Walmart is operating in one of the most competitive markets in the world. The retail industry has become very competitive, and the only way a firm can survive is to become creative in its product offerings. The decision to introduce organic and natural foods into its stores will offer Walmart an opportunity to create an image in the market as a firm that is not only keen to listen to consumers’ needs, but also as one that is focused on avoiding negative controversy in its operations. The introduction of fuel and gas stations into many locations within the United States will offer Walmart an extra source of income. If successful, this product can give it a competitive advantage over its competitors in the market. It will also offer it opportunity to manage stiff competition that some of its market rivals such as Costco, Sears Holding poses in the market.
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To achieve success in this move, the firm must have a clear strategy that shall be used in enhancing its performance. According to Corbet and MacFadzean (2009), performance enhancement strategy focuses on introducing unique management approaches that would enable it achieve efficiency and effectiveness in its operations. Efficiency is necessary in ensuring that every activity is done within the planned time, while effectiveness helps ensure that that activity is done in the right manner. In its performance strategy, Walmart needs to focus on three main issues when handling this new product. The three issues include the productivity of the firm, quality of the products offered, and the manner in which service is delivered in these new areas of operation.
Abraham (2012) defines productivity as “A measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.” As demonstrated in this definition, productivity measures efficiency of factors of production. Organic and natural foods are increasingly becoming popular in the United States. This means that if Walmart introduces this line of products, it will receive a ready market. However, it must ensure that the productivity of its factors of production is efficient enough to help it achieve sustainability in these new products. Fuel and gas stations will introduce a new line of products to this firm. Diversification of products is always important in achieving sustainability in a firm. The management must determine the efficiency of inputs that will be invested in this new line of product. These two products must be treated independently because they need different approaches of management and marketing strategies.
When dealing with the issue of productivity of organic and natural foods, the management of Walmart must consider the cost associated with the inputs that will be used to generate the desired output. In this case, the focus will be to determine the cost of the raw materials for the products. As Abraham (2012) observes, genetically modified foods are cheaper than natural foods. This scholar further clarifies that genetically modified foods are fast replacing organic foods in most of the supermarket shelves, including that of Walmart. The management of Walmart will need to determine the total cost of producing organic food and estimate a possible price that will be able to meet these costs and assure this firm some form of profitability. In order to enhance productivity, the management should make an effort to have control supplies of the organic foods.
This is the most sensitive area in enhancing productivity of this product. It should select reliable farmers who will be supplying the organic foods on a regular basis to avoid cases where the stock for this product runs out. The firm should also be able to prevail upon the farmers to sell their products at fair costs that will enable it make profit. Simerson (2011) warns that it is dangerous for a firm to attack its existing successful products with a new product whose success is yet to be determined. This means that when Walmart is introducing the organic and natural foods into the market, it should not attack genetically modified foods directly because some customers still purchase GMOs.
In enhancing productivity in the line of fuel and natural gas, this firm should try to ensure that it selects locations that are strategic enough to attract customers. Productivity will be achieved if the management is able to identify cheaper suppliers of this product. For instance, the management should consider forming a strategic alliance with a company such as Exxon Mobil to sell its products. Exxon Mobil will deliver fuel and gas to the stations of this firm at cheaper prices. To enhance productivity of the employees who will be assigned at these stations, Walmart may consider contracting quality assurance team of Exxon Mobil to conduct an induction on them. Given that Exxon Mobil understands this industry better because of its long years of experience, it will be able to guide Walmart employees on the best practice in this field. Walmart should also consider use of modern technologies in its production process to enhance efficiency.
Consumers are currently very sensitive on the quality of products they are offered in the market. For this reason, a firm should always make an effort to ensure that quality of the products offered in the market meets the standards expected. To achieve this, the management of Walmart should develop a new quality management unit that will inspect quality of the products offered. The quality assurance team will work closely with the employees at all levels of production and service delivery. In order to enhance value chain management, this firm should employ some of the models of Total Quality Management.
Given the fact that these two line of products are new to this firm, Six Sigma Quality Management tool will be the most appropriate, especially in enhancing productivity and quality delivery at the fuel and gas stations. As May (2010) says, quality should be inspected at all the stages until the product is delivered to the customer. The process of delivering the products should also offer customer maximum quality. For instance, when selling customers organic and natural products, employees of this firm should always be kind and presentable. They should try to explain to the customers the benefits of the products, and the reason why it is superior to other products in the market.
Service delivery should be designed in a unique manner to convince customers that this firm offers higher value. According to Doole and Lowe (2011), service delivery strategy offers a firm an opportunity to appear unique when the product offered in the market is common. For example, numerous fuel and gas stations exists in areas where Walmart will set-up its stations. To attract customers, it will need to design unique service delivery methods in the market. The management may find a way of offering an extra value to the customers when they come for the fuel or gas from this firm.
This can be in the form of offering after sale services such as free delivery of the products. This will make customers believe that this firm is offering higher quality for their purchases. The costs of these extra services should be taken care of by the set price in a way that would not burden the customer. In the line of organic and natural foods, Walmart can consider hiring food nutritionists at their stores that will be able to explain to the customers some of the benefits of this type of food. These nutritionists should be able to address any concerns of the customers regarding this new product. This will help develop trust towards the product, thereby improving its value in the market.
It is clear from the above analysis that the performance enhancing strategy that Walmart should adopt must focus on improving efficiency of production and service delivery to ensure that customers get the best value at competitive prices. The management must always be focused on developing strategies that would make its factors of production efficient and very effective. Human resource employed to undertake various activities in the two new lines should be experts. Their skills should be regularly improved through in-service inductions. The management of this firm should make an effort to ensure that it embraces emerging technologies to enhance its performance.
