Wal-Mart: History of Success

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Wal-Mart: History of Success

Over the last decades, the famous Wal-Mart Company has been the heart of scandals repeatedly. Yet, it did not stop to make its founder one of the richest men in America. Today, custom writing essays service traces its success.

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How Wal-Mart Was Born

Child years

Sam Walton, Wal-Mart’s founder, was born in an ordinary farming family. Since the very childhood, he was remarkable for his abilities, activity, and desire to succeed in all matters taken on. Sam’s mother made him ambitious as she wanted her children to achieve much more than she did. This quality was dominant in Sam’s character, which helped him throughout his life struggles. Why do ambitions matter much? The essay on ambition explains. Being vigorously pushed, the future entrepreneur succeeded in all his undertakings, let alone the fact that Sam was a member of almost all school clubs, engaged in sports, earned on the distribution of newspapers and helped his parents in all ways. Walton was a leader among his classmates and one of the best pupils of the school. He was loved by teachers placing high hopes on him. Many analysts call him a cover boy: an honor pupil, a scout, an American football champion, a member of almost all school extra-curricular clubs. Perhaps the only flaw in Sam's childhood was his parents’ relationship; they got along poorly, and their discussions mostly escalated into quarrels.

College time

Walton became one of the best pupils in the state. Naturally, with such a reputation, Sam had no difficulty entering the University of Missouri and consequently one of the best university fraternities. A year later, he was appointed responsible for recruiting new members, interviewing potential candidates from across the state. The last year, Sam became interested in business, in particular retail trade. Walton knew how to sell since his teenage years. During the Great Depression, when his parents were going through hard times, the boy established his own mini-business spreading newspapers and even hired assistants. Eventually, he managed to earn about $ 5,000 a year, a substantial sum for that time. Upon graduating from the university, Walton was thinking of whether to continue learning but eventually took up working in the store chain as a manager. Despite the position being not prestigious, Sam became one of the best sellers, while studying the peculiarities of store chain operation from his own experience. He was able to combine both studies and work thanks to reasonable time management of which you can learn more here http://bigessaywriter.com/blog/10-tips-how-to-determine-your-ideal-productive-hours-of-day

First entrepreneurial steps

In 1942, Sam was not enlisted in the army as he had heart problems. Ultimately, he was called on for duty but did not follow this road as he was engaged in controlling the safety of industrial enterprises. During service, the young entrepreneur had the opportunity to study the work of retail chains and the basics of store management. After the demobilization, on his old friend’s advice, Walton paid attention to the Butler Brothers network. Young and self-confident, he asked to buy a franchise. The deal cost him about $ 25,000. Here, he passed a special training course for beginning store managers. At the insistence of his wife, who did not want to live in a metropolis, Walton opened a small supermarket in Newport, Arkansas. It was difficult to succeed due to the high cost of rent and fierce competition with a neighboring store, whose owner earned almost twice as much as Walton.

Walton was dissatisfied with the franchise work, which imposed a whole range of requirements. For example, about 80% of the goods were to be theirs; otherwise, the store would not receive discounts; a standardized price level was not competitive. Finally, Walton's patience collapsed, and he began to break the terms discreetly, doing it very carefully, realizing that the contract he had signed for inexperience could become a dangerous weapon against his business. At the same time, Sam began to develop a new method of attracting customers by placing popcorn and ice-cream machines near the store. Two years later, Walton was able to return $ 20,000 invested in the business.

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Bitter oversight

When he found that one of his competitors had decided to expand the business at the expense Sam's supermarket area, Walton achieved the transfer of this space to him. As a result, it became the second Sam’s store in this street. The expansion, of course, entailed an increase in staff and attracted building owner’s attention. Walton turned out to have signed the lease forgetting about automatic renewal after expiration. The building owner used this oversight: he refused further cooperation and knowing well that Sam did have no options for locating the store offered to buy his business. The entrepreneur was forced to agree. In the future, this failure would force Sam to read treaties much more thoroughly so as to avoid such mistakes. However, the first entrepreneurial experience allowed him to understand the basic mechanisms of the retail industry operation. As a result, Walton was able to turn them into "Walton's laws", which consist in direct procurement from suppliers, constant sales, and discounts, as well as customer orientation.

