Wal-Mart

Running header: Wal-Mart Stores in 2003

Wal-Mart Stores in 2003

Abstract

Wal-Mart Stores, Inc. is the world's largest retailer. Sam Walton opened the first Wal-Mart store in 1962 in Arkansas. Now, the company employs more than 1.3 million associates worldwide through more than 3,200 locations in the United States and more than 1,000 units in Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom. There are more than 100 million customers per week that visit Wal-Mart stores worldwide.

Wal-Mart Stores in 2003

"Wal-Mart Stores, Inc. is the world's largest retailer. Sam Walton opened the first Wal-Mart store in 1962 in Arkansas. Now, the company employs more than 1.3 million associates worldwide through more than 3,200 locations in the United States and more than 1,000 units in Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom. There are more than 100 million customers per week that visit Wal-Mart stores worldwide."(Ghemawat, 2004)

"Wal-Mart's mission is to follow Sam Walton's 3 basic beliefs. These beliefs are what the store was built off of. Wal-Mart has always stayed true to the beliefs that Walton established in 1962. The beliefs consist of respecting the individual, service to the customers, and always strive for excellence. Sam Walton had a strategy to keep his company strong throughout the years. He followed the three basic beliefs while also following his 10 factors that make his business the best. The 10 factors range from motivating your partners to controlling your expenses better than your competition. Sam Walton was a man who stayed true to what he thought had a business so great and he never went against his word." ( Ghemawat, 2004)

Sam Walton developed this strategy by placing a premium on imitation and

adaptation. He cruised not only his stores, but also competitors', tape measure and

recorder in hand, and had crashed at least one vehicle while counting the number of

others in a competitors' parking lot. He also cheerfully admitted to borrowing specific

ideas from all over the world. Self-service from another Ben Franklin franchisee,

company cheers from a visit to a Korean tennis ball manufacture, greeters from a Wal-

Mart store in Louisiana, calling employees "associates," a practice at J.C. Penny that he

was reminded of while vacationing in England, SAM's Club, the first significant new

format for Wal-Mart, inspired by the Price Club, and Hypermart USA, from Carrefour

that he visited in Brazil.

Analysis of the value adding activities supporting the generic strategy shows clear

elements of cost focus. "Low cost leadership helps the firm above average returns in the

industry despite strong competitive forces" (Porter, 1980). Traces of cost leadership are

noticeable in the value chain. Wal-Mart saves costs by holding stocks for less than 48

hours in its inventory. Wal-Mart is known to negotiate with suppliers for the lowest cost

of the product without any frills and marketing expenses which adds to the cost later.

Wal-Mart's purchase by the truckload saves costs again by bulk purchasing. Wal-Mart's

inventory handling and logistics distribution with its own fleet of 2000 plus trucks help

attain a cost effective distribution channel than relying on unreliable suppliers networks

which costs in delays. Wal-Mart appears to have a differentiation strategy. "The

differentiation strategy is one of differentiating the product or service offering of the firm,

creating something that is perceived industry-wide as being unique" (Porter, 1980). "It

can be design or brand image, technology, features, customer service, dealer network or

other dimensions" (Porter, 1980). High degree of customer service with store greeters and

'no questions asked' policies reaffirms Wal-Mart's differentiation from its competitors.

'Every Day Low Price' strategy helped reinforce Wal-Mart was the lowest price.

The third generic strategy advocated by Porter is the focus strategy. "The focus strategy

is focusing on a particular buyer group, segment of the product line or geographic market

as with differentiation, focus may take many forms" (Porter, 1980). Wal-Mart right from

its foundation located its stores to out of town areas with small populations. This was a

segment ignored by its competitors giving Wal-Mart an edge over competition by

locating itself in a low competitive environment before it creates competition. Wal-

Mart's focus on the segment of people targeted as well as its location of stores, does give

it an attribute of the focus strategy.