Wal-Mart Shareholders' Report

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Wal-Mart shareholders’ report
Done by Anastasia Boyko,
January 13, 2013

Wal-Mart is the world’s biggest consumer goods retail seller that is doing better than the three of its closest competitors brought together. It mainly operates in the US, but is also represented in 27 foreign countries. The key to its success lies in a set of competitive advantages that are low prices achieved due to the great bargaining power of the company when dealing with suppliers and a very efficient logistics system that also helps to keep the costs on a low level.

Unlike the competitors Wal-Mart has got an absolutely clear vision and a very basic mission – to “make the customers’ life cheaper” by giving them the lowest possible prices and at the same time provide them with a broad range of goods so that they could buy everything in one shop.

Therefore Wal-Mart creates a very important value for the customers – it gives them the opportunity to spend less money and time on shopping. It seems as a truly great policy that serves for the better of the vast majority of people.

The generic strategy Wal-Mart is using is the broad cost-leadership strategy and employing several drivers to achieve cost advantage over competitors. With its huge supercenters it is benefiting from the economies of scale by purchasing and reselling enormous amounts of goods. Besides, it is using location advantages for sourcing inputs by placing its logistics centers in the best possible locations and dealing with the suppliers from the countries with cheap labor and costs of goods. Finally, Wal-Mart is using its purchasing power to push suppliers to the lowest possible contract prices, because it purchases a lot and often becomes the biggest client of the supplier companies.

It is a very successful company with net sales of $443 billion and outstanding 30% market share that positions itself as the best low-cost retail store. The figures of profitability also prove that Wal-Mart business model is...
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