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Publication Date: March 18, 2017

Source: McGraw-Hill Education

The case details the changes Walmart CEO Doug McMillon implemented to address the competitive threat of e-commerce, including the closing of stores and the $3.3 billion acquisition of Jet.com. Walmart struggles with a maturing and over-saturated U.S. market, where it had to close almost 300 stores (in 2016), a first in Walmart's history. The e-commerce threat is continuing to gain in strength. Doug McMillon needs to develop future growth, and is contemplating a hybrid retail strategy between physical stores and an online presence. Finally, Walmart continues to struggle internationally, especially in China and Brazil, which are potentially huge markets.

walmart case study hbr

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Wal-Mart Harvard Case Solution & Analysis

Home >> Supply Chain Management Cases >> Wal-Mart

walmart case study hbr

Wal-Mart Case Study Solution

As Neuhausen, what is your analysis of Wal-Mart’s supply chain?  Are the company’s supply chain capabilities still a source of competitive advantage?

Wal-Mart’s supply chain is a collective effort formed via effective customer relationship management, strategic relationships with partners and integrated technology. This integrated supply chain has been formed over years and has been a source of competitive edge for the giant discount retailer.

Looking back at the trends during the initial days of Wal-Mart’s entry into the retail business, the supply chain was less complex with Wal-Mart buying directly from manufacturers while the introduction of sales offices in the US and other countries increased the complexity of the supply chain.  Evaluating the current supply chain, it can be seen that a rather complex model is being followed where Wal-Mart makes use of Global Merchandizing centers for bulk purchasing for optimal cost savings. While the merchandize includes branded products, 20% of the sales are generated through private label products as well. These private label products also pass through the integrated supply chain since Wal-Mart’s suppliers produce these private label products for further strengthening their relationship with the giant retailer.

The supply chain still enjoys a competitive edge not only because of the strategic relationships that the company has managed to build over years but mostly because of Wal-Mart’s store monitoring and use of information technology for effective communication of information across its stores. The headquarters in Bentonville is linked directly to individual stores via satellite broadcast such that each store is monitored and real time sales data is reviewed via the company’s network. The competitive edge is enhanced by the information system’s ability to capture real time inventory levels in stores and with the supplier network being integrated to the levels of in-store inventory, Wal-Mart manages to have an efficient supply chain network.

While this type of integrated supply chain network and the effective management of operations can be adopted by competitors in the giant discount retail industry, the fact that Wal-Mart enjoys a first mover’s advantage in this industry indicates that the company has managed to gain the trust of its suppliers over years.

Wal-Mart enjoys a high bargaining power with its suppliers not only because of its first-mover’s advantage but also because of the dependency that the giant retailer has created. By offering sales volume and prominence in the retail industry, Wal-Mart makes these suppliers cut prices, produce exclusive items for Wal-Mart and pay for extra advertising support. This indicates that the retailer’s supply chain management is effective enough for suppliers to continue their dependency on the retailer despite opting for a low bargaining power in the retail industry.

The supply chain offers additional benefits in the form of just in-time delivery of merchandise to stores, in addition to consistency in inventory levels. The fact that inventory levels of competitors go through fluctuations while Wal-Mart continues to enjoy an effective management of inventory levels and supplier relationships suggests that the retailer’s strategy is still a source of competitive edge,.

Moreover, Wal-Mart still has a non-unionized labor force which means that the retailer does not allow external influences to affect its supply chain management that complements its low cost strategy.

How is Wal-Mart doing?  How does it compare to its competitors?

The overall performance of Wal-Mart has been shown in appendix 1 in the form of a quantitative analysis from 2002 to 2011. As per the given data it can be seen that the company has had a positive trend in sales revenue over years whereas the cost of goods sold have also increased simultaneously. The trend in gross profit margin over the period shows consistency in cost management suggesting that the firm has not been affected negatively by rising costs of goods sold. The positive trend in net income has not brought a rise in net profit margins owing to a rise in operating expenses. The company has maintained its efficiency levels as evident by the consistent trend in ‘Return on Assets’. Recent years from 2009 onwards have shown a rising trend in gross profit margin, net profit margin and efficiency levels suggesting that Wal-Mart’s current strategy is working to its advantage.

