Entrepreneurship
Sam Walton’s Walmart - A role model Entrepreneur
Lecturer: Ahmed Zaki
Sheeza Naseer
A268592
6/25/2020 0
Contents
1 Introduction ........................................................................................................................ 2
2 Company Overview ............................................................................................................. 2
3 History ................................................................................................................................ 2
4 Entrepreneurial Attributes .................................................................................................. 3
5 Evaluating the environment ................................................................................................ 4
5.1 External analysis .......................................................................................................... 4
5.1.1 Political Factor ..................................................................................................... 4
5.1.2 Economic Factor .................................................................................................. 4
5.1.3 Social Factor......................................................................................................... 4
5.1.4 Technological/Innovation Factor .......................................................................... 5
5.2 Internal Analysis .......................................................................................................... 5
5.2.1 Company’s Financials ........................................................................................... 5
5.2.2 SWOT Analysis ..................................................................................................... 5
6 Key Success Factors ............................................................................................................. 8
6.1 Market Presence.......................................................................................................... 8
6.2 Well-established brand name ...................................................................................... 8
6.3 Quality Customer Service ............................................................................................. 8
6.4 Fulfillment Capabilities ................................................................................................ 9
7 Service to the Community ................................................................................................... 9
8 Conclusion........................................................................................................................... 9
9 Reference.......................................................................................................................... 11
10 Appendix ....................................................................................................................... 12
10.1 Income Statement of Wal-Mart ................................................................................. 12
1
Sam Walton’s Walmart - A role model Entrepreneur
1 Introduction
Choosing a specific entrepreneur as a role model in the business sector is difficult in this
era as there are number of top entrepreneur‟s locally and internationally. Among top
global entrepreneurs Wal-Mart could be one of the best examples that could give better
reflection on this assignment. Sam Walton and his Walmart retail business would explain
every bit of successful entrepreneurship.
2 Company Overview
Wal-Mart Stores, Inc. (WMT) is the world's largest brick-and-mortar retailer by a
substantial margin. The company reported worldwide revenue of $514.4 billion for its
2019 fiscal year, a year-over-year increase of about 2.8% (Walmart, 2019). It operates
11,300 store locations in 27 countries. About $392.3 billion of its 2019 revenue, roughly
76% of the total, is attributed to operations in the United States. Most of the company's
store locations worldwide operating under the Walmart brand. However, the company
also operates a number of other retail chains, including Sam's Club membership
warehouse stores around the world, ASDA stores in the United Kingdom, Bodega
Aurrera stores in Mexico and Seiyu stores in Japan. As of March 2020, Wal-Mart Stores,
Inc. has a market capitalization of about $326.1 billion (Nasdaq).
3 History
Wal-Mart was founded by Sam Walton in Rogers, Arkansas, in 1962 and focused its early
growth in rural areas, thereby avoiding direct competition with retailing giants such as
Sears and Kmart. As it grew, the company developed new retail formats, including Sam‟s
Club discount warehouses (1983) and Wal-Mart Supercenters (1988). Within a decade of
opening the combination grocery and merchandise Supercenters, Wal-Mart had become
one of the largest grocers in the United States. An emphasis on customer attention (e.g.,
direct mail advertising), cost controls (e.g., low-cost imports), and efficiencies in its
distribution networks (e.g., regional warehousing) helped Wal-Mart become the largest
retailer in the United States in 1990.
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It moved into international markets one year later with the opening of a store in Mexico,
and growth continued, either through new stores or the acquisition of established retailers,
in countries such as Canada, China, Germany, and the United Kingdom. The company
experienced a decline in sales immediately following Walton‟s death in 1992 but
rebounded with the introduction of the company‟s house brand Great Value in 1993. In
the years after Walton‟s death, the company was less fiscally frugal, quickly
accumulating corporate debt in order to finance such new strategies as a group of
additional Wal-Mart Supercenters. The financial risk paid off: by 1995 Wal-Mart‟s sales
had doubled, by 1999 the company had become the world‟s largest private employer, and
by 2001 its total sales surpassed those of Exxon Mobil, ranking Wal-Mart as the largest
corporation in the world (Britannica, 2019).
