Wal-Mart Case Review

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BUSI 514
Operation Management
Professor Kipley
Alfie(ZHEN) Zhang

Wal-Mart Case study

Background
Sustainability standards for supplier
Wal-Mart disclosed its sustainability standard to all Wal-Mart suppliers in the world in 2008. It requires Wal-Mart Supplier take more environmental and social responsibilities. To do so, in order to maintain its competitive quality image of Wal-Mart products. With growth slows down in U.S, Wal-Mart focus on expansion in the world, especially in China. Executive Summery

Wal-Mart Company Strategy
“Save people money so they live better”
In 2008, Wal-Mart has new senior management team change. The new team is facing the challenge of expansion in China in a sustainable way. This case study provides challenges, opportunities analysis and solution to Wal-Mart’s current situation. Wal-Mart is facing sustainable Challenges in main three areas: low price versus high sustainable cost, un-sustainable local suppliers, and distributions. In Chinese culture, they concern more about the future so they tent to spend less and save more. It brings out the first challenge of Wal-Mart that How to keep competitive price in China. Second, Wal-Mart Chinese suppliers are mostly local small and median business. It increase the difficulty of meeting the needs of consumer and low quality control. Most importantly, the owners are now education with sustainable development thinking. It is hard for Wal-Mart to push sustainable strategy to its product on the shelf. The last difficulty is Chinese un-sustainable logistics. Due to the lack of the domestic infrastructure, the cost of inland logistic is too high for Wal-Mart. Wal-Mart has to outsource its truck fleets to Chinese logistic companies. It is difficult for Wal-Mart to push better fuel usage during the distribution, keep the delivery to super store on time, and decrease the distribution cost. On the other hand, China is full of possibility to Wal-Mart. First, China is the second largest economic power in the world. The Chinese economy is facing, a reform that it changes from depending on foreign direct investment to domestically consumption. In 2025, the domestic consumption will be 50% of its GDP in 2025. It opens up huge market for Wal-Mart. Second, the Chinese middle class is increasing. They are more educated and willing to pay more for higher quality and sustainable products. Because the purchasing power and geographic spread out, Chinese middle class could be the next profit generator for Wal-Mart. At last, this case study provides solutions to Wal-Mart China. The First solution is to improve Chinese government and Wal-Mart cooperation in restriction and legalization process. Wal-Mart should work with government to push more environment regulations to reduce the usage of plastic bags. This move could turn Wal-Mart’s high sustainable cost into its competitive advantage and build up Wal-Mart’s positive image in Chinese environmental protection. Second, Wal-Mart should consolidate Chinese suppliers into larger size. It copies the successful experience in U.S that larger supplier could reduce Wal-Mart management cost and logistic cost, provide better product quality, and have the capability to develop sustainable production. Third, Wal-Mart should develop its own internal infrastructure that it should digitalize the management process and invest in employee educations.

Sustainability challenges in Chinese market
Low price consumer preference VS sustainability high cost
Wal-Mart established its low price reputation throughout the world, but it is facing higher challenges of even lower price in Chinese market. The Chinese consumers are like to compare the price in local grocery stores. They will visit grocery stores constantly as a leisure activity to find out the lowest price. Compared to other local competitors, Wal-Mart, as an American company with all those higher standards and higher quality company strategies, are not price competitive at...
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