STRATEGIC MANAGEMENT REPORT

Strategic Management Report



Table of Content

Company History3

Strategic Analysis4

External Environment4

Internal Environment5

Economic Environment:5

Technological Environment:5

Social Environment:6

Management6

Porter's Five Forces framework7

Intellectual Assets8

Strategic Formulation9

Business Level Strategies9

Competitive Advantages & Sustainability10

The Role of IS in Wal-Mart's Business Level Strategy11

Corporate Level Strategy12

Social Capital13

Office of Diversity13

Corporate Compliance13

Job Classification & Pay Structure13

Career Preference System14

Wal-Mart's Life Cycle14

International Strategy15

Strategic Implementation16

Strategic Control16

Corporate Governance17

Leadership: Current Strategy19

Becoming an Even Better Place to Work19

Implementing the Vision20

Managing Innovation20

Proposed Alternate Solutions21

Recommendations22

Summary23

References25

Strategic Management Report

Company History

In 1962 Sam Walton opens his first Wal-Mart in Rogers, Arkansas. His low price approach to retail soon became a model that all Wal-Mart stores would follow "Sell brand merchandise at low prices." Interesting enough, 1962 was the same birth year for Kmart, Target and Wal-Mart. Sam Walton, founder of Wal-Mart wanted to take advantage of the opportunity and establish a discount retail company. In the beginning the stores were started in the small towns in the south. During that time period it was considered as the least successful retailer; however it has outgrown most of its competition. Sam's mission was to have an everyday low price discount retail store. Five years into founding Wal-Mart, Sam felt that he needed to expand before his competitors out ran him. “During the 1970s, the retail industry became highly competitive, but at the same time the economy became weak due to inflation Sears was the leading retailer in the nation, during the 1970s, however, the recession of 1974-1975 and inflation affected Sears adversely.

Sears targeted middle class families and expanded its overhead. Wal- Mart's strategy was to compete with its rivals and lower overhead expenses. Compared with Sears, who consisted of more than 6,000 distribution centres, Wal-Mart had only 2,500 comparable units” (Govindarajan, 2001, 65). Although Wal-Mart was under financed, it managed to have 30 stores in the 8 years. In order to sell the merchandise at a low rate, Wal-Mart's purchasing cost must also be at a low rate. However, suppliers and vendors were not willing to supply merchandise at the rate Wal-Mart was asking. As result of this he built warehouses so that merchandise can be bought in bulk at a cheaper price because of the large volumes. At the same time Wal-Mart needed to expand, but did not have enough capital. Sam decided to go public to raise capital. Over all, while his competitors were under the impression that Wal-Mart's business model will not be successful, Sam has taken the advantage of the time and strategically placed his business to grow. Sam was also able to convince his establish an internal culture in order have everybody on the same boat. This resulted in everyday low prices. He did not have any sophisticated systems, which resulted in less overhead cost. Currently, Sam's vision has become a global company employing more than 1.8 million associates worldwide and nearly 6500 stores and clubs spanning across 14 countries.

Strategic Analysis

External Environment

Wal-Mart already provides products categorized as “negative category trips” within their super stores. Consumer habits are not likely to change in this area unless they can change buyer's habits ...