Walmart

Case 1.2 Wal-Mart Stores, Inc.
1. What is Wal-Mart Strategy?
• Wal-Mart's winning strategy in the U.S. was based on selling branded products at low cost.
• Though Wal-Mart may have been the top customer for consumer product manufacturers, it deliberately ensured it did not become too dependent on any one supplier; no single vendor constituted more than 4 percent of its overall purchase volume.
• Wal-Mart used a "saturation" strategy for store expansion. Placing a standard of able to drive a distribution center to a store within a day.
• In its early years, Building large discount stores in small rural towns.

What is the basis on which Wal-Mart builds its competitive advantage?
• Selling branded products at low costs brings Wal-Mart a total of 138 million customer visits worldwide.
• Even by being the top customer for consumer product manufacturer, no single vendor constituted more than 4 percent of its overall purchase volume.
• Saturation strategy for store expansion makes the distribution centers more efficient.
• Building large stores in small rural town while competitors focused on large towns with population greater than 50,000 gives Wal-Mart gives a step ahead its competitors in terms of reaching rural town customers and development. Development wise, it is cheaper to develop in rural town, in terms of rental and/or land acquisition, as compared to developed urban centers.

2. How do Wal-Mart's control systems help execute the firm's strategy?
On becoming the worlds largest retailer:
• Each store constituted an investment center and was evaluated on its profits relative to its inventory investments.
• Data from over 5,300 stores on its such as sales, expenses, and profit and loss were collected, analyzed, and transmitted electronically on a real-time basis, rapidly revealing how a particular region, district, store, department within a store, or item within a department is performing. Information enables the company to reduce the likelihood of stock-outs and the need for markdowns on slow moving stock, and to maximize inventory turnover.
• Data from "outstanding" performers among 5,300 stores were used to improve operations in "problem" stores.
On reduction of Pilferage
• institution of policy that shared 50% of the savings from decreases in store's pilferage in a particular store, as compared to the industry standard, among the store employees through store incentive plans.
On tracking Sales
• Implementation of a process requiring store managers to fill out "Best Yesterday" ledgers. Where these relatively straightforward forms track daily sales performance against the numbers from one year prior.
On keeping store manages creative.
• Encouraging department manages to be accountable and giving them incentive to be creative. Where successful experiments where recognized and applied to other stores. Such as the "people greeter" which not only provided a personal service but also their presence served to reduce pilferage.
On return for employees' loyalty and dedication
• Every associate that had been with the company for at least one year, wand who worked at least 1,000hours a year, was eligible for the profit sharing. Using a formal based on profit growth's percentage contributed to eligible associated which he can take when they leave the company either in cash or in Wall-Mart stock.
• Incentive bonuses, a discount stock purchase plan, promotion from within, pay raises based on performance not seniority, and open-door policy.http://www.oppapers.com/essays/Walmart/116963

Walmart 9.3 of 10 on the basis of 1887 Review.