Marketing

Wal-Mart in the Year 2010

What do you believe are Wal-Mart’s greatest strengths and weaknesses as a company? Explain your reasoning.

Wal-Mart has earned acclamation in the world as the number one retailer in the global market. Every single business operating in the global market contains both strengths and weakness that steer it either to success or to failure. Wal-Mart being like any other business contains strengths that have augmented its success and weaknesses that have been dealt with over time to enhance its competitive advantage (Berman & Evens, 2007). Its first strength lies in its strategy of innovation. This strategy is not only based on incremental changes but also on creating new businesses aimed at challenging the traditional businesses. The second strength encompasses the leveraging of its scalar economies in the supply chain to generate efficiency and increase customer value. This is the reason why its stores attract approximately 138 million people in a week. Another strength exhibited by the company is its capacity to expand a concept rapidly after experimenting and getting it right. This is portrayed by the success of its Supercenter, whose experiment began in 1988, but was implemented in the mid-1990s.Wal-Mart also offers such untraditional services as telecom, financial, entertainment and travel hence increasing their prospects for success.

Being a business functioning under market forces, it contains weaknesses linked to its organization and operations. The company’s dominance has adverse implications on the political, cultural, social and economic arena hence this is its first weakness. This is a threat that the company has been working hard at eliminating (Hicks, 2007). Venturing into new business, services and products might work as both strength and weakness for the company. This is because the company ventured into the discount department store, which not only earned profits for it but also culminated into declining businesses. Its expansion strategy is identified as a weakness because the company does not focus on the amount of damage that it inflicts on other businesses in the supermarket industry. Target is one company that has remained in the expansion stage due to the stiff competition that Wal-Mart has put against it.

Describe the key Short run opportunities and threats facing Wal-Mart

The Short-run opportunities and opportunities for the company include the venturing into low-price internet services and PCs due to the high priced products in the market. Venturing into freestanding units in the huge pharmacy business of the company is an opportunity open for the company in the short-run (Marquard, 2007). Urban cores present another short-run opportunity to the company especially due to the threat of the running out of conventional location opportunities. The availability of retail opportunities in countries like Russia, Australia, France, Spain and Italy is another short-run opportunity for the company. Another opportunity in the short-run is global sourcing in which the company will acquire goods at a lower cost from suppliers. The threats present for the company in the short-run include the availability of stiff competition from other companies because of the public relations obstacles exhibited by the people questioning the company’s economic, political, social and cultural implications. Venturing into business in the urban centers will be a threat in the short-run because the cost of conducting business in these areas is higher than in rural regions.

Describe the key Long run opportunities and threats facing Wal-Mart

The long-run opportunities for the company include the possibilities for domestic expansion of its supercenters, as supercenters can exist together without the risk of self-cannibalization. Due to the approach of the US market towards saturation, the company has the opportunity of focusing on the warehouse club model (Berman & Evens, 2007). Neighborhood Market expansion is another opportunity at the disposal of the company in future, which will be achieved after the slowdown of the supercenter expansion. The use of the web in attracting more customers to the company’s stores is another opportunity that can exist in both the short-run and the long-run. Another opportunity for the company in the long-run is the freestanding c-stores due to the lack of dominant players in the convenient store and gasoline sectors. Some long-term threats for the company include the slowdown expansion of the supercenters after ten years and yet most of the company’s revenue is earned through the supercenters. Another long-term threat for the company is the fact that in future conventional location opportunities will run out hence the company’s expansion plans will have to be halted. The company’s expansion to other countries might be faced with different complexities hence exhibiting another threat in the case of expansion.

In planning for the future, why is it important that Wal-Mart distinguishes between short-run and long-run opportunities and threats?

In planning for the future, the company should distinguish between short-run and long-run opportunities and threats to enhance the measuring of the methodical progress of the company such that the short-run opportunities can be taken advantage of at a faster rate as compared to the long-run opportunities. In most cases, the short-run opportunities are meant to last for a short period and the growth of the business can be substantially boosted at a faster rate through taking advantage of these opportunities (Soderquist, 2005). Consequently, long-run opportunities are those opportunities whose results will be realized in the future hence it is fundamental for the company to distinguish between the two so that it can gain from the faster results of the short-run opportunities and the slow but sure results acquired from the long-run opportunities.

Most businesses are affected by both the short-run and long-run threats in different ways.

It is therefore important for Wal-Mart to distinguish between its long-run and short-run threats such that it can be able to anticipate the effect of the short-run threats in the case where it cannot manage to avoid them. At the same time, it should be able to identify the long-run threats to make sure that it comes up with mitigation solutions for the threats hence removing all the obstacles hindering its success in future (Fish, 2006). Most companies build their competitive advantage based on the short-run opportunities as they are always ignored by other companies who are more interested in long-run opportunities therefore if Wal-Mart distinguishes between the long-run and short-run opportunities, it can manage to build and maintain the competitive advantage it has been enjoying for a long time.

How can Wal-Mart maximize its productivity without sacrificing too much customer service?

