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Wal-Mart’s Integration Strategies: Diversification and Expansion

Apr 23, 2023 | 0 comments

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Apr 23, 2023 | Essays | 0 comments

Wal-Mart is a multinational retail company whose goals of growth, expansion, and diversification have been attained through a combination of different strategies including vertical and horizontal integration. The adoption of vertical integration has contributed to its diversification from a place where customers bought consumer goods to its involvement in the provision of different types of goods and services, and to the point of establishing its own brand called Sam’s Choice. Through this strategy, it has managed to branch out into new retail sectors. For instance, Wal-Mart is involved in the manufacturing of soft drinks, grocery sales, entrainment, pharmaceuticals, and other products as indicated by Hayden, Lee, McMahon, and Pereira (14).

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Wal-Mart is known for providing quality products at lower prices compared to its competitors thus managing to attract more customers as indicated by Hills and Jones (5). This has been greatly contributed by the company’s strategy that focuses on minimizing costs by establishing a central communication system that speeds and lower communication costs thus reduced transaction costs, their outstanding bargaining power at the supply level, and eliminating middlemen’s influence. Production of high-quality products is attributed to their use of appropriate technologies. Hence, has managed to increase its market share enhancing profitability.

Wal-Mart has demonstrated good managerial strategies since it has been able to successfully bring all its business operations under common leadership and corporation. The company has also been able to achieve competence and gain customers’ trust by bringing and retaining a competent team of employees dedicated to achieving its mission of offering quality products and outstanding customer care. Wal-Mart established a culture that takes into consideration the needs of its workforce and devised various ways to motivate them like offering them discounts as stated by Hills and Jones (5). This has enabled the company to create a positive image and gain recognition thus maintaining its superiority in the industry.

Wal-Mart’s success in maintaining its lead in the business has been contributed by its expansion in the market since it has a chain of stores that stocks even its own supplies. The company has managed to extend its customer base by putting up several stores close to the consumers since their stores are everywhere even outside town. Their major goal is to reach as many customers as possible to increase sales thus profitability. Wal-Mart established a variety of stores that meets the needs of a wide range of customers such as, Sam’s club, discount stores, supercenters, and neighborhood markets. This strategy has enabled the company to dominate the retail industry and in the United States create some level of monopoly as implied by Hayden, Lee, McMahon, and Pereira (15). However, as much as the company has diversified using horizontal integration, it may consider buying stores in the area that are not doing well to fully occupy the market and achieve greater gains as well as secure its future since the strategy minimizes the risk of failure.

Wal-Mart has proven its determination and commitment to promoting its growth and development of its enterprise since its foundation within and outside the United States. Considering their progress as well as excellent corporate strategies that have enabled them to achieve their goal of dominating the retail industry, I do believe it is capable of venturing into other sectors besides retailing that has been the center of their focus in terms of diversification. Furthermore, Wal-Mart already has the resources to venture into other sectors in terms of leadership strategies, human resources, experience in customer responsiveness, and capital. The existing customer trust, global recognition, and commendable reputation give them an advantage as well since they make it easier for the company to find a market for their new products. Their venture into e-commerce also provides a platform for them to introduce and market new products.

Wal-Mart may consider creating more brands besides Sam’s Choice soft drink that is the third most popular soft drink in the United States since one of its aims is to create a positive brand. Therefore, the company could venture into the manufacturing of products such as cooking oil or even snacks. Significantly, in case it indeed to go beyond retailing then they need to carry out research to determine business opportunities and select appropriately. Otherwise, Wal-Mart has the potential to invest further in different sectors.

Works cited

Hayden, Patrick, Lee Seung, McMahon Kate, Mike Pereira. “Wal-Mart: Staying on Top of the Fortune 500 A Case Study on Wal-Mart Stores Inc.” (0). Print.

Hills, Charles W. L, and Gareth R. Jones. Essentials of Strategic Management. 2nd ed. Boston: Houghton Mifflin Co, 2008. Print.

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