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Walmart Competitive Advantage Essay

4319 words - 18 pages

Walmart – Case Study
Operations Management – SCH-MGMT-670
Catna, Shanmuga 9/24/2014

Operations Management – SCH-MGMT-670

To what extent can Walmart’s competitive advantages be transferred into international spheres?

Based in Bentonville, Arkansas, Walmart Stores, Inc. was founded in 1945 by Sam Walton and is now one of the largest retailers worldwide. It operates stores in a variety of formats, such as supermarkets, discount stores, warehouse clubs, and online properties. Its product offerings are wide-ranging: automotive accessories, food and beverages, cosmetics, clothing, and housewares. Walmart’s strategy is to be the low-cost leader among mass merchandisers. It operates on a ...view middle of the document...

The efficiency of this system leads to a form of just-in-time inventory, allowing customers to control the supply of goods they want by their purchases. Low cost strategy: Covering the traditional marketing four P’s of product, place, price, and promotion, Walmart uses these activities to support its low-cost strategy. At Walmart, customers buy products knowing that the store will deliver value in excess of its costs and that Walmart stands behind the goods it sells as a trustworthy merchandiser. In regards to price, Walmart has long implemented an everyday low price guarantee, reinforcing its motto of “Save Money. Live Better.” This motto supports its strategy because by guaranteeing the lowest price, Walmart reduces the expense and profit erosion caused by having to run frequent sales to move merchandise. Store format and locations: Walmart’s store formats have long been central to its success, allowing it to maximize its attractiveness to a broad spectrum of customers. Its in-store layout makes for fast movement of product to the shelves and allows easy stocking. Walmart’s stock replenishment process is focused on managing the flow of goods through its stores, using a model it has led the development of—vendormanaged inventories. This enables Walmart to achieve higher levels of sales per square foot of floor space in comparison to most of its competitors. In determining where it places stores, Walmart uses a stringent set of criteria to select locations where it will have maximum market impact. Additionally, Walmart applies data mining and proprietary algorithms to determine where products are placed for maximum sales volume within its stores. Systems and Technology: Walmart is one of the world’s leading companies in any retail sector at developing and employing ways in which technology, both advanced and simple, can improve its operations. It supports and reinforces its low-cost strategy all along the value chain through its tightly integrated vendor and inventory management systems, to its use of satellite communications to track its truck fleet, to RFID tagging and advanced POS systems for merchandising operations in the store. It also uses low-tech, but highly effective, person-to-person and face-to-face communication practices.


Operations Management – SCH-MGMT-670
 Human Capital Management: Walmart has a unique way of linking its human capital management practice with its strategy all along its value chain. Interactions between the company and its associates are based on mutual respect, regular communication, high expectations, and clear incentives. Associates are not paid market-leading wages, thus reinforcing the company’s ability to keep its prices low for customers. But employees are compensated in other ways. They have access to desirable benefits such as profit sharing and health care, retirement, and company stock purchase plans. Employees have a surprisingly high degree of discretion and autonomy. The...

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