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Competitive analysis of walmart
Corporate level strategy of Walmart
Competitive analysis of walmart
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Wal-Mart’s Power: In Economy, Society, & Technology
No one can deny Wal-Mart as the corporate superpower of this generation. A company that has international interests, its power in today’s world is overwhelming. Taking a closer look into the giant’s superpowers we are able to specify exactly how Wal-Mart interfaces with the world and exerts it power therein. In doing this it must first be determined what power is. Sociologists have identified three distinct faces of power. The first is power to direct action. The second is to set agendas and decide what is to be discussed. Finally, the third power is the ability to shape desires. By examining how it is that Wal-Mart exerts power in these ways, it is possible to qualify just how strong its effect on the world today is.
Wal-Mart certainly has the power to direct action. Within the economic arena, of course, they provide many jobs and their demand for products also creates jobs, which raises manufacturers’ need for more labor. But, Wal-Mart also utilizes its own tactics to affect the economical balance of its customers. Wal-Mart is known for their Everyday Low Prices (EDLP); their guarantee that instead of big sales, their customers can come in and get what they need for less. According to Kathleen Seiders and Glenn B. Voss, authors of From Price to Purchase, “Advocates claim that everyday pricing increases customer loyalty, improves inventory management, and reduces labor and advertising expenses.” However, that reassuring EDLP might not be as helpful as it seems. It turns out Wal-Mart doesn’t necessarily guarantee the lowest price on all items, simply the ones at the end of the aisles and in center displays, the other models are often more expensive than other st...
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...ol Your Inventory.” Nov. 2000. Harvard Business Review.
Bloom, Paul N. and Perry, Vanessa G. “Retailer Power and Supplier Welfare: The Case of Wal-Mart.” 2001. Journal Of Retailing.
Featherstone, Liz. “Down and Out in Discount America.” Jan. 3, 2005. The Nation.
Kinsella, Bret “The Wal-Mart Factor.” Industrial Engineer; Nov. 01, 2003
Pohl, Otto. “R.V. Owners Skip Camp and Park at Wal-Mart.” Sep. 11, 2005. The New York Times Online.
Seiders, Kathleen and Voss, Glenn B. “From Price To Purchase.” 2004. Marketing Management, forthcoming.
Wal-Mart was not always the superstore that it is today. In the late 1940’s, Sam Walton took up the ownership of a Ben Franklin’s store in Newport, Arkansas. Even during the time before Wal-Mart, Walton was all about keeping prices low. It is every business’s objective to find the right balance between the prices of an item to meet the demands of the consumer in order to maximize revenue. How could Walton still make a profit while keeping the prices low for the consumer? Even while still operating the Ben Franklin’s store, he would purchase products from wholesalers and minimally markup the price. Where most retailers would rely on markup prices to gain profit, Walton would rely on pure volume in order to make up for the low prices (Frank, 2006). This was a smart decision on his part because it makes sense that if a consumer can get the same product for a lower price then they will purchase the cheaper product. It was not until 1962 that Sam Walton opened the first Wal-Mart store, also in Arkan...
A prior market firm used by Wal-mart (GSD&M) warned Wal-mart of the public image issues they were facing and had not addressed, even though they had been advised of them for over two years. GSD&M wrote in one review to the company that “sadly, after two years of empty rhetoric and ineffective publicity stunts, we now know that Wal-Mart has not only needlessly hurt its Associates and their families, but has pointlessly hurt the image and success that Sam Walton built.” (wakeupWalMart.com, 2007). Wal-mart has acted in a manner that blends with the theory of egoism. This theory “sets as its goal the benefit, pleasure, or greatest good of the oneself alone.” (wofford.edu, 1997). “Egoist use personal advantage…as the standard for measuring an action’s rightness.” (Shaw, 2008, p. 45). Clearly Wal-mart today is acting with interests geared toward their personal advantage and not considering the wreckage it is leaving all around them.
Wal-Mart has had a significant economic impact on the US, as well as the economies of countries that have relations with the US. Wal-Mart is the world’s biggest company of any kind, with 80 percent of the households in America purchasing something from the superstore; it is the nation’s largest retailer. Wal-Mart’s continuing price reduction has given Americans the advantage of being able to afford 15 to 20 percent more than they previously could. (Hansen) In a world governed by globalization and greed, competition has become rigid; as a result firms like Wal-Mart have utilized advanced marketing strategies to insure that they are on the ‘neck’ of competition, and are the core deciders of the market. (Ortega) However, Wal-Mart made decisions that were of a disadvantage to aspects of the economy, including the depletion on a small scale of Small Town USA.
Wal-Mart represents the sickness of capitalism at its almost fully evolved state. As Jim Hightower said, "Why single out Wal-Mart? Because it's a hog. Despite the homespun image it cultivates in its ads, it operates with an arrogance and avarice that would make Enron blush and John D. Rockefeller envious. It's the world's biggest retail corporation and America's largest private employer; Sam Robson Walton, a member of the ruling family, is one of the richest people on earth. Wal-Mart and the Waltons got to the top the old-fashioned way: by roughing people up. Their low, low prices are the product of two ruthless commandments: Extract the last penny possible from human toil and squeeze the last dime from its thousands of suppliers, who are left with no profit margin unless they adopt the Wal-Mart model of using nonunion labor and shipping production to low-wage hellholes abroad." (The Nation, March 4th 2002 www.thenation.com/doc.mhtml?i=20020304&s=hightower).
