Ideas on how to become rich - How to become a billionaire, part 5
So far, we have examined the basic principles of how to become a billionaire and we have also examined various companies that made a lot of money, and how they did in, in terms of their history and what they do to make money, and what they did in their rise to eminence. In this post on how to become a billionaire, we will be examining the history of Ford and General Motors. The resources for this research came from Forbes.com, Wikipedia as well as newspaper resources on the rich and famous. A quick reminder - my research methodology for the topic on "how to become a billionaire" was simply to see how we can emulate billionaires and billion-dollar companies and businesses, and the research methodology for my past few posts have been documented here:
Ideas on how to become rich: research methodology for the billionaire series
Without further ado, the history of Ford and GM, for you to glean insights into the power and virtue of making and creating great and powerful businesses that can generate income and huge amounts of earnings for shareholders and managers alike.
Case study: History of GM and ideas on how to become rich
General Motors was founded on Wednesday, September 16, 1908 in Flint, Michigan, as a holding company for Buick, then controlled by William C. Durant, and acquired Oldsmobile later that year. The next year, Durant brought in Cadillac, Elmore, Oakland and several others. In 1909, General Motors acquired the Reliance Motor Truck Company of Owosso, Michigan, and the Rapid Motor Vehicle Company of Pontiac, Michigan, the predecessors of GMC Truck. Durant lost control of GM in 1910 to a bankers’ trust, because of the large amount of debt taken on in its acquisitions around $1 million.
Durant left the firm and helped establish the Chevrolet Motor Company in 1911 with brothers Gaston and Louis Chevrolet. After a brilliant stock buy back campaign, he returned to head GM in 1916, with the backing of Pierre S. du Pont. Chevrolet entered the General Motors fold in 1917; its first GM car was 1918's Chevrolet 490. Du Pont removed Durant from management in 1920, and various Du Pont interests held large or controlling share holdings until about 1950.
In 1918 GM purchased the McLaughlin Motor Car Company of Oshawa, Ontario, Canada, manufacturer of the McLaughlin-Buick automobile, and renamed it General Motors of Canada Ltd., with R.S. "Colonel Sam" McLaughlin as its first president. In 1925, GM bought Vauxhall Motors of England, and then in 1929 went on to acquire an 80% stake in German automobile manufacturer Adam Opel AG. Two years later this was increased to 100% and the company remains the core of GM Europe to this day.
GM surpassed Ford Motor Company in the late 1920s thanks to the leadership of Alfred Sloan. While Ford continued to refine the manufacturing process to reduce cost, Sloan was inventing new ways of managing a complex worldwide organization, while paying special attention to consumer demands. Car buyers no longer wanted the cheapest and most basic model; they wanted style, power, and prestige, which GM offered them. Thanks to consumer financing, easy monthly payments allowed far more people to buy GM cars, while Ford was moralistically opposed to credit. Guess which idea was better for making money?
During the 1920s and 1930s, General Motors assumed control of the Yellow Coach bus company, and helped create Greyhound bus lines. They replaced intercity train transport with buses, and established subsidiary companies to buy out streetcar companies and replace the rail-based services as well with buses. GM formed United Cities Motor Transit in 1932.
In 1930, GM also began its foray into aircraft design and manufacturing by buying Fokker Aircraft Corp of America and Berliner-Joyce Aircraft, merging them into General Aviation Manufacturing Corporation. Through a stock exchange GM took controlling interest in North American Aviation and merged it with its General Aviation division in 1933, but retaining the name North American Aviation. In 1948, GM divested NAA as a public company, never to have a major interest in the aircraft manufacturing industry again.
General Motors bought the internal combustion engine inside the railcar builder Electro-Motive Corporation and its engine supplier Winton Engine in 1930, renaming both as the General Motors Electro-Motive Division. Over the next twenty years, diesel-powered locomotives — the majority built by GM — largely replaced other forms of traction on American railroads. Electro-Motive was sold in early 2005.
General Motors produced vast quantities of armaments, vehicles, and aircraft during World War II for both Allied and Axis customers, and made a lot of money. By the spring of 1939, the German Government had assumed day-to-day control of American owned factories in Germany, but decided against nationalizing them. During the war, the U.S. auto companies continued to be concerned Nazi Germany would nationalize American-owned factories.
