Introduction
Walmart is a globally accepted retail business that is headquartered in Bentonville, Arkansas, United States. Walmart owns a number of hypermarkets, departmental stores, and groceries worldwide. The company operates a chain of global hypermarkets, departmental stores, and grocery stores. Walmart has a massive workforce of over 2 million people and serves millions of customers. The company is successful in its operations, as indicated by its revenue. In 1972, Walmart went public on the New York Stock Exchange. Walmart became a key player in the retail industry in 1988 by gaining the highest profits from its sales. However, its business plan involves more than just operating at low costs. Walmart has created and sustained such a significant competitive advantage across numerous industrial sectors due to a better understanding of its structure and culture. This report discusses how Walmart has gained popularity among customers through the years and how it manages its operations to curb the rising competition from rival firms.
Background
The company’s original geographic boundaries were the South and lower Midwest, but by the early 1990s, it extended its operations across the globe. The company introduced Sam’s Club in California in 1990 after joining the New Jersey market in 1989The first major Walmart in the Northeast debuted in October 1990 in York, Pennsylvania. Walmart’s Sam’s Club subsidiary faces competition from Costco and the more petite BJ’s Wholesale Club franchise which are the main rivals. Walmart has thrived under competition since it first joined the market in the late 1990s by facing rivalry from supermarkets across the US and Canada. Studies have frequently indicated that Walmart’s prices are much lower than those of its rivals and that people pay less for food when Walmart is nearby. This effect is particularly pronounced when the competitors are unionized. Walmart’s expansion into new regions between 2000 and 2010 frequently resulted in lower local food prices at competing stores. Walmart is renowned for its capacity to provide goods at relatively lower prices. Comparisons of performance indicators, such as sales per square foot, indicate that supermarkets that compete directly with Walmart Supercenters experience much lower profit margins.
Strategic Importance of Business Models and Competitive Advantage
Walmart’s business strategy is centered on the company’s commitment to lowering prices daily. This is a cost leadership strategy through the company’s substantial use of economies of scale. Due to increased cost efficiency, online selling has contributed to Walmart generating 75% of its sales from non-store inventory. The cornerstone of this strategy is the continuous improvement of assortment, prices, and accessibility. Walmart’s mission is to provide customers with the largest selection of goods at the lowest prices while also offering them the option to shop through the channel that best suits their needs.
Walmart’s ability to compete favorably depends on cost leadership. Walmart’s leadership has constantly been working to establish a connection between pricing, access, assortment, customer experience, and its competitive edge. Doug McMillion has made significant adjustments to Walmart’s business strategy through increased attention om the customer, better wages for employees, and focusing on improving sales of more healthy organic foods and fresh vegetables. The company has initiated employee motivation schemes to ensure they perform their duties perfectly. Walmart has introduced increased hourly pay for the employees, motivating them to improve perfection. In response to consumers’ growing interest in organic goods and fresh produce, Walmart is attempting to increase its offering. This trend is most noticeable in the U.S., and marketing communications are aggressively incorporating it into the brand’s message and increasing the purchasing experience’s adaptability. Walmart has been operating under the mission of combining physical and digital selling. Digital selling involves using online platforms, such as websites, to make sales and interact with customers. For example, the company has introduced a website where customers identify the items to purchase the commodities. In addition, it has generated a system that reminds customers of concerns from the pharmacy. In the long run, Walmart’s competitive edge can be maintained in the international market.
Methods of developing Corporate Vision, Direction, and Mission Objectives
Walmart determines what the stakeholders, such as the customers and the shareholders admire and applies that as the primary strategy to determine its vision, mission, and direction. This creates the foundation for determining the strategy that businesses will adhere to in their operations. The first two elements in an execution plan are used to develop the organizational mission and vision statements. Creating these statements is essential for organizations since it provides a sense of direction and helps employees stick to the strategic plan to complete their tasks, ensuring that the organization is successful in its endeavors. These goals keep the organization on track and serve as a directive on its goals and obligations. In addition, it serves as a foundation for creating other parts of the strategic plan for the organization’s operation. This part provides your organization’s vision and mission statements as a guide for creation and execution.
As one of the biggest retailers in the world, Walmart Inc. has demonstrated operational success in implementing its corporate vision and mission statements. Given its sizable global workforce, Walmart is also a shining example of effective human resource management. Since its entry into the retail market, the company has expanded its retail operation using sound financial principles to achieve its goals. Walmart’s corporate purpose and vision statements set forth the company’s core values. The company’s ability to effectively carry out its vision and goal for retail operations is critical in determining its success. Implementing a suitable general competitive strategy and linked intensive growth plans is necessary for such fulfillment. Walmart has continually demanded a rapid expansion of its operations to gain a competitive advantage using a generic strategy that embraces the corporate mission and vision statements that provide the way forward for the employees and other stakeholders. Walmart Inc.’s mission is to help people save more money as they purchase commodities and services to live better lives.
