Wal-Mart's Cost Leadership Strategy
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Case Code : BSTR096
Case Length : 17 Pages
Period : 1962 - 2004
Organization : Wal - Mart
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
The Growth Continues
By the beginning of the new millennium, Wal-Mart was one of the world's largest companies, with revenues of $165 billion in fiscal 2000. Wal-Mart's rapid growth continued in the initial years of the new millennium.
While continuing its aggressive expansion in the food business, the company started launching innovative programs to further penetrate the US markets. For instance, in 2001, Wal-Mart launched a program, called 'Store of the community.' Under the program, Wal-Mart began remodeling its discount stores and Supercenters in the US to fulfill the needs of customers they served, in line with what the customers wanted. Explaining the program, Tom Coughlin, President and CEO of Wal-Mart Stores Division, said, "The one-size-fits-all concept simply doesn't work anymore in the retail industry. Customers tell us what they want and it is our responsibility to meet those needs. Our store associates live and work in each store's community and interact with over 100 million customers each week...
Plans And Challenges
Wal-Mart has chalked out an aggressive expansion plan to accelerate its growth in the near future. By the fiscal year ending 2007-08, Wal-Mart aims at achieving a revenue target of $500 billion.
The company plans to achieve this by expanding aggressively in international markets. In the US, Wal-Mart plans to increase its store count and to introduce new product categories. The company plans to increase the total number of stores in the US from 3,400 to 5,000 in the next five years. By 2008, Wal-Mart plans to open 1,000 Supercenters in the US. Analysts and media reports are expressing doubts as to whether Wal-Mart will be able to achieve its ambitious $500 billion revenue target. Given the size of its operations, some analysts felt that Wal-Mart may also face the danger of anti-trust suits. However, not all analysts agree on this issue, as Wal-Mart enjoys significant customer support, and the customers are the ultimate beneficiaries of low prices...
Exhibit I: Walmart's Awards and Recognitions
Exhibit II: Top Ten Retailers Worldwide (2002)
Exhibit III: Wal-Mart - Types of Retail Stores
Exhibit IV: Wal-Mart - Using It
Exhibit V: Financial Performance of Wal-Mart (1972-2003)
Exhibit VI: The Strength of Walmart (2003)