Second wind

In the early 1950s, Walton was out of business with only $ 50,000. Sam with his brother Budd opened a new store in the city of Bentonville. This time the entrepreneur did not sign any short-term lease; he concluded a deal for 99 years. The store eventually became known as Walton's Five and Dime. The very feature of Walton's new business was self-service: that time there were only a few such institutions in the country. That is why there was nothing surprising in the fact that a crowd came to the opening buying up everything with unprecedented enthusiasm. It is worth, however, to note that later the business of the store went uphill not as quickly as the entrepreneur would have liked. At the end of the year, his income was about $ 30,000, much less than in Newport (about $ 250,000). Walton was not upset: his only desire was to build his own network, and he had ideas and opportunities to achieve what he had planned.

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Growing potent

A year later, several more shops were opened in the nearby towns. The approach was the same: large area, diverse product, flexible prices, and self-service. By the early 1960s, Walton had owned 15 establishments in several states that earned revenue of $ 1.5 million. Walton’s heart was a shop in the Raskin Hight shopping center, one of the first country’s shopping centers, which attracted a huge number of customers. Nevertheless, Sam dreamed of opening a large family store, in which he could introduce his inventions. In an attempt to implement the plan, Walton turned to Butler Brothers hoping to get them as a partner and supplier but was refused: the management of the brand considered the project risky. To this effect, he took a large loan from the bank and began to work. The store was opened in 1962, Walton had been thinking for a long time over the name eventually choosing Wal-Mart. The opening was negatively affected by representatives of the Ben Franklin franchise who visited Walton on the opening day demanding never to open such stores in this city. Sam did the same, after a while opening two Wal-Marts in neighboring cities. The concept of the shop organization was changing gradually. The first Wal-Marts were discounters, that is, they were aimed at providing customers with the lowest possible prices. Later, the network grew, and new directions appeared, such as supercenters providing the opportunity to purchase all kinds of goods: from products to tools, as well as district stores. The whole system was designed to catch the customer in the giant's network and make it a regular customer.

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Where Walton’s might lies

Initially, Wal-Mart stores did not yet have their key features: the goods were placed inaccurately; unshakable Walton rules for the network had not yet been introduced. But the goods were approximately 20% cheaper than those of competitors. This is what interested people the most. Another problem was the lack of suppliers. Working with the Butler Brothers, Walton rarely encountered problems in deliveries, but now he got into a sort of trouble. Building a brand that sells a huge number of product names, he needed a constant increase in assortment and flexible discounts. Instead, managers were forced to dial into offices of major brands to remind themselves. A certain part of the goods was purchased from random suppliers. Besides, it was necessary to keep prices lower than those of competitors. Walton in this respect was inexorable; he forbade increasing the purchase price by more than 30% as this was the key to victory. Self-criticism was another feature of the brand’s corporate culture. At each meeting, the heads should indicate failures and minor errors suggesting ways of their solving. Sam Walton is an example of the impeccable personality, the one who achieves success facing whatever hurdles: http://bigessaywriter.com/blog/the-main-qualities-of-highly-successful-people.

Walton’s unshakable rules

Along with the staff development, the network grew too. In 1967, there were more than 20 Wal-Mart in the US, and the volume of sales reached $ 12 million. The development of the network led to a wider introduction of the rules that Walton developed since his college times. One of the keys became a so-called principle of three meters. Each seller-consultant being at a distance of three meters from a potential buyer had to look into buyer’s eyes and offer help. The second principle was stopping co-work with intermediaries. Suppliers’ high prices irritated Walton at the beginning of his entrepreneurial career. In the process of Wal-Mart’s development, he decided to abandon intermediaries completely raising prices artificially. Initially, this approach looked disastrous given the complexity of supply chain testing. With the increase in the number of Wal-Mart, the situation changed, and most of the manufacturers were willing to contact Walton on their own understanding the benefits of cooperation. Another Wal-Mart’s conceptual feature was opening chain stores in small towns. This approach looked rather strange considering the size of the stores and the volume of products. Nevertheless, Walton realized that in small towns where people mostly deal with small shops, they do not always have enough goods, and the prices for certain exclusives are much higher. That is why opening here Wal-Mart with affordable prices and a wide choice of products was the easiest way of getting most of the buyers. The business ethics essay elucidates clearly why corporate culture is so crucial in business development.

