LEADERSHIP FOR CORPORATE EXCELLENCE

WAL-MART A SUCCESS STORY

SUBMITTED TO

PROF-IPSHEETA SATHAPATHY

SUBMITTED BY

SIKTA BANERJEE

MBA-2, SEC-E

13202230

KIIT SCHOOL OF MANAGEMENT

BHUBANESHWAR

"If we work together," he said, "we'll lower the cost of living for everyone...we'll give the

world an opportunity to see what it's like to save and have a better life."

Founder of Walmart

Walmart as we know it today evolved from Sam Walton’s goals for great value and great

customer service. “Mr. Sam,” as he was known, believed in leadership through service. This

belief that true leadership depends on willing service was the principle on which Walmart was

built, and drove the decisions the company has made for the past 50 years. So much of

Walmart’s history is tied to the story of Sam Walton himself, and so much of our future will be

rooted in Mr. Sam’s principles.

About Sam Walton

Sam Walton was born to Thomas Gibson Walton and Nancy Lee, in Kingfisher, Oklahoma. As

enough money was not raised by farming, Thomas Walton decided to take farm mortgaging as

one occupation to earn money. He worked for his brother's Walton Mortgage Company, which

was an agent for Metropolitan Life Insurance where he repossessed farms during the Great

Depression.

He and his family moved from Oklahoma to Orlando, Florida. There they moved from one small

town to another for several years. While attending eighth grade in Shelbina, Missouri, Sam

became the youngest Eagle Scout in the state's history. In adult life, Walton became a recipient

of the Distinguished Eagle Scout Award from the Boy Scouts of America.

Eventually the family moved to Columbia, Missouri. Growing up during the Great Depression,

Walton had numerous chores to help make financial ends meet for his family as was common at

the time. He milked the family cow, bottled the surplus, and drove it to customers. Afterwards,

he would deliver Columbia Daily Tribune newspapers on a paper route. In addition, he also sold

magazine subscriptions. Upon graduating from David H. Hickman High School in Columbia, he

was voted "Most Versatile Boy".

After high school, Walton decided to attend college, hoping to find a better way to help support

his family. He attended the University of Missouri as an ROTC cadet. During this time, he

worked various odd jobs, including waiting tables in exchange for meals. Also during his time in

college, Walton joined the Zeta Phi chapter of Beta Theta Pi fraternity. He was also tapped by

QEBH, the well-known secret society on campus honoring the top senior men, and the national

military honor society Scabbard and Blade. Additionally, Walton served as President of Burall

Bible Class, a large class of students from the University of Missouri and Stephens College.

Upon graduating in 1940 with a Bachelor's of Economics, he was voted "permanent president" of

the class.

Walton joined J.C. Penney as a management trainee in Des Moines, Iowa, three days after

graduating from college. This position paid him $75 a month. Walton spent approximately

eighteen months with J.C. Penney. He resigned in 1942 in anticipation of being inducted into the

military for service in World War II. In the meantime, he worked at a DuPont munitions plant

near Tulsa, Oklahoma. Soon afterwards, Walton joined the military in the U.S. Army

Intelligence Corps, supervising security at aircraft plants and prisoner of war camps. In this

position he served at Fort Douglas in Salt Lake City, Utah. He eventually reached the rank of

Captain.

The road to Walmart:

In 1942, at the age of 24, he joined the military. He married Helen Robson in 1943. When his

military service ended in 1945, Sam and Helen moved to Iowa and then to Newport, Arkansas.

During this time, Sam gained early retail experience, eventually operating his own variety store.

In 1950, the Walton’s left Newport for Bentonville, where Sam opened Walton’s 5&10 on the

downtown square. They chose Bentonville because Helen wanted small-town living, and Sam

could take advantage of the different hunting seasons that living at the corner of four states had

to offer.

Inspired by the early success of his dime store, and driven to bring even greater opportunity and

value to his customers, Sam opened the first Walmart in 1962 at the age of 44 in Rogers,

Arkansas.

