Strategies of Wal-Mart Corporation - Assignment Example

?running head: Strategy Strategy Case Study Analysis Teacher’s [Pick the According to Levis’, it has an opportunity to access an unexplored market that constitutes of millions of customers shopping at Wal-Mart. Furthermore, expedient and efficient supply chain and planning mechanism would allow it to provide its product to the customer before any other vendor. On the other hand, if this plan works out, Levis’ may form strategic alliances with other retail stores and sell the same product over there as well. Through providing a product line that is less costly and still a reflection of typical Levis’ persona and recent fashion at the same time, it is planning to reap benefits of bulk production and selling while keeping per unit profit margin rather low. 2) According to Wal-Mart, it needs substantial brands to form associations with it in order to attract affluent customers and also have a tendency of increasing peripheral business by selling other commodities. Therefore, forming associations with Levis’ allows it to attach a designer brand name with it that is accepted and received well in affluent customer’s segment. 3) Considering this case study, Wal-Mart has an edge over Levis’ in this corporate strategic alliance. This is so because Levis’ needs Wal-Mart for its business expansion as its own showrooms and other smaller retail networks have been proven incapable of attracting major customer base. Secondly, Levis’ has made considerable capital investment along with extensive business restructuring to suit Wal-Mart’s model. Therefore, Levis’ is dependent on Wal-Mart for cost-recovery and further business revival. Whereas Wal-Mart has a tendency of switching to other suppliers who will offer better profit margins without incurring much liability. Therefore, Wal-Mart has a greater bargaining power as compared to Levis’. 4) Wal-Mart follows a broad target/ cost leadership generic strategy (Porter, 1980). It has multiple product lines that cater to every demographic segment. Furthermore, it has an extensive retail model with around 9000 stores worldwide. Such extensive network makes it a premium choice of suppliers due to which it has a greater bargaining power to persuade suppliers for providing their products at considerably low prices, as compared to other retail stores. 5) ‘Barriers to entry’ is an edge used by various leading market players to create obstacles for preventing new competitors from easily entering into market, industry or particular area (Sullivan & Sheffrin, 2003). Wal-Mart has developed a state of art automated system that is synched with its suppliers through point-of –sale mechanism. Therefore, the moment a product is bought, a supplier is notified which results into timely product delivery. As a result, customers prefer to stay with Wal-Mart since they know that their desired product will be available readily. This strong link with suppliers requires higher switching cost which is difficult to incur for its competition. As a result, their customers would also prefer Wal-Mart over them (Competing with information technology, n.d). 6) Value chain constitutes of following activities along with examples from Wal-Mart’s case study: Production- No self-production, acting as a retailer Production Management- Inventory management Quality Management- Extensive IT network and huge workforce Marketing & Sales- Sales teams dealing with suppliers General management- store management, venue management Marketing and sales management- Sales team heads dealing with suppliers in a particular industry Accounting and Finance- In-house finance department performing general accounting, forecasting etc. Research and development- Constant acquisition of market intelligence and tools to make IT its niche. Human Resource Management- Extensive handling of employees’ daily attendance, payroll, deployment etc (IMA, 1996). 7) Out of all the above mentioned activities, production management is the most important activity. Although Wal-Mart is a retailer with no real production therefore this area can be segregated into inventory management and IT development and they both are the backbone of Wal-Mart’s business model. 8) One of the key steps taken by Levis’ was revamping its supply chain model and, restructuring its IT usage accordingly through changing its data warehouse technology. The changes began with designing of dashboard that allowed executives to monitor inventory and demand per product line along with venue of production. As part of extended IT network, it added scanning tool for speedy accuracy of the shipment. The company implemented AS2 technology to exchange with Wal-Mart EDI transactions that support collaborative forecasting. It further allowed a set of Manugistics applications that provides an opportunity to the company to collaborate on demand forecasting, product modifications and orders planning with Wal-Mart (Girad, 2003). Later plans included acquisition of SAP in near future. All these tools allowed Levis’ to integrate its supply chain mechanism with Wal-Mart’s work model for maximum efficiency and replenishment. 9) First-mover advantage allows the firm to have an edge over other competition by performing necessary development and having a technology patented e.g. Apple’s touch screen technology (Mykytyn & Mykytyn, n.d). Furthermore, while other firms will try to use the same technology or create a replica, original first mover will be through with debugging state and have a fully functional automated system working. This additional time lapse also allows them to have more opportunity to capture the market. 10) Fast-followers may gain an advantage of having necessary intelligence by the history of first-mover that would allow them to avoid mistakes that first-movers have made. Furthermore, such extensive R&D may not be required. Necessary marketing tasks for public awareness of technology usage can be avoided and a better product can be made by using the same resources. The disadvantage may include failing to be fast. Fast followers are required to be well-versed with emerging technology and make alterations in its model accordingly. Hence, a rapid response system is required (Cooper & Edgett, 2009). 11) Considering Cherokee’s case would help in understanding the simple case of demand and supply in casino industry. Since casino industry thrives on leisure and willingness to gamble more with maximum revenue generation for the casino management, therefore, artificial product differentials or price differentials would be created so that customers can be provoked to pay more. Hence, the concept of opportunity cost comes into play and results in higher profits. By providing a complementary service package, customers can be lured to pay more visits that would result in recurrent profits. 12) Segmenting customers by restrictions might be considered as an unethical and illegal activity in some regions of the world. Secondly, evaluating segment’s characteristics with accuracy can be a problem. Customers may also find a way to avoid such artificial segmentations. Furthermore, identification of such segmentation may lead to a loss of good will and negative customer’s feedback affecting future revenue generation. 13) RFB1 refers to complimentary services provided by Cherokee that includes room, food and beverage at the level one having optimum services provided by the casino. This scheme illustrates how customers are segmented on the basis of their previous gambling history and overall rate of loss i.e. which causes more revenue generation for Cherokee. References Competing with information Technology. Retrieved 28 January 2013 from http://highered.mcgraw-hill.com/sites/dl/free/0073043559/314063/OBrien_13e_Chapter_2.pdf Cooper, R.G., & Edgett, S.J. (2009). Product Innovation and Technology Strategy. Stage-Gate International. Girad, K. (2003). Supply chain Partnerships: How Levi’s Got its Jeans into Wal-Mart. Retrieved from http://www.cio.com/article/31948/Supply_Chain_Partnerships_How_Levi_s_Got_Its_Jeans_into_Wal_Mart?page=4&taxonomyId=3207 Institute of Management Accountants- IMA. (1996). Value chain Analysis for Assessing Competitive Advantage. Retrieved from http://www.imanet.org/PDFs/Public/Research/SMA/Value%20Chain%20Analysis.pdf Mykytyn, K. & Mykytyn, P.P. (n.d). First Movers and Information Technology Sustained Compeitive Advantage: Rethinking Old Ideas. Retrieved from http://www.sbaer.uca.edu/research/swdsi/2002/Papers/02swsdi047.pdf Porter, M.E. (1980). Competitive Strategy: Techniques for analyzing industries and competitors. New York: The Free Press. Sullivan, A., & Sheffrin, S. (2003). Economics: Principles in action. Upper Saddle River, New Jersey: Pearson Prentice Hall. Read More