WALMART STORES: ‘EVERYDAY LOW PRICES IN CHINA
Walmart’s retailing secret recipe depends largely on its peerless supply chain that enables the stores to sell Chinese-made products to US consumers at relatively low prices. However, the company has struggled to obtain the same status in the Chinese market itself. The struggle has largely attributed to the differences in social, economic, political and technological factors available in US but not in China. The report has three main objectives. Firstly, it aims at identifying Walmart’s competitive advantages found in the US. Secondly, it assesses whether these competitive advantages founds in US can also be transferred to China and yield Walmart the same outcomes. Lastly, it proposes strategies that make use of the existing competitive advantages which ultimately increase Walmart’s share in China’s retail market. Walmart, based in Arkansas of the United States, has made its way into becoming one of the world leaders in retailing industry. Besides being the first implementer of discounting in its retail business, Walmart’s phenomenal success has primarily attributed to its ability to utilize its resources and transform them into its competitive advantages and sustain it throughout the time. There are distinct competitive advantages that enable Walmart’s success. Small town locations. By locating itself in small towns in America, Walmart could potentially tap on a niche market which was neglected by the bigger players. It was a successful strategy as its expansion led to market saturation. It also helped Walmart to grow unnoticed by its competitors while building up competitive advantages that allowed Walmart to grow bigger into the mainstream. Situating in small town enabled Walmart to grow more quickly due to lower start up requirement stemming from lower land and real estate prices. In the US, this competitive advantage is sustainable due to population and even income distribution nationwide. Prudent cost control. Frugality has embedded in Walmart’s culture since the early days. A penny saved is a penny earned. By reducing surplus cost, the company can operate to its maximum efficiency. To reduce this cost, both the associates and Walmart managers avoid unnecessary costs such as the CEO flying economic class on business trips instead of business class and sharing rooms in budget hotels. The ultimate aim to keep the product prices as low as possible. Walmart can sustain this competitive advantage if it continues to make its effort to cut all the unnecessary costs which it has proved possible. Supplier partnerships. Walmart is believed to be the toughest and shrewdest negotiator. Even so, partnering with Walmart creates a win-win outcome. It has always worked closely with its partner to improve inventory management and efficiency through the earlier adoption of technology. It also provided supports and consultancy to partnering suppliers so that they can achieve efficiency in their lines of businesses. Indeed, its strong purchasing power and collaboration has urged the suppliers to eliminate their operational inefficiency in order to drive costs down and improve products quality. This strong supplier partnership is perceived to be a sustainable competitive advantage as trust and integration have been built over time. It takes times for competitors to establish such a strong relationship. Also, apart from being mentioned, there is no exact information about how Walmart at the beginning could influence the suppliers. Distribution and logistics management. To achieve an on time delivery to satisfy customers’ demand is important not just to get sales on time, avoid excessive inventory but also gain competitive advantage over competitors. Walmart has built one of the most efficient distribution systems in the US through its distribution centre which were constructed in such a way each is located less than a day’s...
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