In the past few years, Walmart hover has grown to be among the leading organizations in the world, offering a variety of products to its vast customer base. It is a Multinational Corporation that is American based and operates a series of grocery stores, discount departments, as well as hypermarkets. The organization focuses on supplying products at relatively low prices in comparison to competitors. Since it was establishment, Walmart has continued to grow at a very high rate due to the low-cost leadership strategy implementation. Many companies have tried to compete with Walmart, but none has ever matched its low pricing strategy. The company focuses on low price strategy as well as offering superior quality products that satisfy the customers' tastes, needs, and preferences. Therefore, the low-cost strategy, together with other strategies at both corporate and business level, has played a vital role in the expansion and growth of Walmart in the whole world.
Walmart aims at offering a variety of products to the vast number of customers at the lowest price. The low-cost strategy is therefore among the major business-level strategies at Walmart. The company applies all efforts, skills and business know-how to ensure that it is the leading organization in offering products at low cost. When it began, the company was considered as the only one that provides many products under one roof. Its main objective is to supply low-price, but high-quality products to its customers hence give it a competitive advantage over the other rival companies. It is very important for a company to achieve a competitive advantage to enhance the market share in the industry (Doyle, 2009). Thus, the competitive advantage for Walmart is founded on the strategy of low-cost leadership which makes the company be able to offer products at low prices.
A combination of low-cost leadership and differentiation strategies makes the company stand a good chance to achieve long-term success. Walmart employs all means possible to reduce the cost by constantly rethinking on how to support business activities and become market leaders while at the same time they sustain the competitive differentiation levels. More so, the supply chain management strategy indicates long-term success since it enables the company to the organization to implement a low-cost leadership strategy. Walmart boasts in its effective inbound logistics that are achieved by utilizing the immediate inventory technique in the retail industry which is very competitive. To ensure minimum costs, the company makes its purchase in bulk. Also, technological advancement plays a role in the supply chain, enabling the company to predict the demand perfectly, forecast the inventory levels, and handle all logistics.
Looking at the competition, it is evident that Walmart has continuously managed to satisfy its customers. Their efforts to felicitate the customers have earned them many benefits. Walmart bases its processes on customers' felicitation. The main thing that attracts many customers is the fact that most of their products are affordable. Affordability makes them win customers from all over the world, and the largest percentage is retained among loyal customers.
Another important feature for this company is the determination on value chain supply. The company ensures that all process generates a higher value for all product. By being consistent in maximizing the efficiency and effectiveness of activities involving value chain, the cost has been reduced to a very great extent. No other organization enters the untapped markets apart from Walmart. This is not just in terms of logic, but in the essence that Walmart has been working out on how to globalize its operations. It makes use of significant technological innovations both in physical shopping and E-business which makes it easy for customers to shop at any time from any part of the world.
Looking at the three strategies; low-cost strategy, supply chain innovations, and provision of high-quality products, it seems that low-cost strategy plays the most vital role in the growth of the company. This is because the cost is always the first factor to consider whenever a consumer, a retailer or a wholesaler is making his or her purchase. The low-cost strategy, therefore, attracts the highest number of customers who are in-turn retained since most of the products are of high quality. It is therefore justified it concludes that although low-prices acts as the cornerstone for the success of Walmart, all strategies are equally important and they contribute to growth and expansion interdependently.
Corporate Level Strategy
Being at a mature stage, Walmart only faces competition from businesses such as clothing, grocery, and stores for auto parts. There is no other competitor that can afford to provide the kind of products offered by Walmart at such cheap prices. Some competitors have been forced to close down their stores, for instance, the Kmart, Pamida, and Sears. Walmart has managed to remain at the top due to the low-cost products they offer. Below is a thorough analysis of the strategies the company employs at the corporate level.
The company makes use of two strategies; that is, the differentiation and cost leadership strategy. Differentiation applies in that they usually have a wider variety of products compared to their competitors. Their transportation, information systems, and logistics lower the costs. Lack of frills service as well as having economies of scale also lowers costs. The overall differentiation/cost leadership strategy leads to huge entry barriers for the competitors. It also makes it difficult for substitute products to find their way into the market. The company has very strong bargaining power with the suppliers of the product who give them an advantage over the competitors. They have also changed their competitive based challenge from retailing to communication industries and transportation logistics to equal their strength. Walmart has made efforts to avoid the pitfalls resulting from differentiation/leadership strategy by ensuring they don't get stuck in between and also calculating future expense and revenues properly.
