Samuel Moore Walton, who would be more commonly known as Sam Walton, was born on March 29, 1918, in Kingfisher, Oklahoma to Thomas Gibson Walton and Nancy Lee Walton. From the time Sam was born until he was five years old the Walton family, which now included Sam's younger brother, James, lived in a farm in Kingfisher. In 1923 though, his dad had to abandon farming due to the insufficient income it produced and went back to his prior profession of loan appraisal. This caused the family to move to Missouri where they spent years moving around throughout the state. [i] During his eighth grade year in Shelbina, Missouri, while Sam was only thirteen, he became the youngest Eagle Scout in the state's history. [ii]
He attended Hickman High School in Columbia, Missouri. At Hickman, Sam excelled in academics, politics, basketball and football. He went on from Hickman High to the University of Missouri where he joined the esteemed Beta Theta Phi fraternity, the business fraternity Alpha Kappa Psi and was an ROTC cadet. [iii] He then graduated from the University of Missouri at Columbia in 1940 with a bachelor's degree in economics. [iv]
Throughout his early life, Sam worked several different jobs in order to supplement his family's income. He worked at everything from delivering milk from the family's cow to delivering newspapers on his route to even waiting tables during college in exchange for his meals. [v] After college, he took a full-time job with JCPenney as a management trainee in Des Moines, Iowa. This job supported him on the $75 that it paid every month until he quit to join the Army in 1942 to serve in World War II.
To his dismay though, a minor heart irregularity kept him from active duty and kept him on limited duty. He awaited enlistment by working in a DuPont munitions plant near Tulsa, Oklahoma. [vi] While working there he fell in love with Helen Robson from Claremore, Oklahoma, and she would become his wife on Valentine's Day in 1943. They went on to have four children: Rob, Jim, John and Alice. [vii] He finally joined the U.S. Army Intelligence Corps where he supervised prisoner of war camps and security at aircraft plants within the United States. He eventually reached the rank of captain before ending his service in the military.
Sam left the military in 1945 and pursued his ambition of opening a department store. A $20,000 loan from his father in law, along with $5,000 from his own savings, allowed Walton to buy a Ben Franklin variety store as a franchise in Newport, Arkansas. The store did so well that the landlord refused to renew Walton's lease in order to buy it and have his son run it. Before leaving his first store, Walton arranged to buy another Ben Franklin franchise in Bentonville, Arkansas, and this would go down in history as the first Walton's Five and Dime. He opened the second Walton's Five and Dime in 1952 in Fayetteville, Arkansas, but this store was not a Ben Franklin franchise. Due to the incredible success of both stores, Sam continued to open stores with the help of his brother, father in law and brother in law. He started opening larger stores called Walton's Family Centre's and started spreading his stores throughout Arkansas, Missouri and Kansas. By 1962, Sam and his brother Bud owned sixteen variety stores throughout the region. Then, in 1962, the world's largest retailer was born in Rogers, Arkansas: the first Wal-Mart opened its doors. [viii]
Childhood Influences
Sam's work ethic and his views on money were largely shaped by his growing up during the Great Depression. This was a time of financial hardship in America and his family was not exempt. On the other hand, seeing as they lived in America's heartland they were not only affected by the Great Depression but also the devastating Dust Bowl storms of that era. He grew up seeing how much his parents valued money, how hard they worked to earn it and how careful they were to spend it, all the while avoiding debt despite being in need of the money.
His father was a very industrious man and was known for his work ethic and honesty. He took on whatever jobs were necessary in order to feed the family, even if it meant relocating and changing professions. He was also an avid negotiator who made deals for just about anything and liked to barter. Once he even traded his watch for a hog so that the family could eat. Nancy, Sam's mother, had an entrepreneurial spirit and made a business of selling the family cow's surplus milk in order to supplement the family income. From his parents Sam undoubtedly learned, early on, the importance of hard work, the value of negotiation and entrepreneurial abilities.
