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Wal-Mart: The High Cost of Low Price - Case Study Example

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Wal-Mart: The High Cost of Low Price

The operating profit of the company was $18,530 million during fiscal year 2006, an increase of 8.4% over 2005. The net profit was $11,231 million in fiscal year 2006, an increase of 9.4% over 2005.
Wal-Mart Stores (Wal-Mart) is the world's largest retailer. The company operates retail stores in various formats. It operates more than 6,000 stores in the US and 13 international markets including the UK, Canada, Japan, Mexico, Brazil and China. The company retails a broad range of merchandise and services at low prices.
Neighborhood Markets offer a full-line supermarket and a limited assortment of general merchandise. The company has 100 neighborhood markets in about 15 US states, offering a variety of products, including fresh produce, deli foods, fresh meat and dairy items, health and beauty aids, one-hour photo and traditional photo developing services, drive-through pharmacies, stationery and paper goods, pet supplies, and household chemicals. Neighborhood markets average 42,000 square feet in size, employ 95 associates on average and offer about 29,000 items.
The company operates more than 550 Sam's Club in 48 US states. Sam's Club is a membership warehouse club, serving both individuals and businesses. Individuals, other than business owners, can become Advantage members. The annual membership fee for an individual Advantage member is $40 for the primary membership card, with a spouse card available at no additional cost. The annual membership fee for business members is $35 for the primary membership card with a spouse card available at no additional cost. In addition, business members can add up to eight business associates for $35 each. The annual membership fee for a Plus member is $100. Sam's Club offers bulk displays of brand name merchandise, including hard goods, some soft goods, institutional-size grocery items, and selected private-label items under the Member's Mark, Bakers & Chefs and Sam's Club brands. Most Sam's Club warehouses have fresh departments, which include bakery, meat, produce, floral and Sam's Cafe. Additionally, a significant number of Sam's Club offers photo processing, pharmaceuticals, optical departments and gasoline stations. Sam's Club warehouses average 129,000 square feet in size (Gondziola, 11).

Sam Walton's Legacy
Wal-Mart became the country's largest company with 3,500 stores and $220 billion in annual revenues through a combination of hardheaded negotiation, brilliant use of information technology, and a simple marketing scheme: "Every day low prices." Walton's deal promised that cost-cutting could coexist with a moral center--that Wal-Mart could be both the cheapest place to shop and the best place to work. But there are some unsettling indications that the deal that Walton and his successors made with their employees is fraying. A coalition of law firms and advocacy groups bringing a sex-discrimination suit is trying to force Wal-Mart to explain why women make up more than two-thirds of its rank-and-file employees but only a third of its managers. (Bhatnagar, 247)
Labor unions have renewed efforts to organize stores, most prominently in Texas and Nevada. Washington State, acting on evidence that Wal-Mart skimps on paying workers' compensation, finally forced the company to get an outside manager to handle its claims. Individually, these might be ...Show more


Wal-Mart Stores (Wal-Mart), the largest retail chain in the world, operates retail stores in various formats, including supercenters, discount stores and neighborhood markets. Wal-Mart operates over 6,000 stores in the US and 13 international markets including the UK, Canada, Japan, Mexico, Brazil and China…
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Wal-Mart: The High Cost of Low Price essay example
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