The first stores

At the age of 26 Walton, retired from military, and took the management in charge of his first

store. Walton purchased a Ben Franklin variety store in Newport, Arkansas. The store was a

franchise of the Butler Brothers chain. With the help of a $20,000 loan from his father-in-law,

plus $5,000 he had saved from his time in the Army,.

There were many concepts pioneered by Walton that became crucial for his success. He had

always ensured that the shelves should always be filled with the goods that the customers need.

His second store, the tiny "Eagle" department store, was down the street from his first Ben

Franklin and next door to its main competitor in Newport.

The sales volume had increased from $80,000 to $2, 25,000 within three years. , P.K. Holmes,

whose family had a history in retail and was the landlord, too, got very much impressed and

attracted to the huge and fast success of Sam Walton. Admiring Sam's great success, and desiring

to reclaim the store (and franchise rights) for his son, he refused to renew the lease. The lack of a

renewal option, together with the prohibitively high rent of 5% of sales, were early business

lessons to Walton. Despite forcing Walton out, Holmes bought the store's inventory and fixtures

for $50,000, which Walton called "a fair price".

SWOT Analysis of Walmart

Strength

Walmart is known to be a powerful and known retail brand

It has a reputation for value for money based in its founder

The company drive is convenience and a wide range of products all in one store

Which makes their customer happy and satisfied?

It has got the attention from people with its tremendous growth in recent years and also for its

global expansion

The SAM’s club customers are able to buy the products in bulk quantity and get the advantage

of low prices

Weakness

The corporation is huge but has it coverage across 14 countries

Quality of the product always become a question for the customers

A system of keeping employees’ wages low in this economy

The market share is low outside the US market

Opportunities

Most of the Asian markets are untapped

Joint ventures to increase market share in international market

The inflation in the US market diverts the customers from buying expensive products towards

cheap products

Threats

Variety of competition nationally, regionally and locally

Substitute products more easily because of intense competition

The competitors are gaining control over international Market

Being a worldwide retailer means that you are uncovered to political troubles in the countries

that you operate in

Changing the face of Retail

The competitors of Sam Walton thought it was a wrong idea to offer goods and services to the

customers at a very low price and it was not going to work much longer but this is what made

Walmart different from others and had brought huge success to the Walmart family. In 1970

Walmart had gone public and had planned for huge expansions.Sam credited the rapid growth of

Walmart not just to the low costs that attracted his customers, but also to his associates. He relied

on them to give customers the great shopping experience that would keep them coming back.

Sam shared his vision for the company with associates in a way that was nearly unheard of in the

industry. He made them partners in the success of the company, and firmly believed that this

partnership was what made Walmart great.

As the stores grew, so did Sam's aspirations. In addition to bringing new approaches and

technologies to retail, he also experimented with new store formats—including Sam's Club and

the Walmart Supercenter—and even made the decision to take Walmart into Mexico. Sam's

fearlessness in offering lower prices and bringing Walmart's value to customers in the U.S. and

beyond set a standard for the company that lives on to this day. His strong commitment to

service and to the values that help individuals, businesses and the country succeed earned him

the Presidential Medal of Freedom, awarded by President George H. W. Bush in 1992.

Walmart is expanding its horizon to Chile, India and South Africa; Carrefour will open stores in

Bulgaria, India and Iran. Tesco is also opening stores in India, and Metro will open in Egypt and

Kazakhstan. These expansion plans sound very exciting, but, there are unknowns and therefore

risk.   Both Walmart and Carrefour have pulled out of Russia. In addition, Walmart withdrew

from Germany and South Korea; Carrefour left Algeria and Thailand; Tesco left Japan and is

currently in the process of withdrawing from the United States; and, Metro left Morocco.  Not

every entry into a foreign country is successful.  Local laws and restrictions sometimes can

create unforeseen challenges. Sometimes there are local market dynamics that make good supply

chain strategies impossible to operate. These large operators have learned, sometimes the hard

way, it is important to hire local managers who understand local consumer preferences and how

to market to these consumers.   Different tastes mean it is necessary to change the product

assortments, adjust pricing and merchandise in-store differently than the companies were used

to.  Of course, store location is always important and research on real estate takes time and

guidance by local experts.  Given the capital investment required to open a new store, a bad

location can be a very costly mistake.  Too many times companies open stores in locations that

are off the beaten path and bring disappointing results.