4 Entrepreneurial Attributes
The founder of Walmart Sam Walton believed in inspiring and motivating members of
his organization in a way that increased productivity and company ownership. He is
hardworking, highly motivated and determined personality always willing to take risk. He
became successful and most memorable when he publicized his self-proclaimed ten
commandments for his brands (Parks, 2016). They were as follows:
1. Commit to your business.
2. Share your profits with your associates and treat them like your partners.
3. Energize your colleagues.
4. Communicate everything you possibly can to your partners.
5. Appreciate everything your associates do for the business.
6. Celebrate your success.
7. Listen to everyone in your company.
8. Exceed your customers‟ expectations.
9. Control your expenses better than your competition.
10. Blaze your own path.
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5 Evaluating the environment
In order to analyze in which environment does Wal-Mart operates, a PESTEL analysis
will be made. Political, Economic, Social and Technological factors influence the
performance of the company and so it is necessary to have a deep insight into them.
5.1 External analysis
External environment can be estimated through PEST analysis. This tool is used to
identify the business size, positions, economics, growth, politics and the development or
decline trend of the market.
5.1.1 Political Factor
Report states that Wal-Mart has spent millions on state and local projects and over $17
million in federal elections. More than 69% which accounted for $11.6 million of Walton
family and Wal-Mart‟s contribution has gone to Republican candidates and committees.
A member of Wal-Mart has reported that Walton‟s family is the richest family in the
world; they are putting millions to their radical ideology and right-wing agenda instead of
putting their money to increase wages for Wal-Mart‟s workers (UFCW, 2013).
5.1.2 Economic Factor
Purchasing power depends on the World‟s economic conditions. The management of
Wal-Mart says that economic factor; both domestically and internationally might affect
Wal-Mart‟s financial performance unfavorably. In U.S and other countries‟ higher fuel
price, energy cost and higher interest rate, inflation, weak housing market, unemployment
rate, higher debt and changes in tax law and overall economic slowdown could affect
consumer demand for the services and products selling through Wal-Mart stores (WMT
10-K, 2008). Therefore, U.S has been planning to increase the number of superstores to
raise the sales in U.S stores and outside to get high returns from it in order to leverage
their capital assets (Nyakangi, 2020).
5.1.3 Social Factor
Social factor plays a pivotal role to making a customer‟s mind. A Quality factor always
has been on forefront of Wal-Mart throughout the history which is why people thought
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that Wal-Mart is the best place to go for shopping. Due to the social influence people who
want one stop service prefers Wal-Mart for shopping (Nyakreal, 2020).
5.1.4 Technological/Innovation Factor
The Company launched its 1st satellite network in 1987 which connects home office to
every single Wal-Mart store and clubs via video, data and voice communication (Brenner,
Eidlin and Candaele, 2006). At current situation Wal-Mart is more innovative and
productive company, and its supply chain and logistics management is more successful
now than before. In terms of technology, Wal-Mart is far away from its competitors. The
modern technology is using by Wal-Mart for the purpose of marketing and selling its
product (Manjoo, 2012).
5.2 Internal Analysis
5.2.1 Company’s Financials
The financial performance of Wal-Mart is presented at the end in “Appendix”.
5.2.2 SWOT Analysis
SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis is the technique
used for the structured planning to oversee and search for the company‟s internal
strengths and weaknesses as well as external opportunities and threats from the
environment outside the business. Based on the knowledge of the business environment
in which Walmart operates, assumptions believed to be reasonable, the SWOT analysis of
Walmart is summarized as follows (Parker, 2019).
[Link] Strength
1. Brand recognition – With millions of customers visiting Walmart every day, it is
the most recognized retail brand in the world. There are over 60 million items
available at the Walmart online store.
2. Global expansion – Walmart has recently purchased ASDA, the UK based retailer
and Indian e-commerce giant Flipkart. Besides, it has created a joint venture with
India‟s biggest retail store Bharti. These global expansions have proven to be a
great success for the company.
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3. Global presence – In 2017, Walmart opened 47 new stores in Central America, 15
in Chile, 11 in the UK and 4 in China. Its international operations have increased
its sales and global presence.
4. „Every Day Low Prices’ strategy – Walmart is based on economies of scale
agenda that‟s why it can offer low prices. It has fixed costs for thousands of
products. Thus, it‟s one of the cheapest shopping places in the world.
