Walmart's Competitive Advantage And Future Strategies Essay.

1. Critically evaluate the company’s current strategies for sustainable competitive advantage

2. Set out the desired competitive position 3 years from now
3. Offer clear recommendations on what the company needs to do to achieve that position
4. Write a logical, well-presented and accurately referenced piece of work

Economic Environment of Walmart

The economic environment of an organization refers to how various economy states such as an economic surge or depression would influence the business of multinational corporations within the specific economy (Ben-Ner, Kong and Lluis 2012). Walmart is always alert towards the economic environment which it operates in due to their model of sales which is depended on low-profit margins and high sales volumes which could be altered easily. In an economic surge, their strategy of the low cost of goods would not be effective to increase their sales, while on the contrary, during a time of economic depression/recession their high volume goals would be threatened. Therefore, Walmart operates in an unstable economic environment and should ensure that it conducts a thorough market economy study before entering an unbalanced economy to prevent the possibility of losses. In addition, as an international company, Walmart has more opportunities for taking advantage. For example, when the domestic market is highly saturated or competitive or when the regulations and laws make it not economically feasible to proceed with its functions in the domestic market, Walmart can always shift its operations to foreign markets and expand in a different economic environment.

According to Schneider and Bartram (2017) an organizational competitive advantage exists when consumers perceive the products of the company as superior to that of competitors. Wal-Mart operates under different strategies in order to sustain a competitive environment. Currently, the company is widely known for its unique selling proposition of offering “every day low prices” philosophy. The same prices have been offered in all its chains that have enabled the company to sustain rapid competition over its competitors offering different prices throughout different chains. The Wal-Mart’s products are competitively priced and the company negotiates with suppliers and manufacturers to make sure all benefits are passed to end customers. The company also gives “black Friday” offers to the customers. Recently the “Black Friday event has become famous as the company offers some products at throwaway prices”. As the “Black Friday” strategy has been termed as “most successful in terms of attracting new customers and increasing market segmentation” . Furthermore, many companies globally under the same industry have copied this strategy.  Furthermore, this pricing strategy has exposed the company to more opportunities on global markets with the majority of new and existing customers preferring low prices and quality products over brand names and overpriced products. In addition, through diligent expenses, the company has been able to cope with the price-cutting strategy. With lowering of prices, Walmart has blocked potential entrant of new competitors in the industry that might result in unnecessary competition hence reducing its profit margins. To maintain prices constant, Walmart has used different approaches. For example, the company achieves low costs by minimizing human resource expenditures and through automation and related technologies.

Competitive Advantage through Pricing Strategy

The strong customer service offered by the company has developed customer loyalty and brand trust that has facilitated to repetitive purchases. Furthermore, Wal-Mart’s customer service is characteristic unique to the chain. The competent customer care representatives offer great services which provide friendly experience to every customer. The brand has further gained trust globally with the company ranked number twenty-two in the list of most valuable brands (Smithson 2018). The company also offers retail services over large market segmentation covering every consumer of its target market.

Wal-Mart’s Broad product assortments is another way the product has a competitive advantage. The company deals with large assortments of products and broad stoke keeping units (SKU) which has assisted the company to generate high-profit margins and low prices.  Broad assortments of products also assist the company to retain its existing customers as they are able to shop a variety of goods conveniently. Furthermore, in order for the company to succeed in generic strategies implementation, Walmart has relied on management approaches, process efficient and beneficial strategies like intensive growth strategy that have assisted in cost reductions. Additionally, with the company having the strategic objective of keeping low costs, Walmart is known for offering large-scale imports of goods with low costs from China.

The operation of Wal-Mart Company are well managed with most qualified strategic staff being in charge of all the activities taking place in the company. According to Tripathi and Kochhar (2016), management of huge retailers requires effective operations management as it is hard to cope with competition from small retailers. Furthermore, Walmart operates under customer caring environment as it gives attention the way it operates so that their consumers can be able to identify their products fast and their shelves are full filled. Products tags are placed strategically with bright colors so that customers can be able to identify what they are shopping easily. Furthermore, the solid supply chain of the company serves millions of customers annually with small profits on each sale but its inventory has many sales per unit.  

In conclusion, the strategies used by Walmart Company to have competitive edge include high-quality products, fair prices for customers from all sources of incomes, effective customer delivery and product differentiation that suits the changing needs of customers and skilled and experienced staff. The company’s high turnover ratio is believed to depend on goods turnover to generate high profits.  Through the analysis, it can be concluded that the common way used by Walmart to have a competitive advantage is offering competitive prices that make low customer cost since many customers in the market look for the lowest prices.

Customer Service and Brand Trust

Walmart’s operations began with several steps ahead of its competitors, where the organization initially removed several links in its supply chain and directly worked with its manufacturers in a bid to minimize costs (McGee 2018). Walmart’s founder, Sam Walton, purchased a selection of bulk merchandise and directly transported to the store instead of transporting to the warehouses, which resulted in space, money and time savings. Despite the company having several strategies to deal with current competitive forces in the market, a lot still needs to be done so as to improve the organization’s competitive positioning in the future. Therefore, in three years’ time from now, the organization should invest in having a concrete supply chain as it plays a major role in the achievement of the organization’s competitive strategy through shaping its functions of procurement, the management of inventory, designs of transportation and distribution. The application of the variable will enable the company to improve the company and brand value.

