Business-Level and Corporate-Level Strategies: Wal-Mart - Case Study Example

Wal-Mart Competitive Strategy Wal-Mart Wal-Mart is a publicly traded retail firm based in the United s of America. The firm is one of the biggest retail firms not in the USA. It has millions of employees in the USA as well as throughout the world where it operates its branches. Wal-Mart has been known for its use of technology since the early days as well as its low cost strategy. Business level strategy Customer satisfaction Wal-Mart has always delivered goods to the customer at the most convenient prices. Wal-Mart business level strategy revolves around the customer and looks at the following four elements. Availability Availability is presented to the customer in two main ways. Number one, the firm looks to be at every possible corner so that the customers can always be able to access a Wal-Mart store. In this regard, especially in the United States of America, the firm seeks to be in every city, in every neighborhood. In line with this, the firm has recently launched a new strategy to bring affordable goods, especially fresh farm products to the regions that have for a long time being ignored such as low income neighborhoods, which have been referred t as food desserts due to the fact that there are no grocery stores in these regions. This strategy is supposed to solve the issue of food insecurity in such food desserts. The second way in which Wal-Mart tries to make sure that its products are as accessible as possible is its product catalogue. Wal-Mart endeavors to make sure that all products are available in its stores so that its stores are a one stop shopping location. In this case, Wal-Mart stocks million of products ranging from grocery to electronics. Affordable prices This strategy can be explained by Wal-Mart’s own slogan, ‘Save Money, Live Better’. This concept of helping people to save money on consumer products was the core of the idea that drove Sam Walton, the founder of Wal-Mart to start Wal-Mart. The idea is that if people can save money on consumables, their lives can be transformed in a positive way. In this regard, Wal-Mart has always promised people that they will be able to save money in Wal-Mart. Wal-Mart has always remained true to this promise and remains one of the retailers that have been able to provide low cost merchandise to its customers. Corporate level strategy Like any other business, the Wal-Mart corporate strategy is the spinal cord for its business strategy. It is its corporate strategy that makes its business strategy to be effective. Wal-Mart corporate strategy is as follows; Cost leadership Cost leadership refers to the situation where a business is the lowest cost provider of goods or services in its industry (Gerald, 2012). Wal-Mart corporate strategy is predicated on this. The firm seeks to reduce the cost of operation in order to ensure that it can then be able to facilitate its business strategy of giving the lowest prices to its customers. This is achieved by a number of ways. Using technology Technology is a major part of Wal-Mart’s strategy. By using technology to manage its value chain, Wal-Mart is able to save a lot of costs. Wal-Mart designed its value chain/supply chain in a way that helps the firm to not only save on cost but also in way that makes the logistics effective and convenient. Using its bargaining power to reign on suppliers Bargaining power is one of the ways in which a firm can gain competitive edge against its competitors (James, 2014). Wal-Mart is able to gain competitive strategy with regard to its corporate strategy. It is able to determine the way its suppliers carry out business. This makes it feasible for the firm to be able to take control of its suppliers thus making it easy for the business to be able to avoid any incontinence. This has helped Wal-Mart to determine the prices that it can pay for the supplies that it gets from its suppliers thus making it possible for the firm to be able to sustain its low cost strategy. Low cost labor Wal-Mart tries to minimize its costs on labor. The firm tries to structure is human resource labor in such a way that it will be able to minimize costs but without having to deteriorate the level of quality of life of its employees. In this regard, Wal-Mart gives the employee smaller salaries but gives the employees many benefits to assists in enhancing their quality of life. Analysis With regard to being cost leader, the firm faces some challenges. For instance, as the economy changes, this is going to be a more serious issue for the firm because it may not be able to continue supplying its customers with low cost goods. The ability to provide the customers with low cost products is affected by the ability to get these products at low cost (Gilbert, 2011). As many manufactures find it harder to produce at low cost in the American market, they will have to escalate the prices of their supplies and this will affect the way Wal-Mart will be able to sustain its corporate strategy of cost leadership. Furthermore, many manufacturers are getting their businesses outside American in order to be able to take advantage of the low cost labor abroad. As they restructure their businesses in order to take advantage of labor outsourcing, Wal-Mart may not longer be able to control these suppliers and this may have a fundamental negative impact on Wal-Mart corporate strategy because its strategy is based on the firm’s ability to use its bargaining power to control the suppliers. The fact that the world of retailing is also changing especially with regard to the increasing use of inline retailing may also mean that Wal-Mart’s corporate strategy may not continue helping the firm in the long run. With regard to using technology to manage its supply chain as a way to minimize costs and increase efficiency, this may not continue to serve Wal-Mart for a long time because this strategy can easily be copied by competitors. In this regard, it is important for the firm to be able to review its corporate strategy with regard to the use of technology. Low cost labor As has been identified, the firm also uses low cost labor as part of its strategy. This strategy is already giving Wal-Mart problems. The firm is already facing a number of law suits both from employees and civil rights groups with regard to its employee compensation. As pressure continues to mount for Wal-Mart to review its employee compensation, it is going to be harder for the firm to be able to sustain its strategy for low labor cost. Comparison with best buy Best Buy is one of Wal-Mart’s formidable competitors in the United States. The firm thrives by not necessarily giving the customers low cost product but by increasing the shopping experience to the customers. Best buy seeks to make sure that the customer can enjoy shopping in any of their sites. This is done by making sure that its stores are well located and that the arrangements in the stores allow for good space to allow the shoppers to feel a sense of space and comfort as they shop in Best Buy. With regard to technology, Best Buy has also been able to deliver good technology that enables it to handle its business in a competitive way. Best Buy also uses a labor strategy that is quite different from Wal-Mart. Unlike Wal-Mart that uses low cost labor as part of its strategy, Best Buy does not use low cost but seeks to make sure that the employees are well compensated. Best Buy also wants to increase the job satisfaction of its employees by making sure that the employees work in the way they feel most comfortable. For instance, best buy introduced a human resource management strategy called ROWE. ROWE is an initialization which stands for Results Oriented Work Environment. What his means is that employees can decide to plan their work and they can work in the way they feel more convenient as long as they can deliver positive results. This works very well with managers and other types of job categories that do not require the employee to report to the office, such as accounting and IT professionals. These employees can either choose to work from home or go to the office. They can choose to work in the office but in their own hours as opposed to the traditional 8:00-5:00 schedule of office work. This increases motivation and the employee feels that they have freedom to work in the way they feel most comfortable. To make the ROWE strategy to be successful, the employees were not forced to use this strategy. They were give the choice to join the program and those who did not want to join could continue to work in the traditional format. Those who wanted to join later could join any time they wanted. The fact that Best Buy has taken care of its employees has saved it from problems with its employees. References Gerald, O. (2012). Cost Leadership and American BUsiness. new York, NY: pearson Books. Gilbert, P. (2011). Busines Strategy, Challenges and Opportunties. Hoboken, NY: John Wiley & Sons. James, P. (2014). Re-Evaluating Porters Five Forces: Creatign Business Strategy in a Modern Economy. New York, NY: pearson Books. Read More