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INTRODUCTION

When it comes to marketing your business, there are three generic strategies you can use focus , differentiation and cost leadership. While the cost leadership strategy can be highly successful, it can be can be difficult to employ. It involves marketing your company as the cheapest source for a good or service. This means that you need to minimize your costs and pass the savings on to your customers. By looking at examples of firms that have employed this strategy successfully, you can see how it can benefit your own business.

Wal-Mart Stores Inc. has been successful using its strategy of everyday low prices to attract customers. The idea of everyday low prices is to offer products at a cheaper rate than competitors on a consistent basis, rather than relying on sales. Wal-Mart is able to achieve this due to its large scale and efficient supply chain. They source products from cheap domestic suppliers and from low-wage foreign markets. This allows the company to sell their items at low prices and to profit off thin margins at a high volume.

Wal-Mart is incredibly successful in managing its supply chain. Wal-Mart applies the most reliable supply chain management system which is very efficient because almost all product data can be tracked to and from the manufacturer, warehouse, and the store shelf. Efficiency in supply chain system may save Wal-Mart several million dollars as it can prevent losses from faulty product management.

The Successful Cost Leadership Strategies of Wal-Mart

When you walk into Wal-Mart, the first thing you will notice is that the prices of the WalMart are much lower than those of any other stores. Why does Wal-Mart offer lower prices? What are its strategies in lowering the prices?

There are two activities that drive the strategy of Wal-Mart in lowering prices; primary activities and secondary activities. Primary activities include all the activities such as supply chain management, operations, distribution, sales and marketing and services etc.

Wal -Marts strategy in cost leadership

Efficiency in supply chain management: Supply chain management is management of a network of

interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

Wal-Mart is incredibly successful in managing its supply chain. Wal-Mart applies the most reliable supply chain management system which is very efficient because almost all product data can be tracked to and from the manufacturer, warehouse, and the store shelf. Efficiency in supply chain system may save Wal-Mart several million dollars as it can prevent losses from faulty product management.

Efficiency in operations and distribution strategies: Operations and distributions strategies have helped Wal-Mart achieve low prices- Wal-Mart opens the stores outside of large cities and within 200 miles of existing stores. By bunching stores together in small areas, distribution costs are below average. Furthermore, Wal-Mart seeks to meet different customers needs with four main distinct retail options; these include discount stores, supercenters, Sams Clubs, and neighborhood markets. In addition to that Wal-Mart is trying to open Wal-Mart Express in urban cities where physical space is at a premium.

The secondary activities of the Wal-Mart stores include all activities and technologies that indirectly contribute in achieving lower prices such as R&D, human resources management especially employee training, etc.

Bargain power: Wal-Mart buys its products at rock-bottom prices, exchanges high purchase volumes for low cost while passing the savings onto its customers. The bargaining power of suppliers is weak. Many suppliers even give in to Wal-Marts pressure because they depend on the discount retailer for the majority of their sales. For most producers, Wal-Mart is their largest account. Obviously, they would do what Wal-Mart wanted them to do if they hoped to maintain their sales. Furthermore, the bargaining power of buyers is also weak because there is a very broad base of customers and a significant demand for low prices.

Failure of potential entrants: Wal-Marts ability to continuously drive its costs lower while satisfying customers needs makes it potential entrants very difficult to compete with Wal-Mart.

Therefore, those are the strategies that Wal-Mart uses to sustain cost leadership position in the value chain market.

Footnote: This is a general study using most updated references and cases study to uncover the successful cost leadership strategies of Wal-Mart. Not all primary activities and secondary activities are discussed. But special emphasis is put on efficiency in supply chain management and efficiency in operation and distribution. In addition to that, this study mentions about the role of Wal-Marts buying power among suppliers, producers, competitors and the bargain power of buyers in order to illustrate the cost leadership of WalMart.

