Analysis of Walmart Inc. - Research Paper Example

Introduction

Walmart Inc. is a multinational retail corporation that runs a chain of discount departmental stores, hypermarkets, and grocery stores. It started as a small chain of stores located in United States rural towns and grew to become the world's largest discount retailer. The company was founded back in 1962 and is now has one of the largest number of employees in the United States (Munoz, Kenny & Stecher, 2018). This research paper analyzes Walmart's business-level and corporate-level strategies that are most important to the long-term success of the firm. It also analyses the competitive environment to determine Walmart's most significant competitor.

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Business-Level Strategies

Walmart has always been a global leader when it comes to offering all kinds of products and services to consumers. The company specializes in offering its merchandise at the lowest prices possible. Since it was formed, Walmart has enjoyed rapid growth thanks to a strategy it applies of low-cost leadership. While numerous retail stores have tried to compete with the company, none of them have managed to beat its pricing strategy. In addition to focusing on the low cost aspect, Walmart also strives to offer products of high quality. There is a mistaken assumption that low prices are linked to poor quality and unreliable products. Walmart appears to have rubbished this perception. It has managed to successfully employ the low cost leadership strategy (Munoz, Kenny & Stecher, 2018).

The business-level strategy that is most important to Walmart's long-term success is low-cost strategy. The company specializes in offering consumers a wide range of merchandise at the lowest price possible. This has made it the low cost leader in the industry. When Walmart began its operations, it was the first business entity of its kind to offer consumers all products under a single roof. Since that time, its focus has been to provide high quality products to its customers at the lowest prices possible. Maintaining a competitive edge is an important survival antic for all business organizations. Walmart's competitive advantage is based on its strategy of selling products at low prices (Munoz, Kenny & Stecher, 2018).

When looking at Walmart's rivals and competitors in the retail industry, it is apparent that the company has managed to satisfy its customers on a regular basis. Its focus on making customers happy has contributed a lot to its success. The company has based its operations on pleasing consumers, having realized that affordability is the most important factor to consumers when it comes to shopping. Walmart sells its products at affordable prices in order to attract loyal customers and retain them. Its focus on offering high quality and affordable products to consumers makes it a global leader within the market. Once consumers become aware that they will get high quality products at a certain retail store at the most affordable price, they tend to stick at that particular place. The nature of products offered by Walmart has been standardized, with many leading manufacturers distributing their products through its stores.

Another important feature of Walmart's operations is its focus on value chain practices. According to Courtemanche, Carden, Ndirangu & Zhou (2018), the company focuses on generating value via its various operations. It has managed to facilitate massive reductions in costs by increasing the efficiency of its value chain activities on a regular basis. No other retail chain possesses the ability to access untapped markets like the way Walmart does. It addition to offering products locally, the company has spread its operation across the world. It has also put in place a lot of technological innovations. In addition to shopping at its physical locations, Walmart has also embraced the concept of e-commerce whereby consumers can purchase products online.

Corporate-Level Strategies

Walmart happens to be in the mature stage of its industry's life cycle. Perhaps the only new form of competition for the company stems from focus businesses such as auto spare, clothing, and groceries. So far, no new competitors have been able to offer all the various products under one roof the way Walmart does, and at its significantly low prices. Certain competitors have over the years been forced to close their stores, including Pamida, Sears, and Kmart. Walmart enjoys a price competition with some of its bigger rivals, particularly Target. The company has managed to stay one step ahead of its rivals within the mature stage by selling their products at lower prices while at the same time offering a wider variety of merchandise than any other retail chain.

The corporate-level strategy that is most important for the long-term growth of Walmart involves an overall cost leadership and differentiation. The company applies differentiation by stocking a wider range of products when compared to its rivals. Its information, transportation, and logistics systems tend to lower the operation costs. The costs are also lowered by incorporating economies of scale and offering a no-frills service. The company has adopted a successful overall differentiation/leadership strategy that results in substantial entry barriers for rivals. The strategy also makes it quite difficult for substitute products to get into the market. The company also enjoys significant bargaining power with its suppliers. It has altered its competitive challenge from retailing to communication strategies and transportation in order to capitalize on its strengths. The giant retailer has managed to avoid the pitfalls associated with the overall differentiated/leadership strategy by carefully calculating its projected expenses and revenues.

