Wal-Mart - Business-Level and Corporate-Level Strategies - Case Study Example

Wal-Mart: Business level and Corporate level strategies Wal-Mart: Business level and Corporate level strategies Company Overview Wal-Mart is a leading multinational retailing corporation operating over 27 countries under 55 different names. Wal-Mart runs chain of large discounted department stores and warehouse with the world’s largest public corporation. It still remains a family owned business as the Walton Family owns more than 50 percent of Wal-Mart shares (Walmart: Annual Report, 2013). Wal-Mart ranks as the largest retailer among the leading retailing companies all around the world. Wal-Mart throughout the times has sustained it high profit margins and market position. The growing competition in the international market has led Wal-Mart face severe competition in the different countries. The main competitors in the market remain Kmart, Target, ShopKo, etc. and there are also small regional competitors in the market. Wal-Mart strategies are one of the major factor that contributed to its succession among it competitors. This document analyzes business level and corporate level strategies of Wal-Mart. Further it analyzes the competitive environment of Wal-Mart with respect to slow cycle and fast cycle market to evaluate company’s significant strategies. Business level strategies Strategies play a major role in the firm’s succession and its decision-making. Business level strategies can be defined as set of commitments and actions of the firm that makes it operation distinct and creates a pathway for its core competencies among its competitors in the market (Hitt, Ireland, & Hoskisson, 2014). Wal-Mart’s business level strategies are focused on the combination of cost of leadership and differentiation. Wal-Mart’s major attraction for its customers is its lowest possible pricing with a large array of products. The low cost strategy of Wal-Mart is a dominant element that makes it one of the leading retailing companies in the market. Throughout the times, Wal-Mart has focused on providing good quality products under one roof at low prices. Wal-Mart facilitates its customers by the affordability factor with the economical prices that makes its customers loyal and satisfied. Wal-Mart mainly concentrates on finding ways to lower its costs constantly in order to provide the best competitive price in the market, through altering its primary and supporting activities to reduce its costs and to sustain competitive level in the prevailing market. It is believed that the Wal-Mart’s supply chain management is one of the significant ways that assists the company to implement its low cost leadership strategies in the market. The company manages its in-bound logistics using just-in-time inventory. Furthermore, Wal-Mart emphasizes on cutting costs as much as possible for it outbound logistics by making its vehicles and transportation fuel effective (Walmart: Annual Report, 2013). The company’s trucks are assembled with the best low cost fuel efficiency and designed to load more pallets. The company reduces empty mile drive-in of their truck (Walmart: Annual Report, 2013). Wal-Mart also reduces it prices by buying large quantity of products that provides it cheaper rates from the manufacturers and suppliers. In addition, the forecasted budgeting and estimates of Wal-Mart management are accurate to determine the future demands, and track and predict the inventory level, efficient transportation routes and manage customer relationship as well as service response logistic (Walmart: Annual Report, 2013). This is evident from the information that Wal-Mart low cost strategies is one of the major factors in order to sustain low prices for its customers, and the main contribution to its success is its Supple Chain Management that has enabled the company to maintain its cost leadership / differentiation strategies in the market (Walmart: Annual Report, 2013). Corporate level strategies Wal-Mart has been a family owned business Walton family still owns 50% of its stock. The company has been operating in different regions of the world with about 55 different names (Walmart: Annual Report, 2013). The parent company of Wal-Mart unifies strategic direction of the entire business. The company deals with its international customers according to the different requirements to ensure the productivity and profitability of the company (Hitt, Ireland, & Hoskisson, 2014). Wal-Mart extends its business operation with a diverse business model by adopting different business approaches in order to enter into a new market. It mainly focuses on region where its stores operate (Hitt, Ireland, & Hoskisson, 2014). The company from time to time has expanded its product line in order to provide wider arrays of products to its customers (Walmart: Annual Report, 2013). The company has always been focused to provide low prices to its customer than its competitors in the market that is based on efficient functionality and improved product and services that are currently being offered to its customers (Walmart Canada taking on Target with plans for 37 new Supercentres, 2012). Its low pricing strategy has eventually increased the brand loyalty of Wal-Mart. I believe that the diverse business model that the company uses for operating in different regions of the world is one of the leading corporate level strategies. This is because Wal-Mart has been focused on the single business strategy that means that most of the revenues of the company are generated through its particular business segment. About 95% of Wal-Mart revenues are generated through its grocery business (Walmart: Annual Report, 2013). Over the last 30 years, Wal-Mart has always stuck with its progress and competency in its particular business segment (Randle & Flamholtz, 2011). This strategy of the company has lead Wal-Mart emerged to be one of the successive and prominent companies. Wal-Mart does not believe in the concept of diversification for growth and also to maintain its advantages at the competitive level. In addition, Wal-Mart offers large and assorted product