Walmart is the leading transnational retail company across the globe with a significant turnover. The company was established in 1962 and incorporated in 1969. It has over 11,700 retail stores spread over 28 countries across the world, serving nearly 270 million customers. The company also engages in e-retailing in eleven countries (Walmart, n.d.).
The company offers high quality products at low prices while maintaining a top position based on efficiency, robust logistics, and supply chain management. The company has implemented an incredible model to rival with other companies.
Delegate your assignment to our experts and they will do the rest.
What is WalMart's strategy?
Walmart's business strategy involves mastering operating costs to offer high quality products at low prices to customers. It focuses on maintaining competition to ensure price leadership, differentiation with how customers access, assortment, and a farfetched experience based on the Every day Low Prices (EDLP) motto. The company's slogan and a mission statement ("We save people money so they can live better") (Walmart, n.d.) emphasize its purpose in which it has focused on offering daily low prices consistently to customers. In turn, this has helped it establish a loyal and robust customer base that is attracted by low prices. It achieves low prices by reducing its operating costs through keeping wages down, offering low-benefit healthcare plans to workers, and denying its senior managers the expensive bonuses that executives in other companies receive. In turn, this allows it to reduce operating expenses while maintaining low overhead costs.
What is the basis on which WalMart builds its competitive advantage?
Walmart builds its competitive advantage based on cost leadership by offering low product prices while delivering high quality customer service. The company also leads in terms of supply chain management, which assists in maintaining low prices compared to its rivals. The company's supply chain strategy is based on cross-docking in which products move from the manufacturer or supplier to the retail chain or customer directly with minimal storage or handling (Nguyen, 2017).
The company also established its distribution centers strategically within 130 miles of its stores, where regional distribution centers are found in low transportation and labor expenses. In turn, this allows it to operate cross-docking at its warehouses where arriving products from manufacturers are loaded directly onto trucks for delivery to stores without the need for offloading or storage in warehouses (Nguyen, 2017). The outcomes of this are low labor, storage, and transportation costs.
Another critical strategy entails dealing with manufacturers directly in which numerous large suppliers and manufacturers depend on the company for a substantial amount of their profits. The company has a high bargaining power that it leverages against its manufacturers due to its leadership in the retail sector and an extensive network of stores across the globe. Manufacturers are compelled to accept the company's regular inclination towards low prices because they want the company to keep buying their products.
How does WalMart Control systems help Execute the firm's strategy?
The company's control systems assist it in implementing its strategy by focusing on three main factors that include information and management of stores, employees, and investment in trucks. The company has also combined its point-of-sale data, real-time sales data, warehouse inventory levels, and established Retail Link, which is an extensive and large database (Open Text Books, 2016). The database leads in the industry, and it can analyze and offer customer behavior insights. The company also uses the database with its suppliers and manufacturers freely to allow them to identify precisely when Walmart stores require specific products (Open Text Books, 2016). The database enhances efficiency in addressing customer needs and managing inventory. The data in the software also allows the company to hold its suppliers responsible for meeting customer demands and ensuring the company has the right mix of stock needed by customers at the price customers want.
The software also allows the company to influence the decision-making process of its suppliers directly while ensuring that its relationship with the manufacturers is skewed in its favor (Open Text Books, 2016). Based on its bargaining power, the company can dictate contract terms with suppliers on quality, packaging, delivery schedule, volume, and price. The partnership leads to low operating expenses for the company and increases the cost-effectiveness of its inventory management process. The company then passes the savings to its customers in the form of reduced prices.
The company also values its workers by referring to them as associates. The company teaches its workers to help customers within ten feet of the worker and encourages them to manage their locations. It also informs them about the amount their unit sells, the actual expenses and inventory, and the generated revenues (Open Text Books, 2016). The company also uses a bonus and compensation model based on performance, which allows workers to share in its profits and earnings. In turn, this incentivizes workers to contribute to the company while maintaining their loyalty.
Walmart's strategy focuses on the idea of daily low prices in which the company achieves cost leadership through economies of scale. It continually improves its access, price, and assortment by striving to provide different product mixes for the lowest price while enabling customers to access its stores conveniently.
References
Nguyen, T. T. H. (2017). Wal-Mart’s successfully integrated supply chain and the necessity of establishing the Triple-A supply chain in the 21st century. Journal of Economics & Management , 29 , 102-117.
Open Text Books. (2016, January 19). Sidebar: Walmart Uses Information Systems to Become the World's Leading Retailer. Retrieved November 6, 2019, from http://www.opentextbooks.org.hk/ditatopic/18347.
Walmart. (n.d.). Walmart.com's History and Mission. Retrieved November 6, 2019, from https://help.walmart.com/app/answers/detail/a_id/6/~/walmart.coms-history-and-mission.
