Walmart Realized the Unique Added Value to Customers Through Their Business Strategy
Wal-Mart realized the unique added value to customers through their business strategy.
Internal business strategy:
Marketing: Wal-Mart had few promotions and low advertising expense. However, the slogan of their promotional strategy was “everyday-low-prices”, which means the price was always the lowest. Instead of just selling nationally advertised high quality branded goods, Wal-Mart’s private label apparel which accounted for about a quarter of apparel sales. In terms of the “place”, Wal-Mart generally located stores in small towns and isolated rural areas. They build their own warehouse and didn’t have distributors, so they could buy in volume at attractive prices.
R&D: Wal-Mart was famous for their heavy investment in information technology. Advanced electronic data interchange (EDI) enabled the sharing of sales data, inventory status, and other information among each point of the supply chain. Also, they used electronic scanning of Uniform Product Codes (UPC) two years earlier than its competitors. As a result, inventory costs were reduced while sales were increased.
Operations: Since Wal-Mart leased about 70% of its stores, their stores rental expense was lower than their rivals. To achieve the attractive price, authorized store managers priced products to meet local market conditions.
Finance: Wal-Mart attached great importance to minimize the costing.
HRM: Wal-Mart hired experienced senior managers, and its culture stressed the key role of their staff, empowered them and built loyalty among them. A well-designed system of merit pay was effective in motivating employees.
Diversification: discount stores, SAM’S Clubs and supercenters.
External business strategy:
Strategic alliances between