Eco/365 Week 5 Final Paper

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Running Head: Final Project

University of Phoenix
ECO 365
April 20, 2011

The evolution of Wal-mart from the early 1960s to the present day has set a benchmark that few can achieve. Wal-mart executives have been successful nationally as well as globally. The knowledge and expertise in economics have made Wal-mart a global giant. The research completed is the final recommendations by the members of research team C and will address questions regarding global competition and issues of the organizations ability to expand or reduce current operations. Price

Wal-Mart continually advertises their prices to be substantially lower than their competitors. The truth is, most Wal-Mart items do not have a drastic price difference. However, the difference is Wal-Marts’ ability to slash prices on many popular items every so often to maintain the ‘low price leader’ image. This has helped the retail giant maintain the number one retail spot over the past decade. This perception has also kept shoppers out of small businesses and other retail chains, giving Wal-Mart that competitive advantage to continue to slash prices after moving most of their inventory. Wal-Mart perpetuates the image of having low unbeatable prices. They flood the airwaves with advertisements of local store promotions to keep the Wal-Mart name fresh in they buyers mind. This is how Wal-Mart continues to have that competitive advantage. Retail giant Kmart failed when consumers felt like they where no longer being offered the best prices and deals. Wal-Mart must continually reach out to its vendors and suppliers so that they can cut prices whenever needed. In 2005, Wal-Mart began and won a pricing war with the most popular toys, directly hurting toy giants such as Toys-R-US. It marked 10 of its most popular toys for 10 dollars each. This is strategic pricing at its best. “M. Eric Johnson, a Dartmouth College professor who follows the toy business, said Wal-Mart is using cheaper toys to "get people into the stores, but not necessarily giving away the store." Supplies of the $10 toys are ample but scattered across store aisles, he said.” (Bustillo and Zimmerman) Wal-Mart uses these tactics to get consumers, once in the door, to purchase other items running at or about the same price as other retailers. Production

Wal-Mart continues to work with countless numbers of vendors and partners to produce and develop goods in its stores. Wal-Mart has also successfully capitalized in marketing their own brand of products known as Sam’s Choice and Great Value. These are generic versions of name brand products also sold in the store. Sam’s Choice brands are typically lower in price than the name brand version. Having its own brands allows Wal-Mart to cut prices even lower and make larger profits. Wal-Mart brands are private labels and can be found in almost every category from healthcare products, to foods and perishables, to toys.

Wal-Mart continues to expand their brand name in order to maintain the iron fist hold on the market they currently dominate. These generic brands allow Wal-Mart to cut prices and offer many goods lower than their competitors. Wal-Mart has announced expanding its generic line by approximately 80 new products, boasting that the products are an average of 40 percent lower than popular brands. The company has reported 75 percent of its shoppers look for better values on household and snack items. Wal-Mart has once again answered and delivered a way to stay competitive. (Pinsker, Beth) Composition of inputs

Major Competitors, like Kmart, are floundering in the current market. This only seems to be a boost for Wal-Mart, who is capitalizing on Kmart’s situation. Technology is an enormous element to the success of a retail company. Advancing technology helps reduce the costs of a company through easier processes and a reduced workforce. One of the biggest trends currently affecting the...
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