A Strategic Audit of the WalMart Corporation

What is WalMart's Distinctive Capability?
WalMart has the goal of providing "quality goods at low prices, responsible manufacturing, and opportunities for growth" (www.walmartstores.com). Due to their expansive nature and broad customer base, they are able to provide a large discount on many of their products. They are also the leading employer in the United States of African Americans, Hispanics, women and senior citizens.

What Business Are We In?
WalMart is in the business of providing high quality products at affordable prices. They do this through three branches: WalMart Stores, Sam's Club and their International Division. WalMart is the leading provider for many different corporations, such as Proctor and Gamble. They provide the opportunity for one stop shopping and economic value.

Who Are Our Customers?
WalMart's customers are the individual, the family, and the small business owner. They provide the ability for an individual to get their tires and oil changed while shopping for everything from groceries to diapers to school clothes to toys. They also provide a pharmacy, a makeup area, jewelry and even furniture.

Through their Sam's Club subsidiary, WalMart provides bulk items to individual members and special benefits for their small business owners. Purchases from Sam's Club include food, restaurant supplies, furniture, hardware, office supplies, pharmaceutical supplies, jewelry, electronics and other items based upon season.

The International Division focuses on globalization. There are very few areas in non-third world countries that an individual would have to drive more than sixty miles to the nearest WalMart. With the exception of Germany, WalMart has permeated the European market and is established somewhere on every continent except Antarctica.
Costs

WalMart has many ways in which it makes its subsidiaries cost effective investments. Companies such as Proctor Gamble actually have a stocking agreement with WalMart. This agreement means that they keep track of their supplies in the WalMart warehouses and re-stock shelves as products ship. This saves WalMart in manpower and technological expenses.

Another way in which WalMart saves costs is sheer volume. Because they are often a company's largest distributor of goods, those companies find it beneficial to supply WalMart their products at a good value. WalMart even has its own 'off-brands' such as Sam's Choice and Home Trends. By effectively managing the supply chain, they keep costs to a minimum.

WalMart also makes deals with towns that are more rural. In exchange for providing employment and products and investing in the local economy, they receive tax breaks. WalMart has employee programs through which they donate money into the community. This gives them tax deductions, as well.

Corporate Culture
WalMart has a strong corporate culture. Under the leadership of Sam Walton, it was based on Christian principles and focused on quality, integrity in business and marketplace manners. Sam Walton's vision was personal service on a large scale. Their new CEO has moved the corporation into a more liberal place and expanded their product line, but tried to maintain the standards of quality instituted by the founder.

Strategic Assets
WalMart's strategic assets are its leadership, its reputation, its value and its variety. Its leadership, first by Sam Walton and then by successive CEOs, have consistently kept WalMart as a leader in its field. Its reputation is for great prices and one stop shopping. As one person said, "If you can't get it at WalMart, you don't need it!" The value found at WalMart is competitive pricing, customer service and products. The variety of products found in the store are also a huge draw.

Fit
As with any firm, WalMart must within the market in which it is doing business. This fit is defined by an organization's "distinctive capability." WalMart's niche is carved out by several factors. It is considered a family store. Every product for every room is available. Its organizational structure makes things easy to find and there is also a flow through the store layout. The final niche that WalMart has created for itself is that no one can compete with their prices. WalMart will actually decrease their profit margins on some products to get people into the store and the value on these products is often enough for the customers who frequent their stores.

Leadership
WalMart's senior officers and board of directors is comprised of a variety of different backgrounds and experiences. Sam Walton's visionary approach is what set WalMart apart from Target and Kmart which were started the same year. Sam Walton believed that discount retailing should be available to every person, not just local people. He also believed that it could be done with a focus on family values and valuing employess.

New Economy
WalMart has bowed to technology and embraced the changes in their business infrastructure caused by the focus on it. A person can place their business order for Sam's Club online and pick it up in store. One can also access the store inventories and order online and pick things up in store or have them delivered. Photos can be ordered and printed and mailed to one's doorstep.

WalMart is also embracing RFID technology. Through this new technology, WalMart can literally scan an entire eighteen-wheeler's trailer full of inventory and know exactly what is on board. It can also inventory entire store rooms. This technology will soon be worldwide because they will be moving towards making it a requirement for all products.

Strategic Directions
WalMart's competitors used to be J.C. Penney's, Kmart and Target. Now, they are largely the only store who in their league. Target is moving towards adding grocery departments, but has not instituted it on a global basis. Also, WalMart is one of the only 24-hour places in most towns. They will continue to do weekly price comparisons on their local competitions and adjust their own product prices accordingly.