Wal-Mart Stores Inc. - Success Strategies in Recessionary Environment
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Case Code: BSTR335 Case Length: 20 Pages Period: 2005-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Wal-Mart Stores Inc. Industry: Retail Countries: US Themes: Corporate Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
"The business model that Sam Walton (company's founder) created is perfectly positioned for the environment we live in now. I do believe this is Wal-Mart's time."
- Michael Duke, President and CEO, Wal-Mart Stores Inc, in February 2009.
"Business in general and a turnaround in particular all benefit from market timing. Nowhere is that more true than in Wal-Mart's case. The US economy turned down just as the company was picking up the pieces of its failed up-market strategy which included new fashion apparel, ethnic market segmentation, and centralization of store operations; most of which were either poorly executed or just plain wrong. The only thing that saved the company's bottom line from deteriorating further was the onset of the credit crisis in July 2007 and subsequent rise in oil prices as the dollar tumbled. Higher energy costs forced all retailers to increase product prices as a direct consequence of rising product costs and increased operating expenses. Simultaneously, consumers suffering acute sticker shock sought out the lowest common denominator to shop in order to balance family budgets. Wal-Mart was the obvious choice."
- Nicholas White, President, White & Company, a Custom Jewelry Retailer, in August 2008.
Introduction
Despite the recession, the US-based Wal-Mart Stores Inc. (Wal-Mart), the world's largest discount store retailer, reported revenues of US$ 107.99 billion in the fourth quarter ending January 2009, a 1.7 percent increase as compared to the fourth quarter that ended January 2008. For the fiscal year 2008-09 that ended on January 31, 2009, the company reported revenues of US$ 401.2 billion, a 7.2 percent increase as compared to the fiscal year 2007-08. The net income for the year 2008-09 was reported at US$ 13.4 billion, as against US$ 12.73 billion in the previous year. On Wal-Mart doing well in spite of the difficult times faced by consumers in the US, Forbes wrote, "Retailers of all kinds have been struggling as the economy has deteriorated, but Wal-Mart's strong appeal to the frugal-minded shopper has kept it afloat." Wal-Mart had been ranked Number 1 in 2007 and 2008 among the Fortune 500 companies5 in terms of revenues. As of December 2008, the company had 176 million consumers spread across 13 countries. According to Mike Duke, President and CEO, Wal-Mart, "Our performance relative to competitors was exceptionally strong in the fourth quarter and throughout the year. We expect this momentum to continue. We finished the year with a strong balance sheet, record free cash flow of $11.6 billion, and great inventory management. Our company created approximately 63,000 jobs worldwide this year, including more than 33,000 in the United States. In addition, Wal-Mart remains well positioned to continue to serve our customers in a challenging environment because of its strong price leadership."...
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