...Executive Summary Walmart is the world’s largest retailer, it focuses on offering a wide range low cost merchandise to its customers. Analysis Competitive position of Wal*Mart As shown in exhibit 3, Walmart dominates the retailer market with highest sales numbers, almost 4 times that of Target. Sales per square foot at Walmart equaled $300 as compared to $209 of target and $147 at K-Mart. It also has the highest sales growth of 17.5% amongst its direct competitors. This strong financial position is achieved because of its pricing strategies, use of technology, focus on centralized communication and at the same time keeping its costs/expenses down. Some of the examples of its savings in terms of expenses are: • Advertising expense were 1.5% of discount store sales compared to 2.1% of direct competitors. • Operating expenses were 18.1% of discount store sales as compared to 24.6% industry average. • Cost of inbound logistics, which was part of cost of goods sold, is 3.7% as compared to 4.8% of direct customers. • Rental expense was 3% of discount store sales, as compared to average 3.3% of direct competitors. • 10% of space devoted to inventory as compared to 25% industry average. Wal*Mart Strategy Pricing Strategy. The core strategy for Wal*Mart is cost leadership. Sam Walton had a philosophy that drove everything in his business – he believed in the value of the dollar and was obsessed with keeping prices below everybody else’s. Ever since the inception of Wal*Mart...
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...Marketing Plan Final Phase MKT/421 Marketing Plan Phase I The marketing plan is a comprehensive blueprint, design, or proposal, which outlines an organization marketing efforts. Most organizations use marketing plans for the purpose of increasing profit, revenue, and shareholders’ wealth (Kerin, Hartley, & Rudelius, 2011). The task of Charlie Team consists of completing the marketing planning phase one. Charlie Team will use the outline of the marketing plan from the student website for assistance in accomplishing the following process of the marketing plan phase one. Selecting an existing organization and discussing its overviews is the first step in phase one. The second step is giving a description of the new product or service. Step three is explaining the importance of marketing for organizational success. The fourth step analyzes the factors of strengths, weaknesses, opportunities, threats, and trends (SWOTT) of the new product or service. Step five is the marketing research approach for developing the marketing strategy and tactics of the new product or service (Perreault, Cannon, & McCarty, 2011). Organizational Overview Team Charlie chose the Walmart organization for completing this assignment. Walmart is one of the best known organizations in the world that have successful marketing plans and strategies. Sam Walton is the founder of Walmart and opened the first store in Rogers, Arkansas, 50 years ago in 1962 (Walmart, 2012). Currently...
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...Q1. Value proposition Walmart’s value proposition is based on offering Everyday Low Price. This is the core of Walmart’s Business Model, and the rest of the key features of Walmart’s Business Model are aligned to keep the everyday low price. This proposition implies that the customers do not need to wait for sales to have the best deal possible. Besides, not only the sells convenience is associated by providing the wide range of products and services to choose from, but also with one-stop is possible to make all the shopping needed, from groceries to pharmacy. Walmart’ customers save time and money Distribution channel To deliver its value proposition Walmart communicates with and reaches its customer segments with its distribution channels which are owned and direct, and brings higher margin. Walmart also is corresponding with its customers mainly through mass media and other ways which have a low cost, such as internet. Customer relationships Walmart establishes a customer relationship is based on self-service and automated and towards co-creation of some products once it is possible. Walmart tends to reach to the mass market toward mass customisation. Walmart’s customers can be divided into three groups: “brand aspirations”, people with low incomes who are obsessed with brand; “price-sensitive effluents” wealthier shoppers who love deals; and finally “value-price shoppers” who like low prices and cannot afford much more Strong buyer-supplier relationship Walmart...
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...affected Walmart’s success in Mexico? Walmart’s marketing campaign has been “everyday low prices”. This was not the case in Mexico prior to NAFTA. Walmart was paying higher tariffs to import American goods. Once NAFTA was implemented, Mexico became a free trade zone. This made it possible for Walmart to reduce its tariffs from 10% to 3% creating a level playing field with its competitors. With the signing of NAFTA, it also opened up the doors to foreign investment in Mexico. Walmart was also paying huge fees for goods to be shipped from Europe and Asia into Mexico. Once these companies knew that building manufacturing plants in Mexico they could keep the costs low by using Mexican labor, they facilitated it. This allowed Walmart to purchase these products without paying high import tariffs. “NAFTA resulted in better suppliers due to an increase in competition, competitiveness and efficiency among the companies in order to gain the trust of their clients. Better supplies also increased the variety of products available to consumer with wider price ranges, which allowed Walmart to offer customers better savings and thus increase their purchasing power. NAFTA also helped Mexico achieve greater economic growth at a lower rate of inflation, which also added to the purchasing power of consumers.”(Daniel & Radenbaugh, pg. 321) 2. How much of Walmart’s success is due to NAFTA, and how much is due to Walmart’s inherent competitive strategy...
