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Walmart and market development
Wal-Mart's competitive strategies
Current economy effects on walmart
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Many large retailers such as Target and Nordstrom did not do well during the recessionary economy. Many of those large retailers had to shut some of their stores down due to low sales during the recessionary economy. During a slow economy the Wal-Mart Incorporation did great. Wal-Mart Inc. did great during the recessionary economy was due to Wal-Mart’s everyday low cost marketing strategy (Ferrell, Hirt, & Ferrell, 2009). The working class consumers are Wal-Mart Inc.’s primary target market clientele. As a result of the recessionary economy, Wal-Mart gained the competitive edge over its competitors and caused their upper class consumers to begin shopping at Wal-Mart Inc. (Collins, 2011).
The Wal-Mart Incorporation could not continue
Mallaby admits Wal-Mart can treat their employees and other retailers unfairly, but as a result everyone can share in the 50 billion in savings that American shoppers consume annually. The pay that employees get is the price they must pay for low priced merchandise. Because of the minimal pay to employees, Wal-Mart strengthens its’ consumer buying power. Giving the American shoppers the savings they need, Wal-Mart’s has ultimately been them successful. Wal-Mart has potentially wiped out the middle class as an employer, but the employees can now work and ...
According to Smithson, Walmart can expand its markets to new and emerging markets especially in the third world countries, which can significantly increase its revenues. Secondly, the company can reform is employment practices and improve the quality standard and in doing so, attract more customers and improve its brand image. On the other hand, the company faces threats such as the rising healthy lifestyle trend I that the company in most cases does not provide customers with healthy goods. At the same time, the company can capitalize on this aspect and increase its revenues. Aggressive competition from other discount retailers such as Target creates a great threat to the company (Smithson, 2015).
My objective is to analyze the two retail giants’ methodology to satisfy and maintain customer although that I anticipate Wal-Mart’s to be a better buy than Costco because of the gargantuan scale of Wal-Mart has constructed its commerce on saving the customer Our decision is to invest in Wal-Mart. The choice for Wal-Mart is on the basis that their functional-level strategy is really robust, nevertheless of the fact that they do not treat their employees well. The fact remains that they are financially stronger, have a better business-level strategy, and have a corporate-level strategy than Costco. Costco v. Wal-Mart: What must we learn about them?
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
Wal-Mart employs three basic beliefs which are respect for the individual, service to their customers, and striving for excellence (Hayden, 2002, p. 2). Wal-Mart’s corporate management strategy involves selling high quality and brand name products at the lowest price possible. In order to keep low prices, the company reduces costs by the use of advanced electronic technology and warehousing. It also negotiates deals for merchandise directly from manufacturers, eliminating the middleman. Wal-Mart’s new slogan is “save money, live better” (Wal-Mart Stores, n.d., p. 1). According to the company’s website, “saving money is a means of helping our customers live better. By offering the best possible prices on the products our customers need, we can help them afford a little something extra” (Wal-Mart Stores, n.d., p. 1). For each strategy that Wal-Mart promotes in flyer ads or television commercials, they measure the return on investment from these promotional strategies. If a strategy does not have a return on investment of a certain percentage in sales, those strategies are revamped or discarded. Backward expansion strategy is another key to Wal-Mart’s success. Unlike other retail stores, Wal-Mart opens their stores in a small town first before entering into metropolitan areas. “Wal-Mart spreads out like molasses from its Arkansas base by constructing new stores strategically located near distribution hubs and smaller towns, rather than leapfrogging across the nation like the other retailers” (Harper, 2004, p. 2).
Wal-Mart was founded in 1962 by Sam Walton (1). Wal-Mart grew to two hundred seventy-six stores in their first decade of service (1). Wal-Mart’s plan was to sale products at low cost while delivering on outstanding service and customer relations (1). Wal-Mart also felt that they could target more customers if they offered convenient hours of business (1). Wal-Mart currently operates in fifteen countries around the world, supplying different needs, preferences and services depending on local retail habits (2). By servicing each geographic location in its own way and supplying the needs of a particular area they seem to do very well (2). Wal-Mart adjusts and adapts to local culture and serves the community in a way that the customers are accustomed to being served (2). Wal-Mart usually enters a foreign country by purchasing an existing chain and simply changing the name to Wal-Mart while retaining key personnel such as management who already know the culture (2). Wal-Mart spends lots of time researching and planning before entering a new market. It sometimes takes years to open in a new market overseas (Class notes).
Wal-mart case analysis Competitive advantage and competitive dynamics. What might explain Wal-Mart ’s performance over time in discount retailing? Is it the industry or company specific factors? Post Second World War, the style of retailing in the US evolved into discount merchandizing.
Wal-Mart Stores Inc. is in the discount, variety stores industry. It was founded in 1945, Bentonville in Arkansas which is also the headquarters of Wal-Mart. Wal-Mart operates locally as well as worldwide. It operated 1209 discount stores, 1980 super centers, and 567 Sam’s Club by January 31, 2006. It has also extended its operations to many international countries. It runs its retail stores in two forms: Sam’s Club and Wal-Mart Stores. The Sam’s Club sells assorted product lines such as hardwares, electronics, jewelry, and to mention a few. The Wal-Mart stores also offer similar products in addition to the following: health and beauty products, apparel for women, men and children, household appliances etc (www.yahoo.finance.com). The Vision Statement, Mission Statement, Values and Code of Conduct, Corporate Governance: Directors, Executive Management, Committees and Stakeholder will be the key elements that will discussed in this report as it relates to Wal-Mart. In addition to that, the major trends in the general/macro environment and industry will be analyzed.
