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Walmart Business Strategy

776 Words4 Pages

Walmart Stores Inc. is a US-situated global discount supermarket chain that has more than 11,000 stores in 27 countries and serves nearly 260 million customers each week. Founded in 1962 by Sam Walton, today Walmart has 2.2 million employees globally and it is the world’s largest retailer. Below the operating results of the company are shown (Annual Report): Walmart business strategy is based on ‘everyday low prices’ philosophy of the company. In other words, Walmart pursues cost leadership business strategy enabled by the economies of scale derived by the company in a significant extent. The main strategic goals of the company are: 1. Increasing focus on customer services. 2. Improving the quality and diversity of groceries. 3. Enhancing the …show more content…

Describe the competitive situation in which the company has been able to succeed (e.g. the number and key characteristics of the closest competitors alongside your other central observations from the "Porter's five forces", for example). 1. Risk of entry by new competitors Risk of entry by potential competitors into the grocery retail industry is not significant. Economies of scale are considered as one of the critical factors of success in grocery retail industry and economies of scale are therefore a substantial barrier to new entrants. Lack of access to distribution channels is another significant disadvantage since the majority of attractive locations for grocery stores are already taken by supermarket chains. 2. Rivalry among established companies In North America, Kroger, Costco, The Home Depot, Walgreen, Target and CVS Caremark are the biggest direct competitors, as they offer very similar variety of goods to their customers. Kroger would be Walmart’s direct competitor. After Walmart Kroger is the second largest retail store. A strategy for Kroger is that they are able to offer private-label products, keeping prices low, as well as offer more product variety to its customers compared to Walmart. This strategy attracts high-income customers and generates higher revenue. The chain is renowned for excellent its customer service, loyalty program, and extensive …show more content…

On the contrary, because 18% of all retail sales in the United States are made in Walmart stores, the company has enormous bargaining power over its suppliers. Most suppliers have to decrease their prices that many can barely afford, because they are always pushed by Walmart to be more efficient and offer as low prices as they can. Besides, Walmart is so important to suppliers of nationally branded products that it is able to demand significant discounts even from them. Walmart has become a brand that is more powerful than the brands of

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