Walmart background and introduction

To explore and describe Walmart journey as the most successful low cost retail business venture –its organization design, structure, leadership etc

1. PBSA 2173 Knowledge Management Seminar Professor Dr Hamdani Saidi WALMART INC. Prepared by: Chan Kok San PBS17032 Tee Sook Sing PBS17031 Wong Siew Lay PBS182007

2. Introduction Walmart Inc. formerly known as Wal-Mart Store, Inc. Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. As of October 31, 2018, Walmart has 11,277 stores and clubs in 27 countries, operating under 55 different names. Each week, Walmart serves nearly 270 million customers. Walmart is the world's largest company by revenue—over US$500 billion, according to Fortune Global 500 list in 2018. Walmart employs over 2.2 million associates worldwide, and continues to be the leader in sustainability and employment opportunity.

3. Founding Stories Sam Walton, the legendary founder of Walmart, opened his first retail store in 1950 in Bentonville, Arkansas. Walmart’s business is the result of Sam Walton’s visionary leadership for great value and great customer service. Mr. Sam believed in leadership through service, and leadership depends on willing service was the principle on which Walmart was built. Walmart’s history is tied to the story of Sam Walton himself, and the principles have drove the decisions the company has made for the past 50 years.

4. The History of Walmart Sam Walton was born in year 1918 in Kingfisher, Oklahoma. He joined the military at the age of 24 in year 1942, and married to Helen Robson in year 1943. Sam and Helen moved to Iowa when he ended his military service in year 1945, and then to Newport, Arkansas. He gained his retail experience during this time, and operating his own variety store. Walton left Newport for Bentonville in year 1950, and opened Walton’s 5&10 on the downtown square. Sam opened the first Walmart in Rogers, Arkansas, at the age of 44 in year 1962.

5. The Success Story and Accomplishments Walmart went public in year 1970. Sam credited the rapid growth of low costs attraction, and his associates who give customers the great shopping experience that would keep them coming back. He made them partners in the success of the company, and firmly believed that this partnership was what made Walmart great. Apart from bringing new approaches and technologies to retail, he also experimented with new store formats such as Sam’s Club and Walmart Supercenter, and even making the decision to take Walmart into Mexico.

6. The Legacy Mr. Sam earned the Presidential Medal of Freedom, awarded by President George H.W. Bush in year 1992. He died in year 1992, shortly after receiving the Medal of Freedom. Walmart remains a leader in the retail industry, and committed to business expansion and communities improvement to better serve their customers.

7. Timeline and Milestones 1960s - Retail Revolution Sam Walton’s strategy is built on an unshakeable foundation - the lowest prices anytime, anywhere. 1970s - Walmart Goes National Mr Sam begins to take Walmart national, providing his vision’s widespread appeal. 1980s - Decade of Firsts The first Sam’s Club and Walmart Supercenter open, serving small business and individuals, and combining a supermarket with general merchandize respectively.

8. ..... Timeline and Milestones 1990s - America’s Top Retailer Walmart is the nation’s No. 1 retailer . Everyday Low Prices goes international. 200 0s - New Millennium Walmart enters the new millennium dedicated to offering customers a seamless shopping experience (online, in a store, on a mobile device). 2010 s - People-Led and Tech-Empowered Walmart commits to serving customers in a changing retail environment, leveraging both associates and technology to make it happen.

9. … ..Timeline and Milestones Present - Leading the Future of Retail In year 2018, the company changes the legal name from Wal-Mart Stores, Inc. to Walmart, Inc. Walmart announces plans to increase wage rate for all US hourly associates to $11, expand maternity and parental leave benefits, and provide one-time cash bonus for eligible associates. Walmart continues to pave the way in retail innovation, benefiting customers and associates by leveraging new technology and learning from its expanding family of brands.

10. History of Walmart Logo

11. ….. History of Walmart Logo The company’s logo features the word “Walmart” spelled out in all lowercase letters, accented on the end by a yellow sunburst refers to as “the spark”. The spark is a symbol for innovation and inspiration - both things that have driven the company forward over the years. It marks the sixth version of the company’s logo, and was reportedly designed to make shopping at the store more attractive to higher income families.

12. Corporate Background

13. Interesting fact about Walmart If Walmart were a country, its sales would rank it 25th in the world GDP for year 2017. (Malaysia rank will drop from #37 to #38) Walmart sold 1 billion pounds of banana each year - the most popular item 60 millions items sold by Walmart eCommerce Walmart Supply 14.5% of all food purchased in USA in 2016 Walmart acquire Jet.com at U$3 billion (2016) and Flipkart at U$16 billion (2018) to boost the ecommerce business Only 15% of store in U.S are leased, the rest Walmart owned. This turn Walmart one of the largest real estate company Rank#107 ‘like’ fan page in facebook