Wal-Mart’s comparison with its competitors has been done using the data from 2011. In terms of sales revenue, Wal-Mart has the greatest sales turnover as compared to its current competitors in the global discount retail market. However, it should be noted that when it comes down to management of cost of goods sold,  competitors like Dollar Tree, Dollar General, Target, Safeway, Big Lots, Fred’s Inc. , Sears and Walgreen have managed to have better gross profits margins as compared to Wal-Mart recently. This could indicate that these competitors have lower costs of goods sold per unit. Wal-Mart has the greatest level of net profit margin in the industry with better margins as compared to competitors like Costco, Safeway, Kroger Co, Amazon .com, Fred’s Inc., CVS , Sears and Carrefour. Giant retail firms like Tesco plc, Walgreen and Target have equivalent net profit margins to Wal-Mart suggesting that the company is doing just well as its direct competitors in generating margins. Competitors like...............

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WAL MART STORES INC Case Solution & Answer

Home » Case Study Analysis Solutions » WAL MART STORES INC

Wal Mart Stores Inc Case Solution

Ever since the establishment of Walmart, its primary objective has been to provide ahuge variety of products to the customers at lower prices compared to other retailers. By keeping in view of its main strategy, Sam Walton the founder of the company had been able to increase the number of stores, supermarkets and others in the U.S in which made the company as the world’s largest retailer and highly recognized company.

The company had also managed to gain skilled and motivated employees due to its friendly working environment. The top management empowers its employees on many tasks and also encourage them to be initiated. The employees are also provided with many benefits such as health and insurance benefits and also training in Walmart is decentralized. This improves the performance of the employees and in turn, improves the overall performance of the company and gaincompetitive advantage.

Main sources of Wal-Mart’s competitive advantage

The main sources of Wal-Mart’s competitive advantage amongst its competitors are:

Low prices “Everyday-Low-Prices”: One of the main sources of Walmart’s competitive advantage is through the low prices and its promotion “Everyday-Low-Prices”. The company has been able to become the top retailer in the world through the cost leadership strategy.

Skilled human Resources: Another reasonof the company being on the top of retailing is because of its skilled employees. The working condition of Walmart is friendly in which the CEO engages with its associates and everyone is treated as a family. This improves the performance of the employees and productivity of the company.

Strong Brand Image:Ever since Walmart established in the year 1945, the company’s focus had been towards the selling of products to customers at lower prices. In the year 1994, company had around 1,953 shops established all over U.S. Due to this, the company had been able to achieve the rank as the top retailing company and it is recognized all over the world.

Sam’s Club:The company’s success is due to the diversification of the business by selling the products in wholesales through membership only. The first Sam’s Club was established in the early 1980sin Oklahoma. The sales of Walmart had been significantly increased due to the Sam’s Club. However, the establishment of Sam’s Club has caused the company to cannibalize its own market although it would not give the competitors any weakness.

Vendor Relationship:Walmart has also maintained a good relationship with its vendors as P&G was the first successful vendor of Walmart where it had placed a number of P&G products in brick & mortar shelves. It had also installed electronic data exchange which helped the company in interacting and providing order to the vendor.

Walmart Competitive advantage sustainable

After analyzing the retail industry and identifying the factors of Walmart’s competitive advantage, we cansay that Walmart could sustain the competitive advantage in the retailing industry. The major advantage that Walmart has against its competitor is through cost leadership strategy in which it provides theproduct at lower cost than Kmart and Target. Another competitive advantage is that Walmart is establishing stores in rural areas in which many of its competitors would generally ignore the location due to low population. This strategy not only affected on improving the company’s revenue but also impacted on the brand image.

The company would be able to sustain competitive advantage through:

  • By following the cost leadership strategy, in which it would provide huge varieties of product of strong brands on low cost.
  • Establishing stores, supermarkets and supercenters in rural areas where there are ample of opportunities.
  • Creating relationships with the top vendors in the world for providing products to the customers such as P&G, Unilever, and other top vendors.
  • The hiring of skilled employees and motivating them through bonus, empowerment, and benefits.

