Strategic Management 2014-2019
TMA03 Walmart around the world
To what extent can Walmart’ s competitive advantages be transferred into international spheres?
Based in Bentonville, Arkansas, Walmart Stores, Inc. was founded in 1945 by Sam Walton and is now one of the largest retailers worldwide. It operates stores in a variety of formats, such as supermarkets, discount stores, warehouse clubs, and online properties. Its product offerings are wide-ranging: automotive accessories, food and beverages, cosmetics, clothing, and housewares. Walmart’s strategy is to be the low-cost leader among mass merchandisers. It operates on a scale unmatched by any of its competitors. To pursue its strategy, Walmart focuses on using advanced systems and technologies to reduce costs, improving relationships with suppliers by purchasing enormous quantities, and being a tough bargainer.
Competitive advantage is anything that a company has, or does better, that customers value but the competition cannot match. The following sections discuss how Walmart uses its value chain throughout its primary activities to achieve its strategy and have a competitive advantage.
• Efficient Inbound and Outbound Logistics: Products from distributors and suppliers are transported to Walmart’s distribution centers via its large truck fleet transportation system and in case of perishables such as groceries are concerned, products are managed by Walmart’s suppliers’ inventory management systems connected directly to the store. Walmart also uses a technique known as “cross docking” whereby finished goods are taken straight from the supplier’s site, sorted, and delivered directly to the store. This leads to a reduction in the handling and storage of finished goods, resulting in fewer damaged goods and decreased staff needs. The efficiency of this system leads to a form of just-in-time inventory, allowing customers to control the supply of goods they want by their purchases.
Low cost strategy: Covering the traditional marketing four P’s of product, place, price, and promotion, Walmart uses these activities to support its low-cost strategy. At Walmart, customers buy products knowing that the store will deliver value in excess of its costs and that Walmart stands behind the goods it sells as a trustworthy merchandiser. In regards to price, Walmart has long implemented an everyday low price guarantee, reinforcing its motto of “Save Money. Live Better.” This motto supports its strategy because by guaranteeing the lowest price, Walmart reduces the expense and profit erosion caused by having to run frequent sales to move merchandise.
Store format and locations: Walmart’s store formats have long been central to its success, allowing it to maximize its attractiveness to a broad spectrum of customers. Its in-store layout makes for fast movement of product to the shelves and allows easy stocking. Walmart’s stock replenishment process is focused on manag...