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Walmart Growth Strategy

Essay by review  •  March 26, 2011  •  Case Study  •  287 Words (2 Pages)  •  1,556 Views

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At present, the most important goal for Wal-Mart is to maintain their current net sales growth of approximately 12 percent per year. As the world’s largest company, Wal-mart’s own vast size serves as the main impediment to achieving this goal.Furthermore, Wal-mart may have saturated the market in the United States thereby limiting its ability to expand domestically. The best solution for achieving the above goal is to expand into international markets that have large population centers.

Increasing net sales at 12 percent per year is the most important goal because it offers Wal-Mart and its shareholders the highest probability of maintaining or increasing their return on equity. Alternatively, return on equity could possibly be improved by increasing the overall efficiency of the organization by reducing operating costs or cost of goods sold. However, by demanding concessions from suppliers and requiring them to use Retail Link Wal-Mart is already an industry leader in reducing cost of goods sold. In the area of human capital, Wal-Mart has no unions, pays low wages, and relies heavily on part-time and temporary help.

Again, Wal-Mart being the largest company in the world is the key impediment to maintaining 12 percent annual sales growth because they are already in almost every market in the United States and many international markets. There is little market share left to capture domestically because firms like Ames, Woolworth’s, and Bradlee’s have already gone out of business. Wal-Mart is already 384% larger than their closest competitor Target. Building more stores may simply cannibalize existing store sales and leave net sales unchanged.

Solution Analysis

We can consider the following alternative solutions:

• Increasing internet sales through Walmart.com

• Enhancing specialty shopping within the current stores such as a medical clinic

• Exploiting the changing...

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