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...The history of Walmart was founded in 1962 by Sam Walton in Rogers, Ark. It is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. They focus on making a difference in the lives of their customers, and helping customers and communities save money and live better. In 1969, the company officially incorporated as Walmart Stores, Inc. Walmart started its public trade on the New York Stock Exchange in 1972. With the continued rapid growth, Walmart was operating in 11 states with 276 stores by the end of 70’s decade. In the 1980s, the first Sam's Club opened, serving small businesses and individuals, and the first Walmart Supercenter opened, combining a supermarket with general merchandise. In the late 1980s and early 1990s the company rose from a regional to national giant, Walmart was the number-one retailer in the nation. In 2000s, Walmart focus on offering customers a seamless shopping experience, whether they are online, in a store or on a mobile device. Also, during these times, Walmart put some effort in implement several environmental measures to increase energy efficiency. Today, the company has grown to be the world’s largest and arguably, the most emulated retailer. The social cultural segment is concerned with a society’s attitudes and cultural values. A major social cultural trend is the continued growth of suburban communities. The increasing number of people living in the suburbs has a number of effects...
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...1. Walmart's three major areas of external environment 1.A. The General Environment of Walmart can be summarized as follows: a) Economic:Despite the general weakness in the world economy and the uncertain environment that prevailed, Walmart had reported sales growth of 11%, amounting to $6.4 billion. The company's associates were indeed doing the Walmart cheer in faraway places like Germany, South Korea, China and United Kingdom. In three decades, it had grown from its rural Arkansas roots to become the world's largest company, and quite possibly the most powerful retailer. b) Socio-cultural: Walmart stores were geared toward the low-income customer segment; headquarters were reflective of the company's tendency to be tightfisted as they were housed in warehouse style buildings with minimalist decor. Frugality was a central tenet at the company, and every associate was expected to fully adopt this value in all its manifestations. It was also said that the company is homogenizing the marketplace by letting smaller towns dictate popular culture. c) Global: Walmart worked globally under the philosophy: Different store for different folks. As it grows around the world, it is important to its success that it exchange best practices among all the countries where it operates. Walmart launched its globalization efforts with an initial foray into Mexico, then to Brazil, as well as Argentina. It then penetrated Europe with its stores in Germany and in the United Kingdom. Its Asian...
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...The company's shares began trading on OTC markets in 1970 and were listed on the New York Stock Exchange two years later. The company grew to 276 stores in 11 states by the end of the decade. In 1983, the company opened its first Sam’s Club membership warehouse and in 1988 opened the first supercenter -- now the company’s dominant format -- featuring a complete grocery in addition to general merchandise. Walmart became an international company in 1991 when it opened its first Sam's Club near Mexico City. (Walmart.com) Background on Walmart Strategy Traditionally, Walmart has had a low-cost, high volume strategy. The strategy aims at customer satisfaction through low prices and good customer service. Following are the key points of Walmart’s strategy: • Low cost: Walmart has low operating expenses. One of the primary reasons for their low operating expenses is their superior distribution capability because of the location of stores, information...
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...This essay will focus on how Walmart’s strategy fits and achieves it’s value proposition, and how the company has created a differentiated, sustainable competitive position through leveraging its key resources and capabilities. Porter argues that the basis for competitive advantage is performing activities differently than competitors. “A company can outperform rivals only if it can establish a difference it can persevere. It must deliver greater value to customers, or create comparable value at a lower cost, or do both” Porter, (1996) He continues by arguing that the essence of strategy lies in a company’s ability to create a unique and valuable position involving a different set of activities. Walmarts value proposition can be summed up as “every day low prices for a broad range of goods that are always in stock in convenient locations.” The question, however, is how does Walmart formulate strategy consistent with its low cost leadership strategy? The answer lies in Walmarts key strategic choices and it’s abilities to use its resources and capabilities better than competitors. First, Walmart has achieved HETEROGENEITY by its different type of geographic market. It’s choice of location gave it a clear competitive advantage in underserved markets. Competitors wishing to enter those markets will have to expend large amounts of resources to hope and take away market share in a relatively saturated market. The early movers advantage in these markets should continue to...