1. a. Corporate Strategy: Before analyzing Wal-Marts corporate strategy, it is important to decide what business it is in. For example, if Wal-Mart is in the business of selling consumer goods such as TVs, sheets, clothes, etc then it is pursuing a concentric strategy by entering the food business. However, this changes depending on how you analyze what business Wal-Mart is in. Wal-Mart is in the business of selling everything customers need in their everyday lives. This includes the consumer goods listed above as well as food-service items. Even still, Wal-Mart pursues multiple strategies. Concerning concentration, Wal-Mart continually finds more consumer goods to sell at its stores which can take money from competitors. Additionally, when Wal-Mart entered into the food market, it quickly consolidated and held to good, saleable products. Wal-Mart never forays too far into a market and only sells what will make it a profit.

Recently, Wal-Mart has pursued a conglomerate strategy by starting to sell used cars at some of its stores in Buffalo, New York. Selling cars is an entirely different industry than selling consumer goods. Additionally, it requires a whole new set of expertise that does not come easily. As far as future plans are concerned, Wal-Mart should abandon this strategy and stick to what they do best.

Lastly,

an

argument

can

be

made

that

Wal-Mart

is

also

pursuing

vertical integration strategy. Wal-Mart has developed its own name brand to sell products called Sams Choice. This puts Wal-Mart into the business of making things like soda, cereal, and dog food. While they still dont grow their own crops or raise their own livestock, it is still a form of vertical integration. Also, Wal-Mart works heavily with its suppliers. This symbiotic relationship can be see as vertical integration due to the level at which Wal-Mart analyzes its suppliers and improves their manufacturing processes, etc.

b. Business Strategy:

Wal-Mart definitely has the business strategy of Low Cost Leadership. They do nothing to really differentiate themselves from competitors and provide no-frills self-service stores that always provide the lowest prices. Wal-Mart has built enough clout with suppliers that they can dictate the prices and go in and change suppliers manufacturing processes in order to wring out more and more savings for the consumer. Everything that Wal-Mart does from calling suppliers collect to having execs double up in hotel rooms, is to save the customer money. While they do try to provide good customer service on top of low prices, Wal-Marts strength is low-prices. No one has such a supplier and distribution network like Wal-Mart that allows such low prices.

Human Resource Management

Wal-Marts success in Human Resource Management is keeping their workforce of 1.3 million from unionizing, while adding to it and pursuing other HR activities to further WalMarts success. Wal-Mart would not have been able to expand and have the same level of success without hiring and taking care of quality employees. Some of Wal-Marts human resource activities include employee advancement, employee recruitment on college universities, and employee training and development. Additionally, while most firms have slowed down their hiring of new employees, Wal-Mart has sought out new ways to attract employees to compensate for their further expansion over the next five years.

Looking at Wal-Marts Human Resource Management, one of the most important aspects is Wal-Marts employee advancement program. Currently, 65% of the companys managers began working hourly jobs, such as cashiers. Wal-Mart has taken great efforts to ensure that there are opportunities for their employees to rise up through the ranks so to speak. This availability of opportunities to advance past low-paying hourly wage jobs undoubtedly is part of the reason that Wal-Mart was voted as one of Fortune magazines most admired companies and was distinguished as one of the best companies to work for in the U.S.

In the realm of employee recruitment and employee training and development, Wal-Mart has targeted college students to add to their workforce. Wal-Mart achieves this recruitment by fanning out over 80 college campuses. While they are at these colleges, they are also able to

expand their demographics by looking at minority fraternities and sororities, which brings all types of people from different backgrounds, races, and genders together in the Wal-Mart family. Having a wide variety demographic for a workforce, only serves to attract more people to seek employment with Wal-Mart because they are able to show that they have a very open hiring process. Beyond this recruitment, Wal-Mart has taken an additional step with college students by offering management training for college students while they are still in school so they are more developed and prepared upon their graduation. This program serves the purpose of making college students consider careers with Wal-Mart, and over the last two years, the program has had immense success.

The results of these Human Resource activities speak for themselves. Wal-Mart has achieved a very good retention rate for their employees, and the proof of this is their focus on adding to their workforce over the next five years by hiring 800,000 new employees bringing the total over two million. Despite the reports that Wal-Marts employees are underpaid and not given benefits, Wal-Mart has not wavered. Employees, as much as 60%, have gone on record saying that they stay with Wal-Mart because the benefits allow them to take care of their families. If employees were unhappy and leaving at a considerable rate, then the focus would be on filling these open spaces rather than expanding their workforce.

