Wal-Mart is the second largest company in the world and a leader of selling low cost products. Wal-Mart has achieved this through its vast resources, capabilities, and cost advantage. Wal-Mart has also had some negative publicity and poor performance that are in need of addressing. Among some of the critical issues facing Wal-Mart is the sustainability of low prices across multiple cultures, negative publicity and societal outcry over low wages, and increased competition. Resources
Wal-Mart became the second largest company in the world through its competitive advantage-cost advantage. Wal-Mart provides less expensive products than other markets but it still earns larger profit margin because Wal-Mart keeps the cost of goods much lower by choosing low cost raw materials, keeping operation process efficient, and hiring low wage labors to serve customers. However, Wal-Mart the most admired company has dropped its placement in the ranking of 2006 after they were criticized for low paying wages and for reliance on part-time employees. The unsatisfied employees or part-time workers hardly provide qualified and professional customer services, leading 8 percent of consumers to stop shopping at Wal-Mart in 2007. Wal-Mart focuses too much on the cost of products to differentiate them, so the products and services are so standardize as to lack of innovation that increases customers’ interests and loyalty. Capability
Wal-Mart has had difficulty sustaining its prior position among all supermarkets. By 2007, Target occupied 83 percent of its stores opened in urban and suburban, but Wal-Mart only have 45 percent of stores opened in rural or semirural countries. So Target became more popular in the urban area than Wal-Mart. Kmart, the discount retailer choosing very similar cost advantage strategy as Wal-Mart does, the third largest retailer in the U.S, could be a huge competitor to Wal-Mart. Home Depot, Best Buy, Costco are the rest of...