Introduction
The evolution of Wal-mart from the early 1960s to the present day has set a benchmark that few can achieve. Wal-mart executives have been successful nationally as well as globally. The knowledge and expertise in economics have made Wal-mart a global giant. The research completed is the final recommendations by the members of research team C and will address questions regarding global competition and issues of the organizations ability to expand or reduce current operations.
Price
Wal-Mart continually advertises their prices to be substantially lower than their competitors. The truth is, most Wal-Mart items do not have a drastic price difference. However, the difference is Wal-Marts’ ability to slash prices on many popular items every so often to maintain the ‘low price leader’ image. This has helped the retail giant maintain the number one retail spot over the past decade. This perception has also kept shoppers out of small businesses and other retail chains, giving Wal-Mart that competitive advantage to continue to slash prices after moving most of their inventory.
Wal-Mart perpetuates the image of having low unbeatable prices. They flood the airwaves with advertisements of local store promotions to keep the Wal-Mart name fresh in they buyers mind. This is how Wal-Mart continues to have that competitive advantage. Retail giant Kmart failed when consumers felt like they where no longer being offered the best prices and deals. Wal-Mart must continually reach out to its vendors and suppliers so that they can cut prices whenever needed. In 2005, Wal-Mart began and won a pricing war with the most popular toys, directly hurting toy giants such as Toys-R-US.
It marked 10 of its most popular toys for 10 dollars each. This is strategic pricing at its best. “M. Eric Johnson, a Dartmouth College professor who follows the toy business, said Wal-Mart is using cheaper toys to “get people into the stores, but not necessarily giving away the store. ” Supplies of the $10 toys are ample but scattered across store aisles, he said. ” (Bustillo and Zimmerman) Wal-Mart uses these tactics to get consumers, once in the door, to purchase other items running at or about the same price as other retailers.
Production
Wal-Mart continues to work with countless numbers of vendors and partners to produce and develop goods in its stores. Wal-Mart has also successfully capitalized in marketing their own brand of products known as Sam’s Choice and Great Value. These are generic versions of name brand products also sold in the store. Sam’s Choice brands are typically lower in price than the name brand version. Having its own brands allows Wal-Mart to cut prices even lower and make larger profits. Wal-Mart brands are private labels and can be found in almost every category from healthcare products, to foods and perishables, to toys.
Wal-Mart continues to expand their brand name in order to maintain the iron fist hold on the market they currently dominate. These generic brands allow Wal-Mart to cut prices and offer many goods lower than their competitors. Wal-Mart has announced expanding its generic line by approximately 80 new products, boasting that the products are an average of 40 percent lower than popular brands. The company has reported 75 percent of its shoppers look for better values on household and snack items. Wal-Mart has once again answered and delivered a way to stay competitive.
Composition of inputs Major Competitors, like Kmart, are floundering in the current market. This only seems to be a boost for Wal-Mart, who is capitalizing on Kmart’s situation. Technology is an enormous element to the success of a retail company. Advancing technology helps reduce the costs of a company through easier processes and a reduced workforce. One of the biggest trends currently affecting the retail industry is the emergence of the e-commerce. This allows for consumers conveniently to shop from the comfort of home.
Wal-Mart excels in customer service; and the wages provided to their employees is beyond just minimum wage. “Wal-Mart’s success is the direct result of the dedication of its associates, and they reward their hard work with benefits that work for them. Their benefits include more than medical coverage and a competitive pay package: They offer associates retirement savings plans, pharmacy benefits, the opportunity to share in bonuses and valuable discounts at their stores (walmartstores. com, n. d). ”
Global Competition
Global competition has a direct impact on Wal-Mart. Global companies offer competition for consumer business and companies within the United States and other countries who compete with Wal-Mart. The global competition for consumer business primarily takes place in the e-commerce domain that Wal-Mart dominates. Wal-Mart offers their consumers a convenient one-stop website with all the merchandise and products offered in the store, and some that are not. The exchange is significantly sped up by the convenience and availability of the internet. The internet allows transactions to take place at a faster pace than the standard face-to-face or telephone method.
Target, a major competitor of Wal-Mart, also has a Website that is reached by consumers all over the world. This added competition, especially from a competitor in the same industry, forces Wal-Mart to keep their prices low while offering quality products. With the internet making the world much smaller, Wal-Mart must concentrate on finding quality products manufactured at a low cost in order to continue providing consumers with the lowest price possible. If Wal-Mart succeeds, then the company will continue to challenge its competitors like Target for market shares in the retail industry.
Maximize Profits
In today’s economic downturn, with many losing their jobs, companies face difficult times for expansion. Wal-Mart has seen the opposite affect on their ability to grow. Wal-Mart has seen increased profits throughout this economic crisis, and continues to expand throughout the world. With their low prices, and now the convenience of their supercenters, most consumers are choosing Wal-Mart because of their lost or decreased incomes. People are turning to Wal-Mart in mass, which allows Wal-Mart to keep expanding and maximizing their profits.
The organization is currently building new hopping centers around the world and is refurbishing their current stores into supercenters. New stores mean a growing profit, but it also means additional job opportunities in a community that lacks other options. Wal-Mart has strategically moved itself into position to be the world’s largest provider of consumer goods, in which other stores struggle to compete. Government Policy, Social Diversity, and Business Ethics Wal-Mart continually offers products at prices that are affordable while still managing to expand and reach customers at home and abroad.
In order to do this, Wal-Mart must comply with all government policies and procedures, or their goals towards expansion will be short-lived. The policies of government are not in place to impact profits or losses that a business may have, but they do influence the corporate decision-making processes. Due to the current economic situation, government must remain in control of retailers such as Wal-Mart. The Government has established unemployment regulations and Equal Opportunity Laws to protect the hard-working American as well as consumer.
Job security is important to the economy and to the American Family. Wal-Mart prides itself in maintaining social diversity and business ethics throughout the company. The company is committed to bringing its customers a variety of products at affordable prices. The company’s strategy of success is placing itself in a position to bring products that are of good quality but at prices that are low. This strategy has brought in customers who would avoid shopping in discount stores.
Conclusion
Wal-Mart is the overwhelming retail giant. The ability for the organization to continuously provide a variety of goods and services, the innovative ways of reaching out the consumer and outstanding customer service are important to the organization’s success. E-commerce has strengthened Wal-Mart globally by dominating the market via the internet. The ability to expand in all economic environments allows Wal-Mart to maximize profits in the retail market. Finally, Wal-mart adheres to all government policies and regulations and ensures social diversity within the organization and in the community they serve.
References
- Bustillo, Miguel, Zimmerman, Ann; The Wall Street Journal Business retrieved April 20th, 2009 online. wsj. com/article/SB122350935030117311. html
- Pinsker, Beth ; WalletPop. com , Walmart Expands Store Brand Food Deals, retrieved April 20th, 2009 www. bloggingstocks. com/2009/02/19/wal-mart-expands-stor.
- Walmartstores. com, (n. d. ) Benefits. Retrieved on April 19, 2009 from http://walmartstores. com/Careers/7750. aspx
- Walmart. (2009) Store Openings. Retrieved April 16, 2009, from http://walmartstores. com/FactsNews/FeaturedTopics/? id=14