ASPECTS:

One aspect of Wal-Mart that sets them apart from other corporations is how they manage their relationship with their suppliers. We have determined that Wal-Mart is such a dominant force and has become such an important account for their suppliers that they have managed to eliminate Supplier Power. By eliminating Supplier Power, Wal-Mart can pursue achieving their goals and concentrate purely on their Cost Leadership Strategy, which serves the consumer with Everyday low prices. However, the fact that Wal-Mart is able to disregard Supplier Power begs the question of where exactly does Wal-Mart derive its power? Additionally, if Wal-Mart has nearly eliminated Supplier Power, then what kind of relationship do they have with their suppliers?

Wal-Marts power is derived from their size and the influence that comes with it. A quick look at Wal-Marts numbers is the proof of Wal-Marts size and power. Some of Wal-Marts numbers include 23% of Cloroxs sales and 20% of Revlon and RJR Tobaccos sales. If these companies choose to walk away from their supplier relationship with Wal-Mart, then they would lose out on nearly a quarter of their revenue. The fact of the matter is that this same concept extends to all of Wal-Marts other suppliers like Kraft, Proctor & Gamble, Gillette, Campbells Soup, and many more. The reality that these suppliers live in is one where they know that their Wal-Mart account is one that they cannot afford to lose. In fact, suppliers are also faced to look at the predictions that, in an estimated five years, Wal-Mart will double in size, which mean Wal-Marts account with only continue to grow.

Since Wal-Mart has effectively eliminated Supplier Power, it is also important to consider the state of their relationship with suppliers. In many ways, Wal-Mart has changed the dynamic of the supplier and buyer relationship. Joe Galli, Newell CEO, was quoted as saying, The days of price increase are over. Often times, Wal-Mart will tell their suppliers upfront what they will and will not pay for a good. However, despite the fact that Wal-Mart has removed the possibility for supplier price increase, their suppliers generally feel one of two ways about Wal-Mart. The first supplier sentiment is serving a client like Wal-Mart forces a company to become more efficient. Many suppliers feel that doing business with Wal-Mart is the equivalent of entering a corporate basic training exercise. Robin Prever, who was CEO of Saratoga Beverage Group, was quoted as saying that this relationship with WalMart, wakes everybody up. And all our customers benefited. We changed our whole approach to doing business."

In this regard, if their suppliers feel cheated, does it really affect Wal-Mart in the end since suppliers cannot afford to lose their business? The answer is yes because, suppliers can affect manufacturing time, product quality, and inventory levels. All of these aspects of supply can shape Wal-Marts ability to effectively restock their shelves for their inventory turnover. In addition, if Wal-Mart pursued avenues that would seriously undercut their suppliers, then they face a variety of possible repercussions. For instance, if suppliers became unable to take care of their workforces, then Wal-Mart could see significant drops in their product inventories. Therefore, even though suppliers do not have power in regards to their relationship with Wal-Mart, it is still important for Wal-Mart to maintain relations with their 21,000 suppliers because suppliers are the key to Wal-Mart achieving its goals and strategy.

Growth Journey Of Wal-mart

During the 1970s Wal-Marts sales increased from $31 million to $1.2 billion, a signification growth rate of 287% & the number of Wal-Mart stores increased from 32 to 276.

During the 1980s Wal-Marts sales increasing at compounded annual rate of over 36%. Introduction of the Sams Wholesale Clubs in 1983, and the Hypermart (which was later known as Super Center) in 1987. Made heavy investments in IT. In 1987, Wal-Mart installed satellite communication systems costing an estimated $700 million. In 1989, Wal-Mart stared building a huge database of customer information in its data warehouse system.

During 1990s

Introduced customer information kiosks in its stores in 1996.

During 2000 Wal-Mart was registered as one of the worlds largest companies, with revenues of $165 billion in fiscal 2000, and Launched the store of the community program, By 2003, Wal-Mart, was the worlds largest company, with revenues in fiscal 2002 amounting to $244.5 billion.

