Family Owned Business: Walmart

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Walmart is the most well-known retailer in the United States and is also known all over the world. When you go shopping at Walmart, you are engrossed in appreciating its vastness and the spectacle it has to bring. What you do not realize is that Walmart is a family-owned business, with the Walton family controlling more than half of the company's stock.

Sam Walton opened his dime store Waltons 5&10 in Bentonville in 1950, after Sam returned from the military, because his wife desired a simpler life and way of life. Soon Sam’s visionary leadership and ideals led him to open the first Walmart store in Arkansas in 1962 when he was 44 years old. Walmart’s success however went beyond Sam’s vision and success in terms of expansions was fast. Walmart was so successful that in 1970s, the company went public. Competitors claim that the reason for this rapid transformation and great success is the customer service that is provided to the shoppers that is an added value, a cherry on top with the market-competitive, low prices on products. The business expanded and so did Sam’s vision who managed to open a Walmart beyond US borders in Mexico, while keeping prices really low too. Sam received the Medal of Freedom and shortly died after in 1992, but his legacy in terms of family owned enterprise continues today.

Walmart remains the leader in retail stores across US and somewhat to a global level too. In 2016 the company made 485.9 billion US dollars in revenue and hired 22,000,000 employees, two vital indicators that prove the upward trending growth of the enterprise as well as its success in terms from of demand by customers. The reason why Walmart can still be considered a family owned enterprise is that despite the company being a public limited one, more than 50% of the shares are owned by the family.

The Walmart business model that focuses on low pricing gave tough competition to small stores and retail shops around the neighbourhoods that could not offer similar pricing as they were not a mass retail business. Walmart is not just a store but is categorised in three segments, Walmart International, Walmart Stores and Sam’s Club. The business manages itself through exhibiting in superstores, hyper stores, hyper markets and ware houses as well. Hence the project that started as a humble neighbourhood shop that promised a simple life to Sam and his wife has quickly transformed into a giant family enterprise. Walmart deals with all kinds of products from restaurants to electronics, lifestyle and furnishing products to personal care and food. Apart from physical stores, Walmart has also entered the digital sphere and offers online shopping to its customers as well. Walmart International functions in 26 countries, located in Latin America, Europe and even Africa (e.g. South Africa). The most different model is offered by Sam’s Club that offers membership to warehouses for technological, fuel and other goods.

Today, the Walton family comes in the richest people of the world with a fortune of over $150 billion as per the estimates by Forbes. The family is involved in charity as well and have established the Walton Family Foundation. According to Forbes, the family wealth comes to approximately 476 billion US dollars.

There are a few take away points from the Walmart example of family enterprise or family owned business. Usually when one thinks about family business, it is usually thought of as a small or medium sized business, relatively unpopular in a small corner, unable to compete with the giants of the industry. Walmart however, gives a quite contradictory. It is a giant in itself that gives a tough competition to all other businesses regardless of their size, big and small. It is a multinational set up, that deals in vast amount of products, covers all aspects and has not only established itself in the physical, retail domain, but also in the digital sphere.

Another take away point is about ownership. Family owned businesses are usually sole proprietorship or in a partnership. Conventional thinking says that this ensures capital safety and that capital remains with the family. Walmart also challenges this thinking; the company is a public limited company but the Walton family still holds ownership to it as they have the ownership of 50.8 per cent of the shares. So expansion and going public does not necessarily have to be in relation with divorce of ownership versus management, as the classical models of business believe.

A family owned business functions differently from a normal enterprise in their motivation and in their vision. Walmart has shown that despite these differences, it has managed to out beat traditional models of business and shine out as one of the best examples of successful family owned businesses in the world.

November 09, 2022
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Business

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794

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