Strategy behind Wal-Mart
Wal-Mart is the world’s largest grocery retailer as for as revenues are concerned (Fortune Magazine, 2008). The company became part of New York Stock Exchange in 1972. Around the world, it provides services under 55 different names in 15 countries to almost 200 million customers per week at 8000 strategically located retail stores. Because of Wal-Mart’s enormous revenues, it has a huge impact on the American economy.
The reason for selecting this company for analysis is its enormity of operations and the availability of a lot of information about it online.The basic strategy of Wal-Mart is to offer products at the lowest prices possible. This basic strategy that shapes the Wal-Mart’s business was articulated by Sam Walton, the founder of Wal-Mart stores. He said that if all the employees work together, the cost can be significantly lowered. This will show the world how it’s like to save and live a better life.
And, this is the philosophy that Wal-Mart has stuck to throughout its years of operations. It has continuously provided people with products at lower prices.This has led people to save money. Everybody values lower prices so, Wal-Mart, with its lower prices, has built a loyal customer base. As pointed out earlier, the basic strategy for Wal-Mart has been to offer products at low prices. But their strategy has also been to introduce cutting- edge technology, and taking steps aimed at making suppliers sell merchandize at lower and lower prices.
Wal-Mart was one of the first grocery retailers to use Universal bar code.The Universal bar code helps Wal-Mart increase check-out time of its product bought and it can easily follow the flow of inventory. When other retailers realized its effectiveness and efficiency, they followed the suit. Since Wal-Mart was the first retailer to introduce the universal bar code, it gave Wal-Mart a significant competitive advantage. Introduction of universal bar code provided Wal-Mart with a lot of information about the consumer buying behavior which it used to improve the quality of service by incorporating changes necessary.Wal-Mart became known for adopting technology which it used to manage inventory and supply chain in an excellent manner.
The latest technology that Wal-Mart has adopted is radio frequency identification technology (RFID). RFID holds more information than can a universal bar code hold. Use of RFID will contribute to the efficiency of supply-chain management. It has also offered Wal-Mart significant advantage over its competitors because it is the first store to adopt this high-priced technology(Wilber,2006).Wal-Mart has also forced its suppliers to reduce the cost of goods sold.
Fisherman discusses how due to Wal-Mart the supplier price of four-pack of light bulbs from General Electric dropped from to 88 cents from $2. 19(Wal-Mart Fact Sheets,2002). Expanding its business in America and internationally is another of Wal-Mart’s strategy. It has made many efforts to open stores outside America and presently out 0f 4000 stores that it owns, 1200 are located outside America.
It has its operation in nine countries around the world (Wal-Mart Factsheet, 2002).Wal-Mart has also aims to position itself in a positive way. It wants its customers to associate Wal-Mart’s name with customer-satisfaction. To accomplish this, it conducts various advertising campaigns(Wilber, 2006). All in all, it can be said that Wal-Mart’s strategy has been to offer products at lower prices than that of its competitors’ prices. Some also believe that on average Wal-Mart’s customer saves around 15% on its products.
And, this has been made possible by Wal-Mart’s use of sophisticated technology.
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