Why Wal Mart Is Successful Management Essay

Published Date: 23 Mar 2015

Wal-Mart is a global company with stores in all United States, and other 14 countries, the Wal- Mart Company started with one small store in Arkansas and since then it become the biggest and most profit company in the world and since then Wal-Mart history is very inspiring for most of the retailer.

In the 1940, Sam Walton placed the foundation stone on the Wal Mart and then it has been the vision of the Sam Walton to be able to changed the features of the retailing business, Sam Walton has opened the first Wal Mart store in the Rogers, Arkansas, which is under the name of Wal Mart discount city in 1962, since then, the store has become more popular than ever with low prices and attracted many customer so that they can expands the business to 24 store in only five years time, however, when the company were incorporated in 1969, during 60s and 70s, Wal Mart stores spread through the Midwest and south and by 90s they also break through the rest of the nation and the company began to expands into United Kingdom and South America in 1999. Wa7l mart is known as the brilliant customer support, competitive pricing and the proper ethics at the place of work.

Wal-MART business system

Why wal-Mart is successful

Wal-Mart is a very successful multinational corporation, at first they views the retail industry that seems like not so attractive, but it tends to be very high competitive, low margin industry, and where the opportunities to achieve will sustained profitability are quite limited, and obviously it was Wal Mart who defined a specific competitive advantage,

In response to increase the industry concentration, many of the surviving retailers attempt to improve their competitive positions by rationalizing their mental structures and value chain by eliminate superfluous operations (Hunter, 2003).

Cost advantage

Wal-Mart mission has cost advantage because of lower operating expenses compared to the competitors, the operating expenses of the average of direct competitors have been $24.6 million. in 1993, moreover, Wal-Mart operating expense were $18.2 million, and they have clear advantages in cost of good sold and operating income. And the strategy of cost orientation, which means is to reduce cost whenever you can is the key for success, therefore, a discount retails stores like Wal-Mart is in the position to accept lower price with lower margins while selling greater quantities of goods.

Pricing strategy

Relating to comparative pricing study by Salomon brothers, Kmart is 10% more expensive than Wal-Mart in four to six miles distance, even if you are moving further distances Wal-Mart is cheaper than the nearer competitor, therefore, you could get the feeling that they try to maintain their prices image in the different area. Walâ€"Mart internal operations and procedures can be acknowledged as milestones to achieve its competitive advantages, the central differences can be seen in the logistics chain.

Wal-Mart expansion in other area

Wal-Mart is also expands as a retailer, they move into many other sectors as well, which including gas stations auto maintenance, groceries and electronics. Each of every year, Wal-Mart seems to find a new way to grow and offer more service to their consumer. Wal-Mart is also continuing to expands into area which the supermarkets is already existed in an attempt to drive them out of the business, therefore, as long as Wal-Mart can offers low price on food and other bulk articles. They will continue to grow and compete at the supermarket level. For example, wal-Mart also making a large discounts on the electronics retailers. For instance, Wal-Mart offered an exclusive (Garth Brooks CD/DVD boxed set in November 2005) which has sold half a million copies on the first day and become the top selling music item in the company history after only three day available in stores (Kneer, 2005)

Wal-Mart international

Although Wal-Mart is a giant on the domestic US market, they play only a subordinated role in the international retail industries, and some of the problems arises when the Wal-Mart first to attempted to enter the international market, furthermore, in the North America they also have store are all over the countries, in Mexico, Puerto Rico and Canada. So far, Wal-Mart is hardly represented in Latin America, with only 11 branches in Argentina and 22 in Brazil. However, in Asia they also arrange of 19 addresses in China and 11 South Korea.. In china, operations fell apart in 1996 because of market differences (Reynolds 2004).