GM's William P. Knudson served as head of U.S. wartime production for President Franklin Roosevelt, who called Detroit as the Arsenal of Democracy. The General Motors UK division, Vauxhall Motors, manufactured the Churchill tank series for the Allies. The Vauxhall Churchill tanks were instrumental in the UK campaigns in North Africa. Bedford Vehicles manufactured logistics vehicles for the UK military, all important in the UK's land campaigns.
Nevertheless, while General Motors has claimed its German (Opel) operations were outside its control during World War II, this assertion appears to be contradicted by available evidence. General Motors was not just a car company that happened to have factories in Germany; GM management from the top down had extensive connections with the NSDAP, both on a business and personal level. American GM Vice President (later Colonel) Graeme K. Howard was a committed Nazi, and expressed such views in his book, America and a New World Order. Adolf Hitler awarded GM boss James D. Mooney the Order of Merit of the Golden Eagle for his services to Nazi Germany. General Motors’ internal documents show a clear strategy to profit from their German military contracts even after Germany declared war against America. Defending the German investment strategy as “highly profitable” and making a lot of money, Alfred P. Sloan told shareholders in 1939 GM’s continued industrial production for the Nazi government was merely sound business practice.
At one point GM had become the largest corporation registered in the United States, in terms of its revenues as a percent of GDP. In 1953, Charles Erwin Wilson, then GM president, was named by Eisenhower as Secretary of Defense. When he was asked during the hearings before the Senate Armed Services Committee if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation "because for years I thought what was good for the country was good for General Motors and vice versa". Later this statement was often misquoted, suggesting that Wilson had said simply, "What's good for General Motors is good for the country." At the time, GM was one of the largest employers in the world – only Soviet state industries employed more people. In 1955, General Motors became the first American corporation to pay taxes of over $1,000 million. Now one can guess how much money that corporation made, if the money it made allowed it to pay that much in taxes!
Case study: History of Ford and ideas on how to become rich
Ford was launched in a converted factory in 1903 with $28,000 in cash from twelve investors, most notably John and Horace Dodge, who would later found the Dodge Brothers Motor Vehicle Company. Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. The largest family-controlled company in the world, the Ford Motor Company has been in continuous family control for over 100 years.
During its early years, the company produced a range of vehicles designated, chronologically, from the Model A in 1903 to the Model S in 1908. That year, Henry Ford introduced the Model T. Earlier models were produced at a rate of only a few a day at a rented factory on Mack Avenue in Detroit, Michigan with groups of two or three men working on each car from components made to order by other companies. The first Model Ts were built at the Piquette Road Manufacturing Plant, the first company-owned factory. In its first full year of production, 1909, about 18,000 Model Ts were built. By 1913, the company had developed all of the basic techniques of the assembly line and mass production. Ford introduced the world's first moving assembly line that year, which reduced chassis assembly time.
These innovations were hard on employees, and turnover of workers was very high, while increased productivity actually reduced labour demand. Turnover meant delays and extra costs of training, and use of slow workers. In January 1914, Ford solved the employee turnover problem by doubling pay to $5 a day, cutting shifts from nine hours to an eight hour day for a 5 day work week (which also increased sales; a line worker could buy a T with under four months' pay), and instituting hiring practices that identified the best workers, including disabled people considered unemployable by other firms. Employee turnover plunged, productivity soared, and with it, the cost per vehicle plummeted. The increase in wages led to Ford making more money. Ford cut prices again and again and invented the system of franchised dealers who were loyal to his brand name. He made yet more money. Wall Street had disagreed with Ford's generous labour practices when he began paying workers enough to buy the products they made.
While Ford attained "international" status in 1904 with the founding of Ford of Canada, it was in 1911 that it began to rapidly expand overseas, with the opening of assembly plants in England and France, followed by Denmark (1923), Germany (1925) and Austria (1925) and also in Australia (1925) as a subsidiary of Ford of Canada. By the end of 1919, Ford was producing 50 percent of all cars in the United States, and 40% of all British ones; by 1920, half of all cars in the U.S. were Model Ts. The assembly line transformed the industry; soon, companies without it risked bankruptcy.
In 1915, Henry Ford went on a peace mission to Europe aboard a ship, joining other pacifists in efforts to stop World War I. This led to an increase in his personal popularity. Ford would subsequently go on to support the war effort with the Model T becoming the underpinnings for Allied military vehicles.
