Wal-MartWal-Mart is more than just the world's largest retailer. It is an economic force,

Wal-Mart

Wal-Mart is more than just the world's largest retailer. It is an economic force, a cultural phenomenon and a lightning rod for controversy. It all started with a simple philosophy from founder Sam Walton: Offer shoppers lower prices than they get anywhere else. That basic strategy has shaped Wal-Mart's culture and driven the company's growth.

Now that Wal-Mart is so huge, it has unprecedented power to shape labor markets globally and change the way entire industries operate.

History of Wal-Mart

Sam Walton opened his first five-and-dime in 1950. His vision was to keep prices as low as possible. Even if his margins weren't as fat as competitors, he figured he could make up for that in volume. He was right.

In the early 1960s, Walton opened his first Wal-Mart in Rogers, Arkansas. The company continued to grow, going public in 1970 and adding more stores every year. In 1990, Wal-Mart surpassed key rival Kmart in size. Two years later, it surpassed Sears.

Walton continued to drive an old pickup truck and share budget-hotel rooms with colleagues on business trips, even after Wal-Mart made him very rich. He demanded that his employees also keep expenses to a bare minimum—a mentality that is still at the heart of Wal-Mart culture more than a decade after Walton's death. The company has continued to grow rapidly after his death in 1992 and now operates four retail divisions—Wal-Mart Supercenters, Wal-Mart discount stores, Neighborhood Market stores and Sam's Club warehouses.

Wal-Mart Strategy

Let's start with technology. Wal-Mart pushed the retail industry to establish the universal bar code, which forced manufacturers to adopt common labeling. The bar allowed retailers to generate all kinds of information—creating a subtle shift of power from manufacturers to retailers. Wal-Mart became especially good at exploiting the information behind the bar code. And thus it is considered a pioneer in developing sophisticated technology to track its stock and cut the fat out of its supply chain.

Recently, Wal-Mart became the first major retailer to demand manufacturers use radio frequency identification technology (RFID). The technology uses radio frequencies to transmit data stored on small tags attached to pallets(货盘) or individual products. RFID tags hold significantly more data than bar codes.

The frugal culture, established by Walton, also plays into Wal-Mart's success. The company has been criticized for the relatively poor wages and health care plans that it offers to rank-and- file employees. It has also been accused of demanding that hourly workers put in overtime without pay. Store managers often work more than 70 hours per week.

This culture is also present at the company's headquarters. Wal-Mart is headquartered in Bentonville, Arkansas, instead of an expensive city like New York. The building is unattractive and dull. You won't catch executives in quality cars and you won't see them dragging into work at 9:30 a.m. Executives fly coach and often share hotel rooms with colleagues. They work long hours, typically arriving at work before 6:30 a.m. and working halfdays on Saturdays.

The central goal of Wal-Mart is to keep retail prices low and the company has been very successful at this. Experts estimate that Wal-Mart saves shoppers at least 15 percent on a typical cart of groceries. Everything—including the technology and corporate culture—feeds into that ultimate goal of delivering the lowest prices possible. Wal-Mart also pushes its suppliers, some say cruelly, to cut prices. In The Wal-Mart Effect, author Charles Fishman discusses how the price, of a four-pack of GE light bulbs decreased from $2.19 to 88 cents during a five-year period.

The Power

Because of Wal-Mart's massive size, it has incredible power. It has driven smaller retailers out of business

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