Case Analysis #2 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 …show more content…
And Walmart has always been able to keep a low price from all the in house stuff they do and subbing it out. 3) Do those same sources of cost advantage enable Walmart to achieve a sustainable competitive advantage in China? With a localized demand, localized supply base, and localized distribution in China also provided domestic stores with an edge in establishing a strong regional dominance when foreign retailers found it hard to leverage national presence in a regional market. In China, however, the constraints on a foreign retailers operation directly limited the regional expansion of Walmart stores and the efficient use of distribution centers since they were so spread out. Would have to spend more on distribution costs and given the slow speed of transportation did not enable Walmart to lower its prices. Walmart also faced a problem with lack of an information technology network with suppliers, making purchasing and distribution difficult. Also, consumers in China were very different than those back home, which added pressure to the operational costs and directly threatened its ability to set the price low as possible. People in China did not buy in bulk and that is what Walmart specialized in, so shopping patterns did not fit. Diminished economies of scale and interrupted supply chain meant higher costs in satisfying Chinese consumers. Everything that Walmart thrived in and was able to do to cut costs, they
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 is the world's largest company by revenue (approximately four hundred and eighty billion dollars) and the largest private employer in the world with two point three million employees. Walmart is also one of the world's most valuable companies by market value, and is also the largest grocery retailer in the U.S. “One Nation Under Walmart” is a case about how Walmart has taken over the retail business and the effects of their market domination. The case also shows statistics of how much percentage Walmart is of many suppliers’ sales. According to the case Walmart has a 30% market share of all household items. Twenty-eight percent of Dial’s business and twenty-four percent of Del Monte’s business go through Walmart stores. It is also worth noting that Walmart imports ten percent of all United States imports from China. The case states that Walmart is able to offer cheaper prices because they put so much pressure on their suppliers to lower their prices. The case, “One Nation Under Walmart”, explains the problems that some people have with the massive retailer. One of these problems is how Walmart has forced numerous local businesses to close their doors through their extremely competitive pricing. They are able to purchase bulk goods at such low prices and thus pass the savings onto customers. As a result of these lew costs, rivals are driven out of business which results in a loss of jobs. Jobs are vital to the success of a community and with Walmart causing job
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
Wal-Mart didn’t just get by with cost-saving methods. They were ahead of their competitor’s technology wise too. Even in the 1970’s, Wal-Mart was able to track inventories in their warehouses and link it with stores. They tracked their sales data for specific items and could increase or decrease their inventory accordingly, achieving a higher efficiency than other retail companies. Another aspect that Wal-Mart felt strongly about was expanding there reaches. In 1978, they introduced a Pharmacy, auto center and jewelry divisions.
Wal-Mart’s expansion in China had been hindered and slowed down by regulatory restrictions for a long time. Thus, international retailers were limited to certain cities, in which not more than three stores were allowed. Additionally, each new store needed the approval of the central government. Furthermore, enforcement of local interest such as tax revenues or jobs and local protectionism by local governmental agencies handicapped Wal-Mart’s expansion in China. As a result, the retailer had only 43 stores in China by early 2005 (p.12-14).
Walmart is one of the successful company in the US and outside the US. The strategies that push Walmart behind competitors are low cost and outperforming the competitors. Walmart has been adopting from the past and use their experience to maintain the company and push the company to become successful in the US and worldwide. So, what are the factor that Walmart use for their company? In order to have an understanding about Walmart , You should know about its overview of Walmart,
Wal-Mart continually advertises their prices to be substantially lower than their competitors. The truth is, most Wal-Mart items do not
Having strong presence in the retail industry, the firm expanded business to offer second hand car. The firm leverage on its competencies to provide its own product to consumer. Also, Wal-Mart works heavily with its suppliers. This symbiotic relationship can be seen as vertical integration due to the level at which Wal-Mart analyses its suppliers and improves their manufacturing processes. Wal-Mart definitely has the business strategy of Low Cost Leadership. They do nothing to really differentiate themselves from competitors and provide no-frills self-service stores that always provide the lowest prices. Wal-Mart has built enough clout with suppliers that they can dictate the prices and go in and change suppliers manufacturing processes in order to wring out more and more savings for the consumer.
Walmart has kept its prices so low by cutting-edge technology, corporate culture and put in their efforts to make the suppliers to lower the prices and sell goods as low as possible. The basic goal of Walmart is to keep their prices low and it has always been successful at this.
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’s sheer size gives it unrestrained economic power which allows it to drive down costs in the retail and manufacturing sectors and to enact its own standards with regards to its work force.
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
Wal-Mart is a company which operates in the service sector, more specifically in the “Discount, Variety Stores/Retail” industry. The company’s superior performance is demonstrated through the fact that it was America’s largest company (in terms of revenue) in 2002, and the reputation of the company is reflected in the opinion of “Fortune” who have identified Wal-Mart as one of the world’s most admired companies. In 2004 Wal-Mart had been hiring 1.4 million employees – making it the largest corporation in the world. Wal-Mart’s share prices have also been stable at time of stock market volatility. There are
(1A) it’s quite simple how Wal-Mart became a world leader in supply chain management. Wal-Mart’s main focus was to develop cost structures that would allow them to provide low costs friendly everyday prices for all of its customers. They accomplished this by eventually cutting off all middle man distributors. Although this is what ultimately Wal-Mart above the rest of the competition it didn’t work right away in Wal-Mart’s earlier years. Just like any large or small business Wal-Mart went through both its share of trials and tribulations. When Wal-Mart first developed the RFID technology, the company began to greater strides towards become a world
Option 2: maintain the present price, be content with the current market share, and use the lower-cost edge to earn higher profit margin on each unit sold 4. Concept & Connections 5.1, How Wal-Mart Managed Its Value Chain to Achieve a Huge Low-Cost advantage over Rival Supermarket Chains, describes Wal-Mart’s strategy for out-managing its rivals in efficiently performing various value chain activities to gain a lowcost leadership. A. Achieving Low-Cost Advantage 1. A low cost edge over rivals is best accomplished in two ways: a. performing essential value chain activities more cost-effectively than rivals, and