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The top management of Wal-Mart at the beginning of 2009 was tasked to provide solution to the question of whether the same strategy that it has been applying in the past can be used in maintenance of the company’s remarkable development and performance in the next several years (Cady et al 2006). In the past decade, Wal-Mart has obtained amazing and continuing development in net income and net sales. It has managed the top place in the U.S. retail industry and has become the biggest retailer worldwide. With the industry maturity, compounded with the extreme competitors from rivalry organizations, keeping the current stage of top rated becomes very challenging (Cady et al 2006).
Current issues affecting business
The Five Forces analysis of Porter’s has exposed that the competition among competitors is the motivation of the industry, in which the price is the most important aspect. The value chain resource and analysis centered view analysis demonstrated that Wal-Mart has been very efficient in applying the strategy as the low-cost chief by inculcating cost performance in its corporate life, style of management , and functions. Furthermore, It has been the first one in applying amazing technology to streamline its chain of supply, and to understand and timely respond to client need (Cady et al 2006). Wal-Mart has come up with many highly effective aspects that help guard its important place and open its door to many essential opportunities for improving the company. However, it also faces risks from expanding too big and in many places, which makes it vulnerable to lose of control, cooperation being weakened among regions and stores, and competition indifferent direction (Cady et al 2006).
Wal-Mart should be cautious in its development strategy, especially in the development of its global presence. Although its management methods, financial strength and efficiency of its functions allow it to get into many international markets, it should be choosy in selecting the destinations. Wal-Mart can concentrate on budding markets where customers are sensitive to price such as India and china. In Latin America, it should concentrate on Mexico and a few key areas that it previously achieved some success. In European countries, it can concentrate on areas that lack the use of huge retailers such as Carrefoure and Tesco (Cravens 2010). Although Wal-Mart’s common tendency of acquiring existing little regional stores to get into a industry has assisted Wal-Mart decreased its industry penetration expenses and quickly adapt to regional industry specifications and culture, this wal-mart’s practice also raises the problems of diluting corporate culture and making weak the company’s capability to reinforce efficient management methods and strategy. Therefore, global development should be implemented carefully and patiently (Cravens 2010).
Role of strategic marketing
Over the past decades, Cravens (2010) observed that Wal-Mart has obtained important achievements to become the world’s biggest retailer. The company has managed maintainable growth and development in a fiercely competitive retail environment in United States. It has been constantly improving both in the extensive variety of products or solutions, and in the number of retail stores in the U.S. and globally (Cravens 2010). While this development has generated handsome income for its stakeholders and placed the company in a financial position that is strong, it has also offered important problems for sustaining development as well as, and managing a company that is becoming bigger incessantly. Top management of Wal-Mart now is trying to find solutions whether the similar strategy the company has been applying is suitable for keeping and strengthening its current rate of development and industry position, as well as for steering the company into the next several years (Cravens 2010).
Evaluation of the approaches to internal environmental analysis
Wal-Mart’s objective is revealed in its developer Sam Walton’s statement, “If we together we work, we will reduce the everyone’s cost of living…we will grant the world an opportunity to see what it is like to have a better way of life and save” (Kollat at al 2012). Its objective statement is, “Saving money for people so they can better live.” Its objective statement is very brief and extensive, but it shows the objective of the company and its developer. With the way that objective statement is written, it can be regarded as the vision statement of the company because of its extensive sense (Kollat at al 2012).
Wal-Mart’s company strategy is to be a leader of low cost, which shows precisely the objective of the existence of the company. In the last decade, its strategy has been very efficient and effective. It has been improving in income revenues and net income from 1998 to 2009 (Kollat at al 2012). Relative to its competitors (e.g. Target, Costco and Dollar Common), it has greater percentages on returns on assets and equity return. Wal-Mart’s development strategy is expansion in solutions and products, as well as in regional areas. It has been successful and efficient in Canada and Mexico, and even established their presence in other nations (Kollat at al 2012).
Below is a value chain design analysis that examines the current activities of the company and evaluates the activities effectiveness. Moreover, the discussion wherever possible, will point out the variations from the competitive organizations and how value is added by these activities.
General administration: Wal-Mart has very exclusive methods. The communication flows are immediate between each personal retailer and headquarter in Bentonville. This method is different from its competitors who need their people from regional stores to go to their respective regional offices to report activities and talk about problems. This practice which is unusual makes a near connection between headquarter and regional stores (Mooradian et al 2012).
Human source management- Recruiting and communication methods between the company and its affiliates are depending on respect, near communication, high expectation, and clear advantages. Workers receive low pay but appreciate other advantages such as insurance options, retirement methods, and stock buy plans and profit incentives (Mooradian et al 2012).
Technology integration– Technological innovation have assisted integrate Wal-Mart’s whole supply chain so that each phase of the value chain is very efficient and effective, which allows it to provide promptly the right products at low expenses to its customers.
Procurement- Wal-Mart directly deals with producers, and purchase of goods is centralized at headquarter. It needs producers to cut their margin and fulfill its employment policies. It also has near collaboration with its main suppliers like P&G to fa.............
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