At the beginning of 2009, Wal-Mart top management faces the question of whether the same strategy that it has been adopting in the past can be used to maintain the company’s remarkable performance and growth in the next decade.
In the last 10 years, Wal-Mart has achieved strong and constant growth in sales and net income. It has maintained the leading position in the U.S. discount retail industry and has become the largest retailer in the world. With the maturity of the industry, coupled with the intense competition from rivalry companies, maintaining the current level of high performance becomes very challenging.
The Porter’s Five Forces analysis reveals that the competition among rivals is the driving force of the industry, in which price is the most critical factor. The value chain analysis and resource based view analysis show that Wal-Mart has been very successful in implementing the strategy as the low-cost leader by inculcating cost efficiency in its corporate culture, management style, and operations. It has been the pioneer in adopting cutting edge technology to streamline its supply chain, and to understand and respond timely to customer demand. Wal-Mart has developed many strengths that help guard its leading position and open door to many opportunities for expanding the business. However, it also faces threats from growing too big and in many areas, which makes it vulnerable to losing control, weakened cooperation among stores and regions, and competition in multiple fronts.
Wal-Mart should be caution in its growth strategy, especially in the expansion of its international presence. Although its financial strength, management skills, and operation efficiency allow it to enter many overseas markets, it should be selective in choosing the destinations. Wal-Mart can focus on emerging markets where customers are price sensitive such as China and