Management Control System

Wal-Mart Case Study

GROUP NO : 13
Vidya Bandgar MMS-07 Rajeshwari Ganjoo MMS-29 Sumedh Ingole MMS-38 Samyak Mehta MMS-49

WAL-MART-Save money Live Better

Founded by Sam Walton in the year 1962 7,800 stores globally, having over 2.1 million

associates and covering 16 countries, serves 176 million customers every week
By 1979 its annual sales topped $1 Billion, by

2005 became worlds largest retailer, with $288 billion in sales

Largest private sector employer in the world
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Wal-Mart Strategy
Wal-Mart's winning strategy

in the US was everyday low price

Largest privately owned

Satellite system
Data collected and analyzed

Observing Merchandise flow,

overstock discount Video transmission, credit card authorisations and inventory control
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CONTD..
Obtained 38% controlling share in Japanese retail

chain SEIYU (market estimated at $1.3 trillion)

Low dependency on any one supplier, had more

than 3000 suppliers catering to Wal-Mart requirements

Competitive Advantage
Insisted its suppliers to have electronic hook-ups

and adapt to latest technologies like RFID

Electronic Scanning of uniform product code at

POS
Ensure accurate pricing Improve efficiency and reduce shrinkage Improve communication

Saturation strategy for store expansion, which

enabled to serve 150-200 stores within a day

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Contd..
Introduced CROSS-DOCKING Techniques and

Laser Guided Conveyor Belts at its Distribution

Distribution cost constituted only 1.3% of sales as

compared to 3.5% for their nearest competitor

Owned a fleet of 6,100 trailer trucks as against

outsourced by the competitors

Enabling the company to buy Full truck load

quantities

Contd.
Penetrated small rural towns as against

competitors like K-Mart which focused on large towns( population greater than 50,000)
Marketing Strategy guarantee everyday low

prices as a way to pull in customers

Concentrated on generating volumes(Gross

margin 22.7%,Sales $288.2 billion)

Control System
Transmission of data on a real time basis

revealing how a particular region,district,store,department within a store or item within a department was performed
Shared 50% of the savings from decrease in

stores pilferage with its employees through store incentive plans

Sam Walton implemented a process requiring
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store managers to fill out Best Yesterday ledgers

Contd.
Introduced a concept of store within store

encouraging managers to be acoountable and giving them an incentive to be creative

10 Foot Attitude Began offering profit sharing in 1971 in return for

employee loyalty and dedication

Contd.
Instituted several other policies and programs for

its associates
Incentive bonuses Stock purchase plan Promotion from within

Pay raises based on performance and not seniority

Open door policy

Promoted frugality as a part of Wal-Marts DNA

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Problems encountered
Cluttered stores Merchandise that turned off shoppers Discount retailing Products like home furnishing, consumer

electronics do not attract customers wanting to pay less

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Contd..
Many suppliers Been slow to catch on to some trends noting that Wal-

Mart didn't have Apple Computer Inc.'s popular iPod digital music players in holiday shopping season
Owned a fleet of trucks for the goods to be carried

from the suppliers

Full truck load economical on a per pallet basis but

increase the inventory carrying and holding costs, increasing the total logistics cost
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Suggestions
Take steps to stock better quality and trendier

merchandise and make housekeeping changes

Have few suppliers with good relationship, this

ensures timely delivery of goods with proper discounts

Implement 3PL(third party logistics) that would take

care of pick and pack warehousing,distribution,crossdocking,vendor managed inventory

Trade-off to be made for developing effective logistics
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and SCM strategy

Thankyou!!

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