In Europe, local regulations that have forced Wal Mart to buy more existing stores, Wal Mart is so far only active in Germany (Wal-Mart de, 2005), which has designated as a central basis for the further expansion in Europe, and the Great Britain which Wal Mart bought the UK third largest supermarket Asda for 6.7 billion (shah et al, 2003)

Definition of MNC

In general, the means of the theory of the MNC is to explain the pattern and the level of the foreign value added activities of firms. Multinational corporations are also known as international or transactional corporation and the business activity included sales, manufacturing or other services in the foreign country. A multinational of the definitions of the MNC are given in the international business text and the question of the important criteria of the MNC, which is still unresolved, many of the authors have agree on that, moreover, in an MNC has fundamental differentiate characteristics with regard to social and cultural norms, government regulations, customer tastes and preference as well as social and economic structures. The MNC faces various incompatible demands and pressure in few of the host countries. The MNC also managed a difficult organizational structure and management system which require control over the product and its functional and geographic diversity, including cultural aspects and linguistic (Forsgren, Holm, and Johanson, 2005)

Low price Strategy which inspired by WAL-MART

Wal-Mart everyday’s low price strategy has revealed it is a mega success which cannot be contributes all to the surfaces competence. Wal Mart's market domination have specified itself significant bargaining power against the suppliers. However, Wal-Mart’s has the most highly developed cost control and logistic system in the industries. Furthermore, combine with strict completion of such advance systems, Wal-Mart have gains the core competence that is very strong in the industry.

Many people have agreed that the technological advanced has play a vital role in the rises of Wal-Mart. however, the dynamic force that behind Wal-Mart rise deceit in its "customer expectation management". Therefore, through this exacting execution of standardization of the internal management and cost control, Wal-Mart was able to offered comparatively very high quality products and very good customer service to consumers at a very reasonable prices, which is so often beyond their expectations. (Songping Hu, 2006).

It is very clearly that the Wal-Mart competitive advantages is they offered everyday low price strategies, hence, Wal-Mart effectively carry out such as strategy by established a low cost procurement low price sales low cost sales business process. Such a process feature two relationships and two system, refers to the logistic system and the information system with the customer and the partnerships relationship with the employee (Fei Li and Xuhui Wang, 2006.)

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Recommendation and Strategy advices

Global localization strategy

After a thorough analysis of the most important fact, several advices can be proposed, it can be a very success formula to embark on a global localization strategy (pownall 2005), Wal-Mart did not sufficiently adjust the corporate strategy to country specific conditions. The strategy of a global player must fit to the local culture. Therefore, Wal-Mart is in needs to tailor the business to the specific countries (Grant, 2005)

However, there might be a few recommendations, which could make the company work appropriate market research. This should be based on the similar ideologies, a cost profit analysis and a demographic analysis, moreover, Wal-Mart also should expands further in the Asian market especially Singapore which possess high growth potentials in the retail and consumer industries, in order to gain access to consumers in these market, they should pursue partnership with country specific retailers.

Wal-Mart aggressive corporate strategy

On the other hand, the next area that Wal-Mart need to address is Wal-Mart aggressive corporate strategy, they might have not implemented their strategy for the best possible ways, but in particularly regards to the public relations, countless anti Wal-Mart websites as the WakeupWal-Mart.com with slogan as “Always high costs, always sprung up. They seem to present a company that neglect the rights of its employee (Kneer, 2005).

Customer friendly website

Moreover, the next big thing is to create a more customer friendly website, by using Wal-Mart online shop people from all over the world could have right to use to the products. For customers, the outcome or results may be time saving, lower opportunity costs and generally as easier way to get in contact, for Wal-Mart this will definitely broaden the customers base and save fixed costs in the whole world, therefore, this may be the one of the essential step for the international market expansion

Finally, a friendly corporate image could have a big impact as well, working with the governments and being sensitive to local culture might benefit the company in the long term base, as a consequences, principal agent problems with the shareholders and associates can be solve.

By implements these advice, Wal-Mart would not only want to expands quicker into the foreign markets, but also want to be better positioned to defend themselves against the critics, therefore, Wal-Mart might can achieve both a very good reputation and keep its name connects with the good quality products and cheap prices (Kneer, 2005).