Strategy of Wal-mart
Same goods for less( charges 2-5%lower price) & still earns profit. Very good operational efficiency Use of IT in all verticals of business Effective use of logistics management Global Expansion for new market opportunity Networked to HQ via private satellite in 1983 Bargaining power over suppliers Data used to profile each market Predicts demand, optimizes stock

Operational Strategy: Wal-mart created significant advantage through the systems it developed to manage its warehouses and stores Initially Wal-mart choose locations without direct competitions from large chains(rural areas) Wal-mart created a culture of supporting values, skills, technologies, supplier customer relationship, HR and approaches to motivation that could not be easily copied by other firms

Wal-marts future
As Wal-Mart continues to grow and expand, they should continue looking into new product markets. The next opportunity that Wal-Mart should seek to incorporate into their stores is the sale of musical instruments. Specifically, Wal-Mart should look into the sale of guitars and other band equipment. This product market is a viable area for Wal-Mart to consider because they have already involved themselves in the music industry.

Wal-Mart is responsible for 14% of music sales worldwide, and they have also jumped on the online music bandwagon by selling MP3s on their website for $.88 a song. They can bring a completely new aspect of music to their consumers by selling quality musical instruments, such as Fender electric and acoustic guitars, amplifiers, drum equipment, etc. Fender is one of the biggest players in this industry being the largest supplier of solid body electric guitars. Last year, Fender made an estimated $256 million dollars of sales with a workforce of 1,800 employees. The musical instrument industry is one that is growing because of increased consumer interest. Another company that has found a great deal of success is Yamaha, which is the nations largest maker of musical instruments. Yamaha made an estimated $822 million of sales last year. Yamaha work mainly through dealers. These companies like Fender, Gibson, and Whether through online sites, such as

guitarplayer.com or through actual dealer stores like Sam Ash, these dealers specialize only in selling musical instruments.

If Wal-Mart could come to an arrangement with a company like Yamaha or Fender, it would add a whole other level for musical instrument sales. Wal-Mart could offer a variety of products with a variety or price ranges that will attract experienced musicians and beginners alike. People that have never previously thought about buying a nice beginner guitar could now have the option to purchase a Fender or Yamaha guitar at a Wal-Mart everyday low price. One question that might come to mind is why wouldnt a customer seek out a dealer if they wanted to purchase a musical instrument? One potential answer to this question is that often times dealers are not nearly as accessible as a Wal-Mart. Also, dealers can raise prices and sell an overpriced product to an unsuspecting new musician. Dealers have the luxury of overpricing their products because it is the only source of revenue and there is very little competition from other dealers in a single geographic area. However, if a consumer were to see musical instruments and equipment for sale in a Wal-Mart, they could feel comfortable that those products meet Wal-Marts Cost-Leadership Strategy of Everyday Low Prices. The bottom line for Wal-Mart is that there is definite potential in this product market, provided that they could find a way to enter the market effectively and stay true to their values while supplying their 3,000 plus stores with musical instruments.

In addition to adding products to its stores like musical instruments, Wal-Mart needs to carefully plan further expansion. While most of the US market is already saturated with regular and super Wal-Marts, there is still room to expand. Wal-Mart still has a lot of room to grow in both New England and in California. However, they need to be careful about doing this so as to not overextend themselves. If they were to do so, it could send ripples throughout the company, causing them to raise prices and destroy what they have built. Based on personal observations from having lived up there, New England is very

sensitive about outsiders coming in, especially when it is a large chain. Most of the restaurants and stores are either owned or operated locally, and are rather small. Most convenience store chains only have one or two stores. Additionally, people like feeling close and maintaining the ambiance. Therefore, Wal-Mart needs to expand slowly into New England so that people can get used to it, just like they have gotten used to large-chain Dunkin Donuts. Also, they need to alter their store strategy and consider opening smaller stores that would fit into the ubiquitous small New England town. When expanding into California, they again need to take it slow. There have been a lot of complaints in California about zoning for Wal-Marts. Wal-Mart needs to penetrate the market slowly and do more to help the community in order to prevent backlash.

