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2 Pages Case Analysis The main issue of article How Big Can it Grow? is rapid growth of Wal-Mart retailing stores network. Author analyses it from position of an observant and tries to predict whether were to expect Wal-Marts further growth in near future or not. Industry Analysis: Wal-Mart is the largest American retailing company. There are close to 3. 000 Wal-Mart discount stores in USA alone. Companys headquarters located in Bentonville, Arkansas.
The most of its stores Wal-Mart has in Arkansas, Oklahoma, Mississippi and Missouri. 87 % of Companys annual profit is based of domestic sales. Many economists say that Wal-Marts continuous expansion will inevitably slow down soon and even turn into contraction. This is because company has grown too big already and it practices inflexible business strategy, when everything that matters is expansion at any cost. The Wal-Marts unique problem is its dependency on Chinese cheap labor and its unwillingness to adopt a progressive marketing strategy, like Costco. Although Companys staff turnover has shrunk from 60 % to 44 % it is still too high. Wal-Mart is being continually sued by its former employees over the violations of Fair Labor Standards Act.
Company Profile: Wal-Marts production lines consist of three thousand retailing super centres. 65 % of all the sales are done in USA, but Company also tries to expand on international market, it now has outlets in Mexico, Britain, Japan, Canada, Germany and China. Companys industry position is best described as superior. Sams Club alone has three times as many outlets as Costco does. The financial position of Wal-Mart is very stable.
Companys continuous expansion attracts new investments. In year 2003 Wal-Mart made $ 256 billion in sales, which makes it one of the biggest U. S. commercial operators.
Wal-Mart uses the latest technology to make operating of its store as effective as possible. Every retailing outlet is fully computerized. Companys approach towards increasing the efficiency of its personnel can be defined as inadequate. Companys entry position salary is $ 8 an hour, which is the lowest of all retailing operators. Wal-Mart retailing capacity is not being fully exploited, as it plans to open 140 new outlets abroad.
It is likely that it will remain at the same level as long as Company can guarantee low prices for the products it sells. Yet, this depends on the Global Economy trends. Companys managers are not encouraged to come up with executive decisions, which make every outlet heavily dependable on Wal-Marts main office. This reduces its flexibility, although it is very important on todays dynamic retailing market. Brief SWOT: Wal-Marts main goal is to increase its profits, just as it is a goal of every commercial enterprise. The strategy it employs to reach this goal is continuous expansion at the expense of pushing smaller retailers out of business.
What enables Company to offer very low prices is its dependency on low quality Chinese products. I my opinion, this strategy is appropriate at present time. The Wal-Marts rapid growth is the best proof of that. The demographic dynamics in USA shows that more and more people only care about how cheap products can be bought, regardless of their quality. This is because majority of new immigrants to U.
S. come from Third World countries and they are generally poor. Their concept of quality is much different from generally accepted American standards. Recommendation: I would recommend that Wal-Mart continues with its present strategy, although it has to become much more aggressive. But I would also suggest that Wal-Mart reconsider its employment policy and put emphasis on selling luxury items through its network, like Costco does.
It appears that Wal-Mart wont enjoy much success on international market, because of numerous psychological differences between American management style and European realities. Instead, Company has to strive pushing its domestic competitors out of business by whatever the means it might take.
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Research essay sample on Wal Marts Continuous Expansion
