The operations of Wal-Mart have a key influence on the global platform due to its expansive nature of business. The company controls international retail operations in more than 26 countries. It has business segments focused on restaurants, Sam’s clubs, retail stores and virtual stores with operations outside the United States. Notably, the membership warehouse that operates under Sam’s clubs has operations in more than 47 states of the U.S. The diversities of operations coupled andsuperior infrastructure make Wal-Mart a model company with high performance levels.
The financial performance of the company in comparison to its closest rivals reveals its market leadership in several fields. For example, in 2011 an analysis of the industry sales revenue puts Wal-Mart at $ 443.80b, Target – $68.40b, Dollar General 14.81b and Costco – 87.05b. Similar trends reveal witnessed reveals that the company controls market leadership. Therefore, Wal-Mart is one of the leading global distributers of retain products and whose activities affect various economies of the world.
Wal-Mart’s Main Competitive Advantages
The main areas of Wal-Mat’s competitive advantages are in the warehousing and distribution divisions. The company is the global leader in distribution logistics and manages almost 82% of its purchases using its internal infrastructure. The cross-docking systems allow the goods to be unloaded and reloaded on inbound and outbound trucks saving on inventory management costs. The company implements and international extension in its procurement system,allowing to source directly from suppliers rather than importers. These prospects give the Wal-Mart anadvantage in controlling the import logistics and distribution centers. Notably, the logistics systems of Wal-Mart are faster, cheaper, and more reliable. Hence, the company enjoys improved profitability and wider competitive advantage. The firm’s warehouses, hauling trucks, large distribution stores and technological support ensure shipment are directly received at projected points as stock-outs are eliminated.
The main objective of the in-store operation units is to create customers’ satisfaction in the industry. The unit manages its core activities through a combination of strategies that yield low product prices and differentiated brands tailored to meet customer needs. To ensure it improves the customers’ experience, the store management system employs support that identify local shopping needs and manages products ranges for easy identification.
The marketing approaches employed by Wal-Mart positively appeal to its customers and are a major source of sustainability. The unit’s slogan of “everyday low prices” influences buying decision making. Programs like waste elimination, environmental sustainability and renewable energy support the marketing approaches employed by the company and lead to competitive advantage.
Information technology (IT) is the principal sector that drives efficiency in the operations of Wal-Mart. The company utilizes a radio frequency identification (RDFI) system that drives its services effectively. The model is significant for inventory controls and logistics management systems. The technological advancement in the warehousing and distribution divisions gives the company competitive advantage through massive cost cutting and efficiency in the distribution systems. Given that the company was the first to employ computers in inventory management, it enjoys an elaborate IT system. The model range from bar code scanner,point of sale inventory control, and the company satellite, which supports data transmission and links stores through voice and video capability and other e-commerce payment platforms like card authorization.
HRM and organization management systems are the main drivers of change in the operations of Wal-Mart. The company refers to its employees as associates. Even though it pays employees a lower hourly wage, the rates are above its competitors in the industry. Employee benefits are at the center of Wal-Marts operations with approximately 94% covered in health plan and retirement schemes. Organizational management approaches provide seamless leadership support to the company’s global operations. The leadership structures are designed to efficiently manage information and decision-making models in the operations.
Walmart’s Competitive Advantage Sustainability
Walmat has a sustainable competitive advantage concentrated within three key areas of cost leadership, marketing strategy, and its differentiation models. The cost leadership ensures the company attains improved profit margins compared to industry rivals. Additionally, the company sustainability is attributed to its ability to lower product prices compared to its competitors in the market. Given the capability of the firm to source for merchandise direct from suppliers, its low price strategy gives it an edge over its rivals. Cost leadership approach gives it the capability to take advantage of the economies of scale in the production sector. Wal-Mart enjoys a large bargaining power among its suppliers. The company takes advantage of its influence on suppliers to market products at low prices leading to improved sustainability. The company implements a lean management process that reduces waste, leading to sustainability. Accordingly, renewable energy sector saves the company energy costs, improvee services, and lowers recurrent expenditure.
The differentiation strategy is a major source of sustainability for the company. Given thatWal-Mat operates large stores with wider product varieties within smaller towns; its performance is improved compared to its rivals who concentrate on cities. The technological advancement and elaborate processes in logistics sector makes it difficult for its competitors to imitate its strategies. The company’s elaborate freight services and distribution centers to its global stores equally limits imitation s from its competitors in the industry.
The recent onslaughts on the company from NGOs, competitors, and industry professional has affected the organization’s reputation. Therefore, it should ensure professionalism in its operations and implement effective CSR programs to remain relevant in the industry. The company should also improve its relationship with female employees since it has previously been accused of discrimination.
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