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Key Success Factors at Walmart

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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. 2. 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. 3. ...read more.


This enabled them to collect sales and inventory data, and use it to improve their operations. This helped lower Wal-Mart's operational expense ratio and gave them key competitive advantages. It is willing to spend a higher percentage of its operational expenses than competitors for IT solutions that can bring additional revenues in the future. This is relatively difficult to replicate and sustainable when combined with advantages. IV. Supplier Partnerships Wal-Mart shares its sales and operational data with its key suppliers for forecasting, planning, shipping and replenishment of merchandise. This helped Wal-Mart receive merchandise directly from the suppliers and enable cross docking to reduce supply chain, inventory and distribution costs; a great example of business process management innovation. Wal-Mart will allocate space to a supplier and have them explain how they will increase revenue for Wal-Mart. If the supplier can demonstrate this well they have the potential to obtain more store space allocated and ultimately create a win/win situation. This may be difficult to sustain as it is a standard practice now in the industry. Recommendations (Also see Appendix-6) Recommendations Reason Possible Tactics Re-evaluate asset base $83bn of assets in 2002. Only $28bn is current. This is up nearly 50% in 5 years. ...read more.


Appendix 5 Porter's Value Chain Model Appendix 6 Since Wal-Mart is already a cost leader it will have to excel in the areas of store factors, service excellence, product quality and trend leadership to create better customer value proposition for future growth. Store factors: Improve store look and feel. Studies have shown that customer's emotional responses and perceptions are influenced by the store's look and feel and have a pronounced effect on the time and money they spent in the store. Customer Service Excellence: Help customers in their decision making by providing personalized information so they can make informed decisions. Guide customers to the merchandise and help them finding it either on the shelves or online. Help customers to understand the services being provided (checkout, returns) and solve any problems they are having so customer have a truly enjoyable shopping experience. Merchandise: Establish trend leadership by providing unique, first mover and quality merchandise. More product variety should be made available to customers by providing access to merchandise outside of inventory. Adapted for our report from "Retailing in the 21st Century" by Manfred Krafft and Murali Mantrala 2006/2010 ?? ?? ?? ?? Wal-Mart Inc. Report 1 ...read more.

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