Wal-Mart Stores, Inc.: Under Attack (2006)
Wal-Mart Current Strategies
Offering products at everyday low prices is one of Wal-Mart’s many strategies. The company value chain helps identify activities associated with how Wal-Mart achieves their many strategies. First, Wal-Mart’s supply chain management is extremely cost effective. For example, Wal-Mart has been known to imitate competition’s successful merchandising concepts. Another cost-effective method in Wal-Mart’s supply chain management is their ability to track the movement of products through the entire value chain. Whether the product is in shipment, in distribution center inventory, in-store inventory or on the shelf, or at the cash register, Wal-Mart can track it in real time. Their capability in streamlining supplies among stores and suppliers has helped them maintain appropriate inventory and track what sells and what doesn’t. Operations and distribution strategies have also helped Wal-Mart achieve low prices. Wal-Mart’s strategy has been to plot stores outside of large cities and within 200 miles of existing stores. Clustering stores together in small areas, Wal-Mart relies on word-of-mouth advertising to win over consumers in larger cities. Because stores are close together, distribution costs are below average. Furthermore, Wal-Mart seeks to meet different customers’ needs with four distinct retail options; these include discount stores, supercenters, Sam’s Clubs, and neighborhood markets. Each store concept has a specific range of store size, total employment, and estimated sales. One of Wal-Mart’s foremost strategies is to provide superior service to customers. Every store has a “greeter” near the entrance to welcome customers, offer them a shopping cart, and direct them toward where their items are located. Rule number eight in Sam Walton’s 10 Rules for Building a Business is to “Exceed our customers’ expectations. If you do, they’ll come back over and over.”
Wal-mart Stores Inc. is known to most as the low price leader but Wal-mart also has a controversial image. Being a multibillion dollar business does not excuse one from problems. Over the years Wal-Mart has been one of the most scrutinized businesses in America. Wal-Mart has had to deal with employee disputes over health benefits, wages, hours, and labor. They have faced opposition from the communities, banks, elected leaders, and unions in many of the small towns they have expanded to. Many argue that Wal-Mart stores can have a negative effect on the community, because Wal-Mart has driven out other local competition by driving the prices down. Some have even gone to great lengths to stop Wal-mart stores from entering their cities. Wal-Mart’s goal is to treat their customers like family while providing them with quality goods at lower prices but Wal-Mart’s image is deflating. Why? What can be done? The challenge facing Wal-Mart, especially in this trying time of economic hardship, is to boost its perceived value to the customer by improving the quality of their goods while keeping themselves differentiated from their competitors. There are several options that Wal-Mart can utilize in order to change their image. There are three significantly different options to follow that Wal-Mart should analyze and take action. One option is Wal-mart needs to target the higher margin, discretionary sales. Different products need to be the center of the marketing efforts, for example more fashionable merchandise. To entice the style conscious advertising should also be shifted to towards the higher margin sales. The second option is unionization. By unionizing a company such as Wal-Mart, the costs would be immense in initial start up while they may balance out future legal costs. If Wal-Mart allowed for unionization, their perceived image will change dramatically. A...
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