Walmart Case Study

Introduction

Founded in the beginning of the sixties, Wal-Mart is the world’s largest retailer, which operates today in 10 countries (U.S, Canada, Mexico, Puerto Rico, Argentina, Brazil, China, Korea, Germany and United Kingdom). Its average sales growth for the period 1999-2004 was 11.6%, and still growing ($ 478.61 billions in 2016). This growth enabled Wal-Mart to become the first supermarket in the U.S.A.

Beyond this, what strategy did Wal-Mart use to become the world’s largest retailer? What is its competitive strength?

We will try to understand Wal-Mart strategy by addressing questions below according to the case.

1. What is Wal-Mart’s strategy? What is the basis on which Wal-Mart builds its competitive advantage?

Wal-Mart main strategy is to master operating costs while offering best branded products at a low cost to the consumers, according to its goal: guarantee “everyday low prices”.

Wal-Mart success is due to its strong supply chain which plays an important role in the distribution. It collaborates with suppliers, retailers, and customers to create value.

A strategy which relies on the following:

 Effectiveness and efficiency of the distribution (information management, center distribution)

 Supplier diversity in order to prevent stock-outs and do not depend on any one supplier, and always look for value prices,

 Involve suppliers to use update technologies (hook-ups) to refine monitoring and management of the inventory,

 Competence in information systems: owned satellite communication network

 Saturation strategy for stores expansion: be close to the consumer where the competitors do not operate, built stores in small areas, fight for every dollar to be spent by consumers,

 Ensure the delivery of various outlets in one day from the distribution center to the store.

2. How do Wal-Mart’s control systems help execute the firm’s strategy?

Wal-Mart’s control systems help execute the firm’s strategy by relying on three (3) main factors: information and store’s management, people (staff), and investment in trucks.

Wal-Mart acquired competencies in the information systems by gathering information from each store. In fact, treat each store as an investment center gives the opportunity to establish a decentralized management. Data collected, analyzed, and transmitted on real-time basis lead to improve “problem stores” management by providing corrective actions from “outstanding” stores