The company is involved in the serving of over 179
million people in one year and it also possesses over 2 million associates all
over the world. The number of stores possessed by Wal-Mart numbers to over 7,
343 and its Sam’s Clubs are also present in over 14 markets. Hence it is not
surprising that it is the biggest retailer in the whole of United States. From
the year 2002 the company has been topping the list of fortune 500 list and in
the year 2006 it was pushed to the second place, next only to Exxon- Mobil due
the rise in the price of oil in that year. In the year 2008, the annual revenue
generated by Wal-Mart was over 378 billion dollars. Hence the company continues
to be successful in many nations exploiting the human resources as well as the
other resources in the nations. Its idea is to capitalise on the strategy set
by the company for global expansions and the present targets of Wal-Mart are
the big nations with huge human resources like Russia and India.
The strategy used by Wal-Mart
at the multinational level is being modified in such a way that it becomes the
transnational strategy and the key aspects of this strategy includes response
at the national level, operations at the international level and also taking
lessons from the operations that are being conducted on a global scale. The aim
of the company in following such an approach is that it should become the best
choice for goods that are low cost in the United States as well as the whole
world. As the company is basically a retail company it stresses on the concept
of orientation of the consumers by acquisition as well as distribution of goods
at a low cost and at the same time facilitating learning on a global scale by
the process of decentralization, tackling competition over the borders and by
sharing its acquired knowledge. But still in the global business arena, the
company is relatively new and on its way to become a leading player. The stress
placed by the company on the concept of national response has to an extent,
brought about reductions in the operational efficiency of the company because
it was not able to accomplish economy of scale which is enjoyed by the
customers when it comes to the products that are standardized.
The company is involved in the formulation of
blueprints for the managers when it comes to the strategies which they are
supposed to follow. According to the needs as well as the culture of the people
there is a high level of adaptation and the company has its location which is
proximal to its market. The company also shows a lot of sensitivity when it
comes to
individual needs of every nation and also responds
in an appropriate manner to these needs. There is also close contact and
co-operative working shown by the company with the respective government so
that every rule or legislation that has been passed by the government could
also be taken into account while designing the strategies. The company is also
involved in a lot of community works by provision of sponsors for the student
community and contributes its share to the welfare of the people in the nations
where it has its operations.
Each of the stores operated by Wal-Mart is from
that of the product being stocked by the company which would move towards the
equipment at the front end and this would go a long way in helping checkouts in
a rapid manner with the philosophy set by the company in place- provision of
goods at low prices every day and at the same time providing customer services
that are of top quality. Hence the added advantage of the low costs is that the
expenses incurred in organisation of promotions for sales could be cut down to
a large extent. Moreover the predictability of sales also increases. The
company firmly believes in the system of “cross docking inventory system” and
hence has invested a lot in the same. The process of cross docking has led the
Wal-Mart to attain economies of scale and this has in turn brought about
considerable reductions in the costs that are incurred for sales. In the system
followed by Wal-Mart, there is a continuous delivery of the goods to the stores
in a time of maximum two days and at times there are no requirements even to
inventory them. Hence the shelves of Wal-Mart are refilled faster than four
times of the existing competition in the market.
This is a particular advantage
possessed by the company when it comes to competition. The power of buying of
Wal-Mart is leveraged by means of purchasing in bulk quantities and also the
company takes care of its own distribution. Hence every day low prices are
guaranteed by the company and hence it has become a one stop shop. Hence at
present the company owns stores in a variety of companies like Argentina,
Mexico, Brazil, Canada, UK, Korea china and also in Germany.
The major reason behind the
success of Wal-Mart lies in the fact that the company believes and concentrates
on the strategy of single business. This is the strategy that has been
providing the company with success over a period of over 30 years. In the three
decades the company has never believed in the concept of diversification for
the sustenance of its growth and also its advantages at the competitive level.
Hence the services provided by the company and the low prices offered are the
major reasons behinds its success. The concentration on one particular strategy
also poses a threat to the company because it is equivalent to place all the
eggs in one single bucket.
1. Explain
Wal-Mart’s global expansion strategy.
2. What is single business strategy? Comment your
view on the strategy.
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