Essay on Case Study Walmart

1255 Words6 Pages
I. Introduction

Wal-Mart is a world-wide active American retail trade company and currently the largest retail company in the world. Beginning in 1962, Wal-Mart has made the transition from a small firm in Arkansas to the largest employer with 3, 800 store units in the United States with record revenues today. But nevertheless, since Wal-Mart launched its online branch, it had to suffer from substantial setbacks from competitors such as Amazon.com or Ebay.
The intention of this case study is to evaluate Wal-Marts.com's profitability of success regarding its situation in 1999.

II. Discussion Questions
II.1 What is the impact of Wal-Mart.com on customer-borne transaction costs?

Wal-Mart's business philosophy is based on the simple
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II.2 Do you think that Wal-Mart.com is likely to create additional value?

Applying our knowledge about Economics of Strategy, we know that there are different ways to create additional value:
(1) To lower production costs or producer transaction costs. Wal-Mart.com is able to lower production costs due to the fact that the number of employees, rent and advertising costs will be respectable lower for the business online than for a discount store. Instead of intermediate warehousing, Wal-mart.com will directly deliver the ordered number of products and in this regard lower its producer transaction costs, which will shift its supply curve to the right, causing a right shift of the demand curve as well.
(2) By implementing policies to reduce consumer transaction costs, for example, lowering the expenditure of time of customers and other possibilities as discussed above, resulting in a shift of the demand curve to the right and
(3) by taking actions other than reducing consumer transaction costs and through devising new products and services. Wal-Mart.com will offer products from all 25 categories you can find in a regular Wal-Mart store. To create additional value, it will offer a richer choice of high quality products, for example DVD players and cameras. But not only will it offer these higher-priced items, it will also offer them as complements, which means that Wal-Mart.com for example will sell DVD players with a set of the latest DVDs.
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