Case 1.2 Wal-Mart Stores, Inc.
What is Wal-Mart Strategy?
Wal-Mart's winning strategy in the U.S. was based on selling branded products at low cost.
Though Wal-Mart may have been the top customer for consumer product manufacturers, it deliberately ensured it did not become too dependent on any one supplier; no single vendor constituted more than 4 percent of its overall purchase volume.
Wal-Mart used a "saturation" strategy for store expansion. Placing a standard of able to drive a distribution center to a store within a day.
In its early years, Building large discount stores in small rural towns.
What is the basis on which Wal-Mart builds its competitive advantage?
Selling branded products at low costs brings Wal-Mart a total of 138 million customer visits worldwide.
Even by being the top customer for consumer product manufacturer, no single vendor constituted more than 4 percent of its overall purchase volume.
Saturation strategy for store expansion makes the distribution centers more efficient.
Building large stores in small rural town while competitors focused on large towns with population greater than 50,000 gives Wal-Mart gives a step ahead its competitors in terms of reaching rural town customers and development. Development wise, it is cheaper to develop in rural town, in terms of rental and/or land acquisition, as compared to developed urban centers.
How do Wal-Mart's control systems help execute the firm's strategy? On becoming the worlds largest retailer:
Each store constituted an investment center and was evaluated on its profits relative to its inventory investments.
Data from over 5,300 stores on its such as sales, expenses, and profit and loss were collected, analyzed, and transmitted electronically on a real-time basis, rapidly revealing how a particular region, district, store, department within a store, or item within a department is performing. Information enables the company to reduce the likelihood of...
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