Walmart PDF

7/31/2019 Walmart PDF

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Submitted By:

Akhil kumarDebashree Mahapatra

Harshal Kumar

Ishita Singh

Rahul Singh

Sr Rajkumar

Vipul SinghVivek Khanna

Strategy of Walmart

An analysis


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1. Operational Effectiveness & Strategy

2. Strategy rests on Unique Activities

3. Strategic Concept: Trade offs

4. Implementation by Wal-Mart

5. Rediscovering Strategy


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Cost to company is a function of many activities required to

Create, Produce, Sell, and Deliver the products or services

OE: Performing similar activities better than rivals performing

them

In the 1980s Japanese challenged western companies

because of the superior Operational Effectiveness i.e. Low

cost & Superior Quality

Some of the management tools to increase productivity,

quality, and speed are TQM, Benchmarking, Outsourcing,

Partnerships, Value Engineering, Six Sigma, LeanManufacturing etc.

Sales force effectiveness with the advent of laptops, mobile

communications, internet, and software


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1. Competitors quickly imitate new technologies, and

other techniques

2. Competitive Convergence- More Benchmarking,

more similar OE


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L1 Low cost & High Volume, Everyday Low Pricing (EDLP)

Information Systems & Inventory management systems are

the best

Excellent Distribution capabilities lead to cost savings from

low inventory levels

Partnerships with vendors and suppliers makes it difficult for

the rival companies to find suppliers

Customer satisfaction as low product prices and wide range of

products

Understanding customer purchase behavior by Advanced data

mining

Sustainable because distribution network cannot be matched

in the short-term


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Wal-Mart used in-store terminals to wire merchandise

requests to a central computer.

Wal-Mart took no more than a fifth of its volume from any

vendor.

Only 20% of the inbound merchandise was shipped directlyfrom the vendors to the stores.

The rest passed through Wal-Marts two step hub-and-spoke

distribution network and this ensured better utilization of

capacities.


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Each distribution centre served up to 175 stores within a

150 to 300 mile radius. Reduced the cost of inbound logistics

Wal-Mart stores gross area was available for selling space as

its distribution network reduced back-room storage

requirements.

The Wal-Mart system included a larger number of SKUs thanmost other chains (over 70,000).

The HR policies Of Wal-Mart were distinctly different. We

care about our people

The administrative style was very austere. It differed fromcompetitors in its very heavy emphasis on communication

within the company.


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A competitor can reposition itself to match the market leader

Straddling: A market challenger can seek to match the

benefits of a successful position while maintaining original

one

Tradeoffs: Strategic position unsustainable without tradeoffsMore of one things necessitates less of other

Tradeoffs protect market leaders from straddlers and

repositioners creating a need for choice

Arise due to inconsistencies in image or reputation

Also due to products themselves reflecting inflexibilities in

people ,machinery or systems

Strategy is making tradeoffs in competing and choosing what

not to do


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Wal-Mart has built competencies that cant be copied by its

competitors

Not imitable due to trade offs

It has first mover advantage in isolated areas where it charges

high margins

Best practices in Management- High involvement and Frugal

office and living style

Human resource practices, purchasing and distribution

competencies cant be replicated by its competitors Wal-Mart gains sustainable advantage due to trade offs


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Need of implementation:-

initial strategies decay with timegrowth trap(desire to grow, like, extending product lines)

sound strategies undermined by misguided view of competition

organizational failures

Approach:- Deepen the strategic position rather than broadening

leverage existing strategic system, offer features/services that

rivals would find costly to match on a stand-alone basis

Find out core of uniqueness :- product/services that are moredistinctive and profitable, effective activities in value chain,

satisfied customers and profitable channels & purchase

occasions


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Current state (1985)- not such the need, net income

increasing, return on growth and sales returns higher than

competitors

Competitors either had no promotions/advertising or too

much of it, Walmart ran those moderately (13 promotions a

year)

Stuck to the philosophy of everyday low prices & we sell

for less (non-central pricing system unlike other competitors)

Deepened their position through diversification (Sams

wholesale clubs)

Sams mix differed from that in discount stores, alsomerchandise buying was independent

Remained primary source of merchandise in most of rural

communities/markets it previously served (strategy retention)


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