Case Study Solution: Wal-Mart Stores, Inc. Essay

Words: 2160
Pages: 9

Wal-Mart Stores, Inc.

1) Please describe the sources of Wal-Mart's Competitive Advantage in discount retailing!

The global player Wal-Mart operates in 14 different markets all around the world, serving 176 million customers every week. Today, the second biggest company of the world, concerning turnover which amounts to 312,427 million US-$, categorizes its operational facilities into five divisions. Among those divisions are the Wal-Mart discount stores, offering convenience and low-priced goods. Wal-Mart supercenters are the biggest stores, being open 24/7 hours and employing a workforce of 350 people, selling all kinds of groceries and general merchandise at the lowest possible price. Wal-Mart neighborhood markets are specified in
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All in all, these facts lead to Wal-Marts uniqueness as a discount retailer and make them the most successful discounter in the whole world. 2) Please describe the future sustainability of Wal-Mart's position in discount retailing!

Wal-Mart has, as mentioned above, developed to the biggest discount retailer by sales . Moreover Wal-Mart's sales almost equal the sales of their ten largest competitors combined. By means of that it becomes clear that Wal-Mart has got a very dominant position in discount retailing. Through Wal-Mart's distribution channels the vendors can sell as much as through ten of Wal-Mart's competitors. The historical data implies that the tendency is that Wal-Mart is growing. The operating results were doubled from 32,602,000 US $ in 1990 to 67,345,000 US $ in 1993 . For the future it is to say that Wal-Mart has the best chances to keep its dominant position, due to many advantages in terms of cost-savings, publicity and locations. For 1993 a Z''-score of 4.3 was reached , showing that Wal-Mart is very solvent and in no financial danger . This can also be observed in the current ratio at 1.51, meaning that all short-term obligations can be met. Furthermore, Wal-Mart creates a net asset turnover of 4.05. In combination with the net profit margin of 6.23% a return on net assets can be appointed to 25.23%. This number reflects the businesses effectiveness that the employed capital is worked with . These and other ratios