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Case study -wal mart

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Wal-Mart: A Case Study
Laura Bowen, Tatyana Budnikova, Ekaterina Mehaffey, and John Paul Robson
The University of Colorado at Denver
BUSN 6620 Applied Managerial Economics
Professor Barbara Pelter
November 16, 2009

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Overview of Industry
Sam Walton opened the first Wal-Mart discount store in Rogers Arkansas back in 1962, and 47
years later, Wal-Mart operates 8,159 units in 15 countries. Wal-Mart is currently the world’s largest
retailer and according to the Forbes top 500 businesses lists for 2009, Wal-Mart ranks second in the
nation and third in the world (behind Royal Dutch Shell and Exxon Mobil) - with a total annual sales of
405,607 million.¹ Wal-Mart employs over 2.1 million people worldwide, making them one of the largest
private employers in both the US and Canada, and the largest private employer in Mexico.² Even in the
midst of a recession it’s estimated that Wal-Mart stores retail market share has raised markedly³ and they
are seeing sales gains for 2009.
4
Wal-Mart has a dramatic story of success from its humble beginnings to
its transformation into an industry leader; one can only wonder what the future holds for this corporate
giant.
Wal-Mart officially incorporated in 1969 and began selling shares of stock in 1970. In 1971 they
had their first 100 percent split at $47, then again the following year for $47.50 (after being listed on the
New York stock exchange). Their 11
th
and most recent 100 percent stock split occurred in 1999 at $95.
5
One aspect of Wal-Mart’s structure that has given them a competitive edge is their efficiency in
logistics. Beginning in the early 1970’s, Wal-Mart utilized a warehouse distribution strategy facilitating
bulk purchasing and streamlined distribution processes enabling them to dramatically minimize
distribution costs. Today Wal-Mart has 147 distribution centers with the average facility serving 75-100
stores. Their truck fleet travels about 800 million miles a year and they move over 5.5 billion cases of
products. A Wal-Mart distribution center can have up to twelve miles of conveyor belts and about 500-
1,000 employees.
2
Wal-Mart has also been able to gain competitive advantage with their embracement of
technology. In 1987, Wal-Mart completed a $24 million investment in a satellite network - the largest
private network at that time. This network included voice and video communication which streamlined

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 Wal-Mart: A Case Study Laura Bowen, Tatyana Budnikova, Ekaterina Mehaffey, and John Paul Robson The University of Colorado at Denver BUSN 6620 – Applied Managerial Economics Professor Barbara Pelter November 16, 2009 Overview of Industry Sam Walton opened the first Wal-Mart discount store in Rogers Arkansas back in 1962, and 47 years later, Wal-Mart operates 8,159 units in 15 countries. Wal-Mart is currently the world’s largest retailer and according to the Forbes top 500 businesses lists for 2009, Wal-Mart ranks second in the nation and third in the world (behind Royal Dutch Shell and Exxon Mobil) - with a total annual sales of 405,607 million.¹ Wal-Mart employs over 2.1 million people worldwide, making them one of the largest private employers in both the US and Canada, and the largest private employer in Mexico.² Even in the midst of a recession it’s estimated that Wal-Mart stores’ retail market share has raised markedly³ and they are seeing sales gains for 2009.4 Wal-Mart has a dramatic story of success from its humble beginnings to its transformation into an industry leader; one can only wonder what the future holds for this corporate giant. Wal-Mart officially incorporated in 1969 and began selling shares of stock in 1970. In 1971 they had their first 100 percent split at $47, then again the following year for $47.50 (after being listed on the New York stock exchange). Their 11th and most recent 100 percent stock split occurred in 19 ...
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