5. Global supply chain and logistics system – The distribution and logistics systems
are the core competencies of Walmart. It uses Information Technology (IT) to
efficiently monitor the performances of every product in each store in each
country.
6. Human Resource Management – Employees are the key assets of Walmart. It
hugely invests its time and money in developing and managing its employees. 1%
of America‟s working population is employed at Walmart as per Business Insider.
7. Effective resource management – Walmart efficiently manages its resources
including information systems, supply chain networks, distribution facilities,
knowledge, and other skills. It has excellent operations in all the locations.
8. Strong market power over suppliers and competitors – Its large organizational
size and global reach have made Walmart capable enough to exercise market
power over suppliers and competitors.
[Link] Weakness
1. Employee treatment and working conditions – Walmart has received criticisms
and lawsuits several times regarding its workforce. Low wages, inadequate
healthcare, and poor working conditions are few of the issues that have been
publically criticized.
2. Large span of control – Its highly extended size and massive span of control could
leave Walmart weak in some areas.
3. Thin profit margins – Walmart focuses on a cost leadership strategy. It results in
thin profit margins for the company.
4. Gender discrimination – A lawsuit was filed against Walmart in 2007 that
allegedly claimed gender discrimination in job opportunities at Walmart. Female
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employees are discriminated in regards to promotions and pay scale as per this
lawsuit (BHRRC).
5. Imitation – Walmart’s business model can be easily copied. The company doesn’t
own any specific competitive edge over its rivals except its huge business size
(Mauborgne).
[Link] Opportunities
1. Expansion to other markets – Walmart can gain the opportunity by expanding its
business to the markets which are not yet ventured. These may include China,
Middle East countries, and Latin America.
2. Strategic alliances – Walmart has the opportunity to create strategic
partnerships with major firms or merge with other global retailers. Acquisitions
of small companies can also be a profitable opportunity for Walmart.
3. Enhancing human resource practices – Bringing advanced improvements in
human resource practices can be a favorable opportunity for Walmart. As it
highly relies upon its workforce, bringing innovation in its human resource
management is a crucial opportunity.
4. Improving quality standards – Low-cost products render low quality sometimes.
Walmart has the opportunity to enhance the quality standards of its products to
address the health concerns of consumers.
[Link] Threats
1. Impeach 45 Controversy – Recently, Walmart was publicized for “Impeach 45”
controversy. It sold T-shirts printed with the words ‘Rope. Tree. Journalist. Some
Assembly Required’. These shirts claimed to imply promotion of violence.
However, Walmart overturned the controversy claiming that the T-shirts were
sold by third-party sellers on Walmart’s Marketplace instead of Walmart itself.
2. Fake craft beer controversy – Walmart was sued for selling fake craft beer in
2017. Though it was made by WX Brands, the beer was labeled and marketed as
‘Trouble Brewery,’ a non-existent production company.
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3. A primary target of competition – The world’s largest grocery retailer, Walmart is
always a primary target for competitors. Target, its direct competitor, offers
similar products but with higher quality.
4. Political and legal Issues – This is also a threat to Political and legal affairs can
always hinder the company to operate in some countries.
5. Small-scale online e-commerce companies – Many small-scale and individual
online selling companies have entered the market offering similar products at
similar prices on their websites. It can be a threat to the company’s future
standing.
6. Technical issues on the website – Customers have complained many times that
there are some technical issues with Walmart’s website. The products are not
listed in an organized way on the website, and it runs slowly.
6 Key Success Factors
Each and every business‟s success factors are different from one business to another on
their business nature.
6.1 Market Presence
Over 100 million people shop each week at Wal-Mart‟s stores making it the world‟s
largest retailer with $139 billion in annual revenues.
6.2 Well-established brand name
Wal-Mart enjoys the global brand name reputable image online e-commerce players are
spending billions to establish. By „monetizing‟ its physical store customer eyeballs,
through in-store signs and newspaper circulars, Wal-Mart will be able to leverage its
well-established offline market presence to help promote their online enterprise at
extremely low cost.
6.3 Quality Customer Service
Quality customer service means taking care of the consumers every need, whether it been
answering a question, helping to find a product and/or streamlining the convenience and
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purchasing experience. Possibly the greatest advantage for click and mortar companies
(Wal-Mart) will be their ability to offer in-store pick-ups and returns.
