Wal-Mart Business Model

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Contents
1.Introduction4

2.Develop Wal-Mart’s Business model from suppliers supplier to customers customer.4

3.Use of communication and technology from point of sales to the entire value chain5

3.1.Self Checkout Lane5

3.2.Radio Frequency Identification (RFID)6

3.3.Cash-Back Facility8

4.Logistics8

5.Pull System10

6.FDI retail in India- would it be beneficial or detrimental in India’s economy (Business & Market perspective)-10

6.1.FDI in India10

6.2.Beneficial11

6.2.1.Increase in GDP.11

6.2.2.Increase in taxes by Govt.11

6.2.3.Control on food inflation.12

6.2.4.Productivity gains, storage innovations, Better/efficient supply chain.12

6.2.5.Low prices – more disposable income may be saved or invested.13

6.2.6.Benefit to Farmers – no middleman13

6.2.7.Increase in foreign investment - Investment will bring foreign currency.13

6.2.8.Brands will loss power with Wal-Mart will try to woo kirana stores.13

6.2.9.Job Creation14

6.2.10.Greening of Wal-Mart – Use of Recycled Material14

7.Detrimental14

7.1.Wal-Mart has always been in news for low payments, sex discrimination, restrictions on suppliers.14

7.2.Affect some small business (kirana stores) in short run14

7.3.Wal-Mart may try to dominate/monopoly15

7.4.Give tough competition to organized sector retailers like Big Bazaar.15

7.5.Will bring American culture.15

7.6.Create more pressure on farmers.15

7.7.More imports from china.15

8.Conclusion16

Introduction

Wal-Mart is a retail phenomenon with a set of characteristics that define its retail concept. The most important of these is “everyday low prices,” which are achieved by economies of scale, purchasing power over suppliers, and a highly efficient sales forecasting and replenishment system that incorporates state-of-the-art information processing and supply chain logistics systems. [pic]

Develop Wal-Mart’s Business model from supplier’s supplier to customer’s customer.

1. Wal-Mart’s Business Model

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Value proposition

Wal-Mart’s value proposition is based on offering Everyday Low Price (EDLP). This is the core of Wal-Mart’s Business Model, and the rest of the key features of Wal-Mart’s Business Model are aligned to keep the everyday low price. This proposition implies that the customers do not need to wait for sales to have the best deal possible. Besides, not only the sells convenience is associated by providing the wide range of products and services to choose from, but also with one-stop is possible to make all the shopping needed, from groceries to pharmacy. Wal-Mart’ customers save time and money.

Distribution channel

To deliver its value proposition Wal-Mart communicates with and reaches its customer segments with its distribution channels which are owned and direct, and brings higher margin. Walmart also is corresponding with its customers mainly through mass media and other ways which have a low cost, such as internet.

Customer relationships & Customer segment

Wal-Mart establishes a customer relationship is based on self-service and automated and towards co-creation of some products once it is possible. Wal-Mart tends to reach to the mass market toward mass customization. Wal-Mart’s customers can be divided into three groups: “brand aspirations”, people with low incomes who are obsessed with brand; “price-sensitive effluents” wealthier shoppers who love deals; and finally “value-price shoppers” who like low prices and cannot afford much more.

Key activities

The key activities which are needed to run Wal-Mart’s business model are: • Purchasing goods
• Their delivery
• Total cost control

Other activities would be to create products that will cover needs of a specific customer segment and to control the brand, which has been developing...
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