...ABSTRACT This report provides an in depth comparative analysis between Walmart and Amazon with respect to each company’s demographics, marketing, operations, and finance. The intent of this analysis is to determine the better stock to buy and hold over the next decade. It addresses the questions of market mispricing, the changes each entity must address to be competitive in the long run, and the importance of profitability. Jon Dages, Mei Li, and Chris Moore WALMART VS. AMAZON: The Economist Case Competition 2016 Table of Contents CUSTOMER DEMOGRAPHICS ........................................................................................................................ 2 MARKETING................................................................................................................................................... 4 OPERATIONS ................................................................................................................................................. 7 FINANCIAL ANALYSIS ................................................................................................................................... 11 RECOMMENDATION ................................................................................................................................... 13 APPENDIX .................................................................................................................................................... 14 WORKS...
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...attractive to customers. Goal is to avoid pure competition Target market: group of likely consumers for product and service. Attract them with good marketing mix Marketing mix: shaping the combination of the product and approach to maximize customer value Predict tastes and preferences Attempt to understand human behavior- perception shape behavior, learned behavior over time creates expectations Factors influencing decision: culture, personal preference, economic, time available, life style Cast study: starbucks switching from competitive item to non competitive differentiated product Monopolistic competition structure: Many buyers, few large seller with complete product offering Information about product is no longer complete Sellers now offer very different products Market is not influences by one single buyer or seller Resources are free to move, ease of entry and exit How to find potential customer: segmentation Geographic- city or rural, Europe or middle east. Regional foods ex: Walmart: did it in a small town to avoid competition Demographic – age sex income education tech savvy look for major shifts Psychographic- life style, personality ex: goth Behavior- usage, loyalty, repeat purchase activity: ex: wegmans card Direct your product efforts to a particular segment rather than whole market Can then be divided into niche markets Opportunities come from looking beyond customers stated needs...
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...SUMMARY19 COMPETITIVE EDGE20 MARKETING AND SALES STRATEGY21 COST STRATEGY21 CAPITAL STRUCTURE STRATEGY21 FINANCIAL ANALYSIS22 GENERAL OVERVIEW22 OPERATING EXPENSES AND NET SALES22 OPERATING INCOME23 FREE CASH FLOW23 ACCOUNTING ASSUMPTIONS AND METHODS23 INVENTORIES23 DEPRECIATION AND AMORTIZATION24 GENERAL STRENGHTS24 ACCOUNTING ASSUMPTION AND METHODS25 EVOLUTION AND CAUSE FOR THE CHANGES26 KEY FINANCIAL RATIOS27 LIQUIDITY RATIOS28 PROFITABILITY RATIOS28 DEBT RATIOS29 OPERATING PERFORMANCE RATIOS30 ANALYSYS OF RISK31 FX AND INTEREST RISK32 SOLVENCY RISK33 COMPETITORS ANALYSIS34 SWOT ANALYSIS37 RECOMMENDATIONS38 BIBLIOGRAPHY39 INTRODUCTION Walmart Stores, Inc. (WMT) is an American public corporation that runs a chain of large discount department stores and a chain of warehouse stores. Walmart operates more than 8,692 retail units across three business segments of retail stores worldwide that offer a wide array of general merchandise including groceries, apparel, electronics, and small appliances. In addition, the company is the world's largest retailer and grocery chain by sales and just over half of the company's sales comes from grocery items. Over 54% of the company's stores are located in the United States, with the majority of international stores located in Central and South America and China. The company focuses on offering the lowest prices across its business segments, which together earned $408 billion in revenue in 2010, a 1% increase from...