In 1919, Edsel Ford succeeded his father as president of the company, although Henry still kept a hand in management. Although prices were kept low through highly efficient engineering, the company used an old-fashioned personalized management system, and neglected consumer demand for improved vehicles. So, while four wheel brakes were invented by Arrol-Johnson (and were used on the 1909 Argyll), they did not appear on a Ford until 1927. Ford steadily lost market share to GM and Chrysler, as these and other domestic and foreign competitors began offering fresher automobiles with more innovative features and luxury options. GM had a range of models from relatively cheap to luxury, tapping all price points in the spectrum, while less wealthy people purchased used Model Ts. The competitors also opened up new markets by extending credit for purchases, so consumers could buy these expensive automobiles with monthly payments. Ford initially resisted this approach, insisting such debts would ultimately hurt the consumer and the general economy. Ford eventually relented and started offering the same terms in December 1927, when Ford unveiled the redesigned Model A, and retired the Model T after producing 15 million units.
On February 4, 1922 Ford expanded its reach into the luxury auto market through its acquisition of the Lincoln Motor Company, named for Abraham Lincoln whom Henry Ford admired, and the Mercury division was established in 1938 to serve the mid-price auto market. Ford Motor Company built the largest museum of American History in 1928, The Henry Ford. Henry Ford would go on to acquire Abraham Lincoln's chair, which he was assassinated in, from the owners of the Ford Theatre.Abraham Lincoln's chair would be displayed along with John F. Kennedy's Lincoln limousine in the Henry Ford Museum & Greenfield Village in Dearborn, known today as The Henry Ford. Kennedy's limousine was leased to the White House by Ford. President Franklin Roosevelt referred to Detroit as the "Arsenal of Democracy." The Ford Motor Company played a pivotal role in the allied victory during World War I and World War II. As a pacifist, Henry Ford had said war was a waste of time, and did not want to profit from it. He was concerned the Nazis during the 1930s might nationalize his factories in Germany. During the Great Depression Ford's wages may have seemed great to his employees but many of the rules of the factories were very harsh and strict. Those were tense times for American companies doing business in Europe. In the spring of 1939, the Nazis assumed day to day control of Ford factories in Germany.
With Europe under siege, Henry Ford's genius would be turned to mass production for the war effort. After Bantam invented the Jeep, the War Department handed production over to Ford. When Consolidated Aircraft could at most build one B-24 Liberator a day, Ford would show the world how to produce one an hour, at a peak of 600 per month in 24 hour shifts. The specially-designed Willow Run plant broke ground in April 1941. Edsel Ford, under severe stress, died in the Spring of 1943 of stomach cancer, prompting his grieving father to resume day-to-day control of Ford. Mass production of the B-24 began by August 1943.
At the behest of Edsel Ford's widow Eleanor and Henry's wife Clara, Henry Ford would make his oldest grandson, Henry Ford II, President of Ford Motor Company. Henry Ford II served as President from 1945–1960, and as Chairman and CEO from 1960–1980. "Hank the Deuce" led Ford to become a publicly traded corporation in 1956. However, the Ford family maintains about 40 percent controlling interest in the company, through a series of Special Class B preferred stocks. In 1947, Henry Ford passed away. Perhaps an estimated 7 million people mourned his death.
In 1946 Robert McNamara joined Ford Motor Company as manager of planning and financial analysis. He advanced rapidly through a series of top-level management positions to the presidency of Ford on 9 November 1960, one day after John F. Kennedy's election. The first company head selected outside the Ford family, McNamara had gained the favor of Henry Ford II, and had aided in Ford's expansion and success in the postwar period. Less than five weeks after becoming president at Ford, he accepted Kennedy's invitation to join his cabinet, as Secretary of Defense.
Lee Iacocca was involved with the design of several successful Ford automobiles, most notably the Ford Mustang. He was also the "moving force," as one court put it, behind the notorious Ford Pinto. He promoted other ideas which did not reach the marketplace as Ford products. Eventually, he became the president of the Ford Motor Company, but he clashed with Henry Ford II and ultimately, on July 13, 1978, he was famously fired by Henry II, despite Ford posting a $2.2 billion dollar profit for the year. In 1979 Phil Caldwell became Chairman, succeeded in 1985 by Don Petersen. Harold Poling served as Chairman and CEO from 1990-1993. Alex Trotman was Chairman and CEO from 1993-1998, and Jacques Nasser served at the helm from 1999-2001. Henry Ford's great-grandson, William Clay Ford Jr., is the company's current Chairman of the Board and was CEO until September 5, 2006, when he named Alan Mulally from Boeing as his successor. As of 2006, the Ford family owns about 5 percent of Ford's shares and controls about 40 percent of the voting power through a separate class of stock.
