yet to come.”
April 19, 2006
Important People
• Co-founders, Sam and James “Bud” Walton started 1st Wal-Mart in Rogers, Arkansas, 1962
• David Glass was named president 1984, in 1988 he became chief executive officer
• S. Robson Walton named chairman of the board in 1992• President and CEO in 2000- H.Lee Scott• Vice President- Laura Philips
April 19, 2006
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
April 19, 2006
Stock Splits
2:1 Stock Splits Shares
Cost Per Share
Market Price on Split
DateRecord
DateDistribute
d
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
April 19, 2006
StocksWMT COST Pvt1 TGT Industry
Market Cap: 193.36B 26.06B N/A 45.01B 1.84B
Employ ees: 1,800,000 60,500 133,0001 338,000 18.62K
Qtrly Rev Growth (yoy): 8.60% 11.00% N/A 11.50% 9.60%
Revenue (ttm): 312.43B 55.68B 19.70B1 52.62B 3.63B
Gross Margin (ttm): 23.06% 12.37% N/A 32.15% 28.72%
EBITDA (ttm): 23.25B 2.06B N/A 5.73B 268.09M
Oper Margins (ttm): 5.93% 2.79% N/A 8.22% 6.37%
Net Income (ttm): 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
COST = Costco Wholesale Corp.
Pvt1 = Kmart Corporation (subsidiary or division)
TGT = Target Corp.
Industry = Discount, Variety Stores
1 = As of 2005
April 19, 2006
Their Mission Statement
• They don’t have a formal mission statement• They are most interested in the customers needs• The culture consists of
– Respect for the individual– Service to our customers– Strive for excellence
• If they did have a formal mission statement it would be,
“To provide quality products at an everyday low price
and with extended Customer service…always.”
April 19, 2006
Their Vision Statement
"The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience."
- Sam Walton (1918-1992)
April 19, 2006
New Mission Statement • Our mission is to provide goods and services for our
customers at everyday low prices. With our innovative technology we strive to have merchandise ranging from food, clothes, music, etc. on hand 24 hours a day 7 days a week. We are committed to the growth of Wal-Mart and challenge ourselves to be better. We strive to have the best, be the best, and provide quality and assurance to our customers. Our employees are a huge asset to our company, and we would not be the company we are today without them. They have a huge impact on what our company was, what it is, and what it will be. We also feel it is important to give generously to those who are less fortunate than others, which is why Wal-Mart donates thousands of dollars a year to different organizations.
April 19, 2006
New Vision Statement
• Our vision is to provide good quality and services to our customers while remaining the market leader and striving daily to be the most admired company.
April 19, 2006
Divisions of WAL-MART
• McLane’s• Neighborhood
Markets• International • Sam’s Club• Supercenters• Distribution
Centers
April 19, 2006
McLane’s
• 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.
April 19, 2006
Neighborhood Markets
• Began in 1998• Located in market
with Wal-Mart Supercenters
• Offers customer groceries, pharmaceuticals & general merchandise.
• Provides 28,000 items to customers.
April 19, 2006
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
Sam’s 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.
• Bulk displays and name brand merchandise.
April 19, 2006
Worldly Stores
CountryDISCOUNT
STORESSUPERCEN
TERS
SAM'S CLUB
SNEIGHBORHOOD
MARKETS
Argentina 0 11 0 0
Brazil 0 12 8 2
Canada 213 0 0 0
China 0 20 4 2
Germany 0 94 0 0
Korea 0 15 0 0
Mexico 472 75 50 0
Puerto Rico 9 1 9 33
United Kingdom 248 10 0 0
International Totals 942 238 71 37
April 19, 2006
Stores in US and World
U.S. Totals 1568 1258 525 49
Grand Totals 2510 1496 596 86
April 19, 2006
Key External Factors
• Opportunities– Agreement with Berkshire Hathaway, Inc.
