It is actually quite the opposite, Wal-Mart’s supply chain is very customer focused, which is what gives them an advantage over their competitors. Wal-Mart focus’s on the customer and employs a pull strategy, where the demand from customers is the basis for production for Wal-Mart suppliers. This gives them a unique production method, in that they do not produce based on traditional methods rather it is based on short-term forecasts of demand generated by their customers. This allows them to not only keep stock costs low, it also allows them to track demand of individual products. This results in lowered costs of advertising and promoting products because they are able to accurately track demand and can adjust their advertising based on what is selling and what is not resulting in more accurate marketing efforts.
The alternative norms are that Costco operations are entirely based on the warehouse model and membership fees offer customer more of an economic advantage to customers than Wal-Mart everyday low prices and flexible payment with suppliers. My objective is to analyze the two retail giants’ methodology to satisfy and maintain customer although that I anticipate Wal-Mart’s to be a better buy than Costco because of the gargantuan scale of Wal-Mart has constructed its commerce on saving the customer
Wal-Mart is a huge retail powerhouse that is able to maintain its competitive edge by cutting costs and maximizing shareholder wealth. Wal-Mart’s strength is derived from its in-depth and diverse supply chain that has been recognized as one of the best business management control systems. The company competes by providing low prices made possible through comprehensive supply lines that allow managers to shop around for the cheapest prices when determining what goods should fill store shelves. Wal-Mart’s ability to efficiently use supply chain management has given them a competitive advantage over their competitors such as: Target, Costco, Kmart, Real Canadian Superstore, Dollarama, etc. All of these rival firms have similar corporate structures to Wal-Mart’s - Costco is a warehouse store offering wholesale... ... middle of paper ... ...ayout, promotions, and inventory supplied.
Wal-Mart provides one-stop shopping where customers could buy a wide variety of quality merchandise at discount prices. Their mission correlates with their growth and stability because Wal-Mart generally operates in smaller communities, offering name-brand merchandise at low prices and friendly service. Corporate-Level Strategies In recent years, Wal-Mart has implemented specific strategies to facilitate growth and stability. In accordance with their mission statement, “We save people money so they can live better”, Wal-Mart has aggressively included new plans to open new stores, open ... ... middle of paper ... ...ble events. Lastly, Wal-Mart has an anti-unionization policy and allow its employee to decide if they would like form a union.
It also negotiates deals for merchandise directly from manufacturers, eliminating the middleman. Wal-Mart’s new slogan is “save money, live better” (Wal-Mart Stores, n.d., p. 1). According to the company’s website, “saving money is a means of helping our customers live better. By offering the best possible prices on the products our customers need, we can help them afford a little something extra” (Wal-Mart Stores, n.d., p. 1). For each strategy that Wal-Mart promotes in flyer ads or television commercials, they measure the return on investment from these promotional strategies.
Walmart has a reputation of having the lowest prices in retail sales. Walmart uses a rather simple yet extremely effective tactic while handling distribution. This gives them an upper hand in the competitive market, keeping their status as the largest retailer in the world. Generally, suppliers to retailer have monumental supply chain with little room for change. Companies account stronger for customer needs, depleting the cost of efficiency.
Shifting cost to suppliers to keep prices low has become the norm for the coorporation and at no risk for Wal-Mart since they have all the power. Despite inflation Wal-Mart will demand it's suppliers to sell for cheaper. Since Wal-Mart is usually the largest buyer by a large margin most companies cannot refuse Wal-Mart's order, resulting in cheaper materials used, less features, moving factories overseas, etc. One specific example is that of deodorant. Before the 1990's deodorant came in a cardboard box.
The nature of Wal-Mart’s competitive priorities are based on the foundational of minimizing all its costs vis-à-vis its competitiors so that it may provide the lowest cost merchandise, and thereby boost its market share. Wal-Mart aims to differentiate itself, and enhnce it’s competitiveness, by making technology, its advanced computer and telecommunication system, a core competency. This maintenance of superior technology greatly enhances Wal-Marts ability to focus on building and maintaining relationships with its customers, suppliers and employees; for example, it cuts down on unnecessary large inventory levels and enables intimate and timely contact with suppliers. Wal-Mart further competes on cost, ‘value of the dollar’ philosophy, and also performance quality, by adding value through its training program and its corporate culture which increases customer satisfaction. However, Wal-Mart’s management which initially portrayed itself as the lowest cost provider had to change this policy partially because it becam... ... middle of paper ... ...r relative to its suppliers, Wal-Mart was able to implement and enforce radical cost-cutting measures; these included saving realized by eliminating manufacturer’s representatives from negotiations with suppliers; by making its vendors pay for communicating expenses.
However, Wal- Mart is able to sell its goods at a low rate through a “ highly efficient distribution system and retailing expertise give Wal-Mart a cost advantage that enables it to price its products below the competition and still make a profit”(Dukes, 2003). Since Wal- Mart is not blatantly engaging in predatory pricing and is still making a profit, Wal -Mart is considered to be engaged in normal market competition. Wal -Mart still needs to make a profit on the goods it sells at extremely low prices so it must obtain its goods at a lower cost. Wal-Mart is a mega retailer and with its buying power is able to have an influence that relatively smaller stores may not have. According to the Mexico’s Federal Competition Commission, Wal-Mart is able to use its power of large
Wal-Mart focuses their competitive priorities on bringing the customer the lowest prices by selling in volume. The vast size and selection essentially guarantees that the store will have what the customer wants in stock and at a cheaper price than competitors. This strategy allows them to outsell their competition. In order to facilitate the achievement of their goals Wal-Mart has designed their layout to accommodate a large number of shoppers at the same time. They build expansive stores with wide aisles so that many people can feel comfortable shopping at the same time.