(The latest before the recession of late 2008) In December 2006, Ford announced that it would mortgage all assets, including factories and equipment, office property, intellectual property, and its stakes in subsidiaries, to raise $23.4 billion in cash – the need to raise huge sums of money. The secured credit line is expected to finance product development during the restructuring through 2009, as the company expects to burn through $17 billion in cash before turning a profit and making money in future. The action was unprecedented in the company's 103 year history.
What can we learn from the history of these two major companies that have made money and lost money, and still managed to become major billion dollar companies? These are good questions that we should ask ourselves.
More to come in the next post on Ideas on How to Become Rich, stay tuned! Cheers.
Ideas on how to become rich!
Ideas on how to become rich - How to become a billionaire, part 5
Ideas on how to become rich - How to become a billionaire, part 4
Ideas on how to become rich - How to become a billionaire, part 4
In the previous post, I explored how Sam Walton made his money and became very rich. In this post, I will be exploring two individuals who have been instrumental in helping make the world digitalised and in the process have made a lot of money and have become incredibly rich.
This article here examines Google, using Wikipedia as well as news reports as sources. First, we shall be looking at Google in general, although I suspect that many people already know how Google makes money and what the company does and such. Secondly, we shall be looking at the founders and their lives, and how they founded the company. In particular, Page and Brin.
However, in this case study on how to become a billionaire, I will not be giving any answers or giving any personal opinions or recommendations on how to become rich or how to become a billionaire - you can read the information below in the case study and figure out for yourself what it was that made these two individuals very rich and how they did, and you should be constantly asking yourself what ideas and what lessons can be take away from them? The theme of course is "how to become rich". Remember to ask yourself such questions as we explore this case study of Google - one of the best and biggest companies on earth currently.
Case study: Larry Page and Sergey Brin and their company, Google
Materials taken from Wikipedia, online sources, as well as newspaper reports, dated before 2008
What is Google? - a basic primer and basic introduction
Google Inc. is an American public corporation, earning revenue from advertising related to its Internet search, e-mail, online mapping, office productivity, social networking, and video sharing services as well as selling advertising-free versions of the same technologies.
Google was co-founded by Larry Page and Sergey Brin while they were students at Stanford University and the company was first incorporated as a privately held company on 4 September 1998. The initial public offering took place on 19 August 2004, raising US$1.67 billion, making it worth US$23 billion. Google has continued its growth through a series of new product developments, acquisitions, and partnerships.
Google began in January 1996, as a research project by Larry Page, who was soon joined by Sergey Brin, two Ph.D. students at Stanford University in California. They hypothesized that a search engine that analyzed the relationships between websites would produce better ranking of results than existing techniques, which ranked results according to the number of times the search term appeared on a page. Their search engine was originally nicknamed "BackRub" because the system checked backlinks to estimate the importance of a site.
Convinced that the pages with the most links to them from other highly relevant web pages must be the most relevant pages associated with the search, Page and Brin tested their thesis as part of their studies, and laid the foundation for their search engine. The domain google.com was registered on 15 September 1997, and the company was incorporated as Google Inc. on 4 September 1998 at a friend's garage in Menlo Park, California. The total initial investment raised for the new company amounted to almost US$1.1 million.
In March 1999, the company moved into offices in Palo Alto, home to several other noted Silicon Valley technology startups. After quickly outgrowing two other sites, the company leased a complex of buildings in Mountain View at 1600 Amphitheatre Parkway from Silicon Graphics (SGI) in 2003. The company has remained at this location ever since, and the complex has since come to be known as the Googleplex. In 2006, Google bought the property from SGI for US$319 million.