acquired McLane Company, Inc.– Fortune’s number one Most Admired Company
and largest company in nation– World’s largest private satellite
communication systems– Ron Brown Corporate Leadership Award
• Threats– “Buy American” policy– Target– A solution to the monopoly that Wal-Mart has
created
April 19, 2006
EFE
Key External Factors Weights Rating Weighted Score
0.0 to 1.0 1 to 4
Opportunities
Agreement with Berkshire Hathaway, Inc. acquired McLane Company, Inc. 0.1 3 0.3
Fortune’s number one Most Admired Company and largest company in nation 0.14 4 0.56
World’s largest private satellite communication systems 0.16 4 0.64
Ron Brown Corporate Leadership Award 0.11 3 0.33
0
Threats
“Buy American” policy 0.15 3 0.45
Target 0.14 3 0.42
A solution to breaking the monopoly Wal-Mart has created 0.2 4 0.8
Totals 1 3.5
April 19, 2006
Key Internal Factors• Strengths
– Stores in all 50 states– New concepts:
• Hypermarkets, supermarkets– Wide variety of merchandise– Nationally advertised merchandise– Limited lines of merchandise – made in USA– Point-of-sale bar code scanning– Great employee benefits
• Weaknesses– No formal mission statement– Management resisted putting women on board of
directors– Hiring illegal minorities to clean– Growth for employees only in division
April 19, 2006
IFEKey Internal Factors Weights Rating Weighted Score
0.0 to 1.0 1 to 4
Internal Strengths
Stores in all 50 states 0.09 4 0.36
New Concepts - Hypermarkets, supermarkets 0.1 3 0.3
Wide variety of merchandise 0.1 3 0.3
Nationally advertised merchandise 0.08 3 0.24
Point-of-sale bar code scanning 0.13 4 0.52
Great Employee Benefits 0.09 3 0.27
0
Internal Weaknesses
No formal mission statement 0.1 3 0.3
Management resisted putting women on board of directors 0.13 3 0.39
Hiring illegal minorities 0.08 2 0.16
Growth for employees only in its division 0.1 3 0.3
0
Totals 1 3.14
April 19, 2006
SWOTIncrease the amount of hypermarkets, supermarkets in 50 states as well as connect to the private satellite systems(S2, SO)
Create mission statements for all of the acquired companies and the different divisions of Wal-Mart (O1, W1)
Use the Most Admired Company award as leverageto advertise the wide variety of merchandise (S3, O2)
Use the Buy American policy to advertise nationally how American Wal-Mart is (S3, T1)
Increase minority sales through buying minority products and selling them in discount stores (T1, W3)
Use point-of-sale bar code scanning as leverage over competitors like Target (S5, T2)
Offer more merchandise that is not apart of the "Buy American" policy to attract more customers (S3, T1)
Find a solution to the monopoly that has been created and come up with a new concept to beat the problem. (S2, T3)
April 19, 2006
CPMWal-Mart Target Kmart
Critical Success factorsWeight
sRatin
gWeighted
ScoreRatin
gWeighted
ScoreRatin
gWeighted
Score
0.0 to
1.01 to
4 1 to
4 1 to
4
Market Share 0.03 3 0.09 2 0.06 2 0.06
Inventory System 0.02 3 0.06 3 0.06 2 0.04
Financial Position 0.04 2 0.08 2 0.08 3 0.12
Product Quality 0.05 3 0.15 3 0.15 2 0.1
Consumer Loyalty 0.03 3 0.09 2 0.06 2 0.06
Sales Distribution 0.02 3 0.06 3 0.06 2 0.04
Global Expansion 0.03 3 0.09 2 0.06 2 0.06
Organization Structure 0.02 3 0.06 3 0.06 2 0.04
Production Capacity 0.01 3 0.03 2 0.02 2 0.02
Advertising 0.25 4 1 3 0.75 2 0.5
Customer Service 0.05 3 0.15 3 0.15 3 0.15
Price Competition 0.4 3 1.2 2 0.8 2 0.8
Management Experience 0.05 3 0.15 2 0.1 3 0.15
Totals 1 3.21 2.41 2.14
April 19, 2006
Key RatiosDa
y's Range:
45.40 - 45.74
52wk Range:
42.31 - 50.87
Volume:
12,143,600
Avg Vol (3m)
:
11,944,400
