Walmart

Scott Mew        Revised

22-10-2017

Dr. Burns

BUAD 451Y

1. Wal-Mart was one of the first companies to apply the self-service supermarket business model developed by grocery chains to sell merchandise in 1962. Wal-Mart focused on small, southern towns that were ignored by other grocery chains and had enough demand to support one large discount store, while other rival grocery chains paid attention to urban and suburban locations. Walton noticed that in America, people would drive an hour to Wal-Mart in a small town rather than drive longer to a larger city with potentially more selection. Wal-Mart rapidly grew by having the lowest market prices and over time outpricing their local competition until they were out of business, which means the ultimate death of the “Ma and Pa” businesses. By the time Wal-Mart’s competitions had realized what was happening, it was too late and Wal-Mart had won.
2. Gradually and ultimately, Wal-Mart pioneered and took huge steps forward with logistics, information systems, and human resources. Actions taken in these functional areas resulted in higher productivity and lower costs as compared to rivals, which enabled the company to earn a high ROIC while charging low prices. This information technology gave Wal-Mart the opportunity to monitor what they were selling and what was popular and sold well, and view the supply and demand for the different areas Wal-Mart’s were found in. The more and more Wal-Mart grew, its massive size, brand power, customer loyalty, and purchasing power (especially in bulk) allowed it to thrive on the low prices it paid its suppliers, therefore Wal-Mart passed the savings they made onto its customers, which helped it gain more and more customers. This has taught me that you need to continuously improve and diversify other components like information systems, logistics, and human resources to help power, improve, and sustain the long-term competitive advantage, just like Wal-Mart did and is still doing.
3. Wal-Mart overcame these limits by diversifying into the grocery business, a wise move because this helped them open a whole world of profits, a shop that housed merchandise and groceries under one roof. It also diversified into the warehouse business with Sam’s Club. These expansion moves made sense as they allowed more convenience for customers, while giving Wal-Mart more profit lines.
4. Wal-Mart is encountering limits to growth within their chosen industries, as there are only so many consumers within America. Wal-Mart should consider diversifying into more profit lines, such as whole food stores and specialty items to push back at these limits, they should also branch into a more diverse and larger sports inventory as well as outdoor items and garden items.
5. Walmart is the largest retailer in United States and its sheer size and brand image give it significant weight. The low prices available at Walmart are not found at other retail stores, it also has price match which other stores are just now catching onto.The range of products it sells is also larger than its competitors.
6. Wal-Mart’s biggest threats to its’ profitability would be other companies creating other competitive lower prices than Wal-Mart.  
7. I believe that originally Wal-Mart had a planned strategy but I don’t believe that its founders planned for Wal- Mart to grow into what it is today. Wal-Mart has adapted and evolved daily, based on the people it services and tends to, but in my opinion, this is the nature of strategy development. When one works with people, there can’t be a set of specific rules or a guide of how to and how not’s; people are fickle and can change their minds and opinions at the drop of a hat, essentially its impossible to truly plan and develop a fool proof strategy to deal with human beings. One must just be wise and be prepared to appease and deal with a situation at any cost and at any time.