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7/31/2019 Walmart PDF
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Submitted By:
Akhil kumarDebashree Mahapatra
Harshal Kumar
Ishita Singh
Rahul Singh
Sr Rajkumar
Vipul SinghVivek Khanna
Strategy of Walmart
An analysis
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1. Operational Effectiveness & Strategy
2. Strategy rests on Unique Activities
3. Strategic Concept: Trade offs
4. Implementation by Wal-Mart
5. Rediscovering Strategy
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Cost to company is a function of many activities required to
Create, Produce, Sell, and Deliver the products or services
OE: Performing similar activities better than rivals performing
them
In the 1980s Japanese challenged western companies
because of the superior Operational Effectiveness i.e. Low
cost & Superior Quality
Some of the management tools to increase productivity,
quality, and speed are TQM, Benchmarking, Outsourcing,
Partnerships, Value Engineering, Six Sigma, LeanManufacturing etc.
Sales force effectiveness with the advent of laptops, mobile
communications, internet, and software
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1. Competitors quickly imitate new technologies, and
other techniques
2. Competitive Convergence- More Benchmarking,
more similar OE
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L1 Low cost & High Volume, Everyday Low Pricing (EDLP)
Information Systems & Inventory management systems are
the best
Excellent Distribution capabilities lead to cost savings from
low inventory levels
Partnerships with vendors and suppliers makes it difficult for
the rival companies to find suppliers
Customer satisfaction as low product prices and wide range of
products
Understanding customer purchase behavior by Advanced data
mining
Sustainable because distribution network cannot be matched
in the short-term
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Wal-Mart used in-store terminals to wire merchandise
requests to a central computer.
Wal-Mart took no more than a fifth of its volume from any
vendor.
Only 20% of the inbound merchandise was shipped directlyfrom the vendors to the stores.
The rest passed through Wal-Marts two step hub-and-spoke
distribution network and this ensured better utilization of
capacities.
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Each distribution centre served up to 175 stores within a
150 to 300 mile radius. Reduced the cost of inbound logistics
Wal-Mart stores gross area was available for selling space as
its distribution network reduced back-room storage
requirements.
The Wal-Mart system included a larger number of SKUs thanmost other chains (over 70,000).
The HR policies Of Wal-Mart were distinctly different. We
care about our people
The administrative style was very austere. It differed fromcompetitors in its very heavy emphasis on communication
within the company.
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A competitor can reposition itself to match the market leader
Straddling: A market challenger can seek to match the
benefits of a successful position while maintaining original
one
Tradeoffs: Strategic position unsustainable without tradeoffsMore of one things necessitates less of other
Tradeoffs protect market leaders from straddlers and
repositioners creating a need for choice
Arise due to inconsistencies in image or reputation
Also due to products themselves reflecting inflexibilities in
people ,machinery or systems
Strategy is making tradeoffs in competing and choosing what
not to do
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Wal-Mart has built competencies that cant be copied by its
competitors
Not imitable due to trade offs
It has first mover advantage in isolated areas where it charges
high margins
Best practices in Management- High involvement and Frugal
office and living style
Human resource practices, purchasing and distribution
competencies cant be replicated by its competitors Wal-Mart gains sustainable advantage due to trade offs
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Need of implementation:-
initial strategies decay with timegrowth trap(desire to grow, like, extending product lines)
sound strategies undermined by misguided view of competition
organizational failures
Approach:- Deepen the strategic position rather than broadening
leverage existing strategic system, offer features/services that
rivals would find costly to match on a stand-alone basis
Find out core of uniqueness :- product/services that are moredistinctive and profitable, effective activities in value chain,
satisfied customers and profitable channels & purchase
occasions
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Current state (1985)- not such the need, net income
increasing, return on growth and sales returns higher than
competitors
Competitors either had no promotions/advertising or too
much of it, Walmart ran those moderately (13 promotions a
year)
Stuck to the philosophy of everyday low prices & we sell
for less (non-central pricing system unlike other competitors)
Deepened their position through diversification (Sams
wholesale clubs)
Sams mix differed from that in discount stores, alsomerchandise buying was independent
Remained primary source of merchandise in most of rural
communities/markets it previously served (strategy retention)
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