Wal-Mart Analysis
History
On May 9, 1950 entrepreneur Sam Walton opened a store named Walton 5 & 10 in Bentonville, Arkansas. As a man trying to constantly find deals with suppliers he decided that he could give the savings to his customers causing his sales to sky-rocket. By 1962, he had eleven Walton's stores inspired by the successes of other discount department store chains; Walton opened the first store in his own discount chain in Rogers, Arkansas that year. Bob Bogle, came up with the name "Wal-Mart" for the new chain. By 1967, the company grew to 24 stores across the state of Arkansas, and had reached $12.6 million in sales, and by 1968, the company opened its first stores outside of Arkansas in Sikeston, Missouri and Oklahoma. The chain continued to add locations in small towns and had 78 stores by 1974. A inter-store computer network was created to improve communication and ordering, and over the next three years, sales more than tripled from $167.5 million to $479 million. The number of stores had more than doubled to 153.The chain continued to grow dramatically, with 330 stores in 1980 and $1.2 billion in sales; 1,114 by 1985 ($6.4 billion); and 1,528 by 1990.
Business Strategy and Business Model
Walton, by contrast, realized he could do better by passing on the savings to his customers and earning his profits through volume. This insight would form a cornerstone of Walton's business strategy when he launched Wal-Mart in 1962. Walton was a cheap man that insisted on always cutting costs. Which lead to his continual success. Walton understood that a major requirement for keeping costs down was controlling the payroll. As he would write in his 1992 autobiography, Made in America, "No matter how you slice it in the retail business, payroll is one of the most important parts of overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margin." Not only did Walton prefer to hire as few people as...
View Full Essay