CS: Strategy with Chris Carr: Lecture 2

1. Presentations should not be like Brad's. There are different requirements for this class.
1. All members should present, those that don't should field questions
2. only case specific information should be used so that you can use templates
3. start with performance analysis (critical leverage) from the get go. (ex: grade them 8/10)
4. at least 5 years of figures (must be an accountant)
1. financial performance (is it looking good)
2. for Walmart, see page 559 (get ratios)
2. Discussion on the usefulness of the Ipad - searching data is much easier. The Kindle is powerful too. Bloomberg is another powerful tool. Put your positions for each company that we will cover in this class.
3. Walmart Presentation: Steve and Graham answering questions for this presentation



Quote from Sam Walton Biography

1. Sarah, Frank, Aaron and George will present.
2. Analyze strategy of the world's largest retailer: Walmart
3. 2 numbers 
1. US $400 billion in sales
2. Sam Walton believed the best method was the cheapest method (never took a taxi)
3. Cost efficiency is key of Walmart's success
4. Cost vs. differentiation
5. principles of cost leadership
6. walmart's cost leadership strat.
7. conclusion
4. Porter's generic strat. Walmart is a cost leader. In order to have leadership, you need to win on cost. Walmart is a discount retailer "everyday low prices". Competitive advantage is related to low cost 
5. cost drivers
1. economies of scale- great logistical control. Own own trucks and warehouses. Cross-docking (receiving, sorting and shipping), hub and spoke (with distribution center at the center), low ad spend, non-union. Revenue per employee is very high.
2. economies of learning- simplify each task, Sam Walton's 4th rule (communicate with partners because the more they understand the more they care, info travels up and down chain of command freely), employee commitment (everyone is called an associate) (Mike Duke is the current CEO, criticized for not changing what works)
3. simple design- discount store, supercenters, neighborhood markets (I've never seen one of these) homogeneity of layout, offerings, and service.  Customers know what they are going to get, and where they will get it. Sundown rule: every issue(possible) solved within the day. One stop shop.
4. Input cost controls- direct negotiations with their vendors. Asymmetric negotiation. 18% of PG sales comes from Walmart sales, but only 3% of Walmart sales come from PG. Walmart purchases direct from Chinese manufacturing firms. Truck loading technology (backhauling to return defective products) Inventory turnover (Costco has a larger turnover)
5. Retail-Link- developed by Cisco. How do suppliers ERP systems interact?
6. International business- in US and Mexico very successful but not in Europe (cultural differences, size constraints)
7. Customer data mining- commitments to IT
6. Porter's 5 forces: Suppliers: Supply Chain is key to Walmart's success 
7. 1946 Peter Drucker
8. For next week: Ryan Air