Finally, Wal-Mart needs to expand further into international markets. Once again the key word is caution since not many countries operate like the United States and Wal-Mart will have a steep learning curve. Wal-Mart should consider pairing up with existing companies when it is possible. This is because they will receive built-in experience and an existing structure. They can then take these companies and Wal-Mart-ize them like they did in Canada. Additionally, they should build only a couple stores in a new country until their staff has learned enough about the idiosyncrasies of the country theyre in. Once they learn about a new country, theyll be able to leverage their strengths to deliver low prices everyday.

Wal-Marts Strategy through the World

Argentina:
Argentina hasnt been a high priority market for Wal-Mart. They entered in 1995 by setting up 100%-owned greenfield stores. They were pretty tiny: by 2007 they had only 13 stores. Argentina is a small economy compared to Brazil and Mexico. In 2007, according to a Citigroup report, Wal-Marts marketshare of organized retail was 4% and the combined marketshare of the two biggest players was 22%. No 3 is not a desirable position in discount retailing because it requires local scale and local marketshare

Mexico:
Wal-Mart, which is No 1 here, entered through a 50:50 joint venture with the leading retailer. They soon acquired the partner completely. In their business, local marketshare is critical. So what Wal-Mart sells in Canada, which is right next to the US, over 85% of it is sourced from Canada. It is all about local economies of scale, local purchasing power and local logistics. Discount retailing is a very multi-local business. When Company A competes with Company B, local scale and local market power determine the cost structure, branding and retail presence in eyes of customer. Wherever Wal-Mart did not pursue this logic they ran into trouble. In the 1990s when Wal-Mart opened its first store in Mexico, they had a huge American-style parking lot. They found all the shopping carts were piled at far end of parking lot because customers came in via buses not cars and went to one side which was closer to the bus stop. They made mistakes in terms of the product mix. They were selling the same thing as in the US. There was a story about them selling golf balls to customers whose income levels were low. The mistakes they made in Mexico were relatively early and non-fatal. They recovered from them very quickly. That was really the first non-US foray so they were learning on the fly. Today Mexico is a fantastic story for Wal-Mart.

Brazil:
In Brazil it took them more time to become No 1 because they had tough competitors like Ahold and Carrefour. As the competitors stumbled, they acquired the Ahold stores. Over time Wal-Mart strengthened in Brazil. They made mistakes again with regard to localization of the product mix.

Hong Kong:
Hong Kong was their first foray into Asia. It was a brief disaster. Wal-Mart knew nothing about Asia. They entered Hong Kong through a joint venture with a Thai conglomerate. This was unwise because instead of picking a Taiwanese or Hong Kong company as a local partner, they picked a Thai partner. They opened three stores and shut them down very quickly. Hong Kong is a very compact place and they didnt factor in how customers would get to the stores. There was nothing wrong with the product mix. They did not factor in the broader ecosystem how customers will come and go. They chose a very inconvenient location for customers. In 1995, they had 2,900 stores worldwide and if three bombed, it didnt matter so much. It shows that Wal-Mart from time to time, hasnt been the smartest company in terms of joint venture partners.

Korea:
Wal-Mart entered Korea in 1999. They entered by acquiring four units from Macro (a Dutch chain, now owned by Metro). Korea is fairly mature market and there was a local company called Emart, which is the market leader. Emart warned Wal-Mart that this is a very local industry and it doesnt matter that you are the biggest retailer in the world we are the biggest retailer in Korea. Wal-Mart made an acquisition offer to Emart which Emart rejected. Wal-Mart entered as a small player and could never become big. Seven years later they sold their stores to Emart and got out.

China:
Wal-Mart is still too early in the game in China. Its a respected retailer in China. They do a good job in terms of localization of the product mix and store format. There have been no big mistakes. Carrefour entered at roughly same time as Wal-Mart but it is growing faster, has double of the number of stores and is much more profitable than Wal-Mart. Wal-Mart appears to be looking at China as one big national market the same way it views the US. Carrefour looks at China as a portfolio of regional/local markets. Unlike Carefour Wal-Mart has centralised sourcing and a centralised distribution centre.