14. World Position (World’s Largest Public Companies 2018 by Forbes) Rank Company Country Sales Profits Assets Market Value #24 Walmart United States $500.3 B $9.9 B $204.5 B $246.2 B #189 Costco Wholesale United States $136 B $3 B $38.7 B $85.9 B #242 Target United States $71.9 B $2.9 B $39 B $37.6 B #53 Amazon.com United States $193.2 B $3.9 B $126.4 B $777.8 B #81 Alibaba China $37.9 B $9.6 B $114 B $499.4 B #897 eBay United States $10 B $-1.6 B $24.6 B $38 B #8 Apple United States $247.5 B $53.3 B $367.5 B $926.9 B #14 Samsung Electronics South Korea $224.6 B $41 B $293.2 B $325.9 B #11 Royal Dutch Shell Netherlands $321.8 B $15.2 B $410.7 B $306.5 B #13 ExxonMobil United States $230.1 B $20.4 B $348.8 B $344.1 B #12 Toyota Motor Japan $265.2 B $22.5 B $473 B $200.7 B #16 Volkswagen Group Germany $272 B $13.1 B $531.4 B $101.4 B #17 HSBC Holdings United Kingdom $63.2 B $10.8 B $2,652.1 B $200.3 B #49 Intel United States $64 B $11.1 B $128.6 B $254.8 B #86 Sony Japan $77.1 B $4.4 B $179.3 B $59.9 B

15. Corporate Background - Core Business Grocery - full line. eg, meat, bakery, food, alcoholic, beverage, floral, beauty aids, baby product, household chemical, and pet supplies Health and wellness include pharmacy, optical services, clinical services, drugs and medical product General merchandise Entertainment (eg electronics, cameras, photo processing services, wireless, movie, music, video games and books) Hardlines (eg stationery, automotive, hardware and paint, sporting goods, outdoor living and horticulture) Apparel (eg apparel for women, girls, men, boys and infants, shoes, jewelry and accessories) Home / Seasonable (eg home furnishing, housewares, small appliance, bedding, home decor, toys) ~ 56 % ~ 11 % ~ 33 %

16. Corporate Background - Other Business Fuel (Gas Station) Financial Service - Money order, prepaid card, money transfer

17. Corporate Structure Walmart U.S. Operate retail store in 50 states in US, Washington D.C. and in Puerto Rico 4761 Stores Contribute 64% of Group Revenue Walmart International Operate retain store over 27 countries outside US 6,360 Stores Contribute 24% of Group Revenue Sam’s Club Operate warehouse clubs in 44 states in the U.S and in Puerto Rico 597 stores Contribute 12% of Group Revenue

18. Walmart U.S. Business Structure Supercenter > 3,500 stores >632k sf Average 178k sf Combine grocery store with fresh produce, bakery, deli and dairy products with electronics, apparel, toys and home furnishings.  Discount Store > 400 stores > 41ksf Average 105k sf Electronics, apparel, toys, home furnishings, health and beauty aids, hardware Neighborhood market or small format > 800 stores > 30ksf Average 42k sf groceries and merchandise. fresh produce, dairy products, deli items, household supplies, health and pharmacy. eCommerce Walmart.com, Jet.com, Hayneedle.com, shoes.com, Moosejaw.com, modcloth.com, bonobos.com Walmart U.S.

19. Walmart International Business Structure Wholly-Owned Argentina Brazil Canada Chile China India Japan United Kingdom Partnership Botswana (Africa) Ghana (Africa) Kenya (Africa) Lesotho (Africa) Malawi (Africa) Mozambique (Africa) Namibia (Africa) Nigeria (Africa) South Africa (Africa) Swaziland (Africa) Tanzania (Africa) Uganda (Africa) Zambia (Africa) Costa Rica (Central America) EI Salvador (Central America) Guatemala (Central America) Honduras (Central America) Nicaragua (Central America) Mexico Cover 27 Countries Store Supercenter Supermarket Hypermarket Warehouse Club Cash & Carry 185ksf 2.4ksf Store Type and Size Global Footprint Country Outlet Argentina 106 Brazil 465 Canada 410 Chile 378 China 443 Indian 20 Japan 336 UK 642 Africa 424 Mexico 2,358 Central America 778 Total 6,360

20. Sam’s Club Business Structure Membership only warehouse club. The warehouse club average 134ksf, total of 597 store in U.S. Provide Grocery and consumable, Fuel, Home and Apparel. Technology, office and entertainment product, health and wellness service. Sam’s Club also offers specialty services, including travel, auto buying, tire and battery centers 2 type of membership – Plus (U$100 p.a.) and Club (U$45p.a.). Plus entitle cash reward and free shipping.   Lower profit margin of product but gain income from membership.

21. Organizational Structure H ierarchical functional organizational structure Two features: hierarchy and function-based definition. The hierarchy feature enable vertical lines of command and authority throughout the organizational structure. Directives and mandates coming from top management are implemented through middle managers down to the rank-and-file employees in Walmart stores. Function-based definition feature of the company’s corporate structure involves groups of employees fulfilling certain functions. For example, HR, IT, Marketing.

