Analysis of Wal-Mart’s Competitive Advantages in International Expansion and Problems

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Analysis of Wal-Mart’s Competitive Advantages in International Expansion and Problems

1. Introduction

1. General information of Wal-Mart
The first opening of Wal-Mart Stores was founded by American retail legend Sam Walton in Rogers, Arkansas in 1962. On Oct. 31st, 1969, the stores were incorporated as world famous Wal-Mart Stores, Inc. Almost forty-four years later, Wal-Mart served more than 176 million customers per week, and became No. 1 retailer in the United States. And, it is now the world’s largest private employer and retailer with over 1.9 million associates worldwide and more than 6,800 stores in 14 countries, including Canada, China, Germany and Britain, etc. In the year of 2001, 2002 and 2003, Wal-Mart topped Fortune's Global 500 and ranked top third among the “Most Admired Companies in America". (www.wal-martchina.com/walmart/history)

Speaking of business strategy, Wal-Mart firmly believed in local procurement and launched a “Made in America” campaign in 1985 that committed Wal-Mart to buying American – made products if suppliers could get within 5 percent of the price of a foreign competitor. (Frank,T.A.2006:A Brief History of Wal-Mart. Washington Monthly) Wal-Mart also promises the lowest prices of their products and announces its nationwide slogan “Every Day Low Prices” in every single branch of Wal-Mart. With the rapid development of the company, Wal-Mart has branched into three kinds of business patterns: super centers, Sam's clubs and neighborhood markets. These threes kinds of stores are very popular in the United States and throughout the world. Such operating methods not only facilitate people’s consumption process and optimize their precious time, but also largely save the company’s operating cost.

Each kind of the pattern-- super centers, Sam's clubs and neighborhood markets-- has its own strategy, target customers and competitive edge. Super centers emphasize on providing the public “one-stop shopping”. Home-made bread, fresh vegetables and fruits, frozen sea food, clothing and cosmetics, gifts and stationery are all available to the customers. Sam's clubs are warehouse clubs with at least 47 million US members. They offer exceptional values on merchandise and services for business owners and consumers. The major product scale includes hi-technology gadgets, high-end living stuff, fresh food and self-brand, member-oriented products. As online shopping becomes popular in the US society, online merchandise and club information are available at samsclub.com as well. Neighborhood markets are newly developed by the Wal-Mart Stores. They offer a convenient shopping experience for customers who need groceries, pharmaceuticals, pet supplies and general merchandise. (Wal-Mart Facts 2006: Tarentum Wal-Mart Super center and SAM’S CLUB Celebrate Grand Openings Wal-Mart website)

1.2. The Prerequisite of Wal-Mart’s Success in the U.S. Retailing Market When it comes to the huge success in American retailing market, Wal-Mart actually owes its great success to these three elements, namely, logistics, advanced technology and careful management.

(1) Logistics System
Wal-Mart has known as the world’s most faultless logistics system, for which Wal-Mart has been considered the pioneer of the logistics revolution. It is the logistics system that largely saves its operating cost, speeds up the inventory replenishment or turnover, and strongly backs up the promise of “Every Day Low Prices”. Wal-Mart’s logistics system is creatively called cross-docking transportation. There are two parts in this system to collaborate with each other and therefore give Wal-Mart its competitive edge. • The Distribution Center.

The distribution centers are the operation heart of Wal-Mart’s logistics system. Wal-Mart’s suppliers could respond quickly to the sales data and the orders gathered from the distribution centers. As Wal-Mart expands its business, it more and more relies on distribution centers for goods...
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