Strengths
Everyday low prices or EDLP is Walmart’s competitive advantage over its competitors. This assertion is true, especially for competitors that are located in the United States of America. The EDLP strategy was developed by company founder Sam Walton. It was Walton’s idea to reduce operating costs and lower prices that has guided Walmart employees through the years. EDLP was made possible through the use of innovative schemes, such as, cross-docking and the application of cutting-edge technology. Cross-docking is a system that enables the efficient management of inventory. This capability was due in part to the presence of at least 2,000 trucks that Walmart employees utilize to efficiently transport goods from a large distribution center.
The company was able to streamline the supply chain management of the enterprise through the innovative use of technology in delivering goods, and in the establishment of an effective communication networks within the organization. EDLP was also made possible by the close coordinated collaboration between Walmart and its suppliers.
Weakness
The desire to sustain the EDLP strategy took its toll on the company. In the long run, Walmart was unable to offer high-quality products, because these items are more expensive than the average brand. Most Walmart stores are located in small markets, and this has prevented the company from expanding into high-end retail markets. Walmart’s competitors rely on a business model that provided quality service to high-end customers. The inability to penetrate new markets to provide quality service to high-end clients created roadblocks for further expansion. As a result, current Walmart executive realized it is difficult to sustain high growth rates. The inability to sustain growth rates created unnecessary pressure for business leaders to generate new revenue streams. Shareholders are going to expect better performance from Walmart. It has be pointed out that the perceived vulnerability of Walmart may encourage increased attempts from competitors to take a bigger slice of the market.
Opportunities
In the context of the American market, analysts pointed out that Walmart’s struggles are rooted in the reality of maturing markets. In other words, the company has experienced saturation. As a result, there are only a few viable areas wherein the company can establish a new Walmart store. This problem is exacerbated by the fact that certain markets resisted the entry of Walmart stores. The practical solution is to expand outside the U.S. market. There are many countries that will benefit from the EDLP concept. However, Walmart’s perceived strengths in U.S. soil has become a liability overseas. For example, the high-speed and ultra-efficient systems that enabled the company to reduce operating expenses in the United States are nonexistent in China. Walmart also struggled to adapt to non-American culture. For example, Japanese customers prefer smaller stores as compared to giant retail stores that characterized the Walmart brand.
Threats
Sam’s Club is a liability for the company. Sam’s Club is an underperforming asset. This has created a high turnover rate in top leadership positions. The change of leadership was a desperate attempt to force the creation of new strategies. The company needed fresh insights on how to beat Costco. However, the high turnover rate was very costly as it was unable to produce the desired results. A major consequence is instability within the company. The high turnover rate is the main reason why Sam’s Club was unable to a culture that will allow the company to overtake Costco.