challenge is how to run more stores with less operating expenses. According to Bill Fields,". . . the goal is to increase sales per square foot and drive operating costs down yet another notch" (Saporito, 1994, p. 66). Trends indicate that operating expenses have been growing at a rate of 27.7% in recent years. However, Wal-Mart should reap the benefits of its investments in high technology, and be able to operate more stores without increasing its expenses. Cost of sales historically has been equal to the level of sales. If the company continues to take advantage of its buying power, Wal-Mart can expect to lower its cost of sales. Wal-Mart's future will depend on how well the company manages its expansion plans. For the coming years, the company will need to justify its expansion plans with consistent growth in sales, in order to offset the increases in debt interest and operating expenses. What Problems are ahead for Wal-Mart? What Risks? -- Throughout the 1980s, Wal-Mart's strategic intent was to unseat industry leaders Sears and Kmart, and become the largest retailer in the U.S. Wal-Mart accomplished this goal in 1991. But Wal-Mart's current strong competitive position and its past rapid growth performance can't guarantee that the company will remain as the industry leader or maintain its strong business position in the future. Carol Farmer, a retail consultant, told the Wall Street Journal that, "One little bad thing can wipe out lots of good things" (Trimble, 1990, p. 267). Every move in its business operation ought to be well thought-out and executed. Wal-Mart needs to address two major areas in order to maintain or to capture an even stronger long term business position: 1) Single-business strategy -- Wal-Mart's success is mainly based on its concentration of a single-business strategy. This strategy has achieved enviable success over the last three decades without relying upon diversification to sustain its growth and competit...