Birth of a major player

In 1970, Wal-Mart was not yet a single company. In fact, there were several dozen stores united under the same name but with different owners. The affiliation of stores to the network was expressed in the fact that most of each of them belonged to Walton. Along with this, the businessman actively expanding his business borrowed from banks, and in the early 1970s the amount of debts reached a dangerous mark of $ 20 million. It was urgent to do something about it. After taking lawyers’ advice, Walton finally began to unite scattered stores in the company and held the first public offering of companies’ shares in 1972. The financial position of the brand has improved significantly, and the company has been able to consolidate its position. In the following three years after the public offering, the growth in the number of Wal-Mart in the US continued: in 1975, the network had 125 stores. Gradually, other networks of the United States were forced to recognize the emergence of a major player. Each goal is attained step by step, as our career goal essay says.

Undisputable success

In 1977, the growth rate of the network reached 50 stores a year. The Walton’s rule worked. It requires adapting to the needs of people in a particular city. This rule says that the client to be a real boss to be focused on. In the early 1980s, the key direction of the brand's work was the US South-East, where the company tried to achieve leadership by all means opening stores and acquiring smaller networks. In 1985, the goal was actually realized: the network included almost 900 stores with more than 10 thousand people working there. At the same time, management ceased to set regional goals, thus seeking to achieve leadership throughout the United States (Do you aim at being a leader? This essay on leadership is a huge step forward).

Walton's departure

In the late 1980s, the network operated already in 27 states and began to spread its influence in large cities. In 1988, Sam Walton resigned as CEO passing this post to David Glass. Initially, Walton's departure had little effect on the network development because the founder remained involved in many cases. He implemented the WalMart information system, which allowed connecting all the country’s brand stores (almost 1,500), suppliers, and distribution centers. David Glass faced the problem of inefficient brand strategy. He chose a standardized approach: the opening of subsidiaries in different parts of the world with the subsequent launch of brand shops and the acquisition of local mini-networks for simplified integration.

International brand

Initially, Wal-Mart came to Canada and the states of Latin America thanks to its unique retail strategy. By 1997, the brand had about 1,000 stores. At the same time, Wal-Mart began entering the European market. To integrate the company into Germany, 21 stores in the local Wertkauf trading network were bought in 1998. In 1999, Wal-Mart came to the UK using the Asda network. In late 1997, the network was represented in China, Indonesia, and other emerging markets. Why did Wal-Mart manage to win the global market? The essay about globalization has an answer.

Heart of scandals

In the mid-1990s, the Wal-Mart management was charged with low salaries, after-hours work, and gender discrimination; the problem of women’s inequality in the company remained urgent for further decades (read the essay on feminism to find out more). In 1999, the workers' union made a statement that the wages of ordinary workers were below the subsistence level. The statement caused a wave of criticism from the public and inflicted tremendous damage on the brand. Glass tried to defend Wal-Mart’s face, but ultimately in 2000, he was forced to resign. Lee Scott replaced him.

In 2006, another extraordinary event took place: the sale of cheaper substitutes for medicines in WalMart stores. This was preceded by the announcement that these products were in no way inferior to analogs, but their manufacturers did not take money for the brand.

In 2008, a new scandal erupted. In one of the shops, a worker was trampled to death. The case occurred in the next sale before the holidays, when more than two thousand buyers broke into the store. The relatives of the deceased insisted that the reason for his death was disregard for the network employees.

In 2011, the network acquired 51% of Massmart Holdings shares, which opened the doors to a number of African countries included in the list of the cheapest world’s markets: http://bigessaywriter.com/blog/list-of-the-cheapest-markets-in-the-world. The low cost of goods will allow the company to achieve leadership in this market.

Still a giant

At the moment, the giant is still the largest world’s retail network, which includes more than 10 thousand stores worldwide. The company's positions in the US seem unshakable, and even the famous loss of $20 billion in 20 minutes had no serious harm. Certainly, Wal-Mart has flaws: expansion problems, struggle with Amazon, frequent criticism. However, they have solutions given the level of capitalization and network’s influence. Their success is solid ( read more about the nature of success in our essay on success). Wal-Mart can be only self-destroyed, rather by its giant size. It is yet unclear whether this huge brand will be able to develop in an incessantly volatile market, where daily it is required to be ready for rapid transformations.

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