Wal Mart Study..Management

In the mid 1940s, Walton gave up his job and decided to set up his own retail store. He purchased a store franchise from Ben Franklin in Newport, Arkansas. It was here that he learnt his first lessons in retailing – offering significant discounts on product prices to expand volumes and increase overall profits. The business was successful and Walton soon acquired a second store within three years.

Walton not only looked for opportunities to open stores in other small towns but also explored the possibility of introducing innovative practices such as self-service.

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As the need for people to manage his stores increased, Walton tried to attract talented and experienced people from other stores. By 1969, Walton had established 18 Wal-Mart stores, reporting an annual sale of $44 million. In mid 1970s, Wal-Mart acquired 16 Mohr-Value stores in Michigan and Illinois. By the late 1970s, the retail chain had established a pharmacy, an auto service center, and several jewellery divisions. In the 1980s, Wal-Mart continued to grow rapidly due to the huge customer demand in small towns, where most of its stores were located.

Commenting on the growth of Wal-Mart, Walton said: “When we arrived in these small towns offering low prices every day, customer satisfaction guaranteed, and hours that were realistic for the way people wanted to shop, we passed right by that old variety store competition, with its 45 percent mark ups, limited selection and limited hours. ” Wal-Mart stores were located at a convenient place in a big warehouse-type building and targeted customers who bought merchandise in bulk. Customers could buy goods at wholesale prices by becoming members and paying a nominal membership fee.

By 1984, there were 640 Wal-Mart stores in the US, generating sales of about $4. 5 bn and accruing profit of over $200 mn. Wal-Mart suffered a setback in 1992, when Walton died after a prolonged illness.

But it continued its impressive growth in the 1990s, focusing more on establishing its stores overseas. In 1992, Wal-Mart expanded its operations in Mexico by entering into a joint venture with Cifra. Two years later, the company acquired 122 Woolco stores from Woolworth, Canada. By 1997, Wal-Mart had become the largest volume discount retailer in Canada and Mexico.

In 1997, Wal-Mart acquired the 21-store German hypermarket chain, Wertkauf. Other international expansion efforts included the purchase of Brazilian retailer Lojas Americans’ 40 percent interest in their joint venture, and the acquisition of four stores and additional sites in South Korea from Korea Makro.

In January 1999, Wal-Mart expanded its German operations by buying 74 stores of the hypermarket chain, Interspar. The stores were acquired from Spar Handels AG, which owned multiple retail formats and wholesale operations throughout Germany. By 2002, Wal-Mart had emerged as the largest company in the world in terms of revenues.

Analysts felt that Wal-Mart had come a long way since 1979, when the company generated annual revenues of more than a billion dollar for the first time. By 1993, the company was doing a billion dollar business in a week and by 2001, it was crossing the billion dollar mark in every 1.

5 days. Analysts attributed this phenomenal growth to Wal-Mart’s continued focus on customer needs and reducing costs through efficient supply chain management practices. The company was able to offer a vast range of products at the lowest costs in the shortest possible time.