Geographic growth strategy
Geographic strategy that a given firm choses in the market should always be based on an elaborate plan. According to Doole and Lowe (2011), a firm may decide to launch its products in one location, in a given region, in the entire country, or internationally based on its size and capacity. Walmart is one of the largest firms in the world with a global market coverage. The firm has also experienced a positive revenue generation in the recent past. This means that it has the capacity to introduce these two products in the entire country. However, different factors should be given consideration before choosing the right geographic strategy that would be most appropriate given the current market forces. The management of Walmart should determine the prevailing market forces, which are relevant to these two products.
When Walmart introduces these two new lines of products into the market, it should have a clear plan of its growth strategy. The plan should focus on how the firm will expand its operations from the initial stations to the new stations as it seeks to increase the market share. To achieve this, the management should develop strategic geographic growth strategy that would help it understand how it can expand its market coverage. This strategy will help it determine the most appropriate locations for both the organic natural foods and the stations for fuel and gases. Walmart will be forced to define different approaches for the two new lines of products it will be taking to the market. This is so because of the difference in nature of the two products. Geographic growth strategy for organic and natural foods cannot be similar to that of fuel and natural gas.
Identification of strategic geographic locations
The first stage in this geographic growth strategy would be to understand the nature of the two new products. The first product is the natural foods. Walmart is a well-established firm in the United States. It has various stores all over this country. Organic food products can easily be introduced into the existing stores, by setting aside shelves that would be used for stocking them. In identifying the geographic locations for this product, the management will only need to classify its current regions as explained in the section below. This will be a relatively easier task as compared to the process of identifying the locations for its fuel and natural gas products.
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In identifying geographic locations for the fuel and gas products, the firm would need to conduct a survey. The survey would try to find market gaps within the United States. The firm will need to find locations within the country that is not fully supplied by this product. Identifying geographic locations that have limited fuel stations, especially in highly populated regions, may be necessary. The most recommended locations will be in Dallas and Newton towns in the United States. These two locations are appropriate because some recent reports have indicated that there has been inconsistency in the supply of this product in these two regions. This will offer the firm a good ground to enter its new market. The firm will then need to define growth strategy.
Defining geographic growth strategy
The geographic growth strategy that Walmart will use for the two products will be different. When defining geographic growth strategy for the organic natural foods, Walmart will start by identifying specific states in this country that have developed laws demanding retailers to label any genetically modified foods. Retailers have had a problem in implementing this legislation because most of the foods they stock are genetically modified. If Walmart introduces this product, it will have an upper hand in gaining market share before other competitors can think of this new line. In defining geographic growth, Walmart should start with Maryland because of its strict laws on genetically modified foods. The firm will use its stores in this state to introduce the product. The product should then be spread to other locations in this country based on the laws and regulations given by individual state. This is so because some states have accepted genetically modified foods as safe for human consumption.
In defining geographic growth strategy for fuel and gas, the focus should always be based on the market gaps. A research should be conducted in the market to determine the regions that are not sufficiently supplied by this product. As mentioned above, Dallas and Newton towns would be the most appropriate locations to introduce this product. In Newton, the most appropriate location will be along Riser Creek Road. This road leads to a highly populated region. It is important to note the difference between the geographic strategies in the two products. Demographic differences should be one of the guiding principles in defining the choice and priority of the location.
According to Corbet and MacFadzean (2009), when defining geographic growth strategy, the focus should not only be focused on the demographic forces, but also on other factors such as the ease with which the firm can penetrate the market. Such issues as costs of opening these new stations should be determined in order to assess the feasibility of the project. The cost of opening new stations for the fuel and gas should be determined per region. Feasibility analysis will be based on the cost of such investment, and the possible rate of return. Although it is necessary for this firm to avoid the temptation of focusing its strategy on quick returns, the strategy should be sensible enough to make the product bear positive results to the firm. It would be important for the management to determine the number of geographic locations that each of the two products should take in order to achieve sustainability.
Achieving sustainability in geographic growth strategy
Sustainability is the most important factor that should be considered in this new project. According to Doole and Lowe (2011), any new project that a firm starts should always be sustainable in order to bear the desired fruits. In both products, it would be necessary to take a feasibility analysis to determine the sustainability of the strategy. Walmart should consider introducing organic and natural products in one of the largest stores in Maryland. This store will be used to determine how well the market will receive the product. The management will use this one location to determine popularity of the product in this region. If the response is positive and the product is received well in this market, the firm will spread the product in the entire Maryland state.
The management should then monitor the profitability of this new product in this region before moving it in other states. It is important to note that organic and natural foods are highly perishable products. As such, the firm should only test the market will a smaller quantity as a way of protecting its revenues. Introducing this product in the entire state can be disastrous if the market rejects it. The loss can be too big for this firm to sustain. Starting with one location, then spreading to the state, before introducing it to other states and finally to all its stores in the country would help this firm protect its revenues. It will also help it determine the rate at which it should be stocking this product per given outlet.
For oil and gas, this firm should choose one state such as Mississippi, and introduce this product in several locations in the entire state. Oil and gas are not perishable products. Moreover, this firm can consume them in case the market response is not positive. The focus in this case will be to create an impact by developing several locations for this product. If the response in the market is positive, the spread for this product can be done at a faster rate as compared to that of organic foods.
As shown in the discussion above, geographic strategy of this firm in introducing the two products in the market will be different. While the strategy for organic and natural foods should start from one location because of its perishability, the strategy for oil and gas will start at different locations because of the need to create an impact in the market.
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Doole, I., & Lowe, R. (2011). International marketing strategy: Contemporary readings. London: ITP.
May, G. L. (2010). Strategic planning: Fundamentals for small business. New York: Business Expert Press.
Simerson, B. K. (2011). Strategic planning: A practical guide to strategy formulation and execution. Santa Barbara: Praeger.