Wal-Mart Stores, Ine,1 Aaron Brenner, Barry Eidlin, and Kerry Candaele Under the supervision of TomJuravich Conference Research Director Kate Bronfenbrenner Conference Coordinator February 1, 2006 Prepared for the International Conference Global Companies - Global Unions - Global Research - Global Campaigns 1 This report was funded by the universities supporting the Global Companies-Global Unions-Global Research- Global Campaigns conference and prepared in keeping with one o f the primary goals o f the conference- increasing our understanding o f the changing nature o f the structure and practices o f multinational corporations in the global economy. It was prepared for educational purposes only and should not be copied, distributed, or disseminated beyond the participants o f this conference. Neither Cornell nor any o f the authors or other academic institutions involved in preparing this report intends to advocate or advance any particular action by any individual or organization as a result o f the report. TABLE OF CONTENTS 1. Executive Summary...................................... .............. „....„.............................................................1 1.1 Description and Operations............. .............................................................................................2 1.2 Profit Centers............................................................... .................................................................. 5 1.3 Growth Plan..................................................... .............................................................. ...............6 1.4 Key Decision Mahers............................................. ....................................................... .......... 7 1.5 Key Relationships..............................................<......... ................. ................ ...............................8 1.6 Possibilities for Union Cross-Border Comprehensive Campaigns,..................................... 9 2. Introduction............. .......................................................................................... ............................. 11 2.1 Basic Information................... .............................................................................................. 11 2.2 Company History...................... ............................. .............................................................. 11 3. Operations................................ ................................................................ ................................ ....... 17 3.1 Business Segments............................... ...................... .................. ....................................... 18 3.1.1 Products and Services......................................................................... ............................. 19 3.2 Organization o f Production and Services.................................................................................22 3.2.1 Store Operations............................................ ................................. ■„.......................... .......25 3.2.2 Distribution Centers................. ........... ..................................... ............................... .......... 27 3.2.3 Facilities.............................................................................. ..................................................31 3.3 Workforce........................................... .......................................................................................... 34 3.3.1 Part-Time vs. Full-Time Employees.............. ................ ............................. .....................35 3.3.2 Gender and Racial Distribution............................... ...........................................................35 3.3.3 Employee Turnover............................ ........ ..................................................... ................. 36 3.3.4 Wages................................................................................................. ................................ 36 3.3.5 Employee Benefits.................................. ........................................ .......... ....................... 38 3.3.6 Personnel and Disciplinary Policies.................................. ................................................ 41 3.3.7 Compliance with Employment Laws..,.............................................................................. 41 3.3.8 Unions.................................. ......... ......... ..................................................... .......... ......... 44 3.4 Suppliers.............. ............................................. ......................................... ........................... 47 3.5 Procurement and Distribution,..................................... .............................................................52 3.5.1 Global Procurement............................................................................................................. 52 3.5.2 Trucking, Shipping, and Railroad.................................. ......................................... .......... 54 3.6 Customers....... .................................................................................................................... .......... 56 3.7 Marketing........... ..................................„....................................................... ..............................57 4. Industry and Competitors.................................................................................................................. 61 4.1 Industry Overview.................................... ................... ............................................................... 62 4.1.1 Mass Merchandisers................................... ...................................... .................................... 63 4.1.2 Survival Strategies and Industry Trends.... ........................... ...........................................64 4.2 Major Competitors................................ ............................ ........................................................ 65 4.2.1 Carrefour........................................................................... ..................................... .......... 66 4.2.2 Metro A G ........................................ ................... ............................................................ 68 4.2.3 Home Depot........................................................................... ...............................................70 4.2.4 Tesco.............................................. .................................. ........ ................. .......................... 71 4.2.5 Costco Wholesale...................... .......................................................................... ................. 72 4.2.6 Target....................................................................... .............................................................74 5. Financial Analysis............................................................................. ................................................ 75 ii 5.1 Income Statement - Fiscal Year 2005............................. .................... ..77 5.1.1 Income Statement - First Nine Months of Fiscal Year 2006...... ,.78 5.2 Balance Sheet - Fiscal Year 2005.......................................... .............. ..78 5.2.1 Balance Sheet-October 31,2005.......................... ...................... ..80 5.3 Cash Flow Statement - 2005.... ............................ ............................... ..81 5.3.1 Cash Flow Statement - First Nine Months of Fiscal Year 2006 .81 5.4 Segment Analysis....... ............................................................................ .. 82 5.4.1 Wal-Mart Stores Segment........................... ...................... ............ „82 5.4.2 Sam’s Club Segment....................................................................... „ 83 5.4.3 International Segment........................... .......................... „ 83 5.5 Competitive Financial Assessment..................................................... .. 84 5.6 Stock Analysis...................... ......................................................... ........ „85 6. Command and Control................................................... ....................... .86 6.1 Management........... .......... ................................... ................................... 86 6.1.1 H. Lee Scott, Jr., Chief Executive Officer................................... „ 87 6.1.2 Thomas M. Schoewe, Chief Financial Officer..................... ....... 89 6.1.3 John B. Menzer................................................................................. 89 6.1.4 Michael T. Duke............ .................................................................. .90 6.1.5 Eduardo Castro-Wright.................................................................. .91 6.1.6 Lawrence V. Jackson...................................................................... .92 6.2 Board of Directors.................................... ........ ....................................... .93 6.2.1 S. Robson Walton - Chairman of the Board............................ .95 6.2.2 James C. Walton................................ ............................................... „ 96 6.2.3 David D, Glass - Chairman of the Executive Committee.......... „97 6.2.4 James W. Breyer........................... ..................................................