Wal-Mart Case Study

Topics: Generally Accepted Accounting Principles, Revenue, Asset Pages: 4 (1216 words) Published: November 14, 2010
Steven Kruid
Wal-Mart Case Assignment

What impresses you about the company?
What accounts for Wal-Mart’s success over the past 25+ years? Is it a great strategy, superb strategy implementation and execution, or great leadership? What aspects of Wal-Mart do you find unimpressive?

Which of the five generic strategies is Wal-Mart employing? What are the chief elements of its strategy?
The generic strategy that Wal-Mart employs is mainly a low-cost leader. This is evident by the company’s purpose: “saving people money so they can live better”. Wal-Mart believes that having a lower price matters to their customers. They continuously seek to reduce costs throughout their company, which will in turn reduce costs for customers. The low-cost strategy is a strategy where companies either try to use a lower-cost edge to under-price competitors and attract price-sensitive buyers, or companies use their lower-cost edge to earn a higher profit margin on each unit sold. For the most part, Wal-Mart uses lower costs than competitors to attract customers who are price-sensitive.

Many elements of a general low-cost strategy are apparent in Wal-Mart. One element is achieving meaningful lower costs by capturing economies of scale. There are quite a few ways Wal-Mart is able to have economies of scale. Since they have so many stores, they also make sure to have enough warehouses that can quickly restock various amounts of stores located near the warehouse. This makes it so inventory levels are not high, which can be very costly. Having a company that is so large it allows for inexpensive distribution. Also, since the company is so large, they have a good amount of bargaining power with suppliers, since suppliers do not want to lose the business of such a giant company. This allows Wal-Mart to receive products as cheap as possible, and pass the savings onto the customer.

Another element of the low-cost strategy Wal-Mart employs is making sure their...
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