Walmart Case Strategic Management

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June 1, 2011
This memo is in response to the requested analysis of the overall position of Walmart. The memo will first discuss the current position of Walmart. This will be followed by two issues, woman working in walmart not getting paid as much as men as well as not having very many upper management positions, and the perception that Walmart ruins small communities way of life once they open up their doors. The memo will then give a reccommendation for how to fix and improve the company to allow it to prosper in the future. Overview

Walmart is successful by following a cost leadership strategy. Their sales revenues were $375 billion in 2008 but their profit was only $12.7 billion. This shows that the markup on all of their items is very low. Because of the large volume of sales Walmart depends on to be successful, they have mastered the technique of “just in time inventory.” This means that whenever a product in a Walmart store drops below a certain level an order is automatically placed to one of its giant distribution centers which then delivers the inventory within a few days. Walmart is able to charge such a low price on all of its inventory because of its negotiation powers over its suppliers. Walmart makes all of their suppliers reduce the selling price in order for their product to be sold at Walmart stores. Most companies do not have the power to dictate to their suppliers the price that the products are sold for. Walmart has this ability and control over the suppliers because of their mass volume of sales allow suppliers to still make profit. This relationship between Walmart and the suppliers allows for the “everyday low prices” strategy. In recent years Walmart has been expanding outside of the United States through acquisition and new store construction. Their entry into European, South American and Asian markets has been possible by acquiring existing general merchandise...
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