DAVID BANJO MGT 4199 1. Identify and evaluate the strategies that Wal-Mart has historically pursued to create and sustain a competitive advantage. Answer: Wal-Mart’s pursuit and ability to sustain a competitive advantage has allowed the company to make use of many strategies. One of the strategies that Wal-Mart has made use of is the Expansion strategy. The company realized that building a new store will allow for increase market share value. The company opened new locations in the community with 5,000 to 25,000 populations.
After their success in the rural areas, Wal-Mart moved to contiguous areas and then moved to adjoining areas. The expansion strategy made Wal-Mart the number one retail store in the United States. As Wal-Mart continue its expansion program domestically, the firm decided to go international. In 1994, Wal-Mart introduced its first overseas store in Canada. With its increase success and introduction in Canada, the firm moved to Mexico, Brazil, Great Britain, Japan e. t. c. Furthermore, Wal-Mart realized that expansion domestically and internationally will not be possible without acquiring an existing retail firm.
Therefore, this became the second strategy used by Wal-Mart by acquiring a retail store which will further or enable an expansion locally and internationally. Third, the “always low prices” strategy is believed to be the strongest strategy used by Wal-Mart. The firm developed the idea of dealing directly with the manufacturer and with the power control by Wal-Mart (Porter fire factors) will enable it to deflate and get the best deal from the manufacturer and supplier. Among these are the ideas of treating its associates good, introduction of groceries and making the store a one stop shopping mart with well arranged aisle.
This also includes a sophisticated inventory technology. All of these have allowed Wal-Mart to sustain a competitive advantage. 2. Based on your analysis of the case, what are the eight (8) most important strategic factors (strengths/ weaknesses/ Opportunity/ Threats) pertaining to Wal-Mart? Explain why you selected each of these (1) Technology – (opportunity): Technology is an opportunity to Wal-Mart with its inventory control system that was recognized as the most sophisticated in retailing.
The technology linked all the stores to the headquarters and the company’s distribution centers. It also enables the warehouse of which the goods are ordered, and direct the flow of goods to the store and proper shelves. (2) Competition: (treath) Wal-Mart faces various competitions locally and internationally. One of Wal-Mart’s competitors is Kmart and target. In 2006, Kmart has over 1,479 stores in 50 states locally and target has 1,418 stores in the 47 states and 1509 super target stores in 21 states. . Kmart and Target is Wal-Mart’s strongest competitor.
With the emergence of two company a firm like Wal-Mart faces some serious completion and probably foreclosure. Internationally, in 2000 when Wal-Mart tried to open in Germany, they had to close down due to these competitions. It affected sales even after using the low price strategy and cut down on prices by 23%, other big companies like Aldi and Idle cut down on heir prices too by 25%. (3) Customer – (opportunity): Due to the low prices provided by the firm, Wal-Mart was able to attract a lot of customer. Wal-Mart controls the longest market share in the retail industry.
Also, customers enjoy the fact that they can shop for almost everything under one roof and with the simple arrangement of aisle and smiling associates that are always ready to assist and answer any questions or concerns customers may have. Moreover, the 24 hours store operation is another reason why Wal-Mart has a lot of customers. (4) Economic – (Threat): Whenever the economy is facing a recession, Wal-Mart becomes affected. With less to spend, customers are making fewer trips to the store in order to save or economize. Good economy is an opportunity for great business, because customers will have more to spend.
If the economy is great, there will be more jobs and people will shop more. However, if the economy is bad there will be fewer jobs and people will shop less. Also, with the high price of gasoline and its effect on the economy, a firm like Wal-Mart will certainly be affected the most. (5) Legal Forces – (Threat): The firm has been faced with numerous litigation that ranging from discrimination to systematic underpayments, and also accusation of promotion. Among these litigations was the 1. 6 million lawsuit filed by the female employee from lack of promotion and discrimination.
In this case, a bill was passed in Maryland requiring all employers with more than 10,000 employees to spend at lease 8% of its payroll on healthcare for its workers. (6) Lack of foreign Culture (Weakness): Wal-Mart’s initial lack of foreign culture put the management through many challenges. In Argentina, Wal-Mart tried to introduce a U. S based retail mix and store layout to the local cultures, the attempt failed. Furthermore, when Wal-Mart tried to set up in German with lack of knowledge about the German culture, the firm discovered that the stores were either cramped, unattaractive or poor location.
The firm also realized that its urgent need to get the Germans involved in the top managerial position of the company. This approach also proved relevant and important in China where there is government restriction of foreign retail operation. (7) H. R – (Strength): Wal-Mart has done a great job in the area of human resources. The firm hire locally, provides training programs for its employees. Wal-Mart also gets its employees involve and encourage them to make use of words like: we, us, and ours. It also provides stock ownership and profit sharing with great contribution from the H.
R of the firm. Wal-Mart was named one of the best 100 firms to work for. (8) Corrupt Associate: Wal-Mart is a company that strives for perfection and having a good reputation is one of the many goals of the firm. However, the firm also deals with corrupt employees and dishonest employees are one of the weaknesses the company is faexample is the case of the vice chairman of the board who admitted to misappropriating company funds and tax evasion. 3. Given the strategic factors you identified in Question 2, do a SWOT analysis and suggest some potential Wal-Mart strategies fort he future. 25pts) STRENGTH WEAKNESS (Attack) (Maneuver) -H. R -Dishonest Employees -Customer Service Lack of Foreign Culture Efficiency Domination of the retail world * Add more international market * Add More variety * Improve on employees’ satisfaction by providing more employee benefits. | * Get into partnership where foreign culture is complex * Strengthen internal control to reveal dishonest and uncommitted employee. | -OPPORTUNITES * Technology * Customers * Variety Threat (retreat) * Economics Cultural Complexity * Government regulated economy| * Legal * Keep pushing for American made products to drive down cost * Better benefits for employees to keep Union away * Improve customer services, to give and encourage customers in high economy period| 4. Is it fair to condemn Wal-Mart as a predator destroying local business and failing to offer a living wage and benefits? (25pts) I do not think that it is fair to condemn Wal-Mart as a predator destroying local business for the following reason. Wal-Mart does a lot of good for all families by keeping prices low and providing products that people want.
Moreover, local stores that are accusing Wal-Mart of running them away and destroying their business only operate for 12hours or less a day. Wal-Mart on the other hand opens 24 hours a day. A person who works late at night can stop at Wal-Mart anytime during the night and is guaranteed a meal for the night. Moreover, I think it is awesome their there is a one stop shop for everything which is what attracts a lot of people to Wal-Mart. Wal-Mart is, also, a store that carries 99% of the items needed for the home and all other personal needs. Wal-Mart supercenter carries everything from, auto products, gasoline, household products and groceries.
Moreover, Wal-Mart is a store that has a great return policy, something that local stores will never do. For example, if a person purchases an item from Wal-Mart and changes his or her mind about the product, the person can take the item back for a refund with receipt or an exchange without receipt. This is why most customers prefer Wal-Mart to other local stores. I believe that local stores will have the same success that Wal-Mart have if they have the same policy has Wal-Mart. Furthermore, Wal-Mart is a store that has helped millions of people secure employment and has changed so many lives in the process.
Wal-Mart is one the companies that have given back to the community by providing jobs for those in the areas or community for which their stores are in. On this note I do not believe that Wal-Mart is failing to offer a living wage and benefits. If anything Wal-Mart compensates it employees by providing health benefits for them and paying them above the minimum wage requirement. I also believe that the issue of not offering a living wage is an issue that should be taken up with congress. If congress should pass a law that increases minimum wage, Wal-Mart will follow the increment.