Sam Walton, who founded the firm, is reflected in this assertion. This purpose statement is linked with the retail company’s tagline is to save money and live better, which directly translates into strategic business choices and decision-making processes. Hence, it is apparent that one of Walmart’s operational strategies is to use pricing as a differentiator to draw in target customers. Many of the retail company’s strategies are observable examples of the importance of such a selling factor.
Walmart Inc.’s vision is to be the customer’s destination for savings, regardless of their shopping. This vision statement was formally stated in the annual general meeting of 2017. The initial vision statement targeted being the best retailer in the industry by positioning itself as critical in positive customer relations. The new tagline indicates Walmart’s interest in controlling the largest market share and the general outlook of the industry.
Company’s Resources, Capabilities, and Competitiveness
Organizations must constantly adapt to the constantly changing external environment in which they operate to retain their place in the highly competitive market. In addition, it is essential to recognize what competitive advantage is and how it develops. When two or more companies compete in the same market, the one with a continually greater rate of profit than its competitors has a competitive edge over the others. At the same time, it pursues future goals, so a competitive advantage may translate into something other than better profitability. Competitive advantage may rise in the market due to changes that may occur daily. Hence, managers must be cautious when making decisions to ensure that the organization does not suffer reputational damage giving its competitors the power to override them.
The resource-based view is a strategy and instrument managers use to identify ads and utilize the resources at hand to create long-term competitive advantages for the firm. The framework evaluates, places, and strategically aligns the resources that improve the organization’s competitive power. The approach indicates that all businesses have access to the possession and control over resources enabling them to develop a competitive edge. The superior long-term performance then becomes possible using a portion of these resources. Furthering the discussion of these resources, ownership, and control of essential resources may result in a long-lasting, sustainable competitive advantage. Tangible resources are simple to distinguish by the organization and rivals, creating a visible gap between the competitors. Additionally, these resources can be quickly procured from the market or, over time, developed. Due to this aspect, rivals can acquire the same or similar resources. They offer the business little to no added competitive edge in the future.
Resources that have no physical worth but are owned and held by companies like Walmart are intangible. Because of connected characteristics and aspects of historical uniqueness, causal ambiguity, and social complexity, competing players frequently cannot purchase or acquire the intangible resources available to Walmart. Since intangible resources are mainly unique and likely to remain within the firm over time, they serve as the foundation of Walmart’s competitive advantage. Because it is difficult for rival companies to imitate in factor marketplaces, Walmart’s intangible resources are also considered a source of the company’s success.
Walmart leads other big retailers in terms of grocery sales and provides the most comprehensive selection of consumer financial services. Economic projections indicate that Walmart generates approximately $1.6 billion in sales through financial services and related products (Volpe & Boland, 2022). However, Walmart may see the most benefit from the contribution of financial services to increased shop traffic. The sale of pet supplies is another area in which Walmart excels. According to Packaged Facts, Walmart receives more orders from pet owners than any other shop. 43 million of the 67 million households with pets in the United States make purchases at Walmart. Walmart has a significant advantage over rivals like Target, Kroger, and Costco when comparing the size of their client bases. These companies only have a combined customer base of 35 million pet-owning U.S. households. Additionally, a sizeable share of customers is shopping at Walmart for pet supplies more frequently than they were a few years ago. Walmart is a more convenient retail brand than others hence the most preferred among customers.
Scope of Operations and Strategic Alternatives
Walmart has employed global strategies to expand operations into other countries except for the US. The organization identifies unique activities in each country creates opportunities to attract customers, and builds the brand image by appropriately positioning itself. Walmart modifies its name in each country and appeals to the buyers locally rather than focusing on visitors purchasing from them due to the Walmart brand. The organization interacts with local producers to obtain healthier fresh products, minimizing waste. The business is currently focusing on the Asian markets due to their reliability In providing affordable and extensive labor and containing high populations. The company faces challenges in agreeing with the local governments since their operations inconvenience small enterprises, but Walmart has succeeded in many countries.
Characterizing Walmart’s products is part of the operational management’s decision-making responsibilities. Product differentiation is another strategy that Walmart utilizes in its operations. The company then advertises the products to create awareness among customers and attract them to purchase the items. The company provides all the services as a retailer and sells some products in its name, including Sam’s Choice and Great Value. Walmart’s organizational management focuses on efficiency and cost-effectiveness. Its general competitive plan and expansion tactics emphasize low costs and selling prices. Walmart enhances efficiency in the distribution of retail commodities and services by placing emphasis on low prices. The company thrives on mass production hence enjoying economies of scale. In addition, the operations management sector impacts its marketing mix and influences strategic operations for product enhancement.
Walmart employs a layers quality criteria approach where the operational management’s decision relies on the minimal standards that most consumers accept. The middle tier defines the market-average quality for low-cost shops. Some of the products in this category are used to determine the performance goals for Walmart’s employees, especially those in sales. The top tier establishes quality standards above industry benchmarks for the retail sector. Only a small portion of Walmart’s products, such as those sold under the Sam’s Choice brand, are subject to this tier (Keller et al., 2022). The three-tiered method meets the organizational objectives and goals, aiding decision-making operations management.
