Case Analysis: Wal-Mart Inc.
Wal-Mart can attribute most of its accomplishment to competitive advantage rather than trade attractiveness. Since they enlarge their product line they become more capable to give tough competition to reputable players like pharmacies, groceries and other health services. In addition, the market is by now extremely saturated as very hardly any untouched markets were left. Furthermore, the single thing that differentiates Wal-Mart from its competitors is its scale. In 2010 and 2011 the gross margin of the company was lower than the target. The current ratio is not quite 0.9 for both years which is a different area where Wal-Mart is considerably lagging.
However, the huge size has sanctioned the company to generate economies of scale and provide them incredible bargaining authority over their dealer. According to the case, P& G obtain 18 percent of their returns thus far their merchandise are just 3 percent of Wal-Mart’s profits. The company controls their warehousing and supply which provides several benefits and tough competition to the major players in the market. Also, thrift and value of money is on delivering to small communities. It has yield remarkable important for the organisation. All these factors revealed that the threat of new entrant is weak which help Wal-Mart to attain competitive advantage in the most effective manner.
Warehousing and distribution: Wal-Mart is a leader in distribution logistics. Furthermore, there are two main resource asset of organisation. The first resource is that most of their goods being transported by Wal-Mart trucks. The second is the value that the products of company
Purchasing: the tremendous size of the company allows it to lean on numerous suppliers and purchase the products at low costs. Also, many suppliers depend mainly on Walmart’s business. This provide additional advantage as purchasing agent is isolated from his own organisation possibly allowing the company’s executives to place additional pressure on them. In addition, it also provides the ability to put extra pressure on the suppliers. This helps the company to enjoy strong barraging power with suppliers.
The company possess resources and capabilities which are hard to duplicate. Furthermore, the company adopted a continuous improvement attitude which helps to provide several competitive advantages as compared to the competitors. The continuous development makes the company even more advanced. Due to the high cost of development the other players cannot copy the strategies of Wal-Mart. In addition, little information is available about how Wal-Mart exactly implemented its distribution technological improvements. It is clear that the company has put more emphasis on using technologies and effective innovations which provides long terms benefits and competitive advantage in the most effective manner.
One of the external threats for Wal-Mart is that it had to deal with huge competition. Furthermore, environmentalist, anti-globalisation activist also affect the day to day operations of the company. The company is highly pressurized by non profit organisations, labour unions and politicians to adapt its image and business practice. The increasing gap between the management and employees revealed that the employees are engaged with the work. However, the company has faced difficulty in providing job satisfaction to employees. In addition, the company has also taken different steps like internal promotion, training to increase the level of commitment. Furthermore, Wal-Mart has also faced criticism as they had not fully compensated former employees and failed to ensure that employees received legally mandated rest breaks. These unethical activities may affect the long terms profit or goodwill of the company. One of the major challenge for the company is to compete with Amazon. In order to compete with Amazon the company tried to imitate its strategy that focuses on offering free two day shipping. Also, the company collaborate with major technological players to use artificial intelligence capabilities. All these efforts indicate that the company faced some challenges in 2018. But effective strategies helped the company to cope up with challenging environment.
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