He began working at an early age to help provide for the family as well. He started off by selling and delivering for his mother's milk venture and went on to deliver newspapers, sell magazine descriptions, sell pigeons and rabbits and taking on all sorts of jobs to the point that he waited tables in college in exchange for his meals. [ix] Despite his working since very young, his mother always stressed the importance of education and decided that Sam would attend college and become a professional, even though she never did. [x] This played a strong role in Sam's future academic success and extended his strong work ethic to the scholarly field as well.
Achievements Prior to Becoming an Entrepreneur
Mr. Walton achieved much success and recognition with Wal-Mart's triumph as the world's premier retailer, but his track record of success began early on in his life. Sam received the Distinguished Eagle Scout Award from the Boy Scouts of America in his adult life in part due to the fact that he was the youngest boy to ever become an Eagle Scout in the state of Missouri at age thirteen. [xi] While attending Hickman High, Sam made his mark as the starting quarterback for the football team that would go on undefeated to win the state championship. He also excelled in academics and his performance earned him the distinction of being an honor student. His high school accolades did not end there, because he also became vice president of the student government during his junior and moved on to becoming president during his senior year. Upon graduating from Hickman, Sam was awarded the title of "Most Versatile Boy." At the University of Michigan, he was elected president of the elite military organization, the senior men's honor society and the Bible club. [xii] Upon graduating from the University of Missouri, he was named "Permanent President" of the class. [xiii]
Personality Characteristics
Wal-Mart came to embody Sam's personal values and traits. One prevalent trait of Sam's character was his belief in the value of teamwork. He began playing team sports in fifth grade and went on to play basketball and football in high school, and even led his football team, as their starting quarterback, to an undefeated season and a state championship. He also enlisted in the military starting with his experience in ROTC during his college years and going on to earn the rank of captain by 1945. Both of these experiences led Sam to create an organization that did not have employees, but rather associates, who all worked together for a common goal in a team environment. He also placed a great importance on the value of the individual in his own life and in his organization. Something as simple as talking to people, who he may or may not have known, and looking them in the eye was very important to him and it became his central philosophy in campus politics and later at Wal-Mart. [xiv]
He was also a very ambitious man, as his career path makes clear. He traces his ambitious nature back to his early days when he would always strive to be involved in many activities at school such as politics and sports. His ambition led to his industriousness in taking on many different jobs throughout his young life and taking on managing his own retail store right after his military service.
As much as he appreciated hard work, he always thought that working could be fun and that it should be so. At Wal-Mart, Sam is known for summarizing his philosophy on work and fun by saying "Just because we work hard, we don't have to go around with long faces. It's sort of a 'whistle while you work' philosophy and we work better because of it." [xv]
The Entrepreneur's Passions
Sam Walton's passion for customer service was central to his career as a business professional. When Walton founded Wal-Mart in 1962, he felt that each store needed to "reflect the vision of the community and the values of each customer." He believed that if you work toward excellence and show passion in your work, you will gain a loyal customer base. [xvi] Take, for example, the seemingly trivial "greeter" you will find in every single Wal-Mart location. Early on, Walton established this particular position because he felt that if customers were greeted with a friendly face it would enhance their shopping experience, thus resulting in a higher percent of customers returning to shop.
On top of his catering to his customer base, Walton showed a particular passion and affinity for his taking care of his employees. Wal-Mart spends significant time and money on its employees, training them in exceptional customer skills. [xvii] The company believes that its employees are the key to success, so if customers can get what they need at a good price and with excellent customer service, they will probably continue shopping at the store. When Walton began setting up stores, he purposely located then in small-town areas, to help provide employment to those individuals who had no access to employment. On average, hourly wages for full-time workers at Wal-Mart stores are $11.75/hour, with people in urban areas receiving higher wages. Additionally, employees can receive performance driven bonuses. [xviii]
Company Description
Wal-Mart is the world's largest retailer. On top of that, it is also the world's largest employer, with over 2.1 million full and part-time employees. In the United States alone, Wal-Mart has 1.4 million employees. The company operates Wal-Mart stores and Supercenters, as well as Sam's Club membership warehouses. The company has about 4200 locations all across the United States, as well as 3800 dispersed throughout 12 foreign countries.
