Strategic Audit of Wal-Mart and Kmart Case Study

Strategic Audit of Wal-Mart and Kmart - Case Study Example It was started in the year 1962 in Rogers, Arkansas, by Sam Walton. It took a long way to reach an annual sales turnover of $1 billion. By the year 2002, Wal-Mart became the world's largest retail giant with sales of $218 billions. In the initial days of starting the business, Wal-Mart designed a strategy to build large discount stores in rural areas. Wal-Mart employed the strategy of selling branded products at a very low price. Initially, the management of the firm decided to develop the firm as a one-stop discounted departmental chain store with a vast variety of general merchandise goods to be offered to the customers that too at a low price. The management's initial focus was on its purchase decisions. The firm focused on exploring each and every opportunity that helped in general merchandise goods. The two important products of the entire Wal-Mart product line on which the firm laid a strong emphasis were health products and beauty products. The stores used to maintain a high stock of these products. When the firma became successful in opening more than 279 stores by the end of the year 1979, the next focus was on designing strategies for expanding the firm aggressively. In contrast, to the other retail stores who built ware houses in order to serve the already existing outlets, Wal-Mart used to first build distribution centers and later started stores around the distribution centers. This strategy of Wal-Mart helped the firm in pooling the advertising and distribution overheads. The firm also focused on the transportation time needed for a customer to reach the outlet. The strategy of aggressive expansion turned out to be a big success because Wal-Mart became the largest retailer and discount stores in United States by the end of the year 1991 which had almost 1,573 Wal-Mart outlets in 35 states. Once the firm attained the position of national discount department store chain, it designed its outlets in such a way that they provided a one-stop-shopping to its customers. The outlets were designed to have 40 different departments like apparel, health products, beauty products, toys etc. Wal-Mart was strict on not spending huge amount on special promotions and advertising strategies etc. It rather operated its outlets on a concept of "everyday low prices." It was a belief in every customer that the Wal-Mart stores would provide them with a friendly, clean and a very pleasant experience every time they shop.The year 2001 was a real challenging era not only to the retail industry but also for many other industries. The reason for this being like a year that ended with a worst holiday season i.e end of 2000, energy crisis, the rise in the unemployment factor, the spending of the consumers became sluggish and last but not least - terrorist blasts of the WTO on September11, 2001. Tho ugh the firm became successful in almost every strategy designed, it did not neglect to focus on the external market environment at the same time. The firm strongly believed that their business in the forthcoming year would definitely be affected by the external market environment. The external factors would also influence the financial figures in the firms' balance