Wal Mart Stores Inc example essay topic

In a world where most retailers are categorized as having a monopolistic competition market structure, Wal-Mart Stores Inc. appears to have an oligopoly market structure. Nevertheless, because there are far too many retailers to deal with, then they also have a monopolistic competition market structure. Regardless, Wal-Mart would rather have it this way because it has not hurt them at all by having competition. When Wal-Mart Stores Inc. opened its doors to their first discount store in 1962, Sam Walton had no idea his business would take off like it has to this day. The reason for Wal-Mart's success has been their ability to create a basic structure for their very own business ecosystem. Wal-Mart came to conclusion that if they offered a variety of well-known brands and sold them about 15% cheaper than other retailers, then this would make them a powerful force in the retail business.

This business ecosystem may be similar to what other retailers may use, such as Kmart, but Wal-Mart did not follow the norm by opening stores in the suburbs where the money was. Wal-Mart decided that it was in their best interest to stay put in rural and small-town markets. They felt that the people from the suburbs would come to them, which is exactly what ended up happening. Their simple strategy worked; one store would cater to several different towns.

The key features of Wal-Marts approach to implementing the strategy put together by Sam Walton emphasizes building solid working relationships with both suppliers and employees. By paying attention to every detail in the store layouts, merchandising techniques, capitalizing and taking advantage of every cost saving opportunity proves to the difference in successes. This strategic formula is used to provide customers access to products when and where customers want them. Wal-Mart Stores, Inc. has enjoyed success by adhering to three basic principles since its founding in 1962. The first principle is the concept of providing value and service to our customers by offering quality merchandise at low prices every day. Wal-Mart has built the relationship with its customers on this basis, and we believe it is a fundamental reason for the Companys rapid growth and success.

The second principle is corporate dedication to a partnership between the Companys associates (employees), ownership and management. This concept is extended to Wal-Marts Vendor Partners who have increased their business as Wal-Mart has grown. The third principle is a commitment by Wal-Mart to the United States and the communities in which stores and distribution centers are located. All of the Wal-Mart stores live by their Everyday low Prices philosophy. Wal-Mart has been able to stay on top because it has been better at containing its cost, which has allowed it to pass on the savings to its customers. Wal-Mart store cut cost everywhere they can, so in return the customer will receive a quality product at a cheaper price.

Wal-Mart has been regarded as an industry leader in testing, adapting, applying a wide range of cutting-edge merchandising approaches (Wal-Mart Stores). Walton was known for his ability to learn quickly from his competitors successes and failures. Wal-Mart has invested heavily in its unique cross-docking inventory systems. Cross docking has enabled Wal-Mart to achieve economies of scale, which reduces its cost of sales.

With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the individual managers more control at the store level. Assisted by a company owned transportation system Wal-Mart can ship goods from warehouse to store in less than 48 hours. This enables Wal-Mart to stock the shelves 4 times faster than its competition. Wal-Mart owns the largest and most sophisticated computer system in the private sector.

It uses a MPP (massively parallel processor) computer system to track stock and movement, which keeps it abreast of fast changes in the market. All of the sales and inventory is distributed with its advance satellite communications system. Wal-Mart has increase their buying power buy negotiating with its vendors. They expect a commitment of quality merchandise. As it has worked out it has been profitable for both sides. Even though Wal-Mart is tough in negotiations with the vendors to get rock bottom Prices, they develop respect and form long-term connections that value both Parties.

Wal-Mart has some of the highest technology working for them. For example, they have an automated recording system linking computers between Proctor & Gamble. The computer recognizes when an item is low on stock and sends a signal straight to the P&G distribution center. Next sends a re-supply order, via satellite, to the nearest P&G factory, which then sips the item to a Wal-Mart distribution center or directly to the store. This method allows P&G to lower its cost and pass on some of the savings to Wal-Mart. Wal-Mart shows its concern for the community in many ways.

One is by building environmental friendly stores. These stores contain environmental education and recycling centers. They have also adopted a low cost theme for its facilities. All of the offices including the corporate headquarters are built economically and furnished simply. They also conserve energy by having computerized temperature controls.