An Example Of How 2 Organisations Facing Almost Identical Circumstances (Ames & Walmart)

An example of how 2 organisations facing almost identical circumstances and trajectories but had 2 completely different outcomes involves Wal-Mart and Ames. Wal-Mart has become the No. 1 company in the world, while Ames has "disappeared". But in the early 1970s Wal-Mart and Ames Department stores had a similar business model for rural discount retailing and regularly copied each other. The main difference was that Ames of started in Northeast America, while Wal-Mart moved in concentric circles from Arkansas. Both organisations delivered exceptional results from 1972 to 1986, beating the market by more than 10 times. Then Ames fell and has never recovered.

"...both Ames and Wal-Mart had strong entrepreneurial founders who guided their early growth, but whereas Sam Walton passed the company to a home-grown insider, Ames replaced its entrepreneurial leader with an outsider. Both Ames and Wal-Mart had vast, untapped opportunity with a basic strategy of low-price rural discounting, but while Wal-Mart maintained steady organic growth consistent with that strategy, Ames deviated from the strategy in favor of wild growth. In 1988, it acquired Zayne, aiming to double the size of the company in a single year. Wal-Mart retained focus on small towns before making an evolution into urban sites; Ames revolutionized itself over night into urban retailing and catapulted itself into decline. Wal-Mart created its own success, and Ames caused its own death..."

Jim Collins, 2008

 

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