Wal-Mart

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HANOI UNIVERSITY
FACULTY OF MANAGEMENT AND TOURISM

STRATEGIC MANAGEMENT
GROUP REPORT: WAL-MART LOW-COST STRATEGY ANALYSIS

Lecturer: Mr. Le Dang Hoang
Tutor:Ms. Do Thi Ha Lan
Tut 1TR10
Group member: Tran Viet Anh 1006090006
Nguyen Tra My 1006090034
Dao Minh Tam 1006090045
Cao Thi Thuong 0907010220

Table of content
Introduction3
I.The implementation of strategy in the company4
II. Archievement of Wal-Mart thanks to low-cost strategy8
III. Competition of Wal-Mart with rivals9
a. Rivals reactions to Wal-Mart strategy9
b. Wal-Mart’s respond to rivals’ competitive moves and market changes12
References 14

Introduction
It was the late 40s that people of the America were full of hope: The World War II ended. Jobs were plentiful, wages were higher, and because of the lack of consumer goods during the war, Americans were eager to spend. The economy shifted from a military emphasis to adapt to the rise of American Consumerism. Many industries successfully converted to produce goods for everyday life such as vehicles, household appliances and baby care product. GDP of the USA increased from $200,000 million in 1940 to $300,000 million in 1950 and $500,000 million in 1960 (George Clark, 2006). As many people who wanted to change their life after 4 years of war, on May 9, 1950, Sam Walton purchased a store from Luther E. Harrison with a one-day remodeling sale. The store renamed “Walton's 5 & 10” and located in Bentonville, Arkansas to take advantages of the different hunting season of four states: Oklahoma, Kansas, Missouri, and Arkansas. On July 2, 1962, Wal-Mart Discount City store, the first Wal-Mart store was opened; followed immediately by continuous boom of other stores and phenomenal successes that changed the whole world. In 2012, with the unshakable foundation “The Lowest Price Anytime, Anywhere”, Wal-Mart celebrated 50 years of helping people save money so they can live better. Employing 2.2 million workers worldwide and serving 200 million customers each week at more than 10,000 stores in 27 countries, with 98 product departments, net sale of fiscal year is more than $443 billion and operating income of $15 billion (bigger than 170 countries including the UAE and Norway) (Dina Spector, 2012), Wal-Mart now becomes the leading company which creates a revolution in retailing and stimulates the Consumerism Culture of the USA. Up to present, there has been a huge number of articles and research about Wal-Mart’s success being published with a lot of different views about its enormously influential strategies changing the whole world retailing industry. Nevertheless, our report’s purpose is to focus only on thoroughly analyzing Wal-Mart’s low-price strategy – the most dominant one - to provide a deeper look into this feature, from that answering the question: “How has Wal-Mart used low-cost strategy to win over other competitors that beautifully?”

I. The implementation of the strategy in the company
Wal-Mart, one of the foremost companies, has succeeded in implementing Low Cost provider strategy which helps the company keep one-third of the United States’ population visit a Wal-Mart store every week (Sailee Kale, 2012). Before analyzing-in-detail the strategy, an overview should be overlooked. Low-cost provider strategy is considered as a powerful tool competitive approach in the markets where there are a lot price-sensitive customers or in other words a high number of products with high elasticity. A company which wants to compete its rivals in these markets needs to apply some price related strategies and low cost provider is prone to be the strongest tool among all; however, low cost provider does not mean lowering cost as much as possible but in the ways no one can imitate. In this paper, the path that Wal-Mart has implemented the unique low cost provider strategy will be stayed focus. The very first step in dissecting Wal-Mart’s strategy is looking at its...
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