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...(Low) In the USA supermarket industry, the threat of a new entrance is relatively low. This consideration is achieved by the advantages that already had by the incumbents. For example, Walmart that was considered as a leader in sales for supermarket in USA,[1] Walmart even already grasped the US market share in 1990 with 41%[2], Walmart had a market presence, buying power and breadth of inventory. Moreover, Walmart also spent large amount of capital investment for its IT division and distribution logistics. Walmarts had IT capability to check individual product sales. In consequences, Walmart is the only retailer that can provide real-time sales data for many suppliers. The market power that Walmarts have, make them very easy to bargain with the supplier, this situation makes it harder for the new entrance to compete with Walmarts. On the other hand, ALDI is considered as a discount grocery chain also has its advantage. ALDI’s unique operating model makes it almost impossible for competitors to match price and quality. Max Levitte, CEO cheapism.com, wrote that one day he visited a store in Ohio and compared ALDI to Kroger and Walmarts, so with the same items in various departments, ALDI was the cheaper for total item in shopping cart, with the gap is more than $13 with Walmarts and more than $21 with Kroger.[3] The bankruptcy case of Kmart in 2002 also strengthen the argument that the low price advantage of ALDI is hard to be beaten. On the other hand, Walmart’s...
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...Internal Environment Walmart: 1.Company Profile : * History : Walmart is a well known American company that operates retail stores including grocery stores, discount stores,wearhouse , clubs and combination of general merchandise store. It was founded in 1962 by Sam Walton along with his brother Bud in Rogers Arkansas. At the beginning he opened more stores in Arkansas but later he expanded walmart to Oklahoma and Missouri in 1968. In 1972 the company listed in the Newyork Stock Exchange. Walton group also introduced the Sam's Club Warehous store in Iowa ,Nibrasca ,Indianna in 1983. During 1980's the company rises considerably by reaching 25.8 billion dollars sales with almost 1,525 stores and 271,000 workers at the end of the decade. In 1990's walmart considered as a largest retailer of the nation and it continued the acheivement by opening more stores within an outside country. The company entered in Japan by buying 36% stake of Seiyu in 2002 and Walmart increased its stake about 67% in 2007.According to the fiscal year sale of Walmart is about 469.2 Billion in 2013 with 2.2 million workers worldwide and 11 thousand stores under 69 banners in 27 countries. * Scale of Operation: The strong market position is the main strength of Walmart with more then 400 billion dollars revenue and almost 11 thousand stores worldwide and consumer trust that differentiate walmart from its competitors. Walmart can also acheive higher profit because of its huge size and it has a strong...
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...FINANCIAL ANALYSIS PROJECT 1 CONTENTS INTRODUCTION...........................................................................................................................................4 VISION STATEMENT................................................................................................................................5 MISSION and OBJECTIVES.......................................................................................................................5 COMPANY SUMMARY................................................................................................................................6 OWNERSHIP....................................................................................................................................................6 ORGANIZATIONAL STRUCTURE..........................................................................................................7 HISTORY OF WAL-MART..........................................................................................................................8 INDUSTRY ANALYSIS.................................................................................................................................9 MARKETING ANALYSIS...........................................................................................................................10 MARKET SEGMENT.............................................................................................................................
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...Wal-Mart through their holding company, Walton Enterprises. Today, Wal-Mart is led by Chairman, Greg Penner, the grandson-in-law of Sam Walton and President and Chief Executive Officer, Doug McMillon and headquartered in Bentonville, Arkansas. Wal-Mart’s brand and low price strategy, ‘Every Day, Low Prices’ prides itself on making a difference in customers lives, helping communities save money and live better domestic and international. Wal-Mart operates 11,532 stores in all 50 states, across 28 countries and 11 e-commerce websites. Each week nearly 260 million customers visit stores or websites (via online and mobile). Many of its brick-and-mortar stores, operate 24 hours a day, seven days a week and consumer products range from a variety of groceries, electronics, sporting goods, clothing, home improvement products, pet supplies, pharmacy and most everything in between. In 2015, Wal-Mart generated the highest sales in its grocery division at 60% of $288 billion dollars in revenue. Over the past several years, Wal-Mart has enhanced its growth strategy to focus on four customer driven elements: price, assortment (of good and products), experience, and access which the company executes on a daily basis, through their vast customer base, with most stores strategically located by geography, to serve all socio-economic and demographic levels and to compete with other consumer retailers in...
