Company Description

Public company chosen for analysis is Wal-Mart Stores Inc., further referred to as Walmart.
Walmart is an international retailer with headquarters located in Bentonville, AR. The company
operates in 27 countries and has more than 11,000 stores which can be classified as discount
department stores, warehouse stores and supercenters.Walmart is the largest retailer in the world,
and is also labeled as the largest public corporation in the world as well as the largest private
employer. Walmart currently employs more than 2.2 million people Business value of Walmart is
also among the highest in the world, and its impact on local businesses in the regions where
Walmart operates is very significant.
Walmart was created in 1962, incorporated in 1969 and became a public company in 1972 The
companys financial performance remained notable even during the recession, and currently
Walmart shows stable growth, primarily due to the expansion into developing markets. During
2012, the company managed to increase its revenues by 4.9% and in 2013 revenues grew by
1.9%. The increase of net profit in 2012 constituted 8.28% and in 2013 Walmarts net profit
declined by 5.75% (Yahoo Finance, 2014). The decrease of profits took place mainly due to the
increase of general and administrative expenses. However, Walmarts operating margin is still
slightly above industry average, while its quarterly revenue growth is almost 4 times lower
compared to average growth rates in retail industry .Walmarts strategy is centered around cost
leadership, so its profits are likely to be lower compared to retailers focusing on premium
customer segments.
Impact of Globalization and Technology Changes on Walmart

Globalization had a notable impact on the development of Walmart, and Walmart, in its turn,
become one of powerful drivers of globalization. First of all, globalization encouraged the
expansion of Walmart inside the United States and overseas. Inside the U.S., Walmart used
multidomestic strategy and launched stores with local responsiveness. Such strategy led to quick
growth of Walmart inside the U.S. Outside the U.S., Walmart adopted a global strategy which
was similar for all countries where it operated. Walmart used its economies of scale in order to
achieve efficiency and to maintain cost leadership overseas. However, due to the impact of
globalization Walmart also had to alter its strategy: in the countries where economies of scale
were not so readily available; for example, global approach did not work in Germany and in
China. Currently Walmart is moving towards transnational strategies in the majority of countries
where it operates. Such strategy turned out to be efficient in the U.K., for example
Technology change was an important factor which was one of the cornerstones of Walmart
market leadership in retail industry. Walmart used technology to optimize its supply chain, to
eliminate extra supply chain links, to share responsibility for delivering the orders with vendors
and introduced an advanced information system allowing all supply chain participants to be
involved in planning, forecasting demand and product replenishment activities
Furthermore, using RFID technology and smart tags, Walmart notably reduced internal
transportation costs. Currently Walmart is working on using advanced technology to make its
operations more sustainable and more environmentally friendly; in particular, Walmart is
adopting light solar panels to supply its stores with electricity where appropriate
Application of Resource-Based and Industrial Organization Model to Walmart

According to the industrial organization model, external factors shaping the environment in the
industry are more important than internal factors for achieving business advantage. Therefore,
basing on the industrial organization perspective, it is necessary to consider the attractiveness of
the industry and Walmarts position in the industry in order to determine how Walmart could earn
higher profits. Porters Five Forces model outlines five key factors determining the attractiveness
of an industry: competitive rivalry, threat of new entrants, power of suppliers, threat of
substitutes and power of buyers
In retail industry, competitive rivalry is very intensive as there exist various kinds of retail
companies, the threat of new entrants is high since it is relatively easy to organize a retail shop in
most countries, the power of suppliers is low (for large retailers), the threat of substitutes is high
and the power of buyer is high, too. In general, the industry is quite challenging and competitive,
and the company should develop unique competitive advantages to earn higher profits. In the
case of Walmart, its key competitive advantages are economies of scale and cost leadership. The
most straightforward way for Walmart to achieve higher profits would be to achieve further cost
optimization, to use advanced technologies and to strengthen economies of scale.
The focus of another model resource-based model is on internal resources. In terms of this
model, the keys to market success are the companys tangible and intangible resources. Key
resources should possess VRIO characteristics valuable, rare, inimitable and non-substitutable
These resources can be used for creating a sustainable competitive advantage. In the case of
Walmart, its key resource is its highly efficient supply chain (combined with Walmarts advanced
information sharing system). It is valuable and hard to imitate, rare and cannot be substituted. In
the context of resource-based model, Walmart should encourage further integration with its

