Business Strategies for Wal-Mart

Business- level strategy is defined as a summary of how an organization will achieve its goals, meet consumer expectations and maintain a competitive advantage within the marketplace. There are four primary business- level strategies: structuralist, cost leadership, differentiation and focused approaches. Structuralist is constructing a strategy by positioning company operations so that they fit within the existing market conditions. Cost leadership is instituting a company network so that the cost for manufacturing a product is less than the production cost of the competition. Differentiation is ways to ensure that the product is distinctive when compared to the competitor so that the firm creates a competitive advantage. Focused approaches are ways for product differentiation and cost leadership that single out a smaller section of the market.

Wal-Mart’s business strategies include increasing their focus on customer service, improving their grocery selections, and increasing the flexibility of the consumer’s shopping experience. My opinion is that the most important would be to increase the flexibility of the customer’s experience while shopping. More consumers are looking for faster, more comfortable and more convenient ways to buy. The organization’s biggest competitors, Kroger, Safeway, Publix, and Amazon are becoming increasingly flexible in their options. The only way to maintain a competitive advantage is to beat the competition at their own game. Flexibility allows for growth. If there is no growth, there is no competition.

Analyze Wal-Mart’s corporate- level strategies and determine which the most important to the long-term success of the organization and whether or not you judge this to be a good choice. Justify your opinion. Corporate- level strategy is defined as an action the is taken to gain competitive advantage through the selection and management of a combination of organizations competing in multiple produce markets or industries. There are three basic corporate-level strategies: growth, diversification, and stability. Growth is looking at different ways to gain more revenue from the sales of goods and products. Diversification is defined as examining a firm’s services and products, and then creates a strategy for effective sales and marketing. Harvard Business review defines stability as a strategy that makes use of current success under existing platforms to retain market shares and requires leadership to focus on retaining the consumer.

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Wal-Mart’s corporate- level strategies involve improving the customer experience by opening more checkout lines and improving the efficiency of its inventory to correct customer complaints of empty shelves and slow-moving or not enough open lanes, and by increasing associates during the holidays and peak shopping hours. The second strategy is beating the competitions price. This was accomplished by the creation of a new application called the savings catcher. This application helps shoppers compare prices and then gives them difference on a gift card. The third strategy involves expanding their assortment of products. Customers were asking for more of a variety, so Wal-Mart decided to create unique product lines to avoid overwhelming the consumer with too many choices.

Customer experience is the most important when long-term success is considered. An organization can have the lowest prices and the biggest variety of products, but if the consumer is not happy with what they experience once they began to shop, they will find somewhere else to go. Consumers like to feel that they are wanted, that they are essential and not just a dollar sign. Experience creates loyalty and strengthens company brands. Analyze the competitive environment to determine the corporation’s most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term. Provide justification.

The competitive environment is an external system where a business functions and competes with other organizations. Wal-Mart is the largest seller when it comes to groceries. Groceries account for 56 percent of its sales. They are followed by Amazon, Safeway, Publix, and Kroger. There are many players in the grocery arena, and this is due to there being little to no barriers to entry.

Larger companies are capable of making lower prices available because of their fixed cost and supply chain management. Wal-Mart’s EDLP, everyday low price is a result of this. Competition with smaller stores forced Wal-Mart to invest in neighborhood stores to push out the smaller competitors. It’s biggest competitor is Amazon, and their merger with Whole Foods helped to give them equal space and opportunity in the grocery market.

Amazon’s business strategy focuses on broadening their logistic applications, investigating and incorporating new technology and improving web services and fulfillment capacity. Their corporate strategies involve leveraging their technological advances and offering their customers the cheapest prices with maximum value. The difference between the Amazon and Wal-Mart strategies is that Amazon is focused on maximizing the total customer experience within e-commerce to include innovation with its technology and Wal-Mart has not invested as much in e-commerce but has continued to improve its logistics.

Amazon’s quest to maximize the customer’s experience includes interactive technology such as Alexa, Alexa Everywhere and Amazon Go. They have included immediate access to music and movies which caters to the consumers need for instant gratification. When it comes to logistics Amazon has incorporated drone delivery to offset the norm of truck deliveries.

Wal-Marts logistics revolve primarily around the delivery of pallets to its facilities versus individual package deliveries. In my opinion, Amazon will be more successful when in the long term. I say this because they have bridged the biggest gap between them and Wal-Mart with the Whole Foods merger which was Wal-Mart’s most significant competitive advantage and has invested more in technology and e-commerce which puts Wal-Mart at a disadvantage.

Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets. The slow-cycle market is a market in which resources are very shielded and allows a company to maintain a monopoly. The organization’s competitive advantage is protected from imitation, and any copying is going to be costly. Fast-cycle markets are markets where the company’s capabilities that contributed to its competitive advantage are not protected from imitation, where imitation happens quickly and is fairly inexpensive. In this case, I do not think my choice would change based on whether or not the market was slow or fast- cycle. Amazon did not imitate Wal-Mart, they created their own unique brand and group of capabilities meaning it would not matter if the competitions capabilities were shielded, they have their own.

References

1. Forbes, (2018, September 9). Playing to its Strengths: Why Wal-Mart Must Focus on Its Stores and Logistics. Retrieved from https://www.forbes.com/sites/brittainladd/2018/09/09/playing-to-its-strengths-why-walmart-must-focus-on-groceries-stores-and-logistics/#648cac7c1e06
2. Yahoo Finance, (2015, February 18). Competitve Forces: Why Wal-Mart Dominates the Grocery Industry. Retrieved from https://finance.yahoo.com/news/competitive-forces-why-walmart-dominates-170550926.htmlChron, (2018, June 26).
3. Types of Corporate Level Strategy. Retrieved from https://smallbusiness.chron.com/types-corporate-level-strategy-60147.html
4. Amazon.com, Inc. SWOT Analysis. (2018). Amazon.Com, Inc. SWOT Analysis, 1–8. Retrieved from http://libdatab.strayer.edu/login?url=https://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=132244145&site=eds-live&scope=site

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