The Google search engine attracted a loyal following among the growing number of Internet users, who liked its simple design and useful results. In 2000, Google began selling advertisements associated with search keywords. The ads were text-based to maintain an uncluttered page design and to maximize page loading speed. Keywords were sold based on a combination of price bid and clickthroughs, with bidding starting at US$.05 per click. This model of selling keyword advertising was pioneered by Goto.com (later renamed Overture Services, before being acquired by Yahoo! and rebranded as Yahoo! Search Marketing). Goto.com was an Idealab spin off created by Bill Gross, and was the first company to successfully provide a pay-for-placement search service. Overture Services later sued Google over alleged infringements of Overture's pay-per-click and bidding patents by Google's AdWords service. The case was settled out of court, with Google agreeing to issue shares of common stock to Yahoo! in exchange for a perpetual license. Thus, while many of its dot-com rivals failed in the new Internet marketplace, Google quietly rose in stature while generating revenue.
Google has created services and tools for the general public and business environment alike; including Web applications, advertising networks and solutions for businesses.
What are some of the money earners for this big company? They are:
How to become rich: Advertising
99% of Google's revenue is derived from its advertising programs. For the 2006 fiscal year, the company reported US$10.492 billion in total advertising revenues and only US$112 million in licensing and other revenues. Google is able to precisely track users' interests across affiliated sites using DoubleClick technology and Google Analytics. Google's advertisements carry a lower price tag when their human ad-rating team working around the world believes the ads improve the company's user experience. Google AdWords allows Web advertisers to display advertisements in Google's search results and the Google Content Network, through either a cost-per-click or cost-per-view scheme. Google AdSense website owners can also display adverts on their own site, and earn money every time ads are clicked.
How to become rich: Software
The Google web search engine is the company's most popular service. As of August 2007, Google is the most used search engine on the web with a 53.6% market share, ahead of Yahoo! (19.9%) and Live Search (12.9%). Google indexes billions of Web pages, so that users can search for the information they desire, through the use of keywords and operators, although at any given time it will only return a maximum of 1,000 results for any specific search query. Google has also employed the Web Search technology into other search services, including Image Search, Google News, the price comparison site Google Product Search, the interactive Usenet archive Google Groups, Google Maps, and more.
In 2004, Google launched its own free web-based e-mail service, known as Gmail. Gmail features conversation view, spam-filtering technology, capability to use Google technology to search e-mail. The service generates revenue by displaying advertisements and links from the AdWords service that are tailored to the choice of the user and/or content of the e-mail messages displayed on screen.
In early 2006, the company launched Google Video, which not only allows users to search and view freely available videos but also offers users and media publishers the ability to publish their content, including television shows on CBS, NBA basketball games, and music videos.
Google has also developed several desktop applications, including Google Desktop, Picasa, SketchUp and Google Earth, an interactive mapping program powered by satellite and aerial imagery that covers the vast majority of the planet. Google Earth is generally considered to be remarkably accurate and extremely detailed. Many major cities have such detailed images that one can zoom in close enough to see vehicles and pedestrians clearly. Consequently, there have been some concerns about national security implications; contention is that the software can be used to pinpoint with near-precision accuracy the physical location of critical infrastructure, commercial and residential buildings, bases, government agencies, and so on. However, the satellite images are not necessarily frequently updated, and all of them are available at no charge through other products and even government sources; the software simply makes accessing the information easier. A number of Indian state governments have raised concerns about the security risks posed by geographic details provided by Google Earth's satellite imaging.
Google has promoted their products in various ways. In London, Google Space was set-up in Heathrow Airport, showcasing several products, including Gmail, Google Earth and Picasa. Also, a similar page was launched for American college students, under the name College Life, Powered by Google.