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... IT investments and systems | Y | N | N | Y | Economies of scale | Y | N | N | Y | Relationship with suppliers | Y | Y | Y | Y | Distribution system | Y | Y | Y | Y | Low price offerings | Y | Y | Y | Y | Culture | Y | Y | Y | Y | Core competencies: Relationship with suppliers: WalMart known for their supply chain management and this becomes possible because of their relationship with their suppliers. So it is valuable for them and rare also and supports by their logistic department. Distribution system: Distribution plays major role in WalMart’s low cost offerings. Because of their effective distribution network they can provide low cost products. So it is valuable for them and rare also and supports by their logistic department and marketing department. Low price offerings: WalMart’s main strategy is to provide low cost offerings to their customers and so it is their core competencies. Culture: WalMart’s value, thriftiness, hard work, innovation, continuous improvement makes the whole culture of organisation and because of their culture they can formulate and apply strategies. Firm Infrastructure Human Resource Management Hu HhhhhhhhHum Technology Devlopment Procurement Inbound Logistics Operations Outbound Logistics Marketing and Sales Services Support activities Primary Activities Firm Infrastructure Human Resource Management Hu HhhhhhhhHum Technology Devlopment Procurement Inbound Logistics Operations Outbound Logistics ...
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...Organization Structure of Walmart An essential part of Walmart’s culture is to constantly look for ways to be more successful. On January 28th, 2010,Walmart released a report of its organizational realigning. This realigning was an attempt by Walmart to create a more efficient organization and to be better equipped to react to it customers demands. Walmart made the decision to re-organize its three United States operations into three geographic units within the United States and then appoint a president to each unit. These units were changed to Walmart South, Walmart North, and Walmart West. Walmart also stated that in the United States it would be bringing all of their operations together into three operating divisions as well. These operational categories would be Store Operations, Real Estate, and Logistics all under one leadership team. This divisional approach and structure works to Walmart's benefit because each division is unrestricted, when it comes to focusing their strengths on specific areas such as customers, service, and product. Tightening the focus permits Walmart to efficiently identify individual procedures and processes that need adjustment and to make modifications appropriately. As a result, of this organizational realigning, Walmart was able to reduce approximately 300 positions in the corporate support areas (Walmart, 2014). This divisional structure and approach is working for Walmart's advantage because each division is able to focus its energies on...
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...Walmart - Information Technology Rachel Thorne Fundamentals of Supply Chain Management BUS 3022 Gordon Flanders Walmart Information Management System (IMS) Walmart is a retail giant. Just about everyone in America has purchased something from them. It is a one stop shop for anything that a person could ever need. Walmart stores can be found just about anywhere, in fact most people are less than an hour drive away from a Walmart store. Walmart’s success has put many companies out of business. The chains success is primarily from low prices and using an information technology system to meet customer demands giving them a competitive advantage. Walmart’s first major use of information technology came in 1975 when the company leased an IBM computer system to track inventory in warehouses and distribution centers. (Wailgum, 2007) Computers have come a very long way since this time and are used almost everywhere. But in 1975 this was cutting edge technology and gave Walmart the competitive advantage over other retailers. Another thing that Walmart used to be revolutionary in their supply chain was the use of scanning barcodes in 1983. (Wailgum, 2007) Before barcodes objects had to be read by a skilled cashier. With barcodes all that was needed was a quick scan and the computer would do all the work. This greatly sped up checkout time and made tracking inventory and data collection much faster and easier for both customers and the employees. Since this time it...
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...the entrance of Walmart into the Mexican market in 1991 amidst trade negotiations between Canada, Mexico and the United States, which eventually resulted in NAFTA (1994). Walmart, through a series of innate and systemic advantages, as well as favorable external conditions (i.e. relaxation of trade protectionism, opening to foreign investment, infrastructural improvement, rise of manufacturing supply base), was able to undercut its domestic rivals on the basis of price. Comerci’s problem regards how, and whether, to compete with Walmart. Beyond a motion filed with the Mexico’s Federal Competition Commission, which seems a longshot, the company is faced with the following options: 1. Remain independent, hoping for more favorable terms with suppliers; or 2. Pursue a merger with a local or foreign retailer. III. STRATEGIC ANALYSIS I have selected Porter’s Five Forces as a strategic analysis tool. This is owing to its incorporation of buyer, supplier and competitive factors, all of which are critical to resolving the case. The present analysis of the mass retail industry will be pursued with specific focus upon Walmart and Comerci’s relative positions. 1. Competitive rivalry is very high from Comerci’s perspective, moderate from Walmart’s. Walmart is simply in a position to dominate the market, for reasons that the remaining forces will educate. 2. Buyer power is a question of perspective....
