Wal-Mart Inc. Report        

Key Success Factors (KSFs)

Wal-Mart is in the supermarket industry, more specifically, discount retailing. From the industry analysis in Appendix 1, the most prominent characteristics of this industry include high degree of rivalry and high bargaining power of consumers which significantly impacts the firm’s strategy and key success factors. From our analysis in Appendix 3 and 4, the following KSFs are most important:

  1. Maximize Revenue per Square Foot

Retailers need to maximize the space utilization of their stores to gain competitive advantage. Merchandise is displayed and promoted with a view to meeting customer demands and maximizing profit. They are aware of store layout and warehouse construction costs to optimize utilization. Retailers must be cognizant of higher costs per square foot in urban areas and amend their offerings accordingly.

  1. Inventory Turnover and Management


High inventory turnover and just in time inventory results in less dedicated store space and a larger merchandising display. Just in time inventory needs an efficient and innovative distribution system and close partnership with suppliers. This needs a state of the art information system to collect sales, inventory and customer information to share with key suppliers in order to improve forecasting, planning, replenishing and shipping applications.

  1. High Dollar Margins


High nominal margins resulting from high sales volume, which in turn translates into more buying and negotiating power with suppliers. This results in lower product costs, higher percentage margins and lower operating costs by distributing it over a large volume of goods sold.

  1. Customer Satisfaction and Value Proposition

Provide a compelling value proposition to the customers and excel in customer service to give an enjoyable shopping experience. Understand how brands, products and services are being perceived and act swiftly to fix any problems and adjust to market demands and inflections. This will create a valuable corporate brand name which customers can trust and be loyal to.

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Wal-Mart’s Key Competitive Advantages

Industry’s successful firms often employ a Cost Leadership generic strategy (Appendix 2), with competitive advantages coming from cost reduction capabilities that are difficult to replicate, sustainable and easy to communicate. This is well reflected by Wal-Mart marketing slogan “Always low price – Always”, which is matched by Tesco’s “Every little helps”. Kmart, in contrast, which stepped into diversified superstores declared bankruptcy in 2002.

  1. Scale

Wal-Mart revenues were 245 billion in 2002, three times the size of the number 2 retailer, Carrefour. This gives Wal-Mart economies of scale where size matters ...

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