Wal-Mart is the largest retailer in the world, founded by Sam Walton in 1962. It focuses on discount and low prices of various products, even with a branded product. Entering into a globalization era, Wal-Mart has used technology advances in order to improve its business efficiency.
SWOT ANALYSIS
There are a lot of strengths that Wal-Mart has due to its great success in doing a business. Since Wal-Mart offers many job opportunities to people with or without college education, it becomes the largest employer in the United States. $288 billion in sales has been achieved due to its aggressive growth strategy. Global market is also one of the strengths as it offers some branded products recognized in worldwide. Incredible logistics system, the largest trucking system, is one of Wal-Mart’s competitive advantages. They are able to ship merchandise from any of their numerous distribution centers in order to provide the cheapest and most efficient route. A satellite network system allows sharing sales data with suppliers, distribution centers and the company’s wide network of stores. The ability to cut prices on some products and a friendly-helpful customer service are great advantages for Wal-Mart’s success.
The weakness can be derived from environmental side, where the large scale buildings cause a problem of traffic pollution and congestion. The employees of Wal-Mart can suffer a great deal as well. Many receive only poverty-level wages and horrible health care benefits. The location of stores in global market is not so strategic, thus competitors are gaining in the other surrounding countries. Wal-Mart tends to overstock products and have to put in on sale in order to turnover the inventories; it can reduce the gross profit. It has no flexibility in making any changes or improvement on its products due to too much merchandise and disability to focus in on sectors that need to be improved.
The Term Paper on Wal-Mart Supply Chain
... many of Wal-Mart’s largest suppliers had offices in Bentonville, staffed by analysts and managers supporting Wal-Mart’s business. In addition, Wal-Mart started sourcing products globally, opening ... lot was). In the mid-1980s, Wal-Mart invested in a central database, store-level point-of-sale systems, and a satellite network. Combined ...
Wal-Mart still has an opportunity to expand its business because it does not always carry a diverse selection of products; thus it can attract more customers. By focusing on a specific target market in a specific area, Wal-Mart could be the number one retailer for everyone. A new health care plan is planning to be implemented in order to improve employees’ benefits. Solving environment pollution by taking part in environmental preservation will increase its image and the share market price. Wal-Mart is such a major player in the retail industry that its decisions can have an effect on the global economy, the environment and society. They have the ability to slightly decrease the price of inflation because of their low prices.
In order to keep the price low, Wal-Mart has cut cost from other areas including wages. Some of the stores have been opened in small areas that have not enough customers to support Wal-Mart; thus it affects the net sales. Because of brand name recognition, some customers do not have direct sales with Wal-Mart. They tend to find small retailers which are more focusing on the product. The shopping experience some customers have at their store is also a threat to Wal-Mart. Customers are often complaining about the long checkout lines and the insufficient quality of the products that are offered. As the technology keeps improving nowadays, it is possible that there is a new system that offers great deals than RFID (Radio-frequency Identification).
WAL-MART’S STRATEGY
Selling branded product at low cost and providing good customer service are the basics strategy of Wal-Mart stores. It tries to do anything in order to cut cost without reduce the volume of advertising.
Wal-Mart used a saturation strategy for store expansion. A distribution center was strategically places so that it could eventually serve 150-200 Wal-Mart stores within a day. They can place their stores so close together that they become their own competition. Once everybody else is wiped out, then they’re free to thin out their stores. With 6,100 trailer trucks and 7,600 truck drivers make a high-speed distribution system.
The Term Paper on Wal Mart Stores Inc
... for each product. Product Diversification Strategy Wal-Mart strives to provide its customers with a large selection of products. Their 10 K reports that the Wal-Mart stores and ... is customer service, Wal-Mart improved its service, but made their value propositi on everyday low pricing. Discussion (continued) Wal-Mart's Competitive Position and Strategy (continued) Product ...
Wal-Mart implemented a satellite network system that allowed data to be shared between the stores, distribution centers and suppliers. Store-level data were collected, analyzed and transmitted electronically to see how a particular region, district, store, department within a store or item was performing. This eliminated stock-outs, reduced the need for markdowns on slow-moving stock and maximized inventory turnover.
Wal-Mart and the United States Department of Defense have published requirements that their vendors place RFID tags on all shipments to improve supply chain management. RFID could increase monitoring and management of the inventory. Vendors use RFID printer/encoders to label cases and pallets that require EPC tags for Wal-Mart. These smart labels are produced by embedding RFID inlays inside the label material, and then printing bar code and other visible information on the surface of the label. It improves the efficiency of tracking inventories and helps the United States Department of Defense to track unlawful products.
Although Wal-Mart is the leading company in the retail industry, it faces intense competition from its three main competitors, which include Kmart, J.C. Penny and Sears. In Australia, there is a store similar to Wal-Mart, Target Australia Pty Ltd., but it has a more diversified products and less amount of assets compared to Wal-Mart. Coles Myer can be considered as another similar stores of Wal-Mart.
RECOMMENDATION
Wal-Mart can keep doing environmental friendly approaches as well as increasing its employee benefits. Wal-Mart can also help in advertising smaller retailers which do not sell competing products but complimentary products; thus those retailers can survive longer. It can create a good image of the company that cares about the community. After focusing on improving the image of the company in United States, Wal-Mart can expand its business in foreign country which has more potential growth.
The Essay on Wal mart Stores New Set Of Challenges
WAL-MART STORES: NEW SET OF CHALLENGES The issues covered pertain to Wal-Marts impressive and unimpressive strategies and operations, core competencies of the management, financial condition, continued success, and recommendations. There are five areas of Wal-Marts strategies and operation. The expansion plan, that stretches around the world shows the financial and management prowess of Wal-Mart. ...
BAO 3312 Advanced Management Accounting (S207)