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...Associate Level Material Appendix D Customer Relationship Management (CRM) Review the examples of Customer Relationship Management (CRM) characteristics found in the table below. In your own words describe at least three activities that represents each characteristic of a CRM plan; share of customer, lifetime value of a customer, customer equity or high-value customers. |Characteristic |CRM Activity | |Share of Customer |Share of customer is a percentage of an individual customer's purchase of a product that | | |is a single brand. As one example I would like to use the “As Seen on TV”, products. Even | | |though it is not just one brand this firm offers incentives that would allow the customer | | |to continue purchasing products from them. Another example would be a food brand name | | |“Kellogg's”. This brand name food product has constant sales on their product and markets | | |the food to be healthy and nutritious. This draws in not only the customer but children as| | |well. The last example would be “Victoria Secrets”. Though they offer semi-annual sales | |...
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...Environment of Walmart can be summarized as follows: a) Economic:Despite the general weakness in the world economy and the uncertain environment that prevailed, Walmart had reported sales growth of 11%, amounting to $6.4 billion. The company's associates were indeed doing the Walmart cheer in faraway places like Germany, South Korea, China and United Kingdom. In three decades, it had grown from its rural Arkansas roots to become the world's largest company, and quite possibly the most powerful retailer. b) Socio-cultural: Walmart stores were geared toward the low-income customer segment; headquarters were reflective of the company's tendency to be tightfisted as they were housed in warehouse style buildings with minimalist decor. Frugality was a central tenet at the company, and every associate was expected to fully adopt this value in all its manifestations. It was also said that the company is homogenizing the marketplace by letting smaller towns dictate popular culture. c) Global: Walmart worked globally under the philosophy: Different store for different folks. As it grows around the world, it is important to its success that it exchange best practices among all the countries where it operates. Walmart launched its globalization efforts with an initial foray into Mexico, then to Brazil, as well as Argentina. It then penetrated Europe with its stores in Germany and in the United Kingdom. Its Asian strategy composed of China, Korea and Japan. d) Technological: Walmart was a leader...
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...either be service or product. The product may be sold through the business or the business is producing the product. In any given situation, the business must choose a strategic path to follow that draws in customers and keeps customers loyal. The business professionals within the business must make two kinds of decisions – strategic decisions and tactical decisions (Martiocchia, 2013). Within the strategic decision making process, the decision makers must consider low-cost strategy or differentiation strategy in addition to various governmental laws, in order to remain competitive within the given market. Scilly (2014) indicates that when it comes to marketing a business, there are three generic strategies that include focus, differentiation and cost leadership. The lowest-cost strategy, or cost leadership strategy can be very successful but also more difficult to employ (Scilly, 2014). When a business is using the lowest-cost strategy the business is marketing their products or services at the lowest cost as compared to the competitor. This means that the business would need to minimize all costs and expenses of the business in order to pass on the savings to the customer (Scilly, 2014). Wal-Mart is an example of a business that uses low prices to gain customers and customer loyalty. This is a company the uses the lowest-cost strategy by keeping various business expenses low, such as employee wages, in order to sell products at the lowest possible cost. This keeps Wal-Mart competitive...
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...Walmart LAW/531 November 7, 2013 Thane Messinger Walmart Walmart opened its doors in 1962 based on Sam Walton’s strategy of creating the lowest prices anytime, anywhere. By 1967, the Walton family was running 24 stores bringing in $12.7 million in sales. By 2012, the company served more than 200 million customers each week, employed 2.2 million associates worldwide, in more than 10,000 stores in 27 countries. After waiting years to open a “Superstore” in India, ambitious plans to expand in the country have seized to continue. India, the world’s largest retailer, has a difficult time with the regulations of the country as well as finding a foreign chain to help invest in the country’s $400 billion retail sector (Pasricha, 2013). Walmart has said it would end its joint venture with Bharti Enterprise Limited amid continued difficulties navigating regulations on foreign investments. To continue the organizational success Walmart has achieved, the organization will need to continue to research several key factors. These factors include: India’s restrictive rules on foreign firm operations, the target market blunder, Walmart’s past efforts to penetrate the retail industry in India, and any challenges encountered in partnership with Bharti. Walmart ceases operations in India because of failed partnership and restrictive government regulations on foreign investments. Walmart’s Ethics Walmart set its business foundation on values and ethics that leads the company. The...
