Revenue Strategy - Essay Example

Module Analysis of Wal-Mart Revenue & Growth Strategies Wal-Mart Stores Inc. of USA founded by Sam Walton in 1962 with a single retail shop in Rogers, Arkansas is the largest retailer in the world today. The company’s annual turnover of US$ 285 billion surpasses the Gross National Product (GDP) figures of many countries in the developing world. Its scale of operations will rank at 33rd place if Wal-Mart is treated as an individual economy, surpassing over 100 countries in the world (“Wal-Mart” 2).

The company boasts of impressive profit figures of US$ 10.3 billion for year 2004 and reports claim that the profits have increased by over 10% for the fiscal year just concluded. With its Corporate head quarters in Bentonville Arkansas, Wal-Mart operates 99 distribution centers and transport offices in USA to service the operations of its 5,246 Wal-Mart stores out of which 1,587 are located internationally. Over 138 million customers per week are catered to by Wal-Mart stores across the world.

82% of American households have made at least one purchase at Wal-Mart during an annum. Such sustained performance over the years have been driven by a series of well crafted business strategies, which are targeted at generating revenue and profitability through the Wal-Mart operations as well as providing the company with significant competitive advantage over its rivals. At the heart of Wal-Mart’s revenue generation strategy lies the focus on attracting new customers and retaining existing ones by offering value that is unparrelel to what its competitiors are offering.

Its marketing campaigns are firmly hinged on the slogan, “everyday low prices” where the company offers certain products at 25-30% less than the normal market prices. With its massive operation volumes the company enjoys economies of scales, that are translated in to low prices, which in turn is used as the main revenue generation tool. The company also pressurize its supply chain in to cutting costs and improving their own productivity so that low prices can be secured at supply chain level, and passed on to customers while maintaining Wal-Mart’s profitability.

The company has utilized many channels to reach different customer segments by differentiating its stores formats and product range to suit locations and different communities. Wal-Mart stores fall in to 5 categories as Wal-Mart Discount Stores, Wal-Mart Super centers, Wal-Mart Neighborhood Market, Sams Club and Wal-Mart International. The company also operates Wal-Mart Online Store to capitalize from the increasing popularity of Internet retailing business. By expanding the product range from grocery, food and general retail items to financial products, telecommunication products as well as holiday packages the company has successfully widened its revenue base.

The company also utilizes the international expansion strategies to widen its market share globally thus increasing its revenue generation. The company’s success is largely attributed to its competitive advantage realized through the economies of scale; productivity derived from highly efficient supply chain and also its high tech Information Technology systems. Wal-Mart operates the largest private sattalite communication system which links its suppliers and stores located globally placing the company at the forefront of efficient logistic management (Wal-Mart: The Irresistable Retail Force..d.n.) Wal-Mart is reported to have a 48% productivity advantage over the competitors giving the firm a significant competitive edge.

Another key factor contributing to the success of the company is the great deal of attention paid in site selection. “The company claims it analyzes potential locations to find those that would support “one and a half” store” (Wal-Mart 9). Supporting its marketing activities, the company operates an in-store television network airing product ads, music and news. This network is viewed by over 130 million people a month placing it as the 5th largest network in America. Wal-Mart spends approximately $500 million on advertising annually.

In 2003, “Wal-Mart’s tab was $456 million” (Mandese 13). Wal-Mart advertisements in TV carry the famous “people greeters” and highlights Wal-Mart’s social activities as well as high level of minority representation in terms of African Americans and Hispanic Americans. In conclusion it can be noted that companies like Wal-Mart that have grown from humble beginnings to corporate behemoths that are financially more powerful than over 100 nations in the world, have relied on sound and sustained corporate strategy to drive their performance.

The focus placed upon productivity improvements and smooth operational processes such as networked communications and distribution systems have given the company an unmatched competitive advantage over its rivals, making it the largest retailer in the world. Works Cited Page "Wal-Mart.". Wikipedia, The Free Encyclopedia. 9 Feb 2006. 20 January 2007. http://en.wikipedia.org/w/index.php?title=Wal-Mart&oldid=38884398. Wal-Mart: The Irrerestable Retail Force is Fueled by Logistics. Council of Logistic Management. (d.n.) 16 January 2007.

http://ihome.ust.hk/~larry/assignments_files/N7-ThreeShortLogisticsCases.pdfWal-Mart Facts Sheet. Wal-Mart .com (2006). 20 January 2007. http://www.walmartfacts.com/articles/2502.aspxMandese, Joe. “Comparison Shopping: How the Kmart/Sears merger will impact TV and its ad agencies” 22 Nov 2004. Broadcasting & Cable. 20 Feb 2006 http://www.broadcastingcable.com/article/CA482072.html?display=Advertising