Market Cap:
189.78B
P/E (ttm)
:
16.98
EPS (ttm)
:
2.68
Div & Yield:
0.67 (1.50%)
Last Trade: 45.54
Trade Time: 4:00PM ET
Change: 0.28 (0.61%)
Prev Close: 45.82
Open: 45.62
Bid: N/A
Ask: N/A
1y Target Est: 56.47
Day's Range: 45.40 - 45.74
52wk Range: 42.31 - 50.87
Volume: 12,143,600
Avg Vol (3m): 11,944,400
Market Cap: 189.78B
P/E (ttm): 16.98
EPS (ttm): 2.68
Div & Yield: 0.67 (1.50%)
April 19, 2006
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
April 19, 2006
QSPM Wal-Mart
More hypermarkets/ supermark
et Buy American
Key factors Weight AS TAS AS TAS AS TAS
External 1 to 4 1 to 4 1 to 4
Agreement with Berkshire Hathaway, Inc. acquired McLane's Company, Inc.0.1 3 0.3 2 0.2 2 0.2
Fortune's number one Most Admired Company and largest company in nation0.14 4 0.56 4 0.56 3 0.42
World largest private satellight communication systems 0.16 4 0.64 3 0.48 3 0.48
Ron Brown Corporate Leadership Award 0.11 3 0.33 3 0.33 2 0.22
"Buy American" policy 0.15 3 0.45 3 0.45 4 0.6
Target 0.14 4 0.56 4 0.56 3 0.42
A solution to breaking the monopoly that Wal-Mart has created0.2 4 0.8 N/A 0 N/A 0
total should be 1.0 1
Internal 1 to 4 1 to 4 1 to 4
Stores in all 50 states 0.09 4 0.36 4 0.36 4 0.36
New Concepts - hypermarkets and supermarkets 0.1 3 0.3 4 0.4 3 0.3
Wide variety of merchandise 0.1 3 0.3 4 0.4 3 0.3
Nationally advertised merchandise 0.08 3 0.24 4 0.32 3 0.24
Point-of-sale bar code scanning 0.13 4 0.52 4 0.52 3 0.39
Great Employee Benefits 0.09 3 0.27 3 0.27 2 0.18
No formal mission statement 0.1 3 0.3 3 0.3 3 0.3
Management resisted putting women on board of directors 0.13 3 0.39 3 0.39 3 0.39
Hiring illegal minorities 0.08 2 0.16 2 0.16 2 0.16
Growth for employees only in its division 0.1 3 0.3 3 0.3 3 0.3
total should be 1.0 1
6.78 6 5.26
April 19, 2006
Decisions
• We decided to add more hypermarkets based on the QSPM even though the numbers were close for both strategies
April 19, 2006
EPS/EBIT Analysis
• Amount needed = $1 Billion• Stock Price = $45.54• EBIT Range = 435,950 - 635,950 • Tax Rate = 26%• Interest rate = 5%• # Shares Outstanding = 4,453,000
April 19, 2006
EPS/EBIT
In $MillionsCommon Stock
Financing Debt Financing
High Low High Low
EBIT (12,719,000 in 2003) 635,950 435,950 635,950 435,950
Interest 5% 0 0 31,798 21,798
EBT 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
# Shares Outstanding4,453,00
0 4,453,000 13,964,000 13,964,000
EPS 5.68 5.64 3.65 3.65
April 19, 2006
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
April 19, 2006
Evaluation
• Quarterly Reports• Yearly Reports• Store growth report• Annual Sales report• Key Ratios• Stock prices in comparison to
competitors
April 19, 2006
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 didn’t want to lose a case for discrimination because would hurt Wal-Mart’s bottom line. But as the judge rightly ruled, companies that do business on as large a scale as Wal-Mart 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.
April 19, 2006
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 H’s 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.
April 19, 2006
In the News…
• Military Families Outreach ProjectPartnership with Sesame Workshop to support children of military families.
• Children's Miracle NetworkBuy a balloon, save a child's life.
April 19, 2006
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.
• Now have 13 divisions within the company
April 19, 2006
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_fortkent
• Tony Gauvin’s presentation on Kroger’s• http://www.target.com
April 19, 2006
Questions?
Thank you for shopping at WAL-MART
