Assess the success or failure Wal-mart has had from an integrative perspective. Answer all of the questions. The company we are talking about is Wal-mart.
How well does the company strategy working?How well the company has done in seizing upon external
opportunities?How well has the company handled outside threats by leveraging its strengths? Has
weaknesses exacerbated the threats and cause them to fail or take advantage of opportunity?Has the company’ realized the mission and vision through dealing with exogenous threats and external opportunities?What do you perceive you have learned about this company? Please provide your evaluation of the in brief.
NOTE: Please note that your report/assignment will not be accepted without proper citations and references. You must use the sources from the background material together with the sources you find your own.
In this paper, your ability to think critically and provide insightful analysis is the key. You do not want to just “rubber stamp” the organization and say they are doing great, but you want to identify specific areas where they fall short as well as where they do very well. Remember to organize your paper for clarity and document any outside resources. This should be at least three pages long.
Wal-Mart has a low cost and high volume strategy. This strategy aims to provide customer satisfaction through low prices and good customer service. The company has main aim to create a loyal customer base by lowering their cost of living through offering quality and other products at lower prices and conveniently (Grant, 2010). In this paper, strategic assessment of Wal-Mart’s strategies will be done. Additionally, strengths and weaknesses of the company that is helpful to take advantage of external opportunities will be discussed.
Strategic analysis of Wal-Mart
The core strategy of Wal-Mart is low-cost leadership that is helpful to attract a broad spectrum of customers by supplying a wide selection of the lowest cost general merchandise. This strategy works well and the company achieves a cost advantage by controlling its cost drivers and relentlessly wringing cost efficiencies out of its supply chain (Kneer, 2009). Wal-Mart is rapidly expanding company by using its cost leadership strategy to penetrate new international markets. The global strategy of the company is to take valuable competencies to foreign markets.
On the other hand, it is found that Wal-Mart is so successful not because of lower prices, as competitors also have lower prices, but the company is master to manipulating perceptions of customers. Wal-Mart convinces its customers that its prices are lower than competitors. When customers convinced, they keep shopping at Wal-Mart. At the same time, sales of company decreased over the past 10 years (Palepu & Healy, 2008). The typical “beat Wal-Mart” programs are promoted by industry experts and wholesalers to their independent and emphasize isolated tactical moves such as increasing advertising, improving the quality of goods, increasing a customer friendliness campaign etc. but it is insufficient for achieving sustainable sales and growth.
Sizing of external opportunities
Wal-Mart has international expansion opportunity with the help of merger, strategic alliances with other retailers, focusing on specific markets such as Europe and China. New locations and store offer market development opportunity for Wal-Mart. In 1996, the company enters into China, where it has 26 stores in present. Wal-Mart has been able to reap significant economies of scale from its global buying power (Wal-Mart case study, 2006). Wal-Mart’s key suppliers are international companies such as General Electric (appliances), Unilever (food products), and Procter & Gamble (personal care products) that have their own global operations.
Wal-Mart has used its large size to demand deeper discounts from local operations of its global suppliers, increasing the company’s ability to lower prices to consumers, gain market share and earn greater profits. At the same time, company can gain opportunities though internet based software that enables the company to control over its global operations, tracking individual store sales, inventory, pricing and profits data (Wal-Mart: Annual Report, 2010). Along with this, company will include development and execution of a global strategy for e-commerce and creation of technology platforms and applications that can be used effectively in every Wal-Mart market.
Use of strengths to overcome threats
Wal-Mart has faced main threats related to target of competition in local and global market. The cost of producing many consumer products tends to have fallen, because of lower manufacturing costs. This increases price competition that is a threat for the company. These threats are resolved by the company with the help of strengths. Wal-Mart is a powerful retail brand that has a reputation in the global market (Wal-Mart: Annual Report, 2010). The company has grown over past years and has expanded its business at global level that reduces competition. For this, it had purchased UK based retailer ASDA.
Along with this, the company uses information technology to support its international logistic system. Through this, company can see the performance of individual products in different countries across the world (Grant, 2010). This system also supports for effective procurement. With the help of focused strategy and development programs, company can reduce its manufacturing cost and compete with competitors for lower prices.
Weaknesses exacerbated the threats
Yes, weaknesses of Wal-Mart exacerbated the threats of the company. The company is huge and globally expanded, but still it has presence in 14 countries. The company is much focused towards America and Europe and having few stores in other continents. At the same time, small towns don’t want entry of Wal-Mart in their areas and company faces variety of competition at global, regional and local level. The mission statement is not very clear. The policies and strategies are quite old and very few innovative steps are taken (Pahl & Richter, 2009). These weaknesses increase threats for the company and competitors are raised with new innovative techniques in products and retailing.
Company purchase products in bulk to maintain constant price, but sometime, stock is being outdated and old fashioned that increases the cost of the company. At the same time, constant price strategy is not beneficial for the company due to increasing manufacturing cost (Warner, 2010). Market share of company is low outside the US market, whereas competitors are gaining control over international market. So, some weaknesses of the company increase the threats and cause for strategic failure.
Mission and vision through threats and opportunities
Wal-Mart’s mission statement is to help people for saving money, so they can live better (Wal-Mart Stores, 2012). Yes, this mission can be realized dealing with threats and external opportunities. Company can provide cheap products at Asian countries due to untapped market from competitors. Along with this, inflation in US market attracts the customers towards buying cheap products rather than expensive products that increase the sales and market share of the company. Company has external opportunity to buy products at cheap rates from suppliers, so it is able to provide better bargains to customers that give confidence for shopping at Wal-Mart.
Wal-Mart follows constant pricing strategy that is helpful to attain mission of the company. Along with this, company faces intense competition from competitors with substitute products that force the company to reduce the prices of the products to attract more customers towards the company (Pahl & Richter, 2009). At the same time, small towns don’t want the entry Wal-Mart in their areas due to high prices and increasing competition. So, company should provide low cost products to maintain their existing customers in city and attract customers of small town areas.
Perception of Company
On the basis of above discussion, it can be concluded that Wal-Mart has focused on low cost leadership strategy that works well in past to capture the market. But, in present, there are some weaknesses and threats for the company that can be resolved with the effective use of strengths and new advance technologies and strategies. So, company should adopt new innovative techniques and strategies and expand the market in new areas for increasing market share and profits.
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