• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Walmart's strategic management

Extracts from this document...

Introduction

´╗┐Executive Summary At the beginning of 2009, Wal-Mart top management faces the question of whether the same strategy that it has been adopting in the past can be used to maintain the company?s remarkable performance and growth in the next decade. In the last 10 years, Wal-Mart has achieved strong and constant growth in sales and net income. It has maintained the leading position in the U.S. discount retail industry and has become the largest retailer in the world. With the maturity of the industry, coupled with the intense competition from rivalry companies, maintaining the current level of high performance becomes very challenging. The Porter?s Five Forces analysis reveals that the competition among rivals is the driving force of the industry, in which price is the most critical factor. The value chain analysis and resource based view analysis show that Wal-Mart has been very successful in implementing the strategy as the low-cost leader by inculcating cost efficiency in its corporate culture, management style, and operations. It has been the pioneer in adopting cutting edge technology to streamline its supply chain, and to understand and respond timely to customer demand. Wal-Mart has developed many strengths that help guard its leading position and open door to many opportunities for expanding the business. However, it also faces threats from growing too big and in many areas, which makes it vulnerable to losing control, weakened cooperation among stores and regions, and competition in multiple fronts. Wal-Mart should be caution in its growth strategy, especially in the expansion of its international presence. Although its financial strength, management skills, and operation efficiency allow it to enter many overseas markets, it should be selective in choosing the destinations. Wal-Mart can focus on emerging markets where customers are price sensitive such as China and India in Asia. In Latin America, it should focus on Mexico and a few key markets that it previously achieves success. ...read more.

Middle

The facts that employees have high degree of autonomy and the company offers ?open door? policy and great promotion opportunities create a very unique culture of Wal-Mart. While this culture is unusual in large retail organizations, it adds values to the value chain by creating a good working environment for employees to devote to their jobs and best serve their customers. The low wage, on one hand, allows the company to keep price low; on the other hand, it exposes the company to employee abuse issues and criticisms from interest groups. Technology integration. Technology integration is one of the primary focuses of the company because of its vital role in the company?s success. Technology has helped integrate Wal-Mart?s entire supply chain so that each stage of the value chain is very effective and efficient, which allows it to promptly offer the right products at low prices to its customers. Procurement. Wal-Mart deals directly with manufacturers, and purchasing is centralized at headquarter. It requires manufacturers to cut their margin and meet its employment policies. It also has close collaboration with its big suppliers such as P&G to facilitate inventory control. All of these practices have enabled Wal-Mart to buy its inputs at the lowest cost and to save inventory holding costs, which allow it to offer low price products. Primary activities: Inbound logistics and outbound logistics. Wal-Mart has superior logistics system. It adopts the concepts of distribution centers and ?hub and spoke? arrangement. This is very effective for keeping the inventory level at each local store low and reducing transportation cost. While other retailers rely on either suppliers or 3rd party logistics companies, Wal-Mart is quite independent from outside logistics companies. It also takes control of import logistics from overseas suppliers. In addition, it always strives for cheaper, faster, and more reliable logistics systems by implementing methods such as cross docking systems and remix systems. These practices not only help Wal-Mart reduce expenses but also give it more control and flexibility in handling purchases. Operations. ...read more.

Conclusion

This is a sound evidence of losing focus and losing control. By maintaining its strengths, Wal-Mart can continue to beat the competition and minimize its threats. Wal-Mart has responded well to the pressure from environmentalists, women?s and children?s rights advocates, and anti-globalization activists. Although these pressures do not currently affect Wal-Mart?s bottom line but successes in responding to them have helped form and maintain a positive image for the company. It should continue its programs of ethical sourcing and environmental sustainability. Regarding low wage issue, it should maintain its current pay schemes. First, the rates are slightly above the general retail trade. Second, Wal-Mart offers other benefits in addition to basic salary, including profit incentives, stock purchase plan, and promotion opportunities. By continuously focusing on its strengths and finding ways to increase operation efficiency, Wal-Mart will stay ahead of the price competition from rivals, and deter potential competitors from entering the markets. Appendix 1: VRIN TABLE Competency Valuable Rare Inimitable Non-Substitutable Conclusion Integrated technology of supply chain Yes No No Yes Competitive parity Ability to generate large sales volume Yes Yes No Yes Temp. comp. adv Superior logistics system Yes Yes No Yes Temp. comp. adv Operation decentralization Yes Yes Yes No Temp. comp. adv Strong culture Yes Yes Yes Yes Sustainable comp. adv Human resources (management team and employee autonomy) Yes Yes Yes No Temp. comp. adv Management routines and practices Yes Yes Yes Yes Sustainable comp. adv Appendix 2: SWOT TABLE Strengths 1. Strong brand name 2. Strong bargaining power over suppliers 3. Integrated technology of supply chain 4. Superior logistics system 5. Strong culture 6. Capable associates 7. Strong presence in Canada and Latin America Weaknesses 1. Only attract price sensitive shoppers 2. May lose control and lack of coherent strategy due to huge expansion plan nationally and internationally Opportunities 1. Big potential market in Europe and Asia Threats 1. Sustain market leader position 2. Exposed to competitions from various fronts 3. Face potential political problems, cultural and practice differences 4. Intense price competition 5. Large foreign competitors entering U.S. and international markets where Wal-Mart is present Page ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Management Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Management Studies essays

  1. General Electric Strategic Plan

    GE has developed cross-functional teams tasked to improve design, yields, supplier agreements, and global best-cost sourcing. Through this, GE should meet its customer delivery dates and technical specifications. General Electric must also develop initiatives that work in a multi-business company.

  2. Strategic Management - CARREFOUR CASE ANALYSIS

    o GLOBAL * Rapid globalization of business markets. * Military and political conflicts continued around the globe. * Increased importance of environmentally friendly businesses. * The global environment presents opportunities and threats for Carrefour. Military and political conflicts may increase expenses in transportation, among other areas, that make it difficult to maintain low prices.

  1. Key Success Factors at Walmart

    This gives Wal-Mart economies of scale where size matters - purchase prices, inventory and distribution costs. Wal-Mart's size also helps it to outspend it competitors and be the first adopter of new communication and information technologies, making the business process management more efficient.

  2. Strategic Business Plan of Nokia. This strategic report examines thoroughly Nokias current position ...

    However, Nokia continued to rely on its ineffective Symbian operating system and at the same time invested greatly on an alternative operating system, Meego. Thus it's more than one, changing strategies, placed its competitors ahead of the market. Development of Symbian costs double compared to developing the iPhone which, implies

  1. ITC - diversification strategy

    The reasons were as follows: Market attractiveness: o Indian consumers spend about $130-150bn annually on food. In developed countries packaged branded comprised of 80-85% of its consumption whereas in India, in 2001, it is just 5.5-6%.30 Hence huge domestic demand, booming economy and low penetration level makes this segment quite attractive.

  2. Ryanair Holdings PLC - Strategic Audit

    Trends that have emerged from this analysis are issues within the human resources department that include turnover, strikes, union issues, and even some training negligence. Surprisingly past performance has been good regarding profits, but there have been many customer complaints and staff complaints.

  1. Tesco strategic management

    Well on the other hand these retail markets have been really engaged in employing big part of population. Specially international students and immigrants from Europe and different places. This helps to bring a better economic situation in the economy as the people tend to spend more.

  2. You are required to provide a strategic analysis of a key supply chain issue ...

    This gives Argos the opportunity to reduce costs and be price competitive, occupying the cost leadership position in the industry. Another successful function in Argos's supply chain is location. As mentioned above over 700 shops exist covering 98% of the population.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work