Why is WM embarking on this new strategy What company strength is management trying to leverage in this strategy What are the risks Comment on the other companies involved in this case - how should they respond to WMs strategy.
The new strategic position being implemented by Wal-Mart focuses on providing services beyond the traditional department store. This strategy by Wal-Mart can be exemplified by the launch of a health care program by selling generic drug supplies for 4.00 per month, focusing on growing wireless technology by selling inexpensive Straight talk phones (Cheng, 2009) and establishing Walmart.com as the biggest and cheapest retailer by online book selling at extremely competitive rates. In 2009, Wal-mart only gained 1 or 2 percent increase in sales (Talley Lloyd, 2009).Wal-mart has implemented this strategy in order to increase its sales by 4 to 6 percent. The strongest factor that facilitates Wal-Mart to implement this strategy is its huge size and economies of scale to achieve low costs for all its products. However, the problem that Wal-Mart may face will be re-establishing the low prices it had set before. In order for other competitors to maintain and increase its percentage of sales, they need to specialize in a particular area of business which adds value and reduce costs. Geek squad services unit is a very good business decision in generating revenue by BestBuy, a competitor of Wal-mart. (Talley Lloyd, 2009).
What strategic changes and shifts has WM embarked on in the past few years What motivated the company Which initiatives were successful and which were not.
The strategic changes being initiated by WM are expansion of business in Brazil and China, offering installation and support services for consumer electronics through 3rd party, collaborating with DELL to market tech-support services through kiosks and building online information about electronics which will substitute for employees in its store (Talley Lloyd, 2009). Oligo-polistic reaction theory is one of the motivational factors due to which Wal-mart has taken these steps. The support services of Best buy generated business of 3.15 billion in 2009 and therefore Wal-mart has taken a similar step to increase gains in sales. Most of the initiatives were successful except building kiosks. This project was abandoned this summer as it was unsuccessful.
Please refer to the subject of Strategic Management and the Five Forces of industry rivalry. What parts of the model apply to this case Please explain.
The competition being faced by Wal-mart can be reflected through the two forces of industry which are
Rivalry.
There are numerous retail stores similar to Wal-mart competing on cost advantage. The rising number of stores along with the mature product results in slow growth and increasing competition. Since similar products and services with minimal differentiation are being sold in each store, there is low-switching cost. All these factors contribute towards more rivalry between the retail stores.
Threat of substitutes
Due to the electronic age and low cost, e-books are gradually being bought as a substitute for hard covered books. In order to gain greater percentage of sales, Wal-mart reduced its cost of book against Amazon.com (Bustillo Trachtenberg, 2009)
As always, please identify and explain the principles of management you find this case to be illustration of.
The foundation of successful businesses is dependent upon ardently following the principles of management. One of the principles that serve a prime factor in the companys success is the division of work. The specialization in a task increases efficiency and productivity of the workforce and this can be reflected by a separate division and hierarchy for Walmart.com. Another tenet which acts as a strength to Wal-Mart is the Unity of Direction. The complete human resource in Wal-Mart understands and pursues the same objective of low-cost product or service. The third principle that Wal-mart has embarked upon is the proper balance of centralization and de-centralization. The information sharing with suppliers facilitates in developing good will and innovational techniques to reduce costs (Comparing K-Mart and Wal-Mart Management, 2006).
The new strategic position being implemented by Wal-Mart focuses on providing services beyond the traditional department store. This strategy by Wal-Mart can be exemplified by the launch of a health care program by selling generic drug supplies for 4.00 per month, focusing on growing wireless technology by selling inexpensive Straight talk phones (Cheng, 2009) and establishing Walmart.com as the biggest and cheapest retailer by online book selling at extremely competitive rates. In 2009, Wal-mart only gained 1 or 2 percent increase in sales (Talley Lloyd, 2009).Wal-mart has implemented this strategy in order to increase its sales by 4 to 6 percent. The strongest factor that facilitates Wal-Mart to implement this strategy is its huge size and economies of scale to achieve low costs for all its products. However, the problem that Wal-Mart may face will be re-establishing the low prices it had set before. In order for other competitors to maintain and increase its percentage of sales, they need to specialize in a particular area of business which adds value and reduce costs. Geek squad services unit is a very good business decision in generating revenue by BestBuy, a competitor of Wal-mart. (Talley Lloyd, 2009).
What strategic changes and shifts has WM embarked on in the past few years What motivated the company Which initiatives were successful and which were not.
The strategic changes being initiated by WM are expansion of business in Brazil and China, offering installation and support services for consumer electronics through 3rd party, collaborating with DELL to market tech-support services through kiosks and building online information about electronics which will substitute for employees in its store (Talley Lloyd, 2009). Oligo-polistic reaction theory is one of the motivational factors due to which Wal-mart has taken these steps. The support services of Best buy generated business of 3.15 billion in 2009 and therefore Wal-mart has taken a similar step to increase gains in sales. Most of the initiatives were successful except building kiosks. This project was abandoned this summer as it was unsuccessful.
Please refer to the subject of Strategic Management and the Five Forces of industry rivalry. What parts of the model apply to this case Please explain.
The competition being faced by Wal-mart can be reflected through the two forces of industry which are
Rivalry.
There are numerous retail stores similar to Wal-mart competing on cost advantage. The rising number of stores along with the mature product results in slow growth and increasing competition. Since similar products and services with minimal differentiation are being sold in each store, there is low-switching cost. All these factors contribute towards more rivalry between the retail stores.
Threat of substitutes
Due to the electronic age and low cost, e-books are gradually being bought as a substitute for hard covered books. In order to gain greater percentage of sales, Wal-mart reduced its cost of book against Amazon.com (Bustillo Trachtenberg, 2009)
As always, please identify and explain the principles of management you find this case to be illustration of.
The foundation of successful businesses is dependent upon ardently following the principles of management. One of the principles that serve a prime factor in the companys success is the division of work. The specialization in a task increases efficiency and productivity of the workforce and this can be reflected by a separate division and hierarchy for Walmart.com. Another tenet which acts as a strength to Wal-Mart is the Unity of Direction. The complete human resource in Wal-Mart understands and pursues the same objective of low-cost product or service. The third principle that Wal-mart has embarked upon is the proper balance of centralization and de-centralization. The information sharing with suppliers facilitates in developing good will and innovational techniques to reduce costs (Comparing K-Mart and Wal-Mart Management, 2006).
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