Business Strategy of Wal-Mart

Published October 27, 2020 | Author: PenMyPaper

Mission Statement of Wal-Mart
Wal-Mart tries to provide quality products at an EDLP or everyday low price complemented with comprehensive Customer service. The company tries to offer services and product improving everyday life of customers. The company has modified mission statement in recent years in order to preserve its significance. In accordance to new mission statement the company will provide merchandises to customers in 24x7 manners. The company emphasizes on their talented human resource pool and treat them as asset for the company. The company also donates thousands of dollars for betterment of unprivileged population of the society.

Vision Statement of Wal-Mart
Even in today’s hypercompetitive business environment Wal-Mart follows traditional vision statement established by Sam Walton (1918-1992). Sam Walton taught them to think from customer’s viewpoint and deliver merchandises complemented with lowest possible prices, superior quality, guaranteed satisfaction, friendly and knowledgeable sales service, free parking, convenient shopping hour and great shopping experience.

Operating Structure of Wal-Mart
Wal-Mart has divided their business operation into three product divisions which are: Sam's Club (USA), Wal-Mart Stores (USA) and Wal-Mart International stores. International operation of the company contributes twenty percent of their annual revenue. The company has established Sam's Club in more than thirteen countries. Each of the divisions is working freely and they set their business objective in accordance to demand of local market.

Success Criterion for Wal-Mart
From an outsider’s viewpoint retail industry seems to be hyper competitive and low margin provider. Many researchers have pointed out that earning sustainable profitability is a challenging task for retailers. Many retailers are trying to decrease value chain steps in order to achieve cost benefits while others are leveraging e-business model to decrease service delivery cost.

Cost Advantage
Operating expense for the company is 33% cheaper with respect to their competitors. Goldman Sachs has pointed out that Wal-Mart has advantage of COGS or cost of goods sold with respect to their competitors. The company follows Cost Orientation (reducing cost in every possible occasion) to achieve cost advantage. Wal-Mart sells large volume of product in minimum profit margin to earn revenue. Maintaining lower margin helps them to sell products at everyday low price (EDLP).

Wal-Mart follows sells product at everyday low price while their selling price is at least 10% lower than competitors. The company has adopted geographical pricing model to differentiate prices in accordance to demand of customers of particular location. This strategy helped them to fight against local retailers and earn sustainable competitive advantage. The company uses web 2.0 technologies to increase brand presence through social media network. Implementing vendor management software helped the company to decrease supply chain cost.

Value Chain
The company has radically changed hub and spoke distribution channel with the help of superior inventory administration and logistic service. The company maintains value chain with 0.1 million trustworthy suppliers. The company implemented private satellite communication system to increase efficiency of value chain. Radio Frequency Identification (RFID) technology helps them to identify and coordinate various elements like logistics, distribution, warehouse activity and sales of value chain. The whole process not only decreases cost for Wal-Mart also helps them to increase product quality.

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