How to become rich: The founders:
Larry Page is the son of the late Dr. Carl Victor Page, a professor of computer science and artificial intelligence at Michigan State University and one of the University of Michigan's first computer science Ph.D graduates, and Gloria Page, a computer programming teacher at Michigan State University. He is also the brother of Carl Victor Page, Jr. a co-founder of eGroups, later sold to Yahoo! for approximately half a billion dollars. Page attended a Montessori school in Lansing, Michigan, and graduated from East Lansing High School. Page holds a Bachelor of Science degree in computer engineering from the University of Michigan with honors and a Masters degree in Computer Science from Stanford University. At University of Michigan, Page was a member of the solar car team and served as the president of the HKN. After enrolling for a Ph.D. program in computer science at Stanford University, Page was in search for a dissertation theme and decided to explore the mathematical properties of the World Wide Web, understanding its link structure as a huge graph. His supervisor Terry Winograd agreed and Page focused on the problem of finding out which web pages link to a given page, considering the number and nature of such backlinks to be valuable information about that page. In his research project, nicknamed "BackRub," he was soon joined by Sergey Brin, a fellow Stanford Ph.D. student and close friend, whom he had first met in the summer of 1995 in a group of potential new students which Brin had volunteered to show around the campus. To convert the backlink data gathered by BackRub's web crawler into a measure of importance for a given web page, Brin and Page developed the PageRank algorithm, and realized that it could be used to build a search engine far superior to existing ones. In August 1996 the initial version of Google was made available, still on the Stanford Web site.In 1998, Brin and Page founded Google, Inc. Page ran Google as co-president with Brin until 2001 when they hired Eric Schmidt to become Chairman and CEO of Google. According to the 2006 edition of Forbes, Page had an estimated net worth of $18.5 Billion, placing him at rank 26 on Forbes's list of the richest persons in the world, together with Brin.
Sergei Brin was born in Moscow, in the Soviet Union to a Jewish family. According to Google lore, Page and Brin "were not terribly fond of each other when they first met as Stanford University graduate students in computer science in 1995." They soon found a common interest: retrieving relevant information from large data sets. Together, the pair authored what is widely considered their seminal contribution, a paper entitled "The Anatomy of a Large-Scale Hypertextual Web Search Engine." The paper has since gone on to become the tenth-most accessed scientific paper at Stanford University. Brin has appeared on television shows and many documentaries, including Charlie Rose, CNBC, and CNN. In 2004, he and Larry Page were named "Persons of the Week" by ABC World News Tonight. In January 2005 Sergey Brin was nominated to be one of the World Economic Forum's "Young Global Leaders." In 2007, Brin was cited by PC World as #1 on a list of the "50 most important people on the Web," along with Larry Page and Google CEO Eric Schmidt. He is also an investor in Tesla Motors, which is developing the Tesla Roadster, a 250-mile range battery electric vehicle.
You've been reading ideas on how to become rich from Google, and the founders Page and Brin. What ideas have you learnt on how to become rich and how to become a billionaire? These are the central questions that you may wish to ask yourself and remind yourself of.
More to come in future posts here on my ideas blog, where I explore various ideas on how to become rich, and in this series, how to become a billionaire in particular. Thanks for reading and cheers!
Ideas on how to become rich!
Ideas on how to become rich - How to become a billionaire, part 3
Ideas on how to become rich - How to become a billionaire, part 3
Case study of Wal-Mart - also known as Walmart
and
Case study of entrepreneur and billionaire Sam Walton
A brief history of Walmart and its founder, entrepreneur Sam Walton, current as at 2007/2008, thanks to Wikipedia as well as newspaper reports:
Sam Walton, a businessman/entrepreneur from Arkansas, began his retail career when he started work on June 3, 1940, at a J.C. Penney store in Des Moines, Iowa where he remained for 18 months. In 1945, he met Butler Brothers, a regional retailer that owned a chain of stores called Ben Franklin and that offered him one in Newport, Arkansas.
Walton could neither come to agreement on the existing store's lease renewal nor find a new location in Newport. Instead, the intrepid entrepreneur opened a new Ben Franklin franchise in Bentonville, Arkansas, but called it "Walton's Five and Dime." There this powerful entrepreneur achieved higher sales volume by marking up slightly less than most competitors.
On July 2, 1962, Walton opened the first Wal-Mart Discount City store. Within five years, the company expanded to 24 stores across Arkansas and reached $12.6 million in sales. In 1968, it opened its first stores outside Arkansas.
The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution centre in Bentonville, Arkansas. It had 38 stores operating with 1,500 employees and sales of $44.2 million. It began trading stock as a publicly-held company on October 1, 1972, and was soon listed on the New York Stock Exchange. The first stock split occurred in May 1971 at a market price of $47. By this time, Wal-Mart was operating in five states: Arkansas, Kansas, Louisiana, Missouri, and Oklahoma; it entered Tennessee in 1973 and Kentucky and Mississippi in 1974.