Wal-Mart is known for its low pricing policy as well as its immense selection of goods, for these reasons among many others, it has been dubbed the "undisputed king of retailing." Due to its sheer size and competitive price advantage, Wal-Mart has the power to open in a particular location and, unintentionally or not, shut down other stores in the area.
As mentioned earlier, Wal-Mart has three different branches of its business. The original Wal-Mart store model boasts averages of 107,000 square feet, 225 employees and offers 120,000 items. As their name suggests, the Supercenters are just an enlarged version of the original stores, with about 185,000 square feet, employing 350 or more employees and offering 142,000 items. Sam's Club, the membership warehouse division of the company, averages 175 employees per store, and offers about 5,500 different products.
Wal-Mart's mission Statement is simple. It states, "Wal-Mart's mission is to help people save money so they can live better." Its motto is "Every Day Low Prices". If one had never heard of the company, but read Wal-Mart's mission statement and motto, it would be easy to determine what Wal-Mart is all about: price advantage.
For 2010, Wal-Mart reported $405 billion in global sales, up 1% from the previous year. The United States generated $258.2 billion of those sales. The company also reported a net income of $14.8 billion. [xix]
Leadership Approach
Sam Walton is credited with saying one of the most profound, yet simple statements regarding what a great leader is. He said, "Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it's amazing what they can accomplish." He truly believed this statement, and what his business has developed into accurately reflects this. Walton recognized that to be an effective leader he obviously had to be great at delegating, but he felt it was even more important to constantly be listening and learning. He would go visit his stores regularly, and encouraged his employees to speak up, ask questions or voice any concerns they may have. Learning is not always an easy process, and the learning curve includes mistakes that serve as lessons. A source close to Sam Walton described the late entrepreneur as "less afraid of being wrong than anyone I've ever known".
Another interesting thing Sam Walton did that accentuated his leadership approach was that he hired the most qualified managers to run his stores. Walton explains: "I did something I would do for the rest of my run in the retail business without any shame or embarrassment whatsoever: nose around other people's stores searching for good talent." Walton would stop at nothing to make sure his business was running as smoothly as possible. His views of the importance of the individual manifested firstly by recruiting the right individuals for the job. [xx]
To sum up his leadership philosophy, Walton developed what he called his "10 Commandments," and put them into practice in his company. The commandments are the following:
1. Commit to your business.
2. Share your profits with your associates and treat them like your partners.
3. Energize your colleagues.
4. Communicate everything you possibly can to your partners.
5. Appreciate everything your associates do for the business.
6. Celebrate your success.
7. Listen to everyone in your company.
8. Exceed your customers' expectations.
9. Control your expenses better than your competition.
10. Blaze your own path. [xxi]
Marketing Strategies and Tactics
Wal-Mart competes with stores such as K-Mart, Target, and used to compete with the now defunct Caldor and Woolworth. On top of that, K-Mart has gone through Chapter 11 reorganization, and Target, although still afloat has not seen nearly the explosive growth that Wal-Mart has seen. So why does Wal-Mart stand alone in this category? Sam Walton may not have invented retailing, but he certainly revolutionized it. His formula for success was elementary: a low pricing strategy, and friendly, helpful customer service. Those were the only two essential aspects of his business strategy, while other things could be helpful, Walton felt that with those two basic principles his business would succeed.
