Case | HBS Case Collection | January 2006 (Revised December 2006)

Wal-Mart's Business Environment

by Felix Oberholzer-Gee

Abstract

In 2004, Wal-Mart Stores, Inc. proposed to build a new supercenter in Inglewood, a low-income community near Los Angeles. The proposal was a part of Wal-Mart's strategy to bring its supercenter format to California. Introduced in the late 1980s, supercenters added a full line of groceries and specialty departments to Wal-Mart's traditional assortment of general merchandise. Wal-Mart's planned entry into California caused problems even before the discounter opened a single supercenter. To compete with Wal-Mart, supermarkets in California cut grocery workers' health benefits and wages. The unions ordered a strike against the supermarkets. The labor unrest lasted five months and involved 70,000 workers. In the meantime, Inglewood's city council rejected Wal-Mart's request to build a supercenter. The retailer took its expansion plans directly to the voters of Inglewood. With the help of the California initiative process, Wal-Mart forced a public vote on the proposed 60-acre development. Will Inglewood's voters dampen the shine of "America's most admired company?"

Keywords: Goals and Objectives; Expansion; Market Entry and Exit; Corporate Strategy; Labor Unions; Conflict and Resolution; Retail Industry; Los Angeles;

Citation:

Oberholzer-Gee, Felix. "Wal-Mart's Business Environment." Harvard Business School Case 706-453, January 2006. (Revised December 2006.)