22. Organization Structure Executive Team Operation Level Board of Director

23. Organizational Culture Walmart’s organizational culture has four main components. These components guide employees’ behaviors, which determine organizational capacities to add value in the provision of retail service and related services to consumers. The cultural components are also identified as Walmart’s beliefs: Service to customers Respect for the individual Strive for excellence Action with integrity In terms of service to customers, the company prioritizes customers in its operations. Walmart also recognizes the contributions of each employee to the success of the business. In addition, the firm strives for excellence in the performance of individual workers, teams, and the entire organization. In terms of maintaining integrity, Walmart promotes the virtues of honesty, fairness, and impartiality in decision-making processes.

24. Vision of Walmart S tarted with a vision of “To be the best retailer in the hearts and minds of consumers and employees” and it has already been achieved Walmart has also greatly influenced the minds of consumers and employees in terms of financial benefits In 2017 investment community meeting, new vision "Be THE destination for customers to save money, no matter how they want to shop" is officially articulated The change in the corporate vision reflects strategic changes that Walmart implements in response to changes in the competitive landscape and the overall condition of the retail industry.

25. Mission of Walmart WalMart’s slogan was their mission statement “We save people money so they can live better”, originated from the founder Sam Walton Walmart sells commodities at reduced prices, and this helps customers to save money. The mission is synonymous to the company’s slogan, “Save money. Live better.”

26. Policies, Principles and Procedures Open Door Policy - Managers' doors are open to employees at all levels Sundown Rule - Answering employee, customer, and supplier questions on the same day the questions are received Grass Roots Process - Capturing suggestions and ideas from the sales floor and front lines 3 Basic Beliefs & Values - Respect for the Individual, Service to our Customers, Striving for Excellence 10-Foot Rule - Making eye contact, greeting, and offering help to customers who come within 10 feet Servant Leadership - Leaders are in service to their team Walmart Cheer - An actual structured chant that was created by founder Sam Walton to lift morale everyday

27. Values of Walmart Customer First Frontline Focused Innovative & Agile Listen Lead by Example Inclusive High Performance Accountable Strategic Honesty, Fairness, Courage

28. Corporate Strategy S trategy adopted by Walmart is Cost leadership generic strategy, which focuses on achieving low costs Walmart has very firm policy to maintain the low cost This strategy is directly linked to the corporate vision and mission Everyday Low Price (EDLP) strategy promises customers a low price without the need to wait for sales event. EDLP saves the store efforts to organize sale events and mark down prices, and most important to generate shopper loyalty

29. Corporate Strategy Lead on price Walmart helps families save money so they can live better Use their size and scale to provide access to goods at everyday low prices Invest to differentiate on access Be competitive on assortment Deliver a great experience

30. Corporate Strategy Technology is intensively used in Walmart e-Commerce Inventory control Logistic control Store operations including price tags, self checkout, mobile payment Customer relationship management The use of technology make them most efficient and cost efficient and then they can pass down the cost saving to the customers

31. Organization Design A process involving decisions about six key elements: Work specialization Departmentalization Chain of command Span of control Centralization and decentralization Formalization

32. Work Specialization The degree to which in the organization are divided into separate jobs with each steps completed by a different person The jobs are clearly defined for each positions in Walmart according to their position Each Walmart store has the same job categories, job descriptions and management hierarchy At the bottom of the ladder, the primary entry level hourly positions The top store position is Store Manager or General Manager in Sam's Clubs Work specialization enable Walmart to have high efficiency so can keep the EDLP strategy Walmart’s store hierarchy

33. Departmentalization Walmart has matrix departmentalization At corporate level, the jobs are grouped based on functional such as finance, HR, product development, IT, legal etc Walmart has divided the geographical areas into districts. Each district has a District Manager who oversees all the stores within that district, which a top manager at each store Each department inside a store handles different types of products to satisfy variety of customer. A manager of each department oversee the department

34. Chain of Command Chain of Command - Continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who report to whom Walmart’s organizational structure is hierarchical and functional Hierarchy is the vertical line of command and authority. Every employee, except the CEO, has a superior Directives from the top management are implemented by middle managers, then to the employees in their stores The clear chain of command makes every employees clear about their responsibilities and duties, from high to bottom

35. Span of Control The number of employees who can be effectively and efficiently supervised by a manager Span of control is narrow as Walmart has management team that decide how merchandise gets priced, how items are shipped and managed

36. Centralization and decentralization The scale of Wal-Mart is very big and a lot of managers cannot make decisions. Many decisions must be made by CEO to standardize across all stores

37. Formalization P rocess of creating a formalized structure and includes the maintenance of that formal structure over time Walmart has high formalization Procedures, rules, roles and responsibilities for the individual employees, organizational units, groups, teams and the organization as a whole are officially written The formalization helps to develop standardize processes, relationships, and operating procedures, alignment to the centralization of the organization High formalization makes employees do their work orderly, and is good for managing

38. Summary Walmart is still a powerful global company and won't lose out in the market anytime soon Walmart has a good and strong foundation with a good vision from founder and corporate culture By using technology and innovation, Walmart is excelling in the global market Although Walmart do has its weakness and challenges, but with the right strategies and adherence strongly to its founding principles, the company will continue to succeed and grow in the years to come