Title: Distribution Strategy and Pricing Strategy
Assignment Questions:
(Case Study: Wal-Mart Stores, Inc.)
The case lays out Wal-Marts corporate history and phenomenal growth record, its strategy to become the largest discount retailer in the world, the companys approaches to strategy execution, and the transformative initiatives that CEO Lee Scott launched to curtail media bashing of Wal-Mart. Theres a detailed rundown of all the things that Wal-Mart has done to implement its strategy in near-perfect textbook fashion. And theres a portrayal of Sam Waltonre instrumental in creating a strategy-supportive corporate culture at Wal-Mart.
- What impresses you about this company? What aspects of Wal-Mart do you find unimpressive? What accounts for Wal-Marts success? Is it a great strategy, superb strategy implementation and execution, or great leadership?
- How would you characterize Wal-Marts strategy? What are the chief components of its strategy?
- Can the company continue to be successful? What issues does management need to address? What needs to be on Lee Scotts worry list?
(Case Study: Schwinn Bicycles.)
This case discusses the situation facing the management of Schwinn Bicycles in 1995. The company has a product line with a broad price range and an image that appeals to the older market but less so to younger, high-tech oriented mountain bikers. The challenge in the case is to evaluate the situation, the pricing strategy and the decision to invest $50 million in the company.
- Evaluate Schwinns strategy of selling bikes for prices from $100 to 2,500.
- Evaluate Zell/Chilmarks decision to invest $50 million in Schwinn. What did it get for its money? Calculate the breakeven and payback period for this investment given the following assumptions: Schwinn has 4 percent of the retail bike market: Schwinn bikes are marked up an average of 20 percent at retail: Schwinn has a 25 percent profit margin on its bikes.
Epilogue
Shortly after this case was written, Schwinn merged with GT Bicycles and formed the Schwinn/GT Corporation. A force in bike technology, innovation and production development, Schwinn/GT Corporation became the dominant force in bikes and accessories through the independent bicycle dealer channel. However, the company eventually filed for bankruptcy in 2001. On September 11, 2001, Pacific Cycle, the nations largest importer of quality bicycles, purchased the Schwinn/GT Corporation out of bankruptcy court and united it with the companys other bike lines like Mongoose, Mongoose Pro, Roadmaster and Pacific. Schwinn moved into mass retailers in 2002. In 2004, Dorel Industries, Inc., a global consumer products company, purchased Pacific Cycles. Pacific Cycles now operates as a division of Dorel and is headquartered in Madison, Wisconsin. In the same year, Schwinn introduced an updated Sting Ray Series and sold 600,000 of them in less than a years time. In May 2005, Schwinn introduced a motorized version of the Sting Ray with a suggested retail price of $399. This bike has an electric motor in the rear hub and can reach speeds of 14 miles per hour. The brand that Ignaz Schwinn founded in 1895 continues to survive.