suppliers and other stakeholders and reduce operating costs due to better planning and demand
forecasting.
Impact of Mission and Vision Statement on Walmart Success
Vision statement of Walmart is not explicitly stated on its corporate website, but one of the key
statements describing the company has clear characteristics of a vision statement: innovative
thinking, leadership through service, and above all, our commitment to saving people money so
they can live better have made us the business we are today and are shaping the company we will
be tomorrow (Walmart 2014). Walmarts mission statement is currently formulated as follows:
Saving people money so they can live better. Initially, Walmarts motto was stated as Always
low prices, but eventually the focus of the company shifted from keeping prices low to
increasing customer welfare.
This change of mission was accompanied by the transformation of Walmarts business practices
and goals. Initially, Walmart was focused on achieving market leadership and offering lowest
prices. This strategy was highly successful, but such approach also affected local businesses and
employees. Eventually, Walmart agreed to slightly increase its bottom line in order to provide
better conditions for people and communities. Therefore, Walmarts mission had a notable
impact on its strategy and market positioning, and the change of mission was followed by the
change of corporate strategy.
Impact of Stakeholders on Walmarts Success
Walmarts corporate success and development is notably influenced by different categories of
stakeholders. In general, it is possible to identify the following stakeholders of Walmart: top

management, store management, Walmart employees (non-managerial positions), suppliers,

customers, competitors and communities. Naturally, top management, and especially Sam
Walton, the founder of the company, had a dramatic impact on the companys success. The
principles and values of Walmart laid by Sam Walton created the background for the companys
success and let Walmart create a giant network of stores worldwide. Store managers have an
influence on the companys local business decisions and are responsible for Walmarts success in
specific areas.
The relationships with suppliers are critical for Walmart. Walmart depends on supplier efficiency
to remain competitive; the sustainability and environmental policy of suppliers are also important
for Walmart. Recently Walmart started switching to suppliers from Asia to reduce costs. At the
same time, Walmart currently became a global power so it also affects the suppliers: Walmart
urges them to comply with quality standards, reduce waste, improve sustainability, etc. Hence,
the role of suppliers in Walmarts business success is critical.
The relationships with customers have a direct impact on Walmarts success. The companys
revenues depend on customers, so Walmart focuses on keeping prices low and making the
process of purchasing convenient and quick for the customer. Although Walmarts cost cuts
sometimes reduce the quality of customer experience, Walmart attempts to balance between cost
cutting and customer convenience
Competitors influence Walmarts strategy in two ways: through offering better products and/or
service compared to Walmart and filing lawsuits against Walmart. In the former case, Walmart is
forced to become more competitive and more efficient, and therefore competition adds to its
business success. In the latter case, Walmart has to defend itself and its strategy in the court and

has to prove that it is not using predatory pricing to push other competitors out of business. In
this case, competitors increase the costs of Walmart and make its market position slightly more
vulnerable.
Employees are valuable Walmarts stakeholders, and their role in Walmarts business rise is
critical. The functioning of Walmart depends on the employees; at the same time, Walmart was
suited many times for low wages, improper working conditions, discrimination and the lack of
healthcare benefits
These legal challenges forced Walmart to reconsider its approach to employment, and currently
HRM practices of Walmart have somewhat improved.
The communities are also reshaping Walmarts strategy as community members force Walmart to
pay attention to environmental regulations, sustainability, community development, etc. As a
result, Walmart started paying more attention to corporate responsibility and started replacing
technologies by more sustainable ones
These developments made Walmart more competitive and more efficient and therefore
contributed to its market success.