Considering New Ventures

In my post on acquisitions, I mentioned WalMart's recent tech company buying spree. I briefly noted the companies were placed into @WalmartLabs, a digital technology division. What i left out however, is this is a new-venture division in the company. Its purpose is tied to e-commerce. Online sales are increasing annually, and WalMart wants to be a big player in getting a piece of the action. The company already has online sales sites, and is continuously trying to improve them.

But, the company isn't just trying to drive sales to the site. The company is hoping to develop new, easier ways for customers to use Web 2.0 technology to purchase goods. Instead of just incorporating these tech pick ups into one of the established e-commerce divisions, the company wanted to create a new division that thinks like a start-up. The head of @WalmartLabs admitted, "We have to be innovative, we've got to experiment, we've got to try things out."

As evidence @Walmartlabs isn't just about WalMart, the division released an app called ShopyCat. The app allows you to monitor your Facebook friends' likes in an effort to help you with gift recommendations. The kicker: the results aren't just from WalMart, but include other top retailers (just not Amazon).

Organizational Structure

WalMart operates under a multidivisional structure. There are 13 divisions, and some are traditional functional areas while others represent geographic areas of retail operations. An interactive chart is available here. The chart breaks down the divisions of WalMart Stores and also breaks down each divisions (such as WalMart U.S.) into their subdivisions. I'll list the 13 divisions below for ease.

President/CEO - Mike Duke oversees the following divisions of WalMart Stores, Inc.

1. ASDA Stores (U.K. division)
2. Global e-Commerce (online sales division)
3. Finance
4. IT
5. Corporate Affairs (Public policy, brand management, etc.)
6. Legal & Secretary
7. Merchandise & Replenishment (Supply chain)
8. Global Customer Insights
9. Human Resources
10. Sourcing (Merchandise purchasing)
11. International
12. Sam's Club
13. US

Mergers and Acquisitions

WalMart is adamant about using mergers and acquisitions to increase its business. These two vehicles are often used when the company is entering foreign markets. However, I'd like to illustrate how the company is using acquisitions to strengthen its  core business and its online presence.

Walmart.com started as a joint venture between the company and a venture capital firm, Accel Partners. Now, the site is a wholly owned subsidiary of the WalMart via an acquisition.


The company is pushing to increase and improve its presence in social media as well as bolstering its online sales. The company has purchased several tech companies. The company purchased Kosmix, to gain better web analytic capabilities. Another pick-up, Grabble, specializes in point-of-service applications via mobile platforms. Smallsociety, purchased in January, develops iOS apps. Finally, WalMart also acquired OneRiot, a specialist in mobile and social advertising.

These companies have been assimilated into the retailer's digital technology division, @WalmartLabs.

Alliances and Cooperative Strategies

As mentioned in a previous post, WalMart is expanding into foreign markets. This post will cover the company's expansion into India. I'm looking at the Southeast Asian country due to WalMart's entry into that market. The company entered into a joint venture with Bharti Enterprises to create a company called Bharti WalMart Private Limited. The new entity will oversee a chain of wholesale stores (similar to Sam's Club in the U.S.). This represents an alliance centered on knowledge sharing and complementary resources. To illustrate, Bharti is a company with hands in telecommunications, retail, and insurance. The company's expertise is in serving Southeast Asian markets. After previous mishaps occurring when entering markets with a culture dissimilar to American, WalMart partnered with a company with extensive knowledge of Indian consumers and their culture. In return for this expertise, WalMart pledged to support the supply chain infrastructure planning for the joint venture - a subject the company is well-versed in.

International Strategies

WalMart is a transnational company, operating operating 55 brands in 15 countries. The company generally has used two strategies when entering new markets, both of which are forms of foreign direct investment. Initially, the company used greenfield investment, using the WalMart brand name and starting up a new subsidiary in the foreign market. This strategy was used in Mexico, Canada, and Germany. Alternately, the company acquires established retail chains in the foreign market. Examples include the purchasing of ASDA in the U.K., and more recently the planned purchase of Massmart in Africa. The company expects a large percentage of future growth to come from foreign markets.

Developing Corporate Strategy - Vertical and Horizontal Integration

WalMart is always willing to expand. The company practices vertical integration, in that it used to only be a retailer - a place where customers shop for consumer goods. But in 1991, the company expanded into offering consumer goods under its own private label brand, Sam's Choice. Today, the Sam's Choice brand of soft drinks is the third most popular brand in the United States. Also, the company has expanded its offerings in home entertainment. The company acquired Vudu in 2010. The online-streaming service allows users to purchase movies that can be viewed on almost any internet-capable device. The company also experiments with horizontal integration. Being good at retail, the company has sought entering the used car market. The company's use of synergy, such as selling its own products in its stores, is now a standard strategy for the company.

Crafting Business Strategy for Dynamic Contexts - Reconfigure the Value Chain

One of WalMart's most successful strategies has been changing the way it views the value chain. The company has tried to remove the middleman from every aspect of its business. I won't talk about the company's efforts of applying this compression to the  supply chain (this time!), but I will touch on another way it has applied a compression to the value chain. The company directly deals with its suppliers of products. The company has used this relationship to help keep its prices low in two ways. First, the company uses its clout as a major outlet for a company's products to "pressure" the company into operating efficiently. Second, the company sometimes makes adoption of new technologies,like RFID chips, a prerequisite for doing business. Again, WalMart's goal is to create a business strategy geared towards efficiency.