Wal-Mart Case Study

Wal-Mart Case Study

Mission:

To provide everyday low-prices on their products as well as a customer friendly store environment with a strong emphasis on customer satisfaction.

Objectives:

To grow at double digit rates for the foreseeable future and propel Wal-Mart's revenues past $500billion by 2010.

Current Strategy

Porter's Generic Competitive Strategies

Competitive Advantage

Wal-Mart was widely seen by consumers by being the lowest priced general merchandise retailer in the market. Prices of its grocery items were 8-27% below other leading supermarkets.

Competitive Scope

Wal-Mart has a broad target

Corporate Strategy

Expansion/Retrenchment

Wal-Mart's domestic geographic strategy was the manner in which it expanded outward into new geographic areas. Wal-Mart always expanded into adjoining geographic areas, saturating each area with stores before moving into new territory.

Wal-Mart also derives cost savings through sharing activities with their suppliers. They work closely with their vendors to find mutually beneficial ways to squeeze costs out of the supply chain. Suppliers operation is scrutinized to find ways on how to reduce cost without sacrificing quality. Wal-Mart also offers to supply data that would be useful and prove to be beneficial to its suppliers.

Wal-Mart's strategy also includes creating value through related diversification with the use of poled negotiating power. Wal-Mart's huge market share gives them the advantage to negotiate with its supplier to get their bottom price yet still height enough to allow suppliers to earn profit.

Acquisition of general merchandise or supermarket chains had been a part of Wal-Mart's expansion strategy on the international market.

Industry Analysis (5 forces)

Risk of New Entry

In order to reduce the risk in entering the discount retailing industry, companies had to compete in terms of pricing, store location, merchandise mix, and store size. New companies also have to start from scratch in building its image with prospective shoppers.

Wal-Mart uses acquisition to reduce barriers to entering markets. Wal-Mart acquired general merchandise or supermarket chains to enter international ...