Challenged Exam Part 1
(1A) it’s quite simple how Wal-Mart became a world leader in supply chain management. Wal-Mart’s main focus was to develop cost structures that would allow them to provide low costs friendly everyday prices for all of its customers. They accomplished this by eventually cutting off all middle man distributors. Although this is what ultimately Wal-Mart above the rest of the competition it didn’t work right away in Wal-Mart’s earlier years. Just like any large or small business Wal-Mart went through both its share of trials and tribulations. When Wal-Mart first developed the RFID technology, the company ...view middle of the document...
The RFID is a low costs frequency identification system which requires very little actual human involvement to carry out task such as billing to material tracking. The RFID system was much more effective than what Wal-Mart was doing previously and eventually replaced by the bar code system. The RFID technology was more effective than the barcode system because it had the ability to sense the items that were tagged that were actually not visible and sometimes hidden being other items, whereas the bard code system you had to actually scan the actual item. Sometimes this was a headache for people whom worked in the warehouse because you would have to carefully scan each and every item, and it wasn’t uncommon that people overlooked items and they became uncounted for.
(1B) Wal-Mart maintains its competitive advantage over the years by developing a highly efficient distribution system and builds long lasting relationships with low costs providers. The retail industry is obviously an internationally competitive industry, but Wal-Mart has been innovative in developing different strategies to continue giving them the competitive advantage over its opposition.
Wal-Mart’s main philosophy is to provide low costs merchandise of basic goods at all times. The main deterrent against this is that there are sometimes much infancy in the retail industry supply chain. Historically retailers are notoriously known to add on a number of additional costs such as handling fees, damage fees, display fees and rebates. All these wind up in the consumer paying more for the products. This was noticed by the company’s founder Sam Walton and his vision create what he called a low cost culture, and as time went on all the companies’ future leaders and management continually reinforced this culture.
(2) PORTER’S FIVE FORCES
1. Threat of competition: Being though that India is ranked first on the list of the world’s most attractive retail destination amongst 30 distinguished markets there are obvious threats of competition throughout the entire retail industry there. The Indian retail industry being valued at $320 million in 2010 and expected to rise to about $637 billion in 2015 thus will attract influence and entice many retail businesses. The retail industry India is so pivotal that it accounts up to 14% of the country’s national gross domestic product and provides jobs for nearly 10% of the entire country and is expected to rise at prompt rates. Before the rapid rate in India’s population there were plenty of competition within the Indian retail sector, but not between major licensed retail corporations but amongst small mom and pop stores, mobile carts and pavement vendors which are known as the unorganized retail sector, which in earlier yeas accounted for nearly 98% of the country’s retail market. With India’s population 1billion plan and the GDP growth estimate at 7.5% in upcoming years all sorts of different opportunity for all mass merchants...