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A project report on Wal-Mart
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| Words: 9300 | Submitted: 19-Apr-2008
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DescriptionWal-Mart Stores, Inc. (NYSE: WMT) is an American public corporation, currently the world's largest public corporation by revenue, according to the 2007 Fortune Global 500. It was founded by Sam Walton in 1962, incorporated on October 31, 1969, and listed on the New York Stock Exchange in 1972. It is the largest private employer in the world and the fourth largest utility or commercial employer, trailing the People's Liberation Army of China, the National Health Service of the United Kingdom, and the Indian Railways.
Wal-Mart has been the target of criticism from some community groups, women's rights groups, grassroots organizations, and labor unions. Specific criticisms include the company's extensive foreign product sourcing, low rates of employee health insurance enrollment, resistance to union representation, and alleged sexism, among other things.
Sam Walton began his career in retail when he accepted a job offer at a JCPenney store in Des Moines, Iowa on June 3, 1940, where he remained for 18 months. In 1945, he met with Butler Brothers, a regional retailer that owned a chain of variety stores called Ben Franklin. Butler Brothers offered him a Ben Franklin store in Newport, Arkansas.
Walton could not come to agreement on the existing store's lease renewal and could not find a new location in Newport. Instead, he opened a new Ben Franklin franchise in Bentonville, Arkansas, but called it "Walton's Five and Dime." Walton achieved higher sales volume by selling products with slightly smaller markups than most competitors.
On July 2, 1962, Walton opened the first Wal-Mart Discount City store. Within five years, the company expanded to 24 stores across the state of Arkansas and reached $12.6 million in sales. In 1968, it opened its first stores outside Arkansas, in Sikeston, Missouri and Claremore, Oklahoma
INCORPORATION AND GROWTH
The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. At that time, there were 38 stores operating with 1,500 employees and sales of $44.2 million. The company began trading stock as a publicly-held company on October 1, 1972, and was listed on the New York Stock Exchange shortly thereafter. The first stock split occurred in May 1971 at a market price of $47. By this time, Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974. As it moved into Texas in 1975, there were 125 stores with 7,500 employees and total sales of $340.3 million.
During the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987, there were 1,198 stores with sales of $15.9 billion and 200,000 associates. This year also marked the completion of the company's satellite network, a $24 million investment linking all operating units of the company with its Bentonville office via two-way voice and data transmission and one-way video communication. At the time, it was the largest private satellite network, allowing the corporate office to track inventory and sales, and send instant communications to stores. In 1988, company founder Sam Walton stepped down as CEO and was replaced by David Glass. Walton remained on as Chairman of the Corporate Board of Directors, and the company also restructured its senior management positions, elevating a cadre of executives to positions of greater responsibility.
Also in 1988, the first Wal-Mart Supercenter opened in Washington, Missouri. Wal-Mart expanded its superstore concept during the 1990s, and shortly thereafter surpassed Toys "R" Us in toy sales. The company also opened overseas stores during this period, entering the South American market in 1995 with stores in Argentina and Brazil. Wal-Mart entered the European market in 1999, purchasing ASDA in the United Kingdom for $10 billion.
In 1998, Wal-Mart entered the grocery business, introducing the Neighborhood Market concept with three stores in Arkansas. By 2005, estimates indicate that the company controlled approximately 20% of the retail grocery and consumables business.
By 2000, H. Lee Scott became President and CEO of the company, and Wal-Mart's sales increased to $165 billion. In 2002, Wal-Mart was listed for the first time as America's largest corporation on the Fortune 500 list, with revenues of $219.8 billion and profits of $6.7 billion. The company was subsequently listed at #1 every year after 2002, except for 2006.
In 2005, Wal-Mart had $312.4 billion in sales, more than 6,200 facilities around the world—including 3,800 stores in the United States and 2,800 international units, employing more than 1.6 million associates worldwide. In fact, its U.S. presence grew so rapidly that there were only small pockets of the country that remained further than 60 miles away from the nearest Wal-Mart.
As Wal-Mart grew rapidly into the world's largest corporation, many critics worried about the presence of its stores in local communities, particularly small towns with many "mom and pop" stores. Several studies have found both positive and negative effects on local businesses, jobs and taxpayers. For example, Kenneth Stone, Professor of Economics at Iowa State University, found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening. However, he compared the changes to what previous small town shops faced in the past—including the development of the railroads, the advent of the Sears Roebuck catalog, as well as the arrival of shopping malls. He concluded that shop owners who adapt to the ever changing retail market can thrive after Wal-Mart comes to their community. A subsequent study in collaboration with Mississippi State University indicated that there are "both positive and negative impacts on existing stores in the area where the new supercenter locates." (See also: Criticism of Wal-Mart: Economic impact)
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