Executive Summary: Wal-Mart is the leader of discount retail stores in the United States. Opening in 1962, the company created its empire by providing low-priced goods to consumers (prices average 10% - 15% lower than conventional department stores). In the 1980’s, the company diversified its store options to include warehouse and supercenter stores. After the death of leader, Sam Walton, Wal-Mart’s new management team faces many challenges. With a stagnant economy and increased competition in the mid-1990s, Wal-Mart faced a staggering double-digit decline in share price in 1993 as growth began to slow down (Table 2). In order to sustain Wal-Mart’s competitive advantage as well as penetrate more growth, the following four suggestions can be considered: (1) increase the number of Wal-Mart supercenters, (2) expand international presence, (3) upscale the product line, and (4) decrease prices.
I recommend a hybrid combination of (1) increasing the number of Wal-Mart supercenters and (2) expanding international presence.
Analysis: Answer the discussion questions in the analysis. Bring in the game theory model. Thus, in order to sustain its position in the market place, as well as continue to grow, I assessed the following four recommendations:
Recommendation 1: Increase the number of Wal-Mart supercenters
Pros: By increasing the number of Supercenters, Wal-Mart can continue to compete with other discount retailers and grocery stores. After purchasing McLane foods, Wal-Mart now has a strong distribution channel for all products, keeping their strategy of maintaining operating costs below the industry average. In addition, Wal-Mart supercenters are highly profitable with an EBIT margin of 6.2% (compared to average supermarket of 3.5%) as consumers use these stores as a “one-stop-shop” for all shopping – food…...