The success of Wal-Mart is so great, that many people believe that Wal-Mart is becoming a monopsony . Suppliers are forced to deal with Wal-Mart because of the large percentage of sales at Wal-Mart cash registers. As such, Wal-Mart also has the ability to dictate prices of the goods it receives from the suppliers. Every day, more and more retail stores close their doors for good because Wal-Mart controls such a huge margin of the retail sector.
There are three articles that will be referenced during this analysis. The first article is taken from the mainstream media publication USA Today. “Wal-Mart takes hits on worker treatment: Lawsuits, unions slam megaretailer”(Armour, 2003) argues that Wal-Mart is coming under attack from critics who argue workers are underpaid, women are discriminate against, and illegal tactics are being deployed to kill unionization efforts. Armour (2003) states, “company officials say they don’t know why the attacks are coming now, and they also say the allegations are unfounded.” The next statement made during the article states that Wal-Mart employees agree with the statement. The author continues reporting on the issues at stake, but focuses mostly on how unions may be less relevant in today’s world. The article makes mention of both sides of the argument, but the rhetoric and terminology used leans towards the portrayal of Wal-Mart as a victim of biased attacks to further union interests in the market.
“Up Against Wal-Mart” by Karen Olsson, a senior editor at Texas Monthly and who’s article appeared in Mother Jones, introduces her article through the perspective of a Wal-Mart worker. She focuses on the negatives of Wal-Mart by telling the real life struggles of different Wal-Mart employees. “Progressive Wal-Mart. Really.” by Sebastian Mallaby, a columnist for the Washington Post, focuses his article on what Wal-Mart critics say and attempts to defend Wal-Mart by comparing Wal-Mart to other retailers. Even though Karen Olsson and Sebastian Mallaby both examine the negative effects of Wal-Mart, Olsson berates Wal-Mart’s unfair treatment towards employees and the unlivable wages that the world’s largest retailer provides while Mallaby defends Wal-Mart’s actions with reasonable statistics.
Within an excerpt from, “The United States of Wal-Mart,” John Dicker explains that Wal-Mart is a troubling corporation. Dicker begins his article by discussing why the store is so popular within the news in an age of global terrorism, coming to the conclusion that Wal-Mart has a huge scope in the United States and that it has more scandals, lawsuits, and stories than any other supercenter. Continually, he goes on to explain that Wal-Mart outsources jobs and their companies demands makes it hard for employees to have livable wages and good working conditions. Furthermore, Dicker addresses the claim that Wal-Mart provides good jobs, by destroying this perception with statistics showing how employees live in poverty and that their union scene
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
Mallaby admits Wal-Mart can treat their employees and other retailers unfairly, but as a result everyone can share in the 50 billion in savings that American shoppers consume annually. The pay that employees get is the price they must pay for low priced merchandise. Because of the minimal pay to employees, Wal-Mart strengthens its’ consumer buying power. Giving the American shoppers the savings they need, Wal-Mart’s has ultimately been them successful. Wal-Mart has potentially wiped out the middle class as an employer, but the employees can now work and ...
Quinn, Bill. How Walmart Is Destroying America (and the world), And What You Can Do About It. Third Edition. Ten Speed Press, 2005. Print.
The Wal-Mart stores had six different environmental analyses that are been given in this case study. They are some other major facts that are listed and can be listed under this general environment analysis. The first factor is economic factors Wal-Mart are having different economic conditions in tim...
...and - its promise, image and emotion that it creates - remains relatively strong. The Wal-Mart mission of “saving people money so they can live better” is clearly and consistently communicated. However, Wal-Mart’s reputation, the “outside in” view, built on direct experiences, outside opinions, rumors and judgments, must be strengthened. The pillar of its overall business strategy – price leadership – must be maintained. The company’s power and influence can be used to create positive affects in consumers’ lives, not only in their wallets. Finally, growth opportunities exist in the US and beyond. In order to deliver growing shareholder value, the company must continue to reach into emerging markets.
It opened in 1962 by Sam Walton, Wal-Mart has become the largest retailer in the United States, and with over 3,300 stores Wal-Mart continues to be successful. Under his successor, CEO David Glass, the small discount store chain started in Arkansas has become one of the largest corporations in the world. David Glass lays out the philosophy: “we approach this new and exciting decade of the 90’s much as we did in the 80’s focusing on only two main objectives, (1) providing the customers with what they want, when they want it, all at value, and (2) treating each other as we would hope to be treated, acknowledging our total dependency on our associate-partners to sustain our success.” This statement by Glass shows that Wal-Mart has devised a plan in order to maintain its high ranking in the retail business. The question becomes, can Wal-Mart continue to expand and succeed in an increasingly hostile retail environment? I will discuss the external stakeholders? 2) Do a SWOT analysis of Wal-Mart. What are the company’s distinctive competencies? 3) How would you describe Wal-Mart’s “Grand” strategy for the next decade? In terms of Porter’s generic strategies?
Walmart has had a long-standing presence in America society since the middle of the 20th century, seen as a place to get everything done, Walmart has become a fixation in our society. From grocery shopping, to changing your oil and even filing your annual tax returns, Walmart is always there, everyday. Started by Sam Walton in 1962, it began as a small operation catering to a small Arkansas community. It was started on principles very similar to small local businesses in small towns. Today Walmart has gotten a different, darker reputation. On the surface, Walmart may seem like the solution to everyday issues. Low-income families are attracted to the low prices, and people who work odd hours benefit greatly from the 24 hours a day that many Walmarts are open. Lately, Walmart has also managed to be publicly recognized as a store that sells many of today’s green products, including organic food, environmental conscious cleaning products, as well as, paper products made from recycled paper. However, underneath all this, Walmart has a different side. Exploitation of its workers is widespread amongst Walmarts who do not belong to a union, especially in the United States. Wal...