The internet has immensely contributed to the growth of Walmart's business by minimizing transaction costs. The company allows consumers to order products online, a strategy that decreases sales force expenses. Consumers can open their own account page on the company's website that enables them track current orders while also checking out previous orders. Walmart's website allows consumers to make enquiries and offer opinion on their shopping experiences. The retailer differentiates its site by recommending to customers other products that they can also buy once they have made a purchase.

Walmart engages in numerous differentiation value-chain activities. It has less management layers when compared to its rivals, something that minimizes overhead costs. The company has managed to induce inbound logistics through the use of just-in-time inventory. It has reduced costs incurred by outbound logistics by ensuring there is better fuel efficiency in its transport vehicles, doing away with unnecessary mileage for these trucks, and having more pallets on any load. It also minimizes costs by making purchases in bulk. The retailer happens to facilitate various differentiation value-chain activities. It incorporates speed and flexibility when moving its merchandise from warehouses to stores, and utilizes advanced technology that enables an accurate ordering process. Walmart's low price strategy has been quite successful, as embodied in its slogan which goes like 'save money, live better.'

Most Significant Competitor

Walmart has several notable competitors in the retail industry. Amazon Inc. offers the company stiff competition with surprise acquisitions such as Whole Goods and voice powered innovations such as Alexa. On the other hand, Target Inc. has adopted a take-it-to-the-city strategy whose aim is to appeal to desired consumer demographics. All in all, Amazon is Walmart's most significant competitor. The two companies are on top of the retail industry, particularly when it comes to online shopping. As more and more consumers embrace online shopping, retailers are doing everything they can to convince them to visit their website rather than that of competitors.

Given the current trends in online shopping and the retail industry in general, Walmart is more likely to be successful in the future. Since Amazon has enjoyed explosive growth in recent times, it is easy to forget that Walmart is still by far the largest retailer in the world. The former's growth trajectory may be aimed at overtaking the latter sooner or later. However, Amazon is still relatively new to the industry and is still after the slim profit, low margin model that was pioneered by Walmart. Such a goal includes coming with strategies that help it maximize profits without having to increase the prices of products. Walmart has always known that private labels can go a long way in helping enhance margins on the products for sale in its stores. It has been stocking its shelves with such labels long before Amazon came into existence. The company has fully embraced this model, with the vast majority of those who shop at Walmart today buying private brands there.

Analysis in Slow-Cycle and Fast-Cycle Markets

A slow-cycle market is one that does not often attract innovative products and changes only occur in a long time. On the other hand, products are always changing in a fast-cycle market as innovations are always taking place. In a slow-cycle market, Walmart Inc. would still be the one most likely to succeed in the long term. Since no new products would be expected in the market any time soon, there would be no need for consumers to seek another online shopping platform to buy newer merchandise. However, it is unlikely that Walmart would succeed for long in a fast-cycle market. It would face stiff competition from present and upcoming e-commerce platforms such as Alibaba and eBid.

Conclusion

Walmart Inc. utilizes both business-level and corporate-level strategies for growth and profitability. Reinventing its social media program is the most crucial corporate-level strategy to its long-term success. The company has set up a social business unit meant to improve consumers' engagement with the brand. The most important business-level strategy is all about service differentiation that focuses on the user experience of both sellers and buyers. Amazon Inc. happens to be Walmart biggest competitor. Given the current trend in online shopping, Amazon is more likely to succeed in the long term.

References

Courtemanche, C. J., Carden, A., Ndirangu, M., & Zhou, X. (2018). Do Walmart Supercenters Improve Food Security? (No. w24750). National Bureau of Economic Research.

Michelson, H., Boucher, S., Cheng, X., Huang, J., & Jia, X. (2018). Connecting supermarkets and farms: the role of intermediaries in Walmart China's fresh produce supply chains. Renewable Agriculture and Food Systems, 33(1), 47-59.

Munoz, C. B., Kenny, B., & Stecher, A. (2018). Walmart in the Global South: Workplace Culture, Labor Politics, and Supply Chains. University of Texas Press.Qian, J. (2018). Charitable Giving, Corporate Image Building, and Market Expansion: The Case of Walmart (Doctoral dissertation).

Smith, N. C., & Crawford, R. J. (2018). 13 Walmart: Love, Earth (A). Managing Sustainable Business: An Executive Education Case and Textbook, 247.