It is desirable for a company to reduce its cost when it plans to increase it productivity with the aim of reducing the opportunity costs. Customer service is one of the costs that a company can decide on reducing when plans for increasing productivity are underway. Because Wal-Mart is a company whose main goal is the increase of productivity while at the same time providing quality customer service, it has to adopt strategies that would ensure the reduction of other costs while maintaining the customer service cost at the same level in the process of increasing productivity (Spotts, 2005). The company can focus on global sourcing as this reduces the cost of the materials utilized in the production process. This will ensure that customers are provided with high quality service and at the same time they are provide with a variety of products due to the increase in productivity. The business of the discount department stores of Wal-Mart has been declining of late therefore increasing costs, which if reduced could steer the increase in productivity.

To counter this effect, the company should increase productivity by replacing a large number of the discount department stores with the supercenters, which are geared at providing the best customer service (Werther & David, 2011). Over time, the conventional location opportunities for supercenters will run out and the company will be forced to open up supercenters in the urban areas. This might increase the company’s costs, consequently reducing its productivity. When the level of productivity is reduced, the company might be forced to compromise of customer service by reducing its cost. This can however be avoided by focusing on the Neighborhood markets, which do not require a lot of space as compared at the supercenters. With the increase in the popularity of the Neighborhood markets, the company will manage to cut-down on the opportunity costs hence avoiding the tampering with the customer service costs.

In comparing itself to Target, what criteria should Wal-Mart use? Why?

Target is on company that does not build stores in small towns hence Wal-Mart can take this advantage and increase the number of supercenters in every small town. The increase in the number of supercenters translates into the increase in productivity as most of the company’s revenue is attained from the supercenters (Fish, 2006). Target has been struggling where expansion is concerned because it has not adopted the expansion strategies utilized by Wal-Mart. Target might have wider isles in their stores while Wal-Mart has narrow isles, but the isles of Wal Mart translate to the variety of products that it can offer. For this reason, Wal Mart should take advantage of the size of its stores to offer customers a variety of products, which encourages an increase in productivity. The prices at target might be low as long as they are not low enough to force the company to bankruptcy. According to target, the only company that can offer lower prices is Wal-Mart.

Wal-Mart can therefore take this advantage to lower their prices with the aim of increasing their profits. Due to the increase in profits, the company can afford to increase its productivity because it has enough financial backing to cater for the increase in costs that accompanies increase in productivity. Both retailers have been providing a low pay to their customers. For Wal-mart to encourage its workers to work harder with the aim of increasing productivity, it should increase the wages it pays its workers (Berman & Evens, 2007). This will culminate into the increase in worker motivation and increase in productivity in the long-run. The quality of customer service provided at Target is known to be better than that of Wal-Mart. Therefore, because Wal-Mart has managed to be more competitive than Target, it should invest more on its customer service. This will increase its customer base hence increasing revenue and productivity.

What should Wal-Mart’s future role be in communities in which it operates? Explain your answer.

As Wal-Mart is the largest retail corporation in the world, its opening a store in a certain small town translates to the loss of business to the retail traders. For this reason, Wal-Mart should ensure that it halts its expansion plans especially to towns whose population is below 4400. This will augment the growth of the retail trades in the small towns. Supercenters might be the biggest contributors to the high revenue acquired by the company, but they require a lot of space that has been impacting negatively on the environment (Soderquist, 2005). The company should therefore as a measure of corporate social responsibility focus more on Neighborhood markets, which do not require a large space but offer the same products and services as supercenters. The company should embark on the provision of more fresh and healthier product to its customers to contribute to the enhancement of a better health care for small communities and the US population at large.

When the company opens up a new store in a certain community it should focus on sourcing the labor force from the community rather than bringing in employees from other communities and regions. This will go ahead in improving the economic prospects of the community in question. For example, the company brought many benefits to the people of Cedar Hills, Utah when it opened a supercenter in March 2009 (Berman & Evens, 2007). Although supercenters are linked with many disadvantages to the community, in this case it came as an advantage to the community. The grants that the company acquires from the grand openings of its different stores can be channeled to different community development programs especially with the increasing numbers of the homeless. With the increase in climatic changes, the company can embark on the production of energy saving products, which will work towards saving energy.

 

Works Cited:

Berman, Barry, and Evens, Joel R. Retail Management: A Strategic Approach 10th

Edition. Upper Saddle River, New Jersey:  Pearson Education, Inc, 2007.Print.

Fishman, Charles. The Wal-Mart Effect: How the World’s Most Powerful Company Really Works, and How It’s Transforming the American Economy. New York, NY: Penguin Press, 2006. Print.

Hicks, Michael. The Local Economic Impact of Wal-Mart. Youngstown: Cambria Press, 2007. Print.

Marquard, William. Wal-smart. New York, NY: McGraw-Hill, 2007. Print.

Soderquist, Don. The Wal Mart Way: The Inside Story of the Success of the World’s Largest Company. Nashville: T. Nelson, 2005. Print.

Spotts, Greg. Wal-mart: The High Cost of Low Price. New York: Disinformation, 2005. Print

Werther, William, and David, Chandler. Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. Los Angeles: SAGE, 2011. Print.