According to the Case 1-3: Wal-mart Stores, Inc., the retail industry is one of the most competitive segments in an economy, players in the industry need to have effective management programs to maintain their competitiveness.
Wal-mart is an international retail giant operating in more than 3,200 outlets in Europe, the United States, Asian countries and North American countries. David and David (1) state that to operate competitively across those countries with different cultures and consumer need, the company has effective global strategies.
Wal-mart stores have been in operation since 1962, with the first branch at Rogers, Ark, in United State of America. In a span of ten years, the company had diversified to major cities in United States and had 11 branches. According to Fortune 500, 2002 to 2010, the company is the leading retail outlet in the world.
It specializes in different merchandise from electronic to toys. The profits made by the company rose from $219.81 billion in 2002 to $405 billion in 2010 despite the world’s economic situation. The number of employees in the same period rose from 1.29 to 2.1 million. The company has over 8,747 retail units situated in 15 countries and operating under 55 different banners. The quality of managerial decisions has led to the company’s success. It adopts strategic management systems in all its operations.
Wal-mart understands that not all countries can be effectively tapped with a similar organizational structure; with this in mind, the company has some unique systems of structure that are relevant to the kind of market that the company is operating.
The company’s structure established three main systems, Wal-Mart Stores, Sam’s Club and International Store; the difference of the stores is on the approach they take to sell the company’s products. Under the structure of Wal-mart Stores, the company is further dividend into Discount Stores, Supercenters and Neighborhood Markets, the above structures offers different shopping atmosphere that assists the company divide the market on income lines; this is the main structure operated in the United States.
With the thousands of products that the company stores; it ensures that every store has the right quantity and quality of products using a computerized supply chain management system.
According to Frankel (2), one of the best ways to remain competitive in modern business environment is to adopt strategic managed policies. The company have 40 Regional Distribution Centers, which each covers an area of over one million square feet’s, inside the distribution centers, there are five conveyer belts that move over 9,000 merchandise, they operate 24 hours, seven days a weeks
To stand out amidst high competition, Wal-mart has an effective marketing strategy; the strategy is responsive to the needs of certain market thus the system may seem different in different countries. To come up with the specific marketing approach to use, the company undertakes a massive marketing and market research to establish the best persuasion approach they will use in the particular market.
In particular the company adopts 4p marketing Mix approach were it ensures that the 4p’s (Pricing, products, promotion and place) have been addressed accordingly; the prices set for the same products vary with the target market and the place that the company sells.
Wal-marts management appreciates that it can only offer value and quality services to its customers when it maintains satisfied, quality and quantity human capital. To meet this noble agenda, the human resources department ensures that the needs of employees regardless of their location have been addressed effectively.
The marketing and trading approach adopted by Wal-mart has made the company be able to sell its products at relatively lower prices than the price sold by its competitors; it low cost strategy has earned the company its legendary status.
To maintain the prices at a low rate the company has three main approaches, they are firm-level economies, efficient distribution systems, and lower labor costs; the large number of outlets makes the company be able to enjoy economies of scale in different manners like distribution costs and transport. It is also able to buy products at bulk resulting to a reduced cost per unit. With large sales, the company is able to sell products are lower prices and recover the lost profit from the increased number of sales.
To ensure that the operations within outlets in different places are managed effectively, the company has an effective information and technology system. The system is crucial for customer service, internal process management, and communication among branches. Information platforms of the company include intranet, internet, and e-business tools.
References
- David FR, David FR. Strategic management concepts and cases: a competitive advantage approach. 15th ed. Harlow, England: Pearson; 2015. 682 p.
- Frankel RM. The definitive guide to supply chain best practices: comprehensive lessons and cases in effective SCM. Upper Saddle River, NJ: Pearson; 2014. 208 p.