Q2a. The Generic Strategies by Wal-MartWal-Mart Stores Inc. is one of the top retailers globally. The entity is headquartered in Bentonville, Arkansas with 11, 695 stores in over 20 countries. Established in 1962, the company’s founder, Sam Walton, had the dream of creating an ideal company that would provide quality products at low prices to the end-consumers. It is this mantra that has continued to guide the retail company to date. The company has won many accolades which emanate from the major milestones it has managed to achieve in the recent past. It is currently the top private employer in the world with over 2 million employees drawn from different countries. Market value wise, the company is hailed as the most valuable with much of its operations in its home market. Its steady rise has been made possible through execution of some of Porter’s five generic strategies of cost leadership and differentiation.
Q.2b Chief Elements of the Wal-Mart Generic Strategies
Cost leadership, as a strategy, entails the provision of low prices to the market with the intent of boosting sales and revenues. Since its establishment, Wal-Mart has been known for its low prices. Its slogan, “everyday low prices” speaks volumes of this fact (Thompson, Gamble, & Strickland, 2005). This strategy further focuses on striving “to achieve overall costs than rivals in offering a mostly comparable product/ service to a broad spectrum of buyers” (Thompson, Gamble, & Strickland, 2005).This strategy is observed through the way the company has incorporated technology and innovation within its operations to bring down costs. For instance, the Wal-Mart management since time immemorial has imposed controls when it comes to its overhead costs. The company’s stores are set up in large structures while ensuring that minimal rent is paid. The retailer has also focussed on efficient data analysis which has enabled cut down costs brought about by assumed costs. It also embraced IT in 1975 to aid in the tracking and distribution of inventory. Currently, IT has allowed the company to reduce its operational costs through outsourcing of cheap labor from other countries such as China. It has also embraced RFID (Radio-Frequency Identification) technology has eased the inventory-taking process hence bringing down costs of hiring additional labor. The company has managed to effect the cost-leadership through achieving similar store layouts where the retailer tries to utilize space as much as possible.
The next strategy that Wal-Mart has employed over the years is differentiation. Differentiation captures the efforts by a business to add value or other attributes to its products to appeal to a broad spectrum of the market. The retailer has in the recent past focussed on having its branded products on shelves. This was prompted by the need to ensure quality is enhanced for the products availed to the customers or consumers. The company has differentiated its customer experience by embracing both digital and physical transactions. Due to its expansive nature, the brand has tailor-made its products to satisfy the omnichannel consumer who prefers to order products online and physically visit retail stores to assess quality and cost of products. This has endeared it to many customers that have continued to prefer it over purely digital retail entities such as Amazon and eBay. The company has thus successfully managed to stretch the experience from digital, mobile to in-store with much ease.
In conclusion, Wal-Mart is one of the top companies globally that highlight how effective generic strategies are. The cost leadership and differentiation strategies have continued to stand out as some of the best strategies that corporates are embracing among the five Porter generic strategies. The company, however, has effectively managed to become a cost-leader due to its sheer size and economies of scale it enjoys. It has also embraced technology which is one of the major factors that have reduced operational costs. As for differentiation, Wal-Mart has been keen on labeling its products. It has also been focussed on altering the consumer experience from the traditional walk-ins to a more hybrid one which has incorporated digital retailing.
- Thompson, A., Gamble, J. E., & Strickland, A. J. (2005). Strategy: Core Concepts and Analytical Approaches. New York: Mc-Grawhill.
