Walmart's Stance In The Asian Markets example essay topic

No other mass retailer or trading community -- domestic, foreign, or global -- has developed a system even close to WalMart's capabilities in supply chain and distribution management and optimization. From 1987 to 1993 WalMart spent over $700 million on its satellite communications network, computers, and related equipment. However, the possibility of competitors having allocated significant resources to developing state-of-the-art data warehouses that, like WalMart's, go beyond collecting point-of-sale data to drive replenishment. The new data warehouses address and understand demographics, individual stores, and customer preferences. To continue to maintain IT as a strategic advantage, WalMart must continue development to further increase the effectiveness and efficiency of its supply chain management systems, to advance the development of its distribution management system, and add new capabilities as the technologies and customer service opportunities arise. In looking at WalMart more closely we realize that since WalMart is a traditional company its value chain is its supply chain.

In order to strengthen its value chain we must focus on strengthening components in their supply chain. As we further analyze the company, WalMart maintains a win-win situation with its suppliers since they order large quantities and they represent one of the largest customers for their suppliers. If we were to analyze WalMart like any other company and focus on its value chain rather than supply chain, WalMart still comes out on top. And more customer service. Walmart is one of the biggest global retailers in the world, operating in several different countries around the world, with multiple formats, all tied together by a state-of-the-art retail distribution system known as a Retail Link. The corporation typically seeks market areas where there is a customer base of 5,000 to 25,000 and targets small to medium-sized towns in particular.

Historically, the corporation avoids big city markets where land prices may be too high and competition from other large retailers much stiffer. Instead, Wal-Mart's strategy has been to locate in peripheral, semi-rural areas or city outskirts where it may draw from a regional clientele. Some of WalMart's sustainable sources of competitive advantage lie largely in their goal to providing their customers with the "Everyday Low Prices". This assurance along with the fact that they are willing to match or beat any of their competitors prices leads their customers to place more faith in WalMart. WalMart's aim to always serve their customers with a smile as well as always be of assistance is another reason they are able to stay ahead of their competition. Sticking steadfastly to the two rules of thumb on customer satisfaction and low price guarantee has lead WalMart to become the leader in their competitive industry.

Relationships Descriptive statistics Some of the key strengths of WalMart are in its value chain activities, most importantly its primary activities. WalMart has an excellent warehouse and inventory management system on hand, a segment of the value chain system, and hence they are able to stay ahead of their competitors. Their IT focuses on data warehousing and improving their inbound and outbound logistics. Also their shipping and order processing to each of their different store locations is done just in time so that none of their stores is lacking in any of the required inventory. Promotions are a big deal for WalMart.

Their heavy reliance on advertisement to boost their sales and increase their number of customers has lead them to their current position today on the New York Stock exchange. WalMart relies on advertising to boost their sales and to build traffic, however in 1993 advertising costs were only 1.5% of WalMart's discount store sales oppose to 2.1% for direct competitors. Their IT helps them determine which products are the most popular to the customers, and thus they are able to offer the lowest prices on the most needed products. Advertising these sale items attracts more customers to their stores.

Customer relations is very important at WalMart since their customer retention rate must be high in order to maintain their level of growth. Due to better inventory management, and higher quality of service they are able to offer customers a lower price on most products and thus increase the customer's willingness to pay. All of the activities described above are segments of the Primary activities of WalMart's value chain system. Some of WalMart's weaknesses lie in their recent entrance into the Asian markets. Since their European competitors have already made their foothold there, WalMart is at a slight disadvantage at gaining customers there. Also the value chain system applied to the American markets needs to be altered for their Asian markets because the tastes of the Asian consumers vary greatly from their American counterparts.

WalMart is also reaching the saturation point in the American markets. Their long time presence has lead to use every trick in the book to gain customer satisfaction the old school way, but now with the use of IT they can further increase their customer market by analyzing the market trends of their various locations. Their new IT will give them further insight on what the customers really want and they will be able to focus and selling and advertising the demanded products at the lowest market prices to beat out their competitors. According to the competitive forces model, analyzing WalMart's stance in the Asian markets reveals that the threat of new entrants into the industry is quite possible, since they are trying to sell foreign products to consumers who would prefer the local products.

The threat of competitors is quite strong as they have to compete with the European stores who have established themselves there well before WalMart's arrival. However, the new IT will give them the ability to determine which products are in most demand in which locations and then switch the order levels with suppliers accordingly, thus avoiding any losses and in fact guaranteeing a profit.