Recommendation for Walmart’s future strategy

There are several initiatives which Walmart could take in retaining its rank for being the world’s top multinational retailing company in the world. Following are the recommendation for Walmart’s future strategy:

  • Improving the customer experience by hiring more employees for providing more checkout lines especially during the peak seasons such as Christmas.
  • Beating the competitors through cost leadership strategy and providing products to customers at lower cost.
  • Expanding the business in developing countries especially in the eastern countries such as Pakistan, India and others.
  • Developing good relationship with the top companies such as Unilever and P&G to attract more customers.
  • Improving the Technology which would easily allow for selling of products domestically and globally.
  • Develop an online website in which it would ease shopping for the customers……………………

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The case details the changes Walmart CEO Doug McMillon implemented to address the competitive threat of e-commerce, including the closing of stores and the $3.3 billion acquisition of Jet.com.…

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The case details the changes Walmart CEO Doug McMillon implemented to address the competitive threat of e-commerce, including the closing of stores and the $3.3 billion acquisition of Jet.com . Walmart struggles with a maturing and over-saturated U.S. market, where it had to close almost 300 stores (in 2016), a first in Walmart's history. The e-commerce threat is continuing to gain in strength. Doug McMillon needs to develop future growth, and is contemplating a hybrid retail strategy between physical stores and an online presence. Finally, Walmart continues to struggle internationally, especially in China and Brazil, which are potentially huge markets.

Mar 18, 2017

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Wal-Mart Stores, Inc. – Case Solution

"Wal-Mart Stores, Inc." case study describes the development and growth of the company over the years. It discusses the move of the company to engage in other business industries. This case study seeks to answer whether the company has been able to sustain its competitive advantage and superior performance in comparison to its competitors.

​Sharon Foley Harvard Business Review ( 794024-PDF-ENG ) January 20, 1994

Case questions answered:

  • Has Wal-Mart Stores, Inc. been able to sustain its competitive advantage and superior performance, as explained in the case?
  • How can Wal-Mart continue to sustain its superior performance?

Not the questions you were looking for? Submit your own questions & get answers .

Wal-Mart Stores, Inc. Case Answers

Case facts – wal-mart stores, inc..

Wal-Mart Stores, Inc. was founded by Sam Walton in 1962. It operates in 16 countries globally. It had the largest market share of the total global retail market. It had the largest global corporation by revenue.

It is considered the largest private employer in the world. It is included among the major players in its industry, along with Kmart and Target.

Major parts of Wal-Mart Stores, Inc. corporate strategy as per the case

  • Creation of positive brand and company recognition
  • Dominance in the retail market
  • Expansion in the US and international markets
  • Branch out into new sectors of retail.

SWOT Analysis

Wal-Mart Stores, Inc. - SWOT Analysis

Porters Five Force Analysis

The Threat of Competitive Rivalry is high. 

Wal-Mart Stores, Inc. faces huge competition. There are high exit barriers due to the huge inventory. The switching cost of buyers is low. And it has a high market share in a low-growth industry.

The Threat of New Entrants is Low

New entrants would be reluctant to enter the industry because this industry is already saturated, and to fight the already existing competitors and penetrate the market is difficult. It requires a high capital requirement, and it is hard to build a distribution network.

The Threat of Substitutes is Medium

The switching cost of customers for Wal-Mart Stores, Inc. is low. Many substitutes with similar performance are available in the market, and the competitive pricing for products of similar quality.

The Bargaining Power of Customers is High

Customers are now more aware and have the resources to search for the best deal possible. Their switching cost in the retail industry is also negligible.

The Bargaining power of Suppliers is Low to Medium.

Cordial trust relationship with suppliers is…

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  1. Saving on Strategies: Using HBR Promo Codes for Top Business Insights

    Harvard Business Review (HBR) is a renowned publication that provides cutting-edge insights into the world of business. Its articles, case studies, and expert analysis are highly sought after by professionals across industries.

  2. What Is a Case Study?

    When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to lear...

  3. Why Are Case Studies Important?

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  5. Walmart

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  6. Wal-Mart Harvard Case Solution & Analysis

    The overall performance of Wal-Mart has been shown in appendix 1 in the form of a quantitative analysis from 2002 to 2011. As per the given data it can be seen

  7. Wal-Mart Stores, Inc.

    Harvard Business School Case 794-024, January 1994. (Revised November 2002

  8. Walmart Update, 2019

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    Harvard Business Review (794024-PDF-ENG) January 20, 1994. Case questions answered: Has Wal-Mart Stores, Inc. been able to sustain its competitive advantage