Sam's 10 Rules for Building a Business

Sam Walton believed running a successful business boils down to 10 simple rules. These rules

helped Walmart become the global leader it is today. We continue to apply them to every part of

our business. You can read the rules below, excerpted from his book,

1. Commit to your business.

Believe in it more than anybody else. If you love your work, you'll be out there every day trying

to do it the best you possibly can, and pretty soon everybody around will catch the passion from

you – like a fever.

2. Share your profits with all your associates, and treat them as partners.

In turn, they will treat you as a partner, and together you will all perform beyond your wildest

expectations

3. Motivate your partners.

Money and ownership alone aren't enough. Set high goals, encourage competition, and then keep

score. Don't become too predictable.

4. Communicate everything you possibly can to your partners.

The more they know, the more they'll understand. The more they understand, the more they'll

care. Once they care, there's no stopping them.

5. Appreciate everything your associates do for the business.

Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise.

They're absolutely free – and worth a fortune

6. Celebrate your success.

Don't take yourself so seriously. Loosen up, and everybody around you will loosen up. Have fun.

Show enthusiasm – always. All of this is more important, and more fun, than you think, and it

really fools competition.

7. Listen to everyone in your company.

And figure out ways to get them talking. To push responsibility down in your organization, and

to force good ideas to bubble up within it, you must listen to what your associates are trying to

tell you.

8. Exceed your customers’ expectations.

Give them what they want — and a little more. Make good on all your mistakes, and don't make

excuses — apologize. Stand behind everything you do.

9. Control your expenses better than your competition.

This is where you can always find the competitive advantage. You can make a lot of different

mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out

of business if you're too inefficient.

10. Swim upstream.

Go the other way. Ignore the conventional wisdom. If everybody else is doing it one way, there's

a good chance you can find your niche by going in exactly the opposite direction.

Intensive People Focus:

“ASSOCIATES” AND NOT “EMPLOYEES”:

1. Various schemes and programmes for associates:

2. Incentive bonus

3. A discount stock purchase plan

4. Promotion from within

5. Pay raised based on performance and not seniority

6. An open door policy

7. Introduced profit sharing in 1971

Role of Technology

1. Implemented a satellite working system

2. Process like ordering, shipping, communication, and logistics were automated

3. Store level data sales were collected, analyzed and transmitted electronically on a real

time basis

Walmart initiatives

There are many issues that Walmart had taken care of and has done remarkable contribution

towards it.Issues like preserving the environment ,fighting hunger, empowering women and

providing the healthiest and affordable food to as many people as possible.

Walmart is committed to help and support farmers and their communities, prodce more food

with fewer resources and less waste

Walmart has always taken environmental issues into consideration and always use renewable

energy sources and produce zero waste

Walmart have always used simple strategies to make their business grow and sustain in this

highly competitive environment. Sam Walton had put three policy goals which clearly defines

the Walmart’s business

1.Respect for the individual

2.Service to the customers

3.Strive for excellence

Walmart has always used simple success practices which is till date followed by every associate

of Walmart. They are as follows

1.Aggressive hospitality- Using of the door greetors for the customers, displaying

patriotic themes and also getting affiliated with the charities.

2.Sundown rule- This rule states that all the request and the demands of the suppliers or

also the customers should be answered or reverted within 24 hours.

3.Ten foot rule-Employees must greet , smile and attend to a customer if at all he/she

comes within 10 feet of the attender.

Retail rise to multinational status:

By 1988, Walmart was more profitable than rivals Kmart and Sears and was the dominant

retailer in the Bible belt; by 1990, it outsold both in terms of revenue and became the largest U.S.

retailer by revenue.

Prior to the summer of 1990, Walmart had no presence on the West Coast or in the Northeast

(except for a single Sam's Club in New Jersey which opened in November 1989), but in July and

October that year, it opened its first stores in California and Pennsylvania, respectively. By the

mid-1990s, it was far and away the most powerful retailer in the U.S. and expanded into Mexico

in 1991 and Canada in 1994. It spread to New England, Maryland, Delaware, Hawaii, Alaska

and the Pacific Northwest last, Vermont being the last state to get a store in 1995.