The internet has played a critical role in the growth of the company by minimizing transaction costs. Walmart makes it possible for customers to make a purchase online hence cutting a lot of costs. Customers need only to create their pages at the company's website where they can check for prior orders and track the orders that are in progress. The site makes it possible for one to ask relevant questions and also receive feedback without much struggle. Walmart has made their website unique by recommending which other products one can order after making the initial purchase (Kampf, 2007). They have numerous value-chain activities involving cost leadership and fewer layers of management which lowers their overall costs. Their inbound logistics are effective since they use inventories that are just-in-time. They have also minimized the outbound logistics costs by making sure the fuel efficiency is enhanced in their trucks, acquiring extra pallets on a given load, and reduction of miles that empty trucks travel. Another method they use to minimize costs is making purchases in large blocks.
Walmart has numerous activities for value chain differentiation. Products transfer from the warehouses is done with a lot of flexibility and at a very high speed. The advancement in technology which is well appreciated in Walmart ensures the ordering process inaccurate. Although the company does not offer too many sales, the day to day low pricing strategy can be termed as one of the most successful. They have a slog that states that for you to live better you need to save money and it is an actual representation of the real image of the company.
According to me, the differentiation and cost leadership strategy at Walmart plays the most significant role in the growth and expansion of the company. This is because through this strategy the company has been able to outdo the entire competitor and continue to shine and thrive in the business field. The strategy also interacts and works pretty well with the current technology hence making it easy for customers to make orders through the internet. Another interesting fact about this strategy and its incorporation with technology is that it has enabled the company to save a lot of money which can be used for other better and productive things in the company.
The Competitive Environment
The competitive environment for Walmart is unique. Although the primary competitors are the general merchandise retailers, supermarket retailers, as well as the warehouse clubs, pose competitive pressure. There is a substantial size of the discount retail industry, and it is constantly experiencing change and a lot of growth. The competitors at the top compete both internationally and nationally. Competition is more extensive on pricing, size of the store, location, layout, and environment, innovation and technology, merchandise mix, and the overall image. It is definite that the market is characterized by the economies of scale. The functions that are vertically integrated by top retailers are many. They include purchasing, and advertising, manufacturing. Due to these functions, some competitors get an advantage over the little things that Walmart may not need to compete.
Generally, in retailing merchandise, the primary competitors for Walmart are the Kmart and also the Target. Superstores for retail which include Bath, Beyond, and Bed and Circuit City also pose a significant level of retail competition. One study reveals that Walmart is more favorable to many consumers compared to Kmart and Target. Most respondents argued that Walmart offered cheap products, better selection, and variety, as well as good quality. It should be noted that the consumers' needs lie on features that are economically important in every competitive environment (Stankeviciute et al., 2012). The things that prompt buyers to prefer a given seller over another is critical in the field of competition. In the segment of warehouses, there exists a tough competition between Costco and Sam's Club for Walmart. Although Costco has lesser warehouses, on the other hand, it has more huge revenues and sales. Customers from Costco do shop at its warehouse more frequently compared to customers at Sam's Club. To be precise, they also use a lot of money whenever they visit. The dominance of Costco might be the outcome of improved and enhanced innovation. It offers very luxurious products and is recognized as the first to make gasoline and fresh meat and produce available for the consumers. This is very necessary because innovation plays a major role in assessing the level of competitors in a given industry.
Finally, Walmart directly competes with some of the biggest retailers for supermarkets. The capacity for production industries such as grocery is much populated. Hence Walmart remains to be a significant threat to almost all retailers' supermarket, both the small ones and the large ones. Safeway, Albertson's, and Kroger are all challenged in this competition and are finding it hard to compete with the low price rates at Walmart. Since the industry is much crowded, the larger retailers' supermarket is also trying to distinguish themselves so that they can stay relevant.
Walmart's internal activities are influenced by various factors from the external environment. For instance, whenever a new technology is launched, Walmart takes the opportunity to make the organization more efficient. In most of their activities, they ensure that the most recent and well-advanced technology is used. Normally, the company has no details concerning its ext...
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