Walmart Case Study

What impresses me about Wal-Mart is its growth in the past four decades. It is unbelievable how large the company has gotten in the time it has been open. As of 2004, it had almost 5,000 stores across the world with profits of $9 billion. It is impressive that its strategy of low prices hasn't been duplicated by that many companies. Wal-Mart has also made the transition into the foreign market and has done extremely well. It has over 1,000 different foreign locations in nine different countries as of 2004.

There are not many things that unimpressive about Wal-Mart. Their strategy is one of the best of any industry. Its international expansion is continually growing and it of sells the merchandise of ten stores combined. Wal-Mart has a great relationship with its suppliers and gets their bottom prices. The biggest aspect of Wal-Mart that is very impressive is its customer service. Its employees are very helpful and well informed of the location they work at.

As already stated, Wal-Mart's low everyday prices, wide selection, big percentage of name-brand merchandise, customer friendly store environment and low operating costs have a lot to do with its success of the past 20 years. In addition to that, Wal-Mart also has a strong emphasis on customer satisfaction, disciplined expansion into new geographic markets, and in many cases using acquisitions to enter foreign markets. Wal-Mart didn't use a lot of its revenue on advertising. It relied mainly on word of mouth advertising to spread its marketing message. "Wal-Mart was unusually active in testing and experimenting with new merchandising techniques". Founder Sam Walton imitated good ideas of other companies and made them better. He would find what worked best, combined ideas and came out with a solution that suited his company the best.

Wal-Mart's success has to do to a combination of a great strategy, superb strategy implementation and execution, and great leadership. Sam Walton found a strategy that he felt would work for his company. Implemented it into a few stores and when it work, he used it for all of his stores. He continued to improve every aspect of his company and used the same formula with each of his stores.

Wal-Mart's strategy includes multiple store formats, low everyday prices, wide selection, a big percentage of name-brand merchandise, a customer friendly store environment, low operating costs, innovative merchandising, a strong emphasis on customer satisfaction, disciplined expansion into new geographic markets, and using acquisitions to enter foreign markets. Out of the five generic strategies Wal-Mart is employing the overall low cost strategy: lower cost and a broad cross-section of buyers. The chief components of its strategy included in Wal-Mart's multiple store format strategy include Discount stores, Supercenters, Sam's Clubs, and Neighborhood markets. The major components of Wal-Mart's expansion strategy for domestic stores is to use a "backward expansion" by starting in smaller geographic areas, saturating each area with stores before moving into the larger metropolitan centers. The components of merchandising innovation include testing, adapting, and applying a wide range of cutting-edge merchandising approaches. Wal-Mart's relies less on advertising than most other discount chains and instead relies primarily on word of mouth to communicate its marketing message. Another component is Wal-Mart's distribution efficiency with its rural store locations and its own centralized distribution centers to supply stores with daily deliveries by its own truck fleet.

Wal-Mart management has worked very hard in many ways to implement and execute their strategy. First, Wal-Mart has always used cutting-edge technology. It began by using computers to maintain inventory control, point-of-sale scanners in 1982, and scanning bar codes in 1983. It developed a computer-assisted merchandising system that allowed each store to tailor the product mix to its own market circumstances and sales patterns in 1984. From 1985 to 1987 Wal-Mart installed the nation's largest private satellite communication network. In 1989 it established direct satellite links with 1,700 vendors which allowed use of electronic purchase orders and instant data exchanges. In the early 1990s, Wal-Mart automated a reordering system that notified suppliers as their items moved through store checkout lanes. Retail Link system allowed suppliers to track their wares through Wal-Mart's value chain, get hourly sales figures for each item, and monitor gross margins on each of their products. Lastly, in 2003 Wal-Mart announced its conversion to electronic product code (EPC) technology based on radio frequency identification (RFID) systems by 2005.

Another way Wal-Mart implements its strategy is through relationships with its suppliers. Wal-Mart is the largest customer of all of its suppliers. Wal-Mart looks for suppliers who were dominant in their category, makes the negotiation process transparent and is tough in negotiating for the absolute lowest prices.

Wal-Mart's distribution center operations is another way Wal-Mart implements and executes its strategy. It has automated many of the labor-intensive tasks, gradually creating an ever-more-sophisticated and cost-efficient system of conveyors, bar-coding, and handheld computers, along with other devices with the capability to quickly sort incoming shipments from manufacturers into smaller, store-specific quantities and route them to waiting trucks to be sent to stores to replenish sold merchandise.

Wal-Mart also implements customer service by having a greeter stationed at a store entrances and stresses five themes in training and supervising store personnel: think like a customer, sell what customers want to buy, provide a genuine value to the customer, make sure the customer has a good time, and exceed the customer's expectations.

Other ways in which Wal-Mart implements and executes its strategy is though its own truck fleet; soliciting ideas from associates; compensation and incentives to its employees such as profit-sharing plans, stock purchase and stock option plans, and sales contests; it's culture; training; and meetings and repaid