Introduction
In 2018, Wal-Mart was in the Fortune Global 500 as one of the biggest and largest companies in the United States. The company generates more than $500 billion in revenue, with over 2.3 million employees. Wal-Mart's owner is the Walton family and a business that started operating as a small scale retailer and later doubled up as the biggest grocery in the United States. Currently, the business has more than 10,000 stores across the world, with revenues growth on upscale on each financial year. It has become the largest enterprise, focusing on different business areas ( Roy, 2020 ). Reflecting on the portfolio management and the BCG Matrix will help us understand and evaluate the financial performance of Wal-Mart and as far as its growth-share is concerned. BCG matrix is an effective growth-share matrix tool that was developed by Bruce D Henderson and copyrighted by Boston Consulting Group in 1970 to assist companies in business units and product-line analyses. The BCG Matrix includes four distinct aspects, namely cash cows, stars, question marks, and dogs. This research paper aims to discuss Wal-Mart’s portfolio management, and it’s BCG Matrix.
Cash Cow Quadrant
Cash cow products are paramount for a company as it generates more cash through business sales, but in return has less market growth. At some point, there is growth and expansion potential on cash cow products with a chance of turning into star products. According to Osiyevskyy (2017) , cash cows play a vital role in balancing the demand curve where the market share is higher in a slow-growth industry, thus a business generates more cash than the amount needed to maintain the business. Wal-Mart has the highest market share as compared to its competitors in the retailing industry, thus fits in the cash cow quadrant. The company offers both international and Sam’s club segment that couples up as the main Wal-Mart cash cows.
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Best customer services and value characterize the international cash cow quadrant segment at low cost with a focus on global position. Sam’s Club cash cow quadrant segment offers membership only, characterized by carrying and cash operations and eases credit card and financial service facilities that act as motivational factors for consumers. Additionally, Sam’s club has affordable annual membership fees along with a merchandised brand name that displays in bulk ( Roy, 2020 ). The quadrant fits Wal-Mart, given that there a slow growth rate in the industry with a 3.8% growth rate and a 3.6 % market share for Wal-Mart superstore. Wal-Mart operates under a slogan that says “Saving People More to Help Them Live Better,” an attribute that helped it win the customer base and expand its business globally.
Wal-Mart makes more profit discounts from Sam’s Club stores, and through diversification and expansion to other parts of the world, the company is vulnerable to the cash cow quadrant segment of BCG Matrix. For instance, the company utilized its portfolio management by developing a complete service superstore that has a grocery store with low cost priced products, thus creating a competitive advantage over its competitors. The portfolio management of Wal-Mart operates stores with a variety of products and adds as a one-stop enterprise where consumer do their shopping, weather on household, clothes, or grocery, all in one place. Wal-Mart also can add automotive and pharmacy stores as it keeps the cost low to remain with a competitive edge over rivalry. Finally, the ability of Wal-Mart accounting for the majority share of the supercenter market makes it fits into the cash cow quadrant ( Roy, 2020 ). The company has the strength to offer mass distribution as well a large purchase amount of merchandise through successful marketing strategies conveyed under low pricing as compared to that offered by its competitors. Its strength lies in the fact that it has a variety of products at disposal within its superstore and can offer products at the lowest prices.
Stars
It is considered one of the best BCG Matrix categories that fit Wal-Mart's portfolio management. Star products have the highest market growth and market share with accompanied services at the maturity stage, although any alteration at the portfolio management without proper retaining of the strategies may avert the star products or services to the cash cow segment. Supercenters at Wal-Mart double up as star with the ability to provide the consumer with anything they need, be it from general merchandise, pharmaceuticals or groceries. The supercenter has more than 28,000 products at disposal with low-cost pricing and high volume provision as adopted strategy to lure customers across the world ( Seenivasan & Talukdar, 2016 ).
Question Marks
The company exhibits challenges in its portfolio management that are termed as question marks but can be dealt with when market share rises through an increased cash inflow that surpasses outflow. Wal-Mart has the highest market growth as compared to its competitors hence require an effective product development ( Seenivasan & Talukdar, 2016 ). Its portfolio management needs to utilize a differentiation strategy to turn some products into cash cows rather than the dog. The neighborhood market adds up as the Wal-Mart question mark of the BCG Matrix, and therefore, a proper strategy that will increase its market share is paramount.
Dogs
Dogs is a breakeven product that has no value to the company if the operations are shut down ( Osiyevskyy, 2017 ). All Wal-Mart discount stores add up as dogs as far as BCG Matrix of the company is concerned. Wal-Mart offers discounts to products that have fewer benefits.
Conclusion
The research paper's aim is discussing Wal-Mart’s portfolio management and it’s BCG Matrix. Cash cows, stars, question marks, and dogs are the four distinct segments of the BCG Matrix, where Wal-Mart fits well to improve its competitive edge over its competitors. Highest market share and market growth make Wal-Mart an entity that will thrive under BCG Matrix.
References
Osiyevskyy, O. (2017). Maximizing the strategic value of corporate reputation: a business model perspective. Strategy & Leadership .
Roy, D. (2020). Formulation of BCG Index (BCGI): An empirical study on Wal-Mart and Amazon (1999–2018). Journal of Transnational Management , 1-27.
Seenivasan, S., & Talukdar, D. (2016). Competitive effects of Wal-Mart supercenter entry: Moderating roles of category and brand characteristics. Journal of Retailing , 92 (2), 218-225.