The company also opened stores outside the U.S., entering South America in 1995 with stores in

Argentina and Brazil; and Europe in 1999, buying Ads in the UK for $10 billion (equivalent to

$14.2 billion in 2015).

In 1998, Walmart introduced the "Neighborhood Market" concept with three stores in Arkansas.

By 2005, estimates indicate that the company controlled about 20 percent of the retail grocery

and consumables business.

In 2000, H. Lee Scott became President and CEO, as Walmart's sales increased to $165 billion.

(Equivalent to $226 billion in 2015) In 2002, it was listed for the first time as America's largest

corporation on the Fortune 500 list, with revenues of $219.8 billion (equivalent to $288 billion in

2015) and profits of $6.7 billion (equivalent to $8.78 billion in 2015). It has remained there every

year, except for 2006 and 2009.

In 2005, Walmart had $312.4 billion (equivalent to $377 billion in 2015) in sales, more than

6,200 facilities around the world – including 3,800 stores in the United States and 2,800

elsewhere, employing more than 1.6 million associates. Its U.S. presence grew so rapidly that

only small pockets of the country remained more than 60 miles (97 km) from the nearest stores.

As Walmart rapidly expanded into the world's largest corporation, many critics worried about its

effect on local communities, particularly small towns with many "mom and pop" stores. There

have been several studies on the economic impact of Walmart on small towns and local

businesses, jobs, and taxpayers. In one, Kenneth Stone, a Professor of Economics at Iowa State

University, found that some small towns can lose almost half of their retail trade within ten years

of a Walmart store opening. However, in another study, he compared the changes to what small

town shops had faced in the past – including the development of the railroads, the advent of the

Sears Roebuck catalog, as well as the arrival of shopping malls – and concluded that shop

owners who adapt to changes in the retail market can thrive after Walmart arrives. A later study

in collaboration with Mississippi State University showed that there are "both positive and

negative impacts on existing stores in the area where the new supercenter locates."

In the aftermath of Hurricane Katrina in September 2005, Walmart used its logistics network to

organize a rapid response to the disaster, donating $20 million (equivalent to $24.2 million in

2015) in cash, 1,500 truckloads of merchandise, food for 100,000 meals, as well as the promise

of a job for every one of its displaced workers. An independent study by Steven Horwitz of St.

Lawrence University found that Walmart, The Home Depot and Lowe's made use of their local

knowledge about supply chains, infrastructure, decision makers and other resources to provide

emergency supplies and reopen stores well before FEMA began its response. While the company

was overall lauded for its quick response – amidst the criticisms of the Federal Emergency

Management Agency – several critics were nonetheless quick to point out that there still remain

issues with the company's labor relations.

Current development (2011-Present)

In January 2011, at the urging of Michelle Obama and her staff, Walmart announced a program

to improve the nutritional value of its store brands over five years, gradually reducing the amount

of salt and sugar, and eliminating trans-fat. Walmart also promised to negotiate with suppliers

with respect to nutritional issues. Reductions in the prices of whole foods and vegetables were

also promised as well as efforts to open stores in low-income areas, "food deserts", where there

are no supermarkets.

On April 23, 2011, the company announced that it was testing its new "Walmart To Go" home

delivery system where customers will be able to order specific items offered on their website.

The initial test was in San Jose, California, and the company has not said whether it will be

rolled out nationwide. On November 14, 2012, Walmart launched their first mail subscription

service called Goodies. Customers pay a $7 monthly subscription for five to eight delivered food

samples each month, so they can try new foods.

Conclusion

The success of Wal-Mart is remarkable one and has set a benchmark for every entrepreneur.

However the success of this organization can be justified as the owner Sam Walton has said,

“The secret of a successful retailing is to give your customers what they want. And really, if you

think about it from your point of view as a customer,you want everything: a wide assortment of

good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy;

friendly, knowledge services; convenient hours; free parking; a pleasant shopping experience.”