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!
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 1
Ideas on how to become rich - How to become a billionaire, part 1
Welcome to this series on my ideas on how to become rich site. This series on my site is about how to become a billionaire, as promised earlier. I have done research into this field and will simplify my analysis and share some ideas about this topic. Then after this series, I should be writing more about investment and finance as usual, and probably have a series on how to make money on the stock market by borrowing ideas from fund manager Peter Lynch and his book "One Up on Wall Street", but that's all in the works and in the future. This series here is about "how to become a billionaire".
First up, my research methodology for researching on this important topic: regarding how to become a billionaire, the most obvious way seemed to me to have a look at Forbes list of billionaires and see how they made their money, where they got their sources on income and the like. And it shouldn't strike you as new or special or something innovative that all of them made their money in some field or other, and they are all billionaires because their companies are listed. Therefore, the question "how to become a billionaire" can be easily answered as "get listed on the stock market and do well there" (and with tongue in cheek, of course get listed on the stock market and do well there but not in a recession - get listed and make money when the stock market is doing well!). Clearly the direct correlation is between being a billionaire and having lots of stock, either in your own company or in Warren Buffett's case, in other companies. Thus this is not the answer we are looking for. We can definitely become billionaires if we have stocks in the right company and/or we own companies that are very successful, and we have stocks in those companies.
The focus will be on the fields that the billionaires are working in, what they do, and how they earn their money - because ultimately the stock price follows their companies' incomes and revenues. This is the main focus of "how to become a billionaire" - the ways in which the rich and famous earn their money, and how their companies made them rich.
Therefore the next step was for me to take a list of billionaires that I wanted to emulate and then observed how they made their money, and that was the basis of my case studies. However, in the case studies, those were rich men, and with the exceptions of Trump and Buffett, none of the others were billionaires, although they were millionaires. To summarise, in this series I correct my former case studies and now make instead a summary and a collation of various billionaires, but not on the billionaires themselves but on the way in which they made their money - in other words, their companies and what they did.
In summary: I will be writing on "how to become a billionaire". I looked at the list of billionaires and selected a few to research on. The focus was not on their stock price but instead on the ways and ideas in which they made their money and how their companies developed.
Some of the richest men and women got their money through court cases, lawsuits, and via inheritance. Those will not be considered here in my ideas site.
The billionaires that I looked at were:
Sam Walton of Wal Mart
Brin and Page of Google
(I got all their information off the internet, and as to the validity, well, I consulted Wikipedia... of all things)
Sergei Popov
Roman Abramovich - you all know this guy if you watch football, and by football I of course am referring to the English Premier League football!
Warren Buffett
Donald Trump
as well as
Jack Welch
Henry Ford
Thomas Edison - believe it or not!
among others
Therefore the main companies that we will be looking at are:
Wal Mart
Google
Berkshire Hathaway
Ford
General Motors
General Electric
We will learn how to become a billionaire from these companies and their founders, and basically this series is a case study series not of people and not of rich people, but superrich people and superrich and huge companies. In these times of 2008 and rapid economic change and problems in the international economy, it is important to learn what is timeless and what does not change - namely the skills of how to make money, the ideas behind the companies that make money, and the history of how some companies made it big and what we can learn from that. More to come here on my site on Ideas on how to become rich! Stay tuned, thanks for reading.
Ideas on how to become rich!