During the 1980s, Wal-Mart continued to grow rapidly, and by its 25th anniversary in 1987 there were 1,198 stores with sales of $15.9 billion and 200,000 associates. In 1988, Sam Walton stepped down as CEO and was replaced by David Glass. Walton remained as Chairman of the Board, and the company also rearranged key personnel in senior positions.
Sam Walton may have stepped down, but Wal-Mart went on and on. Apparently from strength to strength, making more and more money and exapanding and expanding!
In 1988, the first Wal-Mart Supercenter opened in Washington, Missouri. Thanks to its superstores, it surpassed Toys "R" Us in toy sales in the late 1990s. The company also opened overseas stores, entering South America in 1995 with stores in Argentina and Brazil; and Europe in 1999, buying ASDA in the UK for $10 billion.
In 1998, Wal-Mart entered the grocery business, introducing the "Neighbourhood Market" concept with three stores in Arkansas. In 2000, H. Lee Scott became President and CEO, and Wal-Mart's sales increased to $165 billion. In 2002, it was listed for the first time as America's largest corporation on the Fortune 500 list.
In 2005, Wal-Mart had $312.4 billion in sales, more than 6,200 facilities around the world—including 3,800 stores in the United States and 2,800 elsewhere, employing more than 1.6 million "associates" worldwide.
In October 2005, Wal-Mart announced it would implement several environmental measures to increase energy efficiency. The primary goals included spending $500 million a year to increase fuel efficiency in Wal-Mart’s truck fleet by 25% over three years and double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at stores by 30%, and cut solid waste from U.S. stores and Sam’s Clubs by 25% in three years. CEO Lee Scott said that Wal-Mart's goal was to be a "good steward for the environment" and ultimately use only renewable energy sources and produce zero waste. Despite much criticism of its environmental record, Wal-Mart took a few steps in a positive direction, which included becoming the biggest seller of organic milk and the biggest buyer of organic cotton in the world, as well as reducing packaging and energy costs. Wal-Mart also spent nearly a year working with outside consultants to discover the company's total environmental impact and find where they could improve. They discovered, for example, that by eliminating excess packaging on their toy line Kid Connection, they could save $2.4 million a year in shipping costs, 3,800 trees, and a million barrels of oil.
In March 2006, Wal-Mart sought to appeal to a more affluent demographic. The company launched a new supercenter concept in Plano, Texas, intended to compete against stores seen as more upscale and appealing, such as Target. The new store has wood floors, wider aisles, a sushi bar, a coffee/sandwich shop with free Wi-Fi Internet access, and more expensive beers, wines, electronics, and other goods. The exterior has a green background behind the Wal-Mart letters, similar to Wal-Mart Neighborhood Markets, instead of the blue previously used at supercenters.
This brief history of Walmart already teaches us key lessons on how to become billionaires and how to become rich. Look at the key steps that Sam Walton and his future entrepreneurial successors did (the key points of the historical case study that I made out in bold, because those were the key learning points and key learning ideas of how to become a billionaire and to build a billion-dollar company):
Sam Walton achieved higher sales volume by marking up slightly less than most of his competitors - simple but effective initial idea
Walmart began trading stock as a publicly-held company on October 1, 1972, and was soon listed on the New York Stock Exchange - listing the company was one of the key steps on the way to financial success
Wal-Mart continued to grow rapidly and continued to expand, expand, expand - this was one of the critical factors in making the company billions of dollars
The company also opened overseas stores - therefore it is clear that overseas expansion and internationalisation or international trade is key and very important in building a billion dollar enterprise
Wal-Mart announced it would implement several environmental measures to increase energy efficiency - that was both cost effective and environmentally minded - and thus killed two birds with one stone, metaphorically, on the road to success and billions of dollars, to use an extended mixed metaphor
Wal-Mart sought to appeal to a more affluent demographic - one of the key ideas of becoming rich is to appeal to people who have the money, who make money and are willing to spend money - this was not a key step in the building of a billion dollar business, because the business was already successful appealing to a less wealthy crowd from the beginning though - nonetheless, even though Sam Walton made his billions and became a billlionaire but appealing to the masses and selling at low margins, it is undeniable that appealing to people who possess the money is important in becoming rich.
This case study you have been reading here on my ideas site was on Sam Walton, and Wal-Mart/ Walmart. Thanks for reading this case study on how to become a billionaire, and there will be other posts to come on this topic. Stay here, thank you very much! Cheers.
Ideas on how to become rich!