line to its customers which no other competitors except Target can offer these products at such low prices (Walmart Canada taking on Target with plans for 37 new Supercentres, 2012). This is one of the major reasons that some of the competitors in the market have recently closed their stores. Wal-Mart maintains its price competition that makes the company to be bigger competitor in the market (Walmart Canada taking on Target with plans for 37 new Supercentres, 2012). In addition, the online store of the company has allowed Wal-Mart to maintain its cost leadership in various value chain activities. Furthermore, the flexible and speedy transferring of Wal-Mart products from their warehouse and the technology has allowed company to have accurate ordering process (Walmart: Annual Report, 2013). The slogan of Wal-Mart ‘save money, live better’ throughout the time have proved through its operation and accurately represents their image (Walmart: Annual Report, 2013). This is evident from the above that main corporate strategy of Wal-Mart is a unified strategy that adopts different business model in order to meet the requirement of the local public and regions where its stores operate (Hitt, Ireland, & Hoskisson, 2014). Though the parent company holds most of the shares of Wal-Mart, but it ensures that the business models that are adopted for the operation in the local market are suitable to a particular environment. Competitive environment – fast cycle and slow cycle markets The competition in the retailing industry has become intense with the passage of time; therefore, Wal-Mart faces an increasing competition form local, regional, national and international retailers. This is because the retailing industry is constantly growing and changing with the time due to which it is experiencing rapid change (Hitt, Ireland, & Hoskisson, 2014). The competition in the retailing industry has grown to a severe level with the passage of time with extensive competition based on pricing, location, store size, product line, product range, technology and innovation (Randle & Flamholtz, 2011). In addition, change in the consumers’ needs is one of the fundamental aspects for the rapid change in the retailing industry; the preferences of customers vary with prices, quality and products that are available to buyers. They play a significant role in shaping up the perception of consumers of Wal-Mart (Walmart: Annual Report, 2013). Costco is a competitor of Wal-Mart that has fewer warehouses than Wal-Mart, but still generates high sales volume and revenues. This can be due to the unique and luxurious experience of Costco (Walmart Canada taking on Target with plans for 37 new Supercentres, 2012). The innovation of the retailing industry plays a crucial factor for the preference of retailer. Perhaps, there are still few competitors that have low costing strategies like Wal-Mart. Target is the direct competitor of Wal-Mart as it has the similar low costing strategies like Wal-Mart (Hitt, Ireland, & Hoskisson, 2014). Target still offer competitive prices than Wal-Mart this is because Target has a larger product variety as compared to Wal-Mart in the market with a good discounted prices and higher quality due to which Wal-Mart face high competition with Target in retailing industry (Hitt, Ireland, & Hoskisson, 2014). Wal-Mart also faces though competition in regional markets like Germany and South Korea this is because the local retailers like Aldi in Germany has a higher shares than Wal-Mart in the market, they offer lower prices to its customers than Wal-Mart. However, some of the competitors in the market like Safeway, Kroger and Albertson are finding it difficult to compete with the low pricing as Wal-Mart (Hitt, Ireland, & Hoskisson, 2014). As the competition in the market has become serving but the retailing industry still remains sustainable as they are more traditional (Walmart: Annual Report, 2013). Several external and internal factors drive firm to adopt diverse competitive actions to anticipate the requirement of the market. The competitive environment in the retiling industry is different from other industries. This is because of the reason the competitive advantage in the retailing markets is based on meeting daily needs of customers for commodities which makes it traditional. The change in the product range to sustain competitive advantages is moderately costly. This reflects that the flow of advantage of Wal-Mart is standard cycled as time honor; economies of scale and brand loyalty are the main factor for the repetitive purchase from the company (Hitt, Ireland, & Hoskisson, 2014). The sustainability of Wal-Mart competitive advantages depends on its low pricing strategy that is also the main factor that leads it to stay ahead of its competitors in the market. Any change in the product line or strategy of the company is costly. Therefore, it can be observed that the firm’s competitive advantage is costly on a moderate level and, therefore, Wal-Mart can be classified in a standard cycle market (Hitt, Ireland, & Hoskisson, 2014). The main focus of its competitors in the retail industry is to gain customer’s locality by enhancing experiences of their customers and controlling the name or brand image of the company (Walmart: Annual Report, 2013). Wal-Mart aims to secure its brand image and gain customer’s loyalty by providing competitive prices to its customers. Firm’s operations focus on providing consistency and enhance the experience of its customers by improving product line and range of products in it stores. References Hitt, M., Ireland, R. D., & Hoskisson, R. (2014). Strategic Management: Concepts and Cases: Competitiveness and Globalization. Mason: Cengage Learning . Randle, Y., & Flamholtz, E. (2011). Corporate Culture: The Utlimate Startegic Asset. New York: Stanford University Press. Walmart: Annual Report 2013. (2013)New York: Walmart Stores Inc. Walmart Canada taking on Target with plans for 37 new Supercentres. (2012 12-November). Retieved from http://o.canada.com/business/walmart-canada-taking-on-target-eith-plans-for-37-new-supercentres/#.USIRbWeg4X0 Read More