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...“clothing, jewelry, sporting goods, household supplies, toys, electronics, groceries, and health and beauty products” (Keller, 2015). Despite the obvious similarities to its competitors in terms of product offerings, Target distinguishes itself from the pack by promoting affordable quality, rather than low prices (as is the case with most retail discounters). As such, Target’s brand has become virtually synonymous with the concept of “cheap chic.” This strategy has made Target one of the most profitable and recognizable brands in the U.S. This essay will examine the branding methods employed by Target to differentiate itself within the retail industry and build significant brand equity among its loyal fans. The Past 50 Years Though the Target concept began to take form in the early 1900’s, operating as a retailer of dry good, the first operation to be named and fully resemble what we now know as Target, wouldn’t open until the early 1960’s. It was at this time that Target founder, George Dayton began to realize the opportunity to separate his brand from the competition by offering nationally-recognized brands at discounted prices, a move that Dayton believed would appeal to “value-conscience” consumers. The text notes that this model was not a new one when proposed by Dayton. It does not however note the complexity of operating such a model. More recent research identifies two distinct consumer behaviors, both driven by differing psychographics, which at a surface level, would...
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...Walmart The Retail Superpower Vinod Palikala vpalika@hotmail.com Walmart Valuation by Vinod Palikala Walmart Company Overview Walmart is the largest retailer in the world and accounts for nearly 10% of all retail sales in US. It dominates the retail market with sales exceeding that of the next six largest retailers in US. Retailers compete for customers on five major factors: 1. 2. 3. 4. 5. Prices for the products and services Service level Product selection (merchandise line width and depth) Location or access: the overall convenience of shopping the retailer behaviors in the purchase process) Walmart competes primarily on prices (everyday low prices). It also provides a greater product selection compared to peers (one-‐stop shopping). Competitive Advantage Perhaps the most critical judgment in the valuation of a business is the estimation of its competitive advantage. Lacking any competitive advantage, a business is usually worth no more than the replacement cost of its assets. Only in the presence of sustainable competitive advantage would it be possible to value a firm on the basis of its earning power. Retailing is an industry that is characterized by intense competition with few competitive...
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...United States and seven Canadian provinces as of December 29, 2007. The Company is a destination retailer, offering one of the selections of brand-name, as well as private label home furnishings merchandise in the industry. The Company’s average store size of approximately 33,000 gross square feet enables it to offer a more comprehensive product and brand selection than department stores and other retailers that sell home furnishings. The Company’s primary target guest is female between the ages of 25 and 55 who is fashion and brand conscious, has better income and focuses on the home as a reflection of her individuality. On the surface, LNT and BBBY companies were pursuing a similar business-level strategy of cost leadership, but key strategic decisions led them down quite different evolutionary paths. Both companies focused on providing consumers with high-quality houseware goods in a no-frills, value-priced environment, but LNT's decision to build centralized warehouses - seemingly consistent with a cost leadership strategy - ended up bringing it into direct competition with Target and Walmart. In contrast, BBBY allowed for greater decentralization in decision making, thereby allowing more store-level decision making and greater customization to local consumers' tastes. As a result, BBBY was able to better differentiate itself from Walmart and Target. The case will need formulation of basic strategy concepts, such as industry and environmental analysis, business-level strategies...
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...Eric Dowling Alex Davydov Matthew Melnicoff Soledad Querol Molly Rotsch Contents Executive Summary.............................................................................................................................................3 Marketing Analysis .............................................................................................................................................3 The Target Brand ............................................................................................................................................3 "The Guest" ....................................................................................................................................................4 Target's Competitors ......................................................................................................................................4 Expect More, Pay Less ....................................................................................................................................4 Rise of the Store Brand ...................................................................................................................................5 Up and Up......................................................................................................................................................6 The Introduction of PFresh.............................................................................................................
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