Walmart Success Factors Employee
Walmart Key Success Factors
Walmart Critical Success Factors

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Various factors have played an integral role in the success of Wal-Mart, but without the strong execution of the four functions of management, Wal-Mart would have failed like many others. This paper will discuss in detail the how internal and external factors affect the four functions of management. Key Success Factors (KSFs) Wal-Mart is in the supermarket industry, more specifically, discount retailing. From the industry analysis in Appendix 1, the most prominent characteristics of this industry include high degree of rivalry and high bargaining power of consumers which significantly impacts the firm's strategy and key success factors.

Most impressive from a recent evening visit to the Walmart Museum in Arkansas were the company’s yearly chronological milestones throughout the exhibit areas. Being a technology geek, my focus quickly transitioned to understanding the historical innovation adoption cycle.

Additionally, as a student of leadership, of interest was the culture messaging of founder Sam Walton in growing the company.

“Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitor.” – Sam Walton

The following day, I had the pleasure of spending quality time with the Walmart Asset Protection (AP) team. Part of the trip included touring new technologies deployed at a store in Tulsa, Oklahoma.

The Walmart Museum, the AP conversations, and the store walk were a great reminder of several key success formula ingredients in crafting the world’s largest retailer.

The three megatrends driving the future of Retail

Post-World War II, technology has been the primary engine driving the retail industry’s transformation through three powerful megatrends.

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Becoming global is never exclusively the result of a grand design, though certainly it cannot be the result of incremental, ad hoc, opportunistic and random moves. The wisest approach would be one of 'directed opportunism' - an approach that maintains opportunism and flexibility within a broad direction set by a systematic framework.

One of the best examples of the power of an explicit and systematic process to analyze the complex set of factors involved in becoming a global player is Wal-Mart Stores Inc., the largest retailer in the world. The company, which opened its first international store (in Mexico City) in 1991, now operates in all 50 states, Puerto Rico, Canada, China, Mexico, Brazil, Germany, Britain, Argentina and South Korea. Of a work force of more than 950,000, it had more than 130,000 employees working in 729 facilities outside the United States by July 1999.

Until its recent move into supermarkets, the retailer operated three types of outlets: 1) Wal-Mart stores, which offer clothing, linens, small appliances, hardware, sporting goods and similar items; 2) Sam's Clubs, which offer bulk items to customers who purchase warehouse memberships, and 3) Supercenters, which combine the inventories of a discount store with a full-line supermarket.

Wal-Mart has pursued globalization aggressively since its first move across the border in 1991. (See Exhibits I to III.) In 1993 just 1 percent of all Wal-Mart stores were located outside the United States. By 1998, that had grown to 18 percent. Between 1995 and 1998, 5 percent of the company's growth in sales and 4 percent of its growth in profits came from international operations.

Globalization Imperatives
Did Wal-Mart need to go global? Clearly, it had developed a successful business model for competing in the United States. Why not just prosper as an American retailer? The answer is that the company needed to grow in order to survive, and the international arena was the only one in which significant growth was possible.

Why was growth so important? First, the company needed to show increases in both sales and profits to satisfy capital market expectations. Second, it needed to satisfy the expectations of its own employees. One of the key factors in Wal-Mart's success was its dedicated and committed work force. Thanks to Wal-Mart's stock purchase plan, the wealth of these employees was directly tied to the market value of the company's stock, creating a direct link between growth and its effect on stock price and company morale.

Given the necessity for growth, Wal-Mart could not afford to confine its operations to the United States for three reasons. First, it had already saturated most of the domestic markets. Second, the United States accounts for just over 4 percent of the world's population. By limiting itself to this market, Wal-Mart was missing out on 96 percent of the world's potential customers.¹ Finally, emerging markets, with their lower levels of disposable income, offered huge platforms for growth in discount retailing. Other companies had already capitalized on such growth thanks to the rapid expansion of information technology, increasing cultural homogenization and lowered trade barriers.² Wal-Mart had no choice but to pursue globalization aggressively to meet this competition.

In undertaking global expansion, Wal-Mart had the capacity to leverage two key resources originally developed in the United States. It could exploit its tremendous buying power with such giant domestic suppliers as Proctor & Gamble, Hallmark, Kellogg, Nestlé, Coke, Pfizer, Revlon and 3M to procure goods cost-effectively for its non-United States stores. It could also utilize domestically developed knowledge bases and competencies in such areas as efficient store management, the effective use of technology vis-à-vis suppliers, merchandising skills, logistics and I.T. deployment to benefit its foreign outlets. An unforeseen but positive byproduct of this process was that Wal-Mart was also able to leverage sales-generating or cost-reduction ideas learned in its international outlets to benefit its 3,000 United States stores.

Choice of Markets
In going outside the United States, Wal-Mart had the option of entering Europe, Asia or other countries in the Western hemisphere. It could not afford to enter them all simultaneously for at least two reasons. First, in 1991 Wal-Mart lacked the necessary competencies and resources - financial, organizational and managerial.

Second, a logically sequenced approach to market entry allows a company to apply the learning gained from its initial market entries to its subsequent entries.

The choice of which market to enter first is not always easy. During the first five years of its globalization (1991 to 1995), Wal-Mart concentrated heavily on establishing a presence in the Americas: Mexico, Brazil, Argentina and Canada. It is important to examine whether it should have focused first on Europe or Asia instead.

The European market had certain characteristics that made it less attractive to Wal-Mart as a first point of entry. The European retail industry is mature, implying that a new entrant would have to take market share away from an existing player - a very difficult task. Additionally, there were well-entrenched competitors on the scene (e.g., Carrefour in France and Metro A.G. in Germany) that would be likely to retaliate vigorously against any new player. And European retailers have formats similar to Wal-Mart's, neutralizing the competitive advantage Wal-Mart might have expected had its business model been entirely new to the market. Further, as with most newcomers, Wal-Mart's relatively small size and lack of strong local customer relationships would be severe handicaps in the European arena.

Wal-Mart might have overcome these difficulties by entering Europe through an acquisition, but the higher growth rates of Latin American and Asian markets would have made a delayed entry into those markets extremely costly in terms of lost opportunities. In contrast, the opportunity costs of delaying acquisition-based entries into European markets appeared to be relatively small.

It is no doubt true that Asian markets had huge potential when Wal

Walmart Success Factors