Wal-Mart was founded in 1962 (Bauner & Wang, 2014). Wal-Mart is an American multinational retail corporation and runs chains that comprise large discount departments stores. The company mainly focuses on enhancing the lives of its customers. Also, it looks at ways to which it can help its clients and the community to save money and thus live better lifes. By 1969, the organization was officially operating as Wal-Mart store, Inc. With the rapid growth that the company has since experienced it has expanded into 11 states with more than 276 stores in the United States by the end of 1970s (Bauner & Wang, 2014). Currently, as stipulated by the fortune global 500 lists that were done in 2013, the firm is considered to be the second largest public corporation in the world. By the end of the year 2012, the company had employed 2.2 million associates worldwide and was serving over 200 million customers each week. The growth and the success of the organization have, however, been attributed to its well-planned strategies. This paper, therefore, will analyze both the business level and the corporate strategies of the organization and its competitive environment.
Wal-Mart Business Strategies
The organization is fond of using of cost leadership and also differentiation strategies (Bauner & Wang, 2014). The firm provides the wide range of goods and services. The provision in, most cases, is done with the same better quality and price that is on various occasions are cheaper than what their competitors provide. The organization has been focusing on ways that can facilitate how it lowers it cost while still maintaining the competitive edge of differentiation. One of the ways that have since help the organization to reduce the leadership cost is the use of successful supply chain management. The organization is considered to be having an efficient inbound logistics. This is vital to the company since they are using the just in time inventory.
The outbound logistics cost in the organization has been massively cut. This has been done with the use of better fuel efficient in almost all their trucks. Also, the organization has been able to achieve more pallets on the road and has also decreased to the aspect of empty miles that are driven by their trucks. The way in which the firm has been reducing its business cost is by buying in large blocks.
Wal-Mart competitive strategies
Technology is also not a forgotten factor in the Wal-Mart supply chain. The use of technology allows the firm to forecast its demand accurately, predicts its inventory levels, tracks, and inventory, manages its customer care and also help to increase highly efficient transportation routes. Technology is a significant tool that promotes an organization competitive advantage. Walmart has taken advantage of technology to establish market and supply predictions which has increased the organization ability to remain competitive in the retail market. Technology has also improved the management processes of the company hence improving decision making efficiency. In addition, the management and job allocation of the employees has also been significantly impacted by technology making it an effective tool for establishing a competitive advantage.
Another important business strategy has been the improved digital marketing and digital business (Rothaermel, 2015). Digital business has increased the level of the customers who are health conscious by increasing the accessibility of information to the consumers. The aspect of change and digital business and marketing has been evident in the US market, and it's also in actively integrated into the marketing communication message of the organization. There has also been a business level strategy to enhance the flexibility of the shopping experience. Of late, it has been noted that the firm is working hard to integrate its physical stress with the digital business. The customers today are testifying of receiving their online orders from the stores, and they can receive constant reminders. In conclusion, the firm’s overall cost leadership and the differentiation strategy has been leading to a high entry barrier for most of its competitors.
Wal-Mart corporate strategy
One of the major reasons that are considered to be the success of the firm is the fact that it believes and also concentrates on the strategy of its single business (Rothaermel, 2015). This means that more than 95% of the firm’s revenue comes from grocery business. It is recorded that the firm has never believed in the concept of diversification as a source of its sustenance.
The firm has also been able to enter the global market successfully. This is because of the benefits that come with the multinational strategies. Some of these strategies require that the customers who are coming from different countries to be treated differently. With this practice, the organization has since observed an improvement in the productivity and profit of its foreign firms. With the corporate strategy in mind, the firm has also been working at different stores for different folk’s philosophy.
The company tends to be working on a three human resource theoretical model. These include the universalistic practices, the resource-based configuration and the contingency perspective of the “best fit.” The contingency perspective of bets fit all in the joint strategy that is applied in the organization. In this case, the individual human resources are normally selected based on the contingency of the specific context of the firm. Some of the human resource strategies of how to select recruit and train and also reward employees are usually integrated. However, it could be specific on the branch of the firm. Each country in which the firm operates could be having its specific teams who as far as HR are concerned; in this case, it is not given preference. The best corporate strategy which stands out is the human resource and its leadership cost reduction. It has been able to operate on allow cost leadership style while at the same time remain to be one of the best organization.
The firm faces increasing competition from the regional, local, national and the international retailers. Most of the competitors are capable of benefiting from the same low offshore manufacturing costs that the organization has been enjoying. For the scope of the firm assignment, this paper, therefore, will focus on the Wal-Mart North America market. It is from this region that the paper will fully exploit the competition that it receives from some foreign market. In the Northern American region, the major competitors to the company include Targets, Commercial Mexican from Mexico, the Real Canadian Superstore from Canada and the Kmart (Pagell & Wu, 2017). Some the competitors that are considered to be Wal-Mart’s Sam Club division include Meanwhile, Costco, primarily dollar stress and their small retailers. These also have been able to find a little market niche into the market and are such competing successfully against Wal-Mart for the home customer sales.
The target can be said to be the organization's direct competitor. It is also the second largest retail store after Wal-Mart’s. Target strategy that has put it on the competitive edge is the fact that they can deliver discount goods at a higher quality. Also, they can offer a variety of products to its customers as compared to Walworth. The organization strategy has been significant since it has been attracting high-income customers and as a result, has been generating higher revenues to the organization. Targets main customer base has an average of $50,000 per year as income. This is high when compared to the Wal-Mart customer based income which is currently at $ 35,000 annually (Pagell & Wu, 2017). Also, Target as a retail store is also animism at expanding globally with its current acquisition of 2000 Canadian Zellers stores.
The target is, however, not the only firm eating the way the Wal-Mart retail lead. There is also Castro with seem to be outperforming Sam Club by numerous measures. Castro has a firm has grown by 26.1% from 2008 to 2012. This is considered to be more than double rate of the Sam Club. In size, Castro is considered to be larger tat Sam Club; it has $97.06 billion of revenues at last year’s visa via the $53.8 billion tote Sam Club. As such, it can be said that the firm is growing more quickly at the bigger base.
The foreign market also provides good completion to the organization. The organization has been facing a safe completion from the real store in German and South Korea. The firm was reported to have entered the German market in 1997. Since then, it has remained a second player behind Aldi. In the year 2006, the firm announced its withdrawal from Germany (Bentley-Goode, Newton & Thompson, 2017). As such most of its store was led to German metro. Also, into the South Korean market, which it entered into1998; the firm has since withdrawn its 16 stores to the Shinsegae. The Shinsegae since then branded the Wal-Mart’s like the E- Mart stores.
Bauner, C., & Wang, E. (2014). Strategic Retailer Reactions to Wholesale Club Market Presence.
Bentley-Goode, K. A., Newton, N. J., & Thompson, A. M. (2017). Business Strategy, Internal Control over Financial Reporting, and Audit Reporting Quality. Auditing: A Journal of Practice and Theory.
BreaSolís, H., CasadesusMasanell, R., & GrifellTatjé, E. (2015). Business model evaluation: quantifying Wal-Mart’s sources of advantage. Strategic Entrepreneurship Journal, 9(1), 12-33.
Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning.
Pagell, M., & Wu, Z. (2017). Business implications of sustainability practices in supply chains. In Sustainable Supply Chains (pp. 339-353). Springer International Publishing.
Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill.
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