Wal-Mart has grown into one of the largest discount retail stores in the world and has proven that the type of operation that they have is successful and effective. Although they are the industry leader, in the recent years their sales growth rate has not experienced such of an increase. The decrease of the slowing growth rate from their previous double-digit growth has begun to develop problems and serious concern for the company. They are now faced with the attempt to understand the symptoms and causes of the problem and how to regain their growth strength.
Internally analyzing with the VRIO system, Wal-Mart tends to still prove their strength. One of their largest strengths is the distribution system that they use. This decreases their cost and delivery time by remarkable numbers. Their use of the EDLP (Every Day Low Prices) executes the most success in being the lowest prices compared to their competitors. New systems have also now been implemented to decrease the cost of loss of inventory, shoplifting, or simply not having an item in stock. Although the company is so large they are able to stay well organized, one way in which they do so is by keeping all of the vice presidents of the stores in the headquarters to maintain use of internal strategies.
Porter’s five force model is an effective model to help with the understanding of how the company should rebuild their successful sales growth rate. The analysis showed the Wal-Mart faces almost no threat of entry with because Wal-Mart’s economy of scale eliminates the immediate threat of new entrants into the market. With the products that Wal-Mart offers, there is a large chance for substitutes, but since the range is too large for smaller stores the only other substitutes are other large discount retailers. Threat of substitutes is not very apparent due to the fact that the number and size of Wal-Mart is much greater than any other supplier. Since it is difficult to measure name... [continues]
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