Strategies for Building Effective Multi-Business Companies
Price leadership is one of the strategies that Walmart utilizes to build an effective multi-business operation. This attracts more customers, increasing the revenue the firm generates from sales. Price leadership involves reducing the prices of commodities to allow people from all economic classes to enjoy the company’s product range Walmart’s business strategy aims to maintain costs at extremely low amounts to attract more customers and to affirm that they receive quality products that meet their demands and preferences. The company operates under extensive supply networks that enable the purchase of commodities in bulk hence enjoying the economies of scale that enable the company to retain low prices of commodities. The strategy critically influences the decision-making processes and creates a positive profile that enables the management to negotiate for pricing due to high bargaining power (Wang and Coe, 2021). Another strategy that significantly determines the company’s impact in the market is cross-docking which facilitates proper planning and organization. It is particularly evident in Sam’s Club which markets the business extensively. Cross docking is a strategy that is well-organized to approach the distribution of products in a manner that saves time. The company stores the commodities in warehouses and sends them to the customer after proper packaging is initiated immediately they make orders. The approach saves on time and motivates customers to rate the retail business highly making it the strongest operator in the retail industry. The approach is efficient as it aids in the formulation of logistics.
Additionally, Walmart uses product differentiation to create uniqueness from competitors and to gain a competitive advantage over rival retailers like Amazon and Costco. Walmart distinguishes itself from other retailers by being the only pharmacy store and clinic providing customers with healthcare checkups and wellness products. Another strategy is creating small stores with fresh commodities such as groceries and fruits other than the regular large-sized stores people expect. This strategy is effective since it enhances Walmart’s competitive advantage over its rivals and builds its effectiveness. Effective leadership is critical for decision-making to provide a competitive advantage (Gamble et al., 2019). Walmart is aware that the best method for keeping customers is to give a lifetime experience to attract them to return to their locations and make additional purchases (Sitaker et al., 2020). Additionally, the business knows that motivated personnel is necessary for happy customers. As a result, it strives to compensate its workers by funding employee development. Walmart plans to refund customers if they are dissatisfied with the products and services they receive.
Corporate Ethical Standards, Social Responsibility, and Environmental Sustainability
Corporate social responsibilities are essential in businesses because they can eliminate biases and create a positive brand image for the organization. Social responsibilities help the firm interact with its stakeholders, providing critical information that allows it to improve and beat the rising competition. Walmart is conversant with its commitment to providing a sustainable environment for operations by promoting ethical standards in its activities. Its management is aware that a company needs a primary purpose to succeed. That reason can be found in the value it generates for both its shareholders and the wider community. For this reason, Walmart has been working with others to create positive change along global supply chains for more than 15 years. Its emphasis on the environment, waste, and people in supply chains has significantly benefited the surrounding businesses and communities. Walmart’s acts demonstrate dedication to morality and integrity. Its commitments are ingrained in all actions employees conduct, from ensuring the food and products we sell are safe to using technology and data ethically and responsibly to looking into complaints made by our clients, partners, and stakeholders.
Walmart seeks to promote inclusion, equity, and diversity inside the organization and society. To fulfill its purpose of serving our customers, the company is committed to building a more diverse, inclusive team at every level and cultivating a culture where all employees are engaged. To support a widespread movement to achieve equity for all, we also work to investigate the causes of structural inequalities in society using the available commercial and charitable resources. Walmart is dedicated to making the retail industry a place of inclusive and equal opportunities for all its employees and those in related industries. As an employer, retailer, and community member, Walmart advocates for the protection of human rights. Additionally, we are still working on special projects to increase the sourcing of goods that help to promote employment in society.
Walmart’s corporate strategy relies on shared value, which involves solving societal issues that bring value to our business and stakeholders to help meet the organizational goals and objectives. Walmart provides its stakeholders with the services they require, such as giving value to customers, creating opportunities for employees and suppliers, supporting local communities, and extending social sustainability and environmental protection. Thus, the corporation sustains long-term investment relations with its shareholders. Walmart is committed to lowering costs and offering everything needed for caregivers and busy families to live healthier lives (Harisson and Salemo, 2021). This includes pharmacists, who may respond to medication queries, assist with prescriptions, and administer vaccinations.
Conclusion
Walmart operates as one of the largest operators in the retail industry, providing basic commodities like food, shelter, clothing, and healthcare facilities. The organization incorporates different management strategies, including cost leadership, to obtain market control and a competitive advantage over rival firms. This builds the brand name and image hence attracting more customers. Walmart prioritizes its customers and offers them cheaper alternatives that help them build a strong relationship with them and increase sales. Continued organization management and appropriate decision-making based on the market structure and outlooks improve the long-term brand name and image, maintaining profitability.
References
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