Today’s economy presents many opportunities and challenges to businesses. Due to this reason, companies need to acquire a set of new skills as well as adopt innovative strategies to remain relevant in the market. Innovation provides businesses with a chance to develop in time. Scholars have suggested that companies can realize their creative potential if they invest in research and development (R&D). Other researchers have cited that empowering the employees through training and development programs can boost the employees’ creative power. But, why should companies be innovative? Various studies have demonstrated that organizations need to be creative so that they can have a competitive edge in the market (Gilbert, 2006) . Of essence, managers need to understand ways in which they can examine their institutions and strategically identify new opportunities and challenges presented in the market. Performing a competitive analysis of companies is thus important duty managers ought to execute. Such evaluation would act as a highway to realizing a competitive advantage in the market. In that respect, this paper will conduct a competitive analysis of Wal-Mart Stores, Inc. Also, this article will discuss the innovations of the company plus the appropriateness of the company’s organizational structure.
Competitive Analysis of Wal-Mart stores, Inc.
Competitive analysis refers to a process analyzing the strengths and weakness of competitors in the market (Corniani, 2012) . An organization would, therefore, use the findings from the analysis to gauge how its products or services are performing relative to that of the competitors. Competitive analysis is a valuable tool especially when a company is formulating its marketing plan. The evaluation, notably, informs a firm about what makes its products or services unique (Gilbert, 2006) . Besides, the outcomes of such analysis would tell the company what it ought to do in order to attract new customers or rather increase its market share. The most important thing during this process is to evaluate different competitors and placing them in particular groups depending on how they directly compete with the organization for market share. The identified groups would then be listed depending on product and service; revenue generated; growth patterns; and organizational structure among others.
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Like other businesses, Wall-Mart faces stiff competition from various stores including Aldi. Aldi has been very successful in Germany (its parent state) that it even managed to outshine Wal-Mart. Nonetheless, in the U.S., Wal-Mart is regarded as the major retail player. The competitive analysis of Wal-Mart stores will take into account the following factors regarding Aldi (the major competitor). First, it will analyze the current strategy adopted by the competitor. The essence of this step is to enable Wal-Mart to predict future events of the competitor. The company will study what the competitor says and does in so that it can achieve this objective. Second, the competitor’s objectives will be evaluated (Corniani, 2012) . Identifying a competitors goal helps in forecasting how a competitor would change its strategy. Notably, market or financial goals can drive an organizations goal. Research shows that most firms that are driven by financial goals have short-term success. Businesses like coca-cola have been able to sustain their productivity primarily because of the preference to focus on increasing their market share. Therefore, if the competitor’s goals are established to be short-term, the company can take advantage of the situation to balance between short term and long term goals.
Third, assessing the competitor’s assumptions regarding the industry is of great importance. Traditionally, the decisions that companies make are guided by certain perceptions. The opinions, notably, affect the way a firm regards itself and its environment. The perceptions are primarily a product of the beliefs that the managers have held regarding their industry and factors that contribute to the success of the sector. The last important factor of consideration is the competitors’ resources and abilities (Corniani, 2012) . Wal-Mart needs to evaluate the magnitude of competition from competitors. That can be achieved by understanding the competitor’s capabilities as well as the strength of the resources at the competitor’s disposal. If Aldi has abundant resources, it will be unwise for Wal-Mart to initiate competition based on price.
Innovative Trends Introduced by Aldi
Unlike its competitors, Aldi sells products to consumers at considerably lower prices. The company has adopted multiple strategies that have allowed it to unveil cheap products to its customers. For instance, Aldi uses little labor to run its stores. As a result, the company has managed to minimize operating costs. Nevertheless, instead of the firm to explore on the minimization of expenses to increase its revenues, it opted to create a pricing formula that is favorable to the consumers. Secondly, the company’s packaging process is set up in such a way that it reduces inventory activities. Third, the employees have been equipped with multiple skills to enable them to perform a variety of duties. Lastly, Aldi has embraced the private label (PL) brands strategy to reduce costs (Deleersnyder et al., 2007) . The adoption of these innovations enabled the firm to gain a competitive edge in the market. Eric & Lane (2015) noted that these strategies led to Aldi’s products being about 20% cheaper compared to the prices set by Wal-Mart. Additionally, the products cost was 40% less when compared to other retail stores in the U.S.
Wal-Mart’s Capabilities
Despite the fact that Wal-Mart faces stiff competition from developing brands such as Aldi, the company still has the potential to increase its activities in the market. Unlike Aldi, the company has a larger market share in the United States. As indicated earlier, firms ought to assess the goals of their competitors. In this study, it is apparent that Aldi’s objective is financial oriented. As such, the main activities of the company in the market aim at increasing its profitability. Various studies have demonstrated that businesses that focus on financial are often exited from the market due to their shortsightedness. Nonetheless, those that tend to concentrate on market oriented goal usually have a long life in the market. The objectives of Wal-Mart are inclined towards increasing its market share. Notably, the company has a strong culture that ensures that superior customer service is rendered. The organizational culture also seeks to enhance performance to help people save money to improve their living standards.
Rating the Organizational Structure of Wal-Mart
Wal-Mart used a hierarchical organizational structure (Lombardo, 2017). New strategies and policies are often formulated at the top and passed down to other employees hierarchically. Apparently, this is an indication that the top leadership influences the activities taking place within the organization. The strength of this structure is that it is easy to monitor and control a firm’s activities. Nevertheless, this structure is associated with rigidity since the managers will always hold on their beliefs and factors that influence organizational success. Besides, adjusting business practices is difficult due to the lengthy communications. In that regard, the organization chart of Wal-Mart is the primary hindrance to innovation and success.
Conclusion
In conclusion, the success of firms is dependent on their innovative abilities. Through innovations, businesses can gain a competitive edge in the market. Companies like Aldi have been successful in the market due to their innovative strategies. As such, they tend to pose significant threats to other established companies such as Wal-Mart. In order to increase its success rates, Wal-Mart ought to conduct a competitive analysis to determine the strengths and weakness of its competitors. Overall, it needs to adopt an organizational structure that promotes innovation.
References
Corniani, M. (2012). Innovation, imitation and competitive value analysis. Symphonya , 2, 37-52.
Deleersnyder, B., Dekimpe, M. G., Steenkamp, J. B. E., & Koll, O. (2007). Win–win strategies at discount stores. Journal of Retailing and Consumer Services , 14 (5), 309-318.
Eric, V. & Lane, D. (2015). Aldi: The Dark Horse Discounter. Harvard Business School, 9, 14-474.
Gilbert, R. J. (2006). Competition and innovation. Journal of Industrial Organization Education , 1 (1), 1-23.
Lombardo, J. (2017). Walmart: Organizational Structure & Organizational Culture. Panmore Institute. Retrieved from http://panmore.com/walmart-organizational-structure-organizational-culture.