The four aspects of the marketing mix are product, price, placement and promotion. There is no definitive product category that Wal-Mart falls into, because they sell nearly everything. Walton described the goods that his stores carry as "general use items," or goods that any household would need. Walton's pricing strategy was simple: everyday low pricing, which is commonly referred to by its acronym of EDLP. Customers do not have to have to wait for a sale at the establishment, because they know they will always be getting the best possible value. The company's view on promotion is "less is more." Their sparse TV ads, radio commercials, and magazine ads proclaim their stance on EDLP, so the company has no reason to spend a large deal of money on advertising. Wal-Mart's EDLP pricing strategy has also left little need for promotion such as weekly specials and sales, in fact, their advertising budget is one-third of the industry standard. As for place, Walton first established Wal-Mart in rural America. He believed that small-town America had not seen big city discounting, and his customers were thrilled when he introduced them to it. Eventually, Wal-Mart added so many locations that they were no longer restricted to rural areas, but are now found everywhere. A big draw to the company is that they have convenient store locations and a comfortable one-stop-shopping atmosphere. [xxii]
Role of Innovation / Technology
"I have always been driven to buck the system, to innovate, to take things beyond where they've been" said Sam Walton; and buck the system and innovate he did. Even though Walton's stores sold discounted products who target market was a lower-middle class in small towns the company was more than willing to invest at the cutting edge of technology. Walton built his stores around warehouses in order to permit one day deliveries which in return minimized his advertising costs. One of his earliest innovations was the concept of cutting out the middle man and buying directly from the manufacturer. By doing so he was able to buy in bulk which kept prices down for not only himself but his customers too.
At that time Walton decided that the future of retailing was in discount stores, not dime stores like the executive of Benjamin Franklin thought. He studied chains, such as K Mart and Zayre, and proposed to the Ben Franklin management that they open a discount store. They showed no interest and Walton took matters into his own hands, along with his younger brother James, and opened their first Wal-Mart outlet in Rogers, Arkansas, just five miles from Bentonville. Walton proceeded to visit the store once a week to handle any problems that may have arisen and reviewed the store's profit and loss statement regularly so he was always in the loop. It was about this time; Walton introduced the concept of check-out counters at the front of the store. Customers could be rung up for all their purchases and pay for them at one time, instead of paying for several things at several locations. This not only made it easier for the customer, but cut down on the possibility of people not paying for an item. Walton also insisted that his stores be clean and well lit at all times. No one wants to shop in a dirty store where they cannot see the merchandise. "When you have the best quality you have nothing to hide".
Walton's genius was more than transparent by the way he allowed his company to take on new technology. When the Wal-Mart chain started to gain momentum, Walton realized that in order to continue growing at the pace that it was, he would have to computerize and standardize his operations. In 1966, Walton had 20 stores under his belt and was still growing fast. So Walton decided to go to an IBM school in upstate New York to find the brightest pupil in the entire school. He wanted to hire someone who would be able to take his company technologically to the forefront of retailing. Ahead of his time as he usually was, Walton was attempting to ensure that Wal-Mart could remain on top of its competition for years to come; and that it did and did it well. "Walton also introduced the first electronic scanners at cash registers, which were linked to a central inventory-control computer system and informed him of when items had to be re-ordered. These tools enabled Wal-Mart to be one of the first companies to master just-in-time inventory control with its superior logistics, thereby removing much of the waste in its supply chain" (Lesson #4). By doing this Walton was able to keep his costs to a bare minimum and maximize profits. Being able to order the precise number of products that he needed when he needed them enabled Walton to remove unneeded inventory from his stock room while also making sure he was never under stocked on popular items.
Selling Approach:
Walton said the most important lesson he ever learned in life was taught to him
by Mr. Penny Owner and founder of JC Penny's; he told Walton "never place profits before
people" (Wal-Mart Corp). Between 1951 and 1962 Walton opened fourteen more Ben Franklin stores, which served small communities, most of which had populations under 5,000. The expansion was based on his strong belief in the possibilities of discount merchandising in a small town. He attempted to convince the Ben Franklin group of the possibilities that a discount store could have, but they just weren't buying it. Walton's guiding philosophy for his stores from the very start was to offer consumers a wide selection of goods at a discounted price. The company saved capital by keeping advertising costs down and located stores in small towns where the residents had minimal options for retail shopping. On one hand, Sam Walton was "the guy with the old red dented pickup with the bird dogs in the back". On the other hand, he was the entrepreneur, there to do whatever it took to get the sales rep to give him a better discount for Wal-Mart's bulk purchases. Sam Walton's motto was, "always exceed the customer's expectations; and that he did. He operated his business much like Stew Leonard's is operated today with the main principle of "the customer is always right".
