Walmart Business Strategy and Competitive Advantage
Walmart business strategy is based on ‘everyday low prices’ philosophy of the company. In other words, Walmart pursues cost leadership business strategy enabled by the economies of scale derived by the company in a significant extent. An efficient utilization of online sales channel contributes to the level of cost-efficiency of retail operations and about 75 percent of walmart.com sales come from non-store inventory[1].
Constant improvements of assortment, price and access are basis of Walmart business strategy. In simple terms, Walmart strives to offer the widest choice of products for the cheapest price, along with giving customers the opportunity of choosing the most convenient channel to facilitate the purchase.
Wall Mart competitive advantage relies on cost leadership. Moreover, the strategic level management consistently aim to associate Wall Mart competitive advantage with price, access, assortment and experience. Since his appointment as CEO in February 2014, Doug McMillion introduced important changes in Walmart business strategy in the following three directions:[2]
- Increasing focus on customer services. In February 2015, the company announced a USD1 billion investment in U.S. hourly associates to provide higher wages, more training and increased opportunities to build a career with Walmart.[3]
- Improving groceries. Due to increasing level of health-consciousness of consumers, Walmart is attempting to increase its range of organic options and fresh produce. This change is more evident in the US market and it is being actively integrated into marketing communication message of the brand.
- Enhancing the flexibility of the shopping experience. It has been noted that “Wal-Mart is working to integrate its physical stores with the digital business”[4]. For example, thanks to the latest changes, customers are able to collect their online orders from stores and they can also get text reminders from the pharmacy.
Generally, Walmart competitive advantage can be sustained in the global marketplace in long-term perspective. ‘We Operate for Less’ and ‘We Buy for Less’ programs saving us USD150 million in China[5]. The company can replicate this strategy to other markets in order to gain and sustain its cost advantage….
Walmart Stores Inc. Report contains more detailed discussion of the company’s business strategy. The report also illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Walmart. Moreover, the report contains analyses of Walmart leadership and organizational structure and marketing strategy and discusses the issues of corporate social responsibility.
[1] Annual Report (2015) Walmart Stores Inc.
[2] Lutz, A. (2015) “Wal-Mart is making 3 changes so people will want to shop there” Business Insider, Available at: http://www.businessinsider.com/wal-marts-new-strategy-2015-2
[3] Annual Report (2015) Walmart Stores Inc.
[4] Lutz, A. (2015) “Wal-Mart is making 3 changes so people will want to shop there” Business Insider, Available at: http://www.businessinsider.com/wal-marts-new-strategy-2015-2
[5] Annual Report (2015) Walmart Stores Inc.