Wal Mart Case Study

When you think of the discount retail industry there is no bigger name than Wal-Mart. Wal-Mart has built them selves into the industry leader in a very competitive market, and they continue to set the bar for every company. But as of late Wal-Mart’s sales growth rate has been slipping, which is causing a major problem for them. For the past few years Wal-Mart has grown accustom to double digit sales growth rates, but recently they have been unable to match their previous success. Now Wal-Mart is faced with the challenge of regaining the success that they once had.

In order to recapture these high growth rates it is important to understand what lead Wal-Mart to these high growth rates in the first place. When analyzing Wal-Mart externally you find that its 5 forces tend to have a positive effect on the company. The company has high barriers of entry, a moderate threat of rivalry with Target and Kmart due to its expansion of super centers, and its incredible power over all its suppliers because Wal-Mart purchases so many products, the suppliers have little negotiating powers, and finally Wal-Mart technically has a great amount of power over its buyers because of its product variety and low prices.

When analyzing Wal-Mart internally you discover may things that lead to their success. Probably the number one thing that led to success is their world class supply chain. Wal-Mart’s supply chain is remarkable and really allows them to cut cost by eliminating unneeded steps. For instance their supply chain is so high tech that it can notify Wal-Mart’s suppliers directly (cutting out worker intervention) when inventory is low for certain products. Another internal strength that has lead to Wal-Mart’s success is its ability to focus on driving costs down to ensure every day low prices. Wal-Mart has never drifted away from this motto. This has led to Wal-Mart’s extensive self size and amount of products offered which allows them to take advantage of economies of scale