Wal-Mart, as the largest retailer in the whole world, has business operations that fall under three business segments: Wal-Mart Stores, the international segment and Sam’s Club. It has operation in more than 1,000 discount stores located in almost all the states in United States. It offers different value-priced wide-ranged general merchandise that includes “family apparel, automotive products, health and beauty aids, home furnishings, electronics, hardware, toys, sporting goods” and other related items. Likewise the company retailer works hand in hand with an estimated 225 associates.
Moreover, Wal-Mart Stores has under its control more than 2,200 supercenters. More than this the general merchandise that it caters the wide consumer public, the store also offers bakery goods, fresh produce and deli and frozen foods. On a cursory look at the encompassing ownerships and operations of the Wal-Mart Stores segments, it can be concluded without doubt that Wal-Mart is a goliath in the retail store business. To list: Wal-Mart has 40 general merchandise distribution centers. It also has 38 grocery distribution centers.
It has seven apparel and shoes centers and 12 professional services and specialized distribution supercenters in 47 states in United States (Datamonitor, 2007). As a backgrounder, the stores of Wal-Mart have able to record collective earnings and revenues reaching a staggering amount of $348,650 million in 2007. This earning is an indication of the power being enjoyed by the firm in the retail industry. This amount is an estimated increase of 11. 7% compared with what it had earned during the previous fiscal year of 2006 (Datamonitor, 2007).
At the end of the fiscal year of 2007, the revenue and sales by which the company operates is marked at $20,497 million. Meanwhile its net profit has reached an amount of $11,284 million; a hike of 0. 5% over the fiscal year of 2006 (Datamonitor, 2007). This achievement by Wal-Mart as a retail store company and also what can be considered as its firm-specific edge over its rivals can be attributed to its management philosophy and strategy of reducing its operational costs to obtain a result that it can able to apply its “always low prices” formula on its merchandise (Rugman, 2005).
Still, even with status and capability of Wal-Mart earning sales and revenues that can be said and consider the firm as the world’s biggest retail company – given a record sales of $285 billion in the fiscal year of 2001 – the retail store firm is still categorized as a home-based multinational (Rugman, 2005). Thought it is a reality that it has able to expand in its operation spread across several continents and countries to strengthen its business muscle and tentacles, the establishment still fairs less in terms of net sales in several of these countries.
The country of Japan is one of the best examples regarding this case. Wal-Mart Stores is still seen as a home region multinational company considering the biggest chunk of its profits and revenue earnings – estimated to reach at 80% based in its annual sales for the years 2004 and 2005 – still come from its homebase United States (Rugman, 2005). There is no doubt that the competition in the retail industry, both local and aboard, is getting harsher and harsher for those that have been in the business for quite sometime now.
It is not a surprise that the advent of globalization is bringing the in new rivals in the retail store industry. Even though there is a huge market out there that remains to be tapped, this entrance of new players in the industry is a risk and danger to the financial and operational healthiness of Wal-Mart Store in general. It is thus the vision statement of the company to withstand these blows of competition and weather the challenges posed by the cutthroat competition in the market. There is no other option for the firm to bow under these external realities.