Walmart T4
- 1. Case Analysis 1974 - 1985 MBAM 619 Scott Campbell - Christina Connolly - Maureen Stafford
- 2. Political Change Distrust and Instability Nixon and Ford Brief relief with Carter Vietnam War Energy crises 1973 Nixon’s demands 1979
- 3. Economic Change 1970’s: Decade of Crisis Most traumatic decade for economy since Great Depression Nearly every economic indicator goes south Productivity Costs Unemployment soared Stagflation (high inflation but slow econ. growth) Exports low Imports swamped market 1980’s: Economic Malaise Deep recession (1981 - 1982) Broke skyrocketing inflation Paves the way for growth during the decade
- 4. Economic Troubles (1974 - 1985) Source: http://harvardbusiness.org/flatmm/hbextras/200805/recessions/ 73 - 75: Stagflation 75 - 80: Uneasy growth; stagflation continues 80 - 81: Short Recession 81 - 82: Deep Recession
- 5. Social Change Household structure changed: More single family homes Female householder 58% change (1970-1980) Male householder 41% change Non-family householder Male householder increased by 117% Increase in personal savings levels throughout the Carter administration Consumers are better informed
- 6. Technological Change SKU presence, larger than other stores UPC scanners – sped up process Satellite network Real-time communication Reduced telephone charges ($10 million)
- 7. SWOT
- 8. Strengths Walton’s continued involvement with the company Communication system/sharing of information Linked to their 3,000 vendors Quick turn around time of merchandise in a distribution center (within 48 hours of request) Efficient use of delivery trucks to and from stores (60% full on backhauls) Identified best product mix for in store display (hard vs. soft goods) Capitalized on branded merchandise for national advertisements Industry leader in technology innovation
- 9. Weaknesses Was not seen as a place for consumers to invest in apparel, hardware, electronics Employee remunerations were not stellar
- 10. Opportunities Growing population in the Sunbelt area, more than any other area in the U.S. Consumers’ need to save money Reduce “shrinkage” problem by incentivizing employees Acquire other discount stores’ leases who were going out of business
- 11. Threats Discount Store competitors increase by 64% in the 1970s. Uncertain economy Change in politics Competitors copying production/technology
- 12. Wal-Mart PEST Analysis 1974 - 1985 Opportunities Threats Implementing streamlined technology progressively Expensive; adoption time; availability to competitors Accelerated growth and expansion; real-time communication Greater productivity Large strides in communication and efficiency technologies Philosophy of “Everyday Low Prices” Higher demand for discount store products Greater interest in lower prices More single parent households; personal savings increases Focus on hard goods; more SKU’s; lower prices vs. comp.; buy American Increased competition in discount store market Be the low-cost leader; capitalize on high unemployment People seeking value Recessions; Nearly every economic indicator went south Consistently low prices, tailored to local needs; nearby stores People withholding income Deliver on consistency Growing distrust in stability and leadership Oil embargoes, Vietnam, Watergate, change of Presidents Strategic Response Impact of Change Nature of Change
- 13. Questions?
- 14. Sources - Ghemawat, Pankaj. “Wal-Mart Stores’ Discount Operations.” Harvard Business School Case, Rev: 4/12/07. - Harvard Business Publishing: “Brief History of Recessions” http://harvardbusiness.org/flatmm/hbextras/200805/recessions/ (Accessed 1/7/09) eNotes.com: “1970’s and 1980’s Decade Overviews” http://www.enotes.com/1970-business-economy-american-decades http://www.enotes.com/1980-business-economy-american-decades "1970s Flashback-Economy / Prices ." 1970s Flashback 1970 - 1979 . 07 Jan. 2009 <http://www.1970sflashback.com/1971/ECONOMY.asp>. "Can a President Tame the Business Cycle?" NYTimes.com 18 Oct. 2008. New York Times. 07 Jan. 2009 <http://www.nytimes.com/interactive/2008/10/18/business/20081019-metrics-graphic.html>. "Government Spending Grew Faster Than Revenues for Most Administrations." The Heritage Foundation - Conservative Policy Research and Analysis . 07 Jan. 2009 <http://www.heritage.org/research/features/BudgetChartBook/fed-rev-spend-2008-boc-C2-Government-Spending-Grew-Faster.html>. U.S. Census Bureau, "Families and Living Arrangements"; 07 Jan. 2009, <http://www.census.gov/population/www/socdemo/hh-fam.html>.