Carrefour gives greater autonomy to store managers. It is not even relying on local economies of scale, forget global. Chinas infrastructure is better than Indias but it is in the process of being built up when you have weak infrastructure for consumer goods, you have national manufacturers and not local manufacturers. In terms of food products, Chinese like to buy fresh meat so local sourcing is much smarter than centralised sourcing. Just like any developing economy, heterogeneity across China in terms of what people want to buy is very high.

Carrefour can open one store in the middle of the city and tell the local store manager you are an independent profit manager so you decide what you want to buy, from whom. Your competitor is the small mom and pop store in the city. Its a perfectly fine strategy. In retailing, local government bureaus become very important so if you give store managers high degree of autonomy it makes it easy for them to understand how to work with local governments. Carrefour is looking at China as a portfolio of local markets.

Wal-mart Strategy in India


When you enter a new market, a lot depends on the kind of a partner you have. If you have a partner that itself has ambitions to be a major retail powerhouse in India, there is a strategic conflict. Sooner or later India will permit foreign retailers to have direct equity ownership in India. Then what will Wal-Mart be left holding? Bharti has retail ambitions it will want to buy Wal-Marts shares then, rather than sell.

If stores are branded BestPrice, what is Wal-Mart getting in this deal? One could argue that Wal-Mart should have thought of India as a portfolio of regional markets and work with smaller regional partners. Its hard for them to have much bargaining power or have national ambitions. They would have been happy to brand them as Wal-Mart and when regulations change, Wal-Mart would be able to buy them out.

Wal-mart Entering India


1.Wal-Mart should focus on local customer preferences, strategic locations, regionaldiversity. Given the compliance with

Regulatory norms and fast market penetration, Wal-Mart to gofor strategic alliance joint venture. Success depends on implementation within time-limits.. Wal-Mart should apply its Repeatable formula of Lowest price - supported with efficientsupply chain and Information technology for Indian markets as well.. Organized retail are expected to increase its market share from 5.7% in 2011 to about 12%by 2016. Major gainers are expected to be the new entrants like Wal-Mart and Carrefour. Recommendations. Increasing per capita income and changing consumption pattern are the key drivers of fastgrowing Retail sector in India..With the opening up of Indian Retail sector for FDI up to 51% in multi-brand retail, India isset to become hub of Multinational Retailers from across the Globe. 2. The Corporate Level Decision: Entering India Should WalMart Enter India? No Yes More Downside Risk Growth Opportunities Acquiring a local Player Joint Venture Organic Start Growth Greenfield Operational & Cultural Issues - Not Recommended Recommended Regulation Issues Too risky Not Not Recommended Recommended Considering various Regulatory & Risk vs. Return aspects, it is recommended that Wal-Mart should enter India with a strategic Joint Venture, at least to start with.

3. Indian Retail Market - Growth & Opportunities Indian Retail Food Industry Market Value Indian Retail Industry had total Revenues (Billion USD)of $470 bn in 2011. 500 400 300 CACG between 2007-11 stands at 10.7%. 200 100 Data Monitor Research estimates a 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Industry size of $675 bn between 2010- Source Datamonitor India Food Retail Industry Retail report dated June 20102014 with a CAGR of 14.7%. Indian Food Retail Segmentation 2009 (% by Value) Fast Urbanization & Young demographics 1.3% 0.1% 0.3% Convenience Stores &are key drivers. Gas Stations 32.9% Food and Drinks Changing preference will boost 65.4% Hypermart, Supermarhypermarket & super markets in India. t & Discounters Cash & Carries & Warehouse Clubs With rising per capita income & changing consumption pattern, retail industry to become massive in next 5 years. Organized retail & hypermarkets to have a even higher proportionate growth. 4. Profitability Analysis: Porters 5 Forces Threat of New Entrants Carrefour to enter market. Wal-Mart has first mover advantageBargaining Power of Suppliers Competitive Rivalry Bargaining Power of Customers With high volume model of Large unorganized sector Present Organized/ Wal-Mart, suppliers have low Moderate to high organized Unorganized sector unable to bargaining power sector e.g. Big Bazaar give low price deals Threat of substitute products No immediate

