Walmart S Cost Leadership

Topics: Customer, Barriers to entry, Target market Pages: 14 (503 words) Published: December 2, 2014
walmart's cost leadership/Broad market
strategy

WALMART'S STRATEGY
Basis for Customer Value
lowest cost
Broad Market

Target
Market

Who:
Determining the customers to serve
1.Wal- Mart ensures that it positions itself strategically in the market by offering products that meet the needs of
all the population segments.
2.Wal- Mart’s target marketing has been based on the fact
that different age groups’ demands are catered for
sufficiently

What:
Determining which customer needs to satisfy

•before 2006: always low price
•after 2006: save money ,live better

How: Determining core competencies
necessary to satisfy customer needs
Core competencies
1.Low Cost Operations
2.Culture:
Wal-Mart’s employees are hardworking, efficient, and
process oriented.
3.Distribution
Wal-Mart operates an unrivaled global network of 146
distribution centers . Because of this, the trickle-down
effect happens. Trucks do not have to travel long
distances to make deliveries which helps to reduce time
for delivering

5 competitives forces
on walmart

Rivalry with existing competitors
1.Having the low-cost position is valuable to deal with
rival ,rivals hesitate to compete on the basis of price
(entry barriers)
2.Case of Costco and Dollar Amazon (cost advantage)
Walmart: cost advantage
entry barriers

Bargaining power of buyers(customers)
powerful customers can force a cost leader to reduce its
prices ,but not below the level at which the codt leader's
next-most-efficient industry competitor can earn average
returns P103
ananlysis:
As a number of firms is increased,abundance of groceries
firm in this industry,and that lead to the result of the
buyer's power is more and more powerful.but in this
industry,buyer always have low bargaining powers, so it
is more important to bring more values to attract
them,because they have many options.

Bargaining power of suppliers
1.cost leader may be able to force its suppliers to hold
down their price but it can not gain the best good price
relative to it's competitors.
2.outsourcing: need time and effort to good relationship
and trust
ananlysis:
suppliers have a high bargaining power in walmart 's

Potential Entrants
Cost leaders serve a significant entry barrier to potentil
competitors
analysis: Walmart now face a low threaten of potential
entrants .even some enterprises enter this industry ,they
must be willing to accept no-better-tha average returns
until they gain the experience required to approch the
cost leader's effivciency

Products substitutes
Compare to other rivals,the cost-leader also holds an
atrractive position in terms of subsitutes.
analysis:compare to other competitors, walmart is more
flexibility

Competitive risk of the cost leadership
strategy
The cost leadership is not risk free
1.good and service become obsolete
2.more force on cost reducing may occur the expense of
trying to understand the customer's perceptions of
"competitve levels of differentiation"
3.imitation
ananlysis:Walmart consists of three retail formats:discount
stores,supercenters,Walmart market,and has also
opened thr other 3 types for particular population or
place:Supermercado de Walmart,Marketside and
Walmart Express to offer different good and service to
avoid to be obsolete,and as a cost leader,when imitaton
happens,it can increase the value of goods and service
to customers.

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