Role of Social Responsibility:
Sam Walton's philosophies were and are fundamentally based on giving back a large portion of the money that he and his family receive. Sam Walton, was not just one of the most successful and rich men in America, but prided himself and his family on giving something back to the community who made him who he is. Walton's charity programs still continue on after his death. He funded a special scholarship program that sends kids from Central America to college in Arkansas. Currently, there are approximately 180 children enrolled at three different Arkansas schools, and Sam paid about $13,000 a year per child. On top of this he also sponsored seventy scholarships of $6,000 each year for children of Wal-Mart employees. In addition to a number of educational institutions, recipients of Walton family donations include church groups and community projects like zoos, libraries, and recreational facilities. Walton also supported hospitals and medical research programs; while funding local art, theater and symphonies groups. He gave to conservation and environmental causes and veterans' groups, as well as to economic development groups and free enterprise groups. Walton and his family are always quick to support private and public schools as well as such groups as the Citizens against Government Waste, Students in Free Enterprise, and the Arkansas Business Council. "He was the largest single contributor to the Children's Miracle Network Telethon, donating $7.5 million. Sam donated his share of the proceeds from his book, Made in America, to the New American School Corporation, a private initiative started by business leaders who have pledged to raise $200 million for the development of break-the-mold schools" (Wal-Mart Case Study). Most of the giving that Sam Walton has done has either been anonymously, or linked to strict requests for no publicity.
Through his actions Walton was able to show the world, especially the retailing world, that success was rooted in a mindfulness of a few basic principles. These principles consisted of constantly being mindful of; customer service and satisfaction, always take advantage of the competitions ideas, diversify, employee satisfaction, and give back to the community. Couple this with a relentless drive to put these principles into practice. Customer Service and satisfaction are two things that Sam Walton understood better than anyone else in the game. Walton knew all too well that no business could exist without customers. He lived by the creed of, make the customer the centerpiece of all your efforts. In addition, in the process of serving Wal-Mart's customers he served Wal-Mart associates, shareholders, and communities.
The Role of Ethics:
When Sam Walton founded Wal-Mart, he instilled many principles and values within the company, three of which became our 3 Basic Beliefs to which we remain firmly committed. "Respect for the Individual, Service to the Customer, and Striving for Excellence" (3 basic beliefs). Walton expected his employees to always act with integrity, lead with integrity and expect others to work with integrity. Walton also was a big advocate for diversity and had a zero tolerance policy for anyone discriminating against anyone for any reason. Most importantly Walton expected his employees to always follow the law and be honest and fair.
Of course, it would not be fair to take a look at Sam Walton's set of ethics that laid the foundation for this great empire and not compare then to the ethics of Wal-Mart today. After doing extensive research and pulling out all political views on the issue it seems that the general consensus of the people is that Wal-Mart's product quality is diminishing right along with their customer service; which just happens to be two of Walton's biggest principles on which he built Wal-Mart on. Walton also spoke of how he always wanted his employees to feel like they were part of the "family" now Wal-Mart has one of the highest employee turnover rates out of any retail business. Employee's say that they are not being compensated fairly and that in most cases their pay is well below the poverty line. As I am sure many have said before me, I cannot help but to imagine that Sam Walton is rolling in his grave right now.
The Entrepreneurs Views about Money:
Sam Walton, the founder of Wal-Mart, grew up poor in a farm community in rural Missouri during the Great Depression. The poverty he experienced while growing up taught him the value of money and to persevere it at all costs. One of Walton's most famous quote was "There is only one boss - the customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else." Sam Walton was known to be industrious, always trying to get the most out of money, and had a heart of fire and a will that wouldn't stop until he succeeded. Walton learned what it was to make money at the early age of seven by selling magazine subscription. From the magazines came a paper route that he kept up through his college years. Through his early jobs, Sam learned how much hard work it took to earn a dollar. Not too many years later Sam Walton would be volleying for the position of richest man in the world and held the number one position from 1982-1988. On Walton's death bed he admitted that his biggest regret was spending too much time on making money and expanding his business and not enough time with his own family.