substitutes possible to Retail With fast increasing demand & proposed model of cost leadership, Indian Retail Industry looks substantially PROFITABLE. 5. SWOT Analysis: Wal-Mart Strengths Weakness1. Deal with Suppliers - Cost Leadership 1. Unable to adapt to different cultures/2. Efficient Supply Chain countries e.g. Germany3. Strategic Location/ Facilities at Stores 2. Heavily dependent on bulk sales4. Strong IT backup 3. Late entrants5. New Technology Implementation 4. No success beyond Americas Opportunities Threats1. New Economies - India/ China/ Brazil 1. Restriction on FDI e.g. India2. Rising disposable incomes 2. International law against dumping3. New channels Marketing/ Internet 3. Regional competitors based models 4. Law against Monopoly Anti-thrust4. J.V. with some leading players policies Opportunities look impressive. The key to success lies in how Wal-Mart tackles local laws/ regulations & makes its repeatable formulas work in new markets. 6. Key Success: Factors for Indian Markets1. Cost Leadership Attracting Masses2. Strategic Retail Outlet Location3. Wide Range of Goods/ Variety - keeping ethnic & economic diversity in mind4. Sales Promotion/ Marketing Campaigns in Festive SeasonsStrategic Gaps in Indian Retail Sector1. Limited mainly to Metros, Tier-I cities. Huge potential lies in sub-urban, rural markets, Tier-II & Tier-III cities2. Geographical Gaps Markets

like North East are yet to be explored3. Truly Global Shopping Experience missing in Indian Retail Stores Wal-Mart has to incorporate Indian Values & preferences while designing the business model. Focus on strategic gaps critical for its eventual success. 7. Competitors in India: Name Category Target Segments Comments Rating Big Bazaar Merchandize Diversified Middle Class(Future Group) The main competitors Pantaloons Apparels, Accessories Upper Middle Class +(Future Group) Lower Upper Class Star Bazaar Merchandize Upper Middle Class + String Backing by Tata, (Tata Group) (Diversified) Lower Upper Class Limited Reach Spencers Smaller outlets, Limited More Merchandize Middle/Upper Middle Growth D.Mart

ClassShoppers Stop Apparels, Accessories Mostly Upper Class Strong hold in Metros. Good (Corporate) presence in Target Segment LifeStyleGiven bargaining power (with FMCG

companies) along with its Logistic& IT support, Wal-Mart is expected to tackle its competitors. Key lies in capturing new geographies & finding strategic locations 8. Wal-Mart Expansion: Past Track RecordCountry Mode Strategy ResultsCanada Acquired a Weak Player Operating in markets which Very Successful required minimum adaptation High Brand Recognition Segment UK Acquired ASDA M&A Synergies SuccessfulCompetition from TescoGermany

Acquired a Big Player Leveraged Acquired Network Failed Werkauf cultural & operational issues China Greenfield Operations Sourced from Chinese suppliers; Neutral- focused on need gaps Labour Union and Law Suit issuesSuccess & Failure mainly driven by adapting to local culture, consumer need gaps and tackling Government issues. 9. Key Challenges in India: 1. FDI Restrictions - FDI Restrictions of 51% on Multi-brand Retail. Proposal for increasing the cap to be discussed in winter session, but chances are low .2. Social & Political Resistance - A strong opposition from certain political parties is certainly expected in some pockets of society local retailers, dealers would protest 3. Countering deep penetration of Mom & Pop Stores Especially in Tier-II & III cities, the network of Kirana Stores is extensive. Also sales on credit facility is available which WalMart cannot do. 4. Poor Infrastructure will cause friction - Indian standards of roads, ports & freight facilities are way below global benchmark. It will lead to inefficiency in the value chain.

Wal-Marts Keys to Successful Supply Chain Management


As the following case study demonstrates, a successful supply chain management strategy can lead to lower product costs and highly competitive pricing for the consumer.

Over the past ten years, Wal-Mart has become the worlds largest and arguably most powerful retailer with the highest sales per square foot, inventory turnover, and operating profit of any discount retailer. Wal-Mart owes its transition from regional retailer to global powerhouse largely to changes in and effective management of its supply chain.