6.4 Fulfillment Capabilities
Some analysts suggest that technology to make Wal-Mart a full-scale e-commerce
success has been in place for years. Indeed, Wal-Mart has made substantial efforts to tie
in all of its suppliers worldwide and has given the suppliers the necessary integrated
software for free.
7 Service to the Community
Walmart has a long history of stepping up in times of disaster to help communities with
relief and recovery. Since 2016, we have given nearly $50 million in cash, water, food
and other products to support victims of hurricanes, wildfires and tornadoes. Additionally,
during the same time period, we have raised $44 million in donations from customers to
support hurricane relief (Inc, 2020).
8 Conclusion
In conclusion, Wal-Mart is the number one retailer in the United States and is at the top of
the Fortune 500 listing. Wal-Mart operates in many countries world-wide and is moving
into new countries every year.
Wal-Mart is also expanding as a retailer. They have expanded into many other sectors of
the marketplace, including groceries, gas stations, electronics, and auto maintenance.
Each year, Wal-Mart finds new ways to grow and offer more services to their customers.
Each year, the number of people who have a stake in Wal-Mart also grows. Each year,
more claims are made against Wal-Mart by the unions and other businesses that have
been forced out of business. Wal-Mart is often able to uncut many other local industries
and more and more local businesses are shutting down when Wal-Mart moves into town.
The unions are filing more court claims against Wal-Mart because they encourage their
workers not to join unions.
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As a result of Wal-Mart's ever growing size and variety of services they offer, their public
affairs department is going to become more and more important. As Wal-Mart att ectors
of the marketplace, there is going to be more regulation against them and their public
affairs department is going to have to work harder to make it possible for Wal-Mart to
continue to grow.
And as the animosity against Wal-Mart becomes more widespread, here and in foreign
countries, Wal-Mart is going to have to work harder to maintain their good reputation.
Wal-Mart's foundation will become increasingly more important for giving things back to
the community.
In order for Wal-Mart to stay at the top of their game and follow the company strategy
and achieve their key policy goals, they are going to have deal better with their
stakeholders and make sure they guard their reputation well.
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9 Reference
BHRRC. (n.d.). Walmart lawsuit (re gender discrimination in USA). Retrieved June 25, 2020, from
Business and Human Resources Centre: [Link]
[Link]/en/walmart-lawsuit-re-gender-discrimination-in-usa
Britannica, T. E. (2019, March 4). Walmart. Retrieved June 23, 2020, from Encyclopædia
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Hayes. (2013). Walmart Is Now The World's Second-Biggest Company, Says Fortune. Retrieved
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Hayes, A. (2020, January 28). Entrepreneur. Retrieved June 23, 2020, from [Link]:
[Link]
Inc, W. (2020). What does Walmart do for local communities? Retrieved June 20, 2020, from
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communities
Manjoo, F. (2012, November 26). Walmart’s Evolution From Big Box Giant To E-Commerce
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commerce-innovator
Mauborgne, W. C. (n.d.). Strategy Canvas | A Tool for Competitive Advantage. Retrieved from
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Nasdaq. (n.d.). Walmart Inc. Common Stock. Retrieved June 23, 2020, from Nadag:
[Link]
Nyakangi, E. (2020, March 30). SWOT and PEST Analysis of Wal-Mart. Retrieved June 24, 2020,
from [Link]: [Link]
Parker, B. (2019). Walmart SWOT analysis 2019 | SWOT Analysis of Walmart. Retrieved June 20,
2020, from Business Strategy Hub: [Link]
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Parks, M. (2016, September 16). A Great Leader: Sam Walton’s Legacy. Retrieved June 20, 2020,
from PennState : [Link]
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UFCW. (2013, June 19). New Report on Political Contributions Underscores Walmart’s Sharp Turn
to the Right. Retrieved June 24, 2020, from UFCW:
[Link]
walmarts-sharp-turn-to-the-right/
Walmart, I. (2019). 2019 Annual Report: Defining the Future of Retail. Retrieved June 20, 2020,
from [Link]
[Link]
10 Appendix
10.1 Income Statement of Wal-Mart
[Link]
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