Wal Mart's Business Level Strategy

Wal-Mart is a brand that is well known around the world, especially in the USA. It has gradually developed into the largest retailer in the world. Wal-Mart’s globalization efforts have been happening rapidly. But have they been successful in all aspects of their international expansion or not? This is the main thought that is going to be discussed in this essay. The questions I will be looking at are based on a case called “Wal-Mart takes on the world” from the book of International Business The Challenge of Global Competition eleventh edition – Ball, McCulloch, Geringer, Minor, and McNett. Questions are the following:

Walmart faced strong entrenched competition in Canada and Europe. In these developed countries, they couldn’t gain critical mass through internal growth, so they had to acquire companies that have been in the market already. They acquired Woolco, a money losing operation, applied many of the American business practices, and within a few years, the Canadian operations were successful. They have 317 stores, and they account for more than 35 percent of the Canadian discount and department store market. In Europe, Walmart entered Germany by acquiring the Wertkauf hypermarket chain in 1998 and entered the UK by acquiring the 229-store ASDA group. They the leader and are now losing ground to Tesco. A major problem for Walmart in the European market is overexpansion. Accompanied with the famous “Always low prices” approach, they met large resistance from the competition and regulators. Large price wars began because Walmart was accused of underselling the competition. They struggled to build a strong competitive base in German losing more than $1 billion. They were unable to create a competitive advantage, so they sold their operations to a competitor, Metro. They also faced problems in Korea, so

The evolution of Wal-mart from the early 1960s to the present day has set a benchmark that few can achieve. Wal-mart executives have been successful nationally as well as globally. The knowledge and expertise in economics have made Wal-mart a global giant. The research completed is the final recommendations by the members of research team C and will address questions regarding global competition and issues of the organizations ability to expand or reduce current operations.

1) What sources of cost advantage does Wal-Mart rely upon to execute its business-level strategy in the US? Walmart was able to fly under the big company’s radar for a while by putting stores in rural towns. They were able to buy land for cheap and once they opened a store the town could not support another store of similar size. And everyone played a part in keeping the cost down, from owners buying cheap hotel rooms to people taking out their own trash. They wanted to drive the cost down as low as it could possibly get. With suppliers Wal-Mart presented unlimited growth potential due to its size, so Wal-Mart could easily press for a lower price and high quality and suppliers would deliver to keep their business. They

Walmart is one of the biggest companies in the world, but it also has extremely tough competitors. Currently Walmart is the largest retailer in most countries of the world for numerous reasons. For one, they supply a wide variety of items to be purchased that include entertainment, groceries, health and wellness, hardware, furnishing, apparel and many more. Walmart also has over 11,100 stores in over 27 countries according to Market Realist. These two reasons alone give Walmart a huge advantage over its’ competitors. Walmart has both strengths and weaknesses when it comes to its’ competitors not only across the nation, but across the world as well. Some of the main domestic competitors of Wal-mart consist of Target, Costco, Amazon, and the dollar store trinity. Along with that, Walmart has international competition such as Carrefour in France, Metro in Germany, Tesco in the United Kingdom, Loblaw Companies in Canada, and Ahold in the Netherlands. Although Walmart has competitors with all of these companies worldwide, it still remains the “#1 retailer in Canada and Mexico and has operations in Asia (where it owns a 95% stake in Japanese retailer SEIYU ), Africa, Europe, and Latin America”, according to Hoovers. Strangely enough, Walmart is growing more overseas than it is in the United States. Even with all these companies it has to compete with, Wal-mart’s total sales are still almost 5 times its’ competitors. As it generates a net sale of over $483 billion in one year,

This pattern of growth, allowing it to build market share and secure volume advantages quickly, through large expenditures on warehouses, is also evident in the manner in which Wal-Mart built its stores. Wal-Mart stores were initially built of a smaller average size than its direct competitors and only if there was space in the location for future expansion; this increased Wal-Mart’s flexibility and it helped reduce unnecessary costs, as indicated by Wal-Marts lower proportion of rental expense and its significantly higher sales per square foot. Indeed, this is just one manner in which Wal-Mart, unusually for a service industry, was able to create a real competitive advantage. However, because this advantage is clearly imitable Wal-Mart has been aggressive in maintaining its technological lead.

Evidently, Wal-Mart is not doing anything to differentiate itself from rivals. It gives no frills to self-service outlets always providing the cheapest prices. Through a well-built influence with suppliers, the company has gained the power to manipulate prices and amend manufacturing procedures thus wringing out more savings for its customers. All that the company does from the frequent calls to suppliers to doubling up execs in hotel rooms aimed at saving the

Wal-Mart is a company that has taken its core competencies, which are the capabilities the firm emphasizes and performs especially well while pursuing its vision (Ireland, Hoskisson, Hitt, 2008), and turned them into competitive advantages. Core competencies must satisfy four characteristics in order to be a competitive advantage. These advantages, according to our text, include: *valuable, *rare, *difficult to imitate,*nonsubstitutable.

Corporate structure was structured into three business units, Wal-Mart Stores USA, Sam’s Club, and Wal-Mart International. Wal-Mart is a public corporation, however the majority of the stock is still held by Walton family members. Therefore, there is lots of family involvement at the top level. The headquarters are in Bentonville, Arkansas, along with the control and decision making ability of the organization. There is a very hierarchical structure in place which only fuels the "good ' boys club" for top management. The other unique element in Wal-Mart's

The success of Wal-Mart is due in large part to its ability to consistently produce high quality products at a low cost. This is very critical to the future success of Wal-Mart because it provides consistency to customers who are price sensitive. By committing themselves to "Everyday low prices," Wal-Mart assures customers that the products sold within their stores are competitive in reference to its retail competition. This low price strategy also provides Wal-Mart with a

A few reasons as to why Wal-Mart became a leader in the retail industry is due to their practices in obtaining competitive advantage by offering the lowest prices for the market. Wal-Mart built their practices by giving suppliers transparency to meet the demand of customers and granting them long-term relationships by purchasing goods in bulks. In addition, their turn times on inventory are three-five days faster than regular competitors. The inventory shelves are similar to Honda since they only hold up to four hours of inventory in their manufacturing site. Also, Wal-Mart holds their own transportation which is why they can manage their costs efficiently for the company. Their transportations system constitutes links between suppliers, distribution centers and retail stores. They have restrictive criteria for drivers where in order for them to be hired they would have to be accident free for a consistency of minimum 300,000 miles accident free. The supply chain practice that they have gained since they began the business was strategically faster and cheaper than all competitors. 85% of Walmart’s inventory is taken care of by their own transportation system and only about fifteen percent is taken care of by the suppliers through cross-docking. Wal-Mart uses

Wal-Mart maintains their strategy of low-cost leadership, which appeals to a larger market than competitors. The most prominent difference is that Wal-Mart owns the supply chain and has superior bargaining power over suppliers. This cost-saving opportunity is represented in inbound and outbound logistics. They maintain a young fleet of trucks, and recently released a new concept truck and trailer that has higher fuel efficiency due to the low profile aerodynamic design, and a 53 foot trailer made out of carbon fiber, which saves on weight and can further

To be the world 's largest low cost store that carries all types of merchandise for all possible consumers.

Bonini, S. M., Mendoca, L. T., & Oppenheim, J. M. (2006). When Social Issues become strategic. McKinsey Quarterly, 20-32.

Concepts & Connections 5.1, How Wal-Mart Managed Its Value Chain to Achieve a Low-Cost Advantage over Rival Supermarket Chains