Wal-Mart began with the goal to provide customers with the goods they wanted when and where they wanted them. Wal-Mart then focused on developing cost structures that allowed it to offer low everyday pricing. The key to achieving this goal was to make the way the company replenishes inventory the enterprise of its strategy, which relied on a logistics technique known as cross docking. Using cross docking, products are routed from suppliers to Wal-Marts warehouses, where they are then shipped to stores without sitting for long periods of time in inventory. This strategy reduced Wal-Marts costs significantly and they passed those savings on to their customers with highly competitive pricing. Wal-Mart then concentrated on developing a more highly structured and advanced supply chain management strategy to exploit and enhance this competitive advantage.

Components of Supply Chain Management (SCM) The main elements of a supply chain include purchasing, operations, distribution, and integration. The supply chain begins with purchasing. Purchasing managers or buyers are typically responsible for determining which products their company will sell, sourcing product suppliers and vendors, and procuring products from vendors at prices and terms that meets profitability goals.

Supply chain operations focus on demand planning, forecasting, and inventory management. Forecasts estimate customer demand for a particular product during a specific period of time

based on historical data, external drivers such as upcoming sales and promotions, and any changes in trends or competition. Using demand planning to develop accurate forecasts is critical to effective inventory management. Forecasts are compared to inventory levels to ensure that distribution centers have enough, but not too much, inventory to supply stores with a sufficient amount of product to meet demand. This allows companies to reduce inventory carrying costs while still meeting customer needs.

Moving the product from warehouses or manufacturing plants to stores and ultimately to customers is the distribution function of the supply chain.

Supply chain integration refers to the practice of developing a collaborative workflow among all departments and components involved in the supply chain to maximize efficiencies and build a lean supply chain.

Wal-Marts Method of Managing the Supply Chain Wal-Mart has been able to assume market leadership position primarily due to its efficient integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain strategy has four key components: vendor partnerships, cross docking and distribution management, technology, and integration. Wal-Marts supply chain begins with strategic sourcing to find products at the best price from suppliers who are in a position to ensure they can meet demand. Wal-Mart establishes strategic partnerships with most of their vendors, offering them the potential for long-term and high volume purchases in exchange for the lowest possible prices.

Suppliers then ship product to Wal-Marts distribution centers where the product is cross docked and then delivered to Wal-Mart stores. Cross docking, distribution management, and transportation management keep inventory and transportation costs down, reducing transportation time and eliminating inefficiencies.

Technology plays a key role in Wal-Marts supply chain, serving as the foundation of their supply chain. Wal-Mart has the largest information technology infrastructure of any private company in the world. Its state-of-the-art technology and network design allow Wal-Mart to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics.

Benefits of Efficient Supply Chain Management Wal-Marts supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection, and highly competitive pricing for the consumer. This strategy has helped Wal-Mart become a dominant force in a competitive global market. As technology evolves, Wal-Mart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.

Conclusion
Wal-mart is the leader in the Low cost retailing industry With $404.16 billion in revenue, the company is bigger than 160 nations. Imbibing sustainable business practices in its business process Has strategic partnerships with P&G, China, several consulting firms which provide them sustainable business consulting. Excel at attributes such as price, quality, on-time delivery, selection, availability, that their competitors cant match Non-commodity brand based on lower prices, which is a key differentiator and value proposition to most of our society today. hange in tagline last year from Everyday Low Prices to Save Money. Live Better. proves its move toward sustainable products with low cost.

Awards & Recognition


Ranked #1 Consumer Staples Company - Carbon Disclosure Project (CDP) 2008 report and scored 89 out of a possible 100 Corporate Energy Conservation, Energy and Environment Award 2009 Green Choice Award 2009 Sustainability Excellence Award Top 50 Companies for People with Disabilities Top Organizations for Multicultural Business Number One Most Admired Company in America Best Place to Work in the United Kingdom (ASDA) Top Organizations for Multicultural Business

Bibliography www.Wal-Martfacts.com www.gartner.com www.forrester.com www.hoovers.com www.wikipedia.com www.tsmg.com www.finance.yahoo.com

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