Wal mart's – cost leadership strategy

Wal-Mart's –

Cost

Leadership

Strategy

Made By:-

SACHIN MOTWANI

About Wal-Mart The company was incorporated as Wal-Mart Stores, Inc. on

October 31, 1969 and first distribution center in

Bentonville,Arkansas.

Wal-Mart Stores, Inc. branded as Walmart since 2008 and

Wal-Mart before then, is an American public multinational

corporation that runs chains of large discount department

stores and warehouse stores.

Walmart has 8,500 stores in 15 countries, under 55 different names.

It operates in Mexico as Walmex, in the United Kingdom as Asda, in

Japan as Seiyu, and in India as Best Price.

Made By- Sachin Motwani

Walmart’s Operating Divisions


Retail Formats

Supercentr

es

Restaurants


Additionally, when Wal-

Mart entered into the

food market, it quickly

consolidated and held

to good, saleable

products.

Concerning

concentration,

Wal-Mart

continually finds

more consumer

goods to sell at

its stores which

can take money

from

competitors.

Wal-Mart is in the

business of selling

everything

customers need in

their everyday lives.

Wal-Mart pursues

multiple strategies.

Wal-Mart never forays too far

into a market and only sells

what will make it a profit.


Wal-Mart definitely has the business strategy of Low Cost Leadership.

They do nothing to really differentiate themselves from competitors and provide no-frills self-service stores that always provide the lowest prices.

While they do try to provide good customer service on top of low prices, Wal-Mart’s strength is low-prices.

No one has such a supplier and distribution network like Wal-Mart that allows such low prices.


3 S of

Wal-

MartMade By- Sachin Motwani

STRATEGY Wal-Mart’s overall strategy is to always

provide the lowest prices.

They aim to have a store which provides

convenience by allowing consumers to find

everything they need under one roof.

This strategy has infiltrated the entire company

so that in encompasses all the other S’s.

The other two hard S’s, systems and structure,

support this strategy.


SYSTEM Wal-Mart has in place a

set of systems that helps it

achieve its strategy of low

prices everyday.

Wal-Mart has employed

computers, networking,

and the internet to reduce

inventories and waste,

and speed deliveries.

Wal-Mart has streamlined

the supply system so well

that it would be very hard

to find any inefficiencies

and would be hard for any

competitor to beat.

The largest

and most

profitable of

these systems

is the

Information

Technology

system.


STRUCTURE Wal-Mart also employs a good structure that works

with the systems to empower the low price strategy.

Wal-Mart has planned warehouses and integrated

them with systems in order to achieve “cross-

docking” so that supplies coming in never touch

the warehouse floor before going out to stores, which greatly reduces inventory cost.

They have developed time schedules so that one

truck can service many stores and that after a

delivery the truck can take back returned goods to

the warehouse.


an emphasis

on everyday low prices

an innovative

warehousing system

basing store

design on consumer

studies

effective use of

superstores

an industry leading

inventory control system

using size to negotiate

for the best price on brand-

name items

Wal-Mart

has pursued

many strategies

over the

decades to

achieve

and then maintain a

cost-

leadership

position.


Aftermath of Walmart- Negative

1.

• As Walmart grew rapidly into the world's largest corporation, many critics worried about the effect of its stores on local communities, particularly small towns with many "mom and pop" stores.

2.

• Economic Research found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening.

3.• Both positive and negative impacts on existing stores in

the area where the new supercenter locates.


Aftermath - Positives

1.

•Since 2005 spending $500 million a year to increase fuel efficiency in Walmart's truck fleet by 25% over three years and double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at stores by 30%.

2.

•Wal-Mart announced a program to improve the nutritional values of its store brands over the next five years, gradually reducing the amount of salt and sugar, and eliminating trans fat.

3.

•The company announced that it was testing its new "Walmart To Go" home delivery system where customers will be able to order specific items offered on their website such as groceries, toiletries, and household supplies.


SUGGESTIONS

Since Indian government is thinking to

allow 51% /49%/46% of FDI for multi brand

retails, So Walmart has a great scope of

expanding their business in India

They need to Expand their vendor base

for small and mid cap companies.


They should support mom and pop stores. They should also be reaching out to local mom and pops with free consulting advice.

The world’s largest retailer WalMart has termed India’s decision to allow 51% FDI in multi-brand retail as a “first important step” and said it will study the finer details of the new policy to determine the impact on its ability to do business in India.


Wal mart's – cost leadership strategy

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