When Sam Walton died in 1992, some industry insiders doubted that the Wal – Mart chain that he had founded some 30 years earlier would retain its prominence as a discount retailer. Lost for good they feared, would be the “magic spark” that Walton used to light fires under the chain’s 1.3 million associates. And, as Wal – Mart stock failed to enjoy the same bull – market growth as many other companies in the mid – 1990s, the pundits appeared to be correct. Today, however, with stores in all 50 U.S. states and nine other countries, Wal – mart has rebounded, leading the pack of discount stores with record earnings. In fact, with $218 billion in annual sales and 100 million customers per week, Wal – Mart is the world’s largest retailer and was named “Retailer of the Century” by Discount Store News.
Another symptom of Wal-Mart’s mid-life crisis is a healthy growth amongst its competitor’s, similar to a person’s change in social relationships (Doheny, 2009, p. 2). Wal-Mart is experiencing declining demand as compared to its competitors (Kotler & Keller, 1 - Defining Marketing for the 21st Century, 2014, p. 7). Declining demand, consumers choosing to buy the...
The first Wal-Mart store opened in July of 1962 in Rogers, Arkansas by Sam Walton who believed that the future of retailing was in discounting and to avoid competing with established giants like Sears and Woolworth, Wal-Mart’s stated out of the large cities in the beginning and this strategy help avoid competition, while in rural areas Wal-Mart began growing their customer base by offering ways to save money and shorter travel distance, Sam Walton felt the best way to make customers happy was to provide the low prices every day (Farhoomand, 2006). The company needed to continually find ways to control the operating costs so the savings would then be passed on to Wal-Mart customers in the form of lower prices than the competitors. Walton was opposed to having any kind of employee unions for its company and saw them as a disruption and an inconvenience (Farhoomand, 2006). The continued search for lower prices made him aware of business related travel cost, Wal-Mart executives stayed in low cost hotels when they traveled and the cost related to the services provided by suppliers, Wal-Mart helped suppliers improve operations and efficiency to produce lower cost. Walton wanted the suppliers to correct any nonessential or insufficiencies existing in their business structures as a way of gaining lower prices and higher value products for its Wal-Mart stores. To further push savings Wal-Mart forced cost down by eliminating the middleman and buying directly from the manufacturers. This cost saving also applied to executive salaries Walton felt providing employees with stock options, training opportunities, and allow employees to grow and develop would be a better way to engage and involve them in his vision (Farhoomand, 2006).
This case explains that just as people experience mid-life crises so does corporate America. Specifically, in my analysis, I will be examining Wal-Mart’s current issues. For three decades, Wal-Mart displayed phenomenal growth and great ability to stay ahead of the competition. However, just like most people experience a mid-life crisis in their mid-forties, Wal-Mart has taken a similar road. The mid-life crisis is a normal occurrence in the human and corporate maturation process (Bajpai, (2011). Symptoms associated with a mid-life crisis include, but aren’t limited to, lack of focus, drop in energy, and complacency with the societal norm instead of staying true to oneself (Meyer, 2012).Wal-Mart has displayed signs of each of these symptoms. The wear and tear of becoming the industry leader has led to the company’s fatigue, thus resulting in mismanagement and flux within its supply chain. As Wal-Mart continued to grow it increased inventories, despite the fact that the products weren’t a necessity and in doing so, lost effective inventory distribution. These decisions have led to increased stress and barriers which do not easily allow Wal-Mart to maintain its ...
Wal-Marts emphasis is on its image of everyday low prices and high quality goods when marketing. Wal-Mart uses many different channels when marketing itself. It uses television, radio, monthly circulars, weekly newspapers and many more channels. Each one of these channels can be used in an unique way to emphasize Wal-Mart’s position of selling quality products at low prices. Radio usually grabs the audience’s attention by promoting products which are experiencing high demand. Both of these channels are made stronger by the use of newspapers adverts and monthly circulars. In these marketing channels deeply discounted items are highlighted to the potential competitors and these items help lure the customers into the stores. The idea of having “quality for less” is a good marketing plan because it gets people into the store. It also offers a competitive advantage over the competitors because they can not financially match Wal-Mart prices. This is due to Wal-Mart having better use of financial resources, technology and physical resources.
As Wal-Mart becomes a new service provider of cellular service to the market, Wal-Mart’s Family Mobile will face many challenges and one such challenge is pricing. As according to Armstrong and Kotler, “The introductory stage is especially challenging. Companies bringing out a new product face the challenge of setting prices for the first time” (p. 280). That service is cellular service, known as Wal-Mart’s Family Mobile. Wal-Mart has partnered with T-Mobile via the use of T-Mobile towers to create a low cost cellular services that average families can afford. Though Wal-Mart services cost as low as $29.88 a month, the demand and supply of the service can be affected by macroeconomic variables just like any other product. Such variables as
One must first have to understand Walmart’s strategy in order to understand its growth and success. First, Walmart believes that lowering price of a product is a direct means of increasing a population’s standard of living, because people are able to obtain more of that product, at lower prices (Morrillo, McNally, & Block, 2015, p. 386). Walmart takes pride on always offering the general population amazing items at low costs which has added to the American way of life. In spite of its effort to offering low prices on products, its system is still met with negative feedback by media and people who assert that it has an adverse effect toward our nation. Although Walmart disagrees it is still content with its purpose to continue to cut cost and still improve efficiency. Walmart continues to advance in the retail industry and altered the word of distribution. Another class of retailer, called "dollar stores" developed that beat Wal-Mart's cost on nearly everything at the genuine cost customer. These 99 cent retail shops, for example, Family Dollar Stores, turned out to be truly prominent, and the quickest developing conventional retail idea in America. All the while, enormous box retailers like Best Buy extended their stock and impression into more areas, drastically expanding the opposition against neighborhood Wal-Mart's