In three years’ time from now, Walmart aims at achieving various competitive strategies in order to improve its overall competitive positioning. Low-cost strategies are the focus of the company whereby the company will integrate medium quality products at a much lower cost for the achievement of a competitive edge over its competitors. Selling products at a price which is lower than its close competitors will assist the organization in achieving preference by many customers which would, in turn, lead to customer loyalty. According to (Ouabouch 2015) having an excellent supply chain would assists companies in the achievement of low costs of products in the companies’ product mix. To make the low-cost strategies a reality, several factors will be used. For example, Walmart will increase the number of products procured and save on storage charges by transporting directly to the stores. In addition, the company will collaborate with suppliers to procure goods at the best prices. Furthermore, the company aims at achieving economies of scale through the transportation of large quantities of stock at a single time especially since the organization has a fleet of trucks at its disposal. The various factors will contribute to a considerable difference in price margins when compared to its competitors hence Walmart will collectively achieve its strategy for low costs through the effective management of its supply chain.

In addition to the much lower costs, Walmart will provide better customer value with an aim of keeping them satisfied hence retaining them. According to (Jurevicius 2018) the value orientation and addition will be aimed at improving the company’s services, avoiding stock outs or delays in delivery, product mix differentiation and availing the right goods where and when the customers need them. Walmart will achieve the value orientation strategy by improving its logistics network to comprise of more trucks in its fleet which will give the company increased control over the product’s movement. “Improving the vendor management of products will assist the organization in achieving increased responsiveness in three years from now”. Therefore, the company will increasingly be more expectant in achieving almost one hundred percent fulfillment of orders on merchandise.

Broad Product Assortments and Operations Management

Walmart also aims at achieving greater market control through the creation of solid barriers to new entrants into the market by keeping its competitive advantages, especially smaller competitors who are focused on specializing on a specific mix of products like fashion apparels stores, small retailers and electronics stores. According to (Zheng 2016) the smaller stores have an added advantage of differentiating their products better and an easy product access. Therefore, by reducing the cost of products, Walmart will attract the customers which will reduce the probability of emergence of the smaller retailers. Further research by (O'Leary and Sheehan 2008) shows that due to their small structures, the smaller retailers will have to purchase products in small quantities and store them, which will lead to higher pricing to gain profit.

Furthermore, Walmart seeks to invest more in the integration of technology for a better shopping experience due to the increased trends of online shopping. In three years’ time, Walmart aims to improve its recently launched mobile application and e-shopping site to improve the experience of customers while shopping remotely and getting the products delivered at their doorstep. It will be highly important for the organization to improve their e-shopping platform so as to stabilize its future competitive position due to the emergence of other online shopping platforms like Amazon (Mullins and Walker 2013).

Moreover, Walmart aims at achieving higher vendor partnership relations in the future by improving its strategic sourcing from suppliers at increasingly reduced prices and ensuring that they are able to meet the increased customer demand. Research by (Taylor 2018) predicts that Walmart will improve their partnerships with vendors which will improve the company’s potential for long-term and high volume purchases to achieve the lowest possible price as compared to its competitors. In addition, the organization will improve its communication and relationship network with its suppliers for the improvement of the flow of materials with lower inventories. Walmart will also improve the use of Just in Time (JIT) inventories for an improved inbound logistics and better management of transport by increasing their fleet of trucks for better fuel efficiency. The organization also aims at loading more goods on the trucks and tracking the levels of inventory, the creation of highly efficient routes and the proper management of reverse logistics to improve its competitive position in three years from now

Walmart needs to implement a supply chain which improves the solid support to the organization’s competitive strategy, and an efficient management of the results of the supply chain that will lead to the achievement of the strategies. The behavior of suppliers is influenced by large companies like Walmart by applying pressure to them resulting in an alteration of the shopping mix alternatives for the buyers. The company should consider differentiating its products further in order to activate its competitive position in 3 years. According to Lord (2009) product differentiation is a way of introducing new and unique products in the market that suits the needs of customers. With major competitors like Amazon and Tesco differentiating their product every year, the company also needs to focus on its uniqueness. For example, the company should consider offering “daily flash sale” services as a way of attracting potential buyers.

The company should also implement a strategy of offering convenient on doorsteps delivery of all products to their customers. Furthermore, Amazon being a major competitor offers doorstep delivery of products but customers are not happy with the process, as it took longer for customers to get their products. Despite the process being long, the charges for delivery products outside town are somehow expensive. Therefore, Walmart should offer doorstep delivery to their customers but with low prices or free to their customers. The payment methods should be automated such that customers are conveniently able to pay using all payments methods include the current ones like bitcoins. The free delivery strategy will work well for the company without loss by Walmart Company charging a constant delivery fee indirectly to the product. For example, if the company sales a television at $133 and delivers to the customer at &5, the company should charge the $5 delivery fee on the product and offer some $2 discount so the product should be delivered free at $135.

Walmart should also consider investing high in creativity and innovation. With the world evolving every day and the company focusing on cost leadership as a generic strategy, the company need to do more customization on their platforms and have convenient mobile phones application. The innovation starts by monitoring the current technological trends and opportunity for the company to implement new technologies that catch customer’s eye first. Furthermore, the technology will assist the company in lowers the inventory costs that are have been liked with low profits. Technologies such as in-store inventory technologies and radio frequency identification will reduce and eliminate all inefficiencies in the supply chain.

To capture the busy schedule for all social classes of people, Walmart’s company should focus on extending its operating hours. Furthermore, stocking should be done on appropriate timing that creates an opportunity for customers to find desired products easily when employees are stocking products. Furthermore, when employees are stocking at daylight hours they are in a position of helping and directing customers to their wants.  

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