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...Walmart’s Strategy Walmart’s Current strategy In Walmart's thinking, there are three types of shopping trips (Depillis, 2013): The stock-up mission- this kind of shopping trip brings families to Walmart's 3,200 nationwide Supercenters. The basic grocery run- where shopping trip shoppers want to go someplace nearby, such as one of Walmart's 300 neighborhood markets. The "immediate access" stops - where shoppers head for the traditional convenience store. As of today, Walmart hasn't really touched the third segment, except for a handful of "express" stores in Arkansas. Bill Simon, Walmart’s chief executive, vision to put all three segments together on what he called “ecosystem”. Walmart believes that “tethering” is the key to make this system work. From tether hiring and back- office functions, to tether inventory distribution systems, and even online orders, for greater efficiency and quick response to demand. In other words, instead of having one huge store with endless goods, Walmart will offer three kinds of stores with most of those goods, at the time and place customers need them. Walmart’s current strategy includes more emphasis on smaller-format stores and more e-commerce. (Cheng, 2012). Competitive Advantage Walmart enjoys several of competitive advantages that are the source of the company’s market dominance. However, Walmart’s primary competitive advantage is low costs. Low cost culture and leadership initiated by the company’s founder, Sam Walton...
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...[;’p// Walmart Case Study: Half a Century of Supply Chain Management SCM 607 Dr. John Wu March 15, 2014 Table of Contents INTRODUCTION 4 BACKGROUND OF THE COMPANY 4 GOALS AND OBJECTIVES 5 KEY ISSUES 6 EXTERNAL ANALYSIS 7 Economy 8 Customer Behavior 8 Technology 8 Politics & Legal Aspects 8 INTERNAL ANALYSIS 9 Company Culture 9 Operations 9 Purchasing & Suppliers 10 Inventory 10 Logistics 10 SWOT ANALYSIS 11 Strengths 11 Procurement 11 Distribution 12 Store Network 12 Information Systems 13 Weaknesses 14 Procurement 14 Store Network 14 Human Resources 14 Focusing on the Supply Chain 14 Opportunities 15 Focusing on the Supply Chain 15 New Initiatives and a Reorganization 15 Threats 16 Human Resources 16 DECISIONS 17 CONCLUSION 18 EXHIBIT 3 19 EXHIBIT 3 (continued) 20 EXHIBIT 3 (continued) 21 EXHIBIT 5 22 REFERENCES 23 Walmart Case Study: Half a Century of Supply Chain Management INTRODUCTION Walmart dominates the retailing industry in terms of its sales revenue, its customer base, and its ability to drive down costs and deliver good value to its customers. After all, the world’s largest corporation, employing 1.8 million associates worldwide, takes pride in having received numerous accolades for its ability to continuously improve efficiency in the supply chain while meeting its corporate mandate of offering customers everyday low prices. Walmart demonstrates how a physical product retailer...
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...costs still further while maintaining competitive levels of differentiation. Their successful supply chain management is an important way helping them to implement the cost leadership strategy. They has effective inbound logistics by using just-in-time inventory. And they have cut costs from outbound logistics by creating better fuel efficiency in their trucks, getting more pallets on a load, and decreasing empty miles driven by their trucks (Dess, 2012). Walmart also reduces costs by buying in large blocks. Technology plays a key role in Walmart’s supply chain too, it allows Walmart to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics (Walmart's Keys to Successful Supply Chain Management, 2013). In conclusion, Walmart's successful overall cost leadership/differentiation strategy leads to high entry barriers for competitors. • Corporate-level Strategy The major reason behind the success of Walmart lies in the fact that the company believes and concentrates on the strategy of single business, which means more than 95% of its revenue comes 6 |!Page from their grocery business. Over 30 years, the strategy of single business has been contributing greatly to the success of Walmart, they have never believed in the concept of diversification for the sustenance of its growth and also its advantages at the competitive level (Market entry strategies...
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