Walmart Draft

Corporate strategy is a company's master plan for its overall growth direction and the management of its various business units and product lines. A value chain refers to the value-adding activities that begin with raw materials and end with the products in the hands of the final consumers. When an industry (a group of firms that provide a similar product or service) has evolved, market saturation, the point at which a market is no longer generating new demand for a firm's products, may occur. Market saturation can be combatted through horizontal growth, which can be achieved through expanding operations into other geographic areas; this results in horizontal integration, defined as the degree to which a company operates in multiple locations along the same point on the value chain.

In 1994 the most important goal for Wal-Mart was to maintain its sales growth of 12 percent per year, initially achieved by the company's domination of its value chain. As the largest discount retailer, Wal-Mart has virtually saturated the United States (U.S.) market, thereby limiting the ability to expand domestically. There is little left of this market to share because Wal-Mart has annihilated most of its competing firms. Building more stores in the U.S. market may simply leave net sales unchanged. Wal-Mart has little choice but to continue expand operations globally; in 1994, the company has expanded to Mexico and to Canada and planned to enter South America. This global expansion reflects Wal-Mart's horizontal integration on a global scale to maintain sales growth.