Walmart's Generic Competitive Strategy Walmart's Generic Competitive Strategy and Intensive Growth Strategies

Walmart’s Generic Competitive Strategy
Walmart’s Generic Competitive Strategy and Intensive Growth Strategies:

Walmart Inc. (formerly Wal-Mart Stores, Inc.) applies its generic strategy to achieve competitive
advantage based primarily on low cost and the correspondingly low selling prices of goods
offered to consumers in the international retail industry. Michael E. Porter’s model illustrates
that a company uses a generic competitive strategy as a general and basic approach to effectively
compete against other firms in the industry. In this business analysis case of Walmart,
competitive advantage is maintained through a variety of strategies and tactics. However, the
main generic strategy applied in the business relies on minimizing cost. This condition enables
the company to adjust its selling prices accordingly. As shown in the SWOT analysis of Walmart
Inc., selling price minimization is a strength that makes the business competitive against other
firms that operate in the global retail market. The company directly and indirectly competes
against firms like Costco Wholesale, Amazon.com Inc. and its subsidiary Whole Foods
Market, Home Depot, and eBay Inc. These companies influence Walmart’s strategic
management and the implementation of its generic competitive strategy and related strategic
objectives.
Walmart Inc. uses its intensive strategies to grow the business and minimize the effects of the
retail industry’s competitive forces. Considering the saturated nature of the retail market, the
company experiences the strong force of competitive rivalry, as shown in the Porter’s Five
Forces analysis of Walmart Inc. With multinational operations, the company uses its intensive
growth strategies along with its generic strategy to counteract the negative impacts of
competition, especially in the e-commerce environment.Walmart business strategy is based on
‘everyday low prices’ philosophy of the company. In other words, Walmart pursues cost
leadership business strategy enabled by the economies of scale derived by the company in a
significant extent. An efficient utilization of online sales channel contributes to the level of cost-
efficiency of retail operations and about 75 percent of walmart.com sales come from non-store
inventory.
Constant improvements of assortment, price and access are basis of Walmart business strategy.
In simple terms, Walmart strives to offer the widest choice of products for the cheapest price,
along with giving customers the opportunity of choosing the most convenient channel to
facilitate the purchase.
Wall Mart competitive advantage relies on cost leadership. Moreover, the strategic level
management consistently aim to associate Wall Mart competitive advantage with price, access,
assortment and experience. Since his appointment as CEO in February 2014, Doug McMillion
introduced important changes in Walmart business strategy in the following three directions
a) Increasing focus on customer services. In February 2015, the company announced a USD1
billion investment in U.S. hourly associates to provide higher wages, more training and
increased opportunities to build a career with Walmart.
b) Improving groceries. Due to increasing level of health-consciousness of consumers, Walmart
is attempting to increase its range of organic options and fresh produce. This change is more
evident in the US market and it is being actively integrated into marketing communication
message of the brand.
c) Enhancing the flexibility of the shopping experience. It has been noted that “Wal-Mart is
working to integrate its physical stores with the digital business. For example, thanks to the
latest changes, customers are able to collect their online orders from stores and they can also
get text reminders from the pharmacy.
Generally, Walmart competitive advantage can be sustained in the global marketplace in long-
term perspective. ‘We Operate for Less’ and ‘We Buy for Less’ programs saving us USD150
million in China. The company can replicate this strategy to other markets in order to gain and
sustain its cost advantage
Walmart’s Generic Strategy for Competitive Advantage (Porter’s Model)
Walmart Inc.’s generic strategy is cost leadership. Michael Porter’s model defines cost
leadership as a generic competitive strategy that focuses on achieving low costs. As a low-cost
producer of retail services and related business outputs, Walmart is able to compete based on low
selling prices. Low prices are a fundamental strategic objective used in the company’s pricing
strategy (see Walmart Inc.’s Marketing Mix or 4Ps). Low prices are a main selling point of the
retail business. The company uses various approaches to maintain low costs and, consequently,
low prices. For example, through automation and related technologies, and through minimized
spending for human resources, the company achieves low costs in operations.
Cost leadership involves low product differentiation. With focus on low prices as a selling point,
Walmart Inc.’s retail services are common and, thus, poorly differentiated from retail services
from other firms in the industry. In addition, this generic strategy involves a low level of market
segmentation. For example, the company offers its retail services to every consumer in all
segments of its target markets. Doing so aligns with Walmart’s corporate mission and corporate
vision, which aim for leadership in the global retail market. To succeed in implementing its
generic competitive strategy, the company relies on process efficiency, management approaches,
and other strategies, such as intensive growth strategies, that help reduce costs. With the strategic
objective of keeping costs low, the corporation is known for large-scale imports of low-cost
goods from countries like China.
Walmart’s Intensive Strategies for Growth:
Market Penetration (Primary Strategy).
Walmart’s main intensive growth strategy is market penetration. In Igor Ansoff’s model, this
strategy entails selling more goods or services to the company’s current markets. Current
markets are those where the business has existing operations. In implementing this intensive
strategy, Walmart Inc. sells more goods and services to its current consumers by giving discounts
and related offers. For example, as a cost leader, the company offers discounted wholesale
packages of various goods. In addition, Walmart enhances its online presence to improve
customers’ access to the products it sells. This access improvement contributes to the growth of
the company’s sales revenues. A strategic objective related to this intensive strategy is to
increase the company’s market share, especially in the biggest retail markets, such as the United
States. Walmart applies market penetration by using the selling point of low prices, which is
achieved through the cost leadership generic strategy.
Market Development:
This intensive strategy is of secondary significance in supporting Walmart Inc.’s business

growth. Market development involvesoffering the company’s existing goods and services to new
markets. For example, in using this intensive growth strategy, Walmart opens new stores in
countries where it does not yet have operations. A related strategic objective is to continue to
establish the company’s presence in new markets. This objective includes online presence for
retail transactions. The cost leadership generic competitive strategy supports the market
development intensive growth strategy through low prices that attract consumers to Walmart
stores in these new markets.
Product Development:
Walmart Inc. uses product development as a minor intensive strategy for growing the retail
business. Based on the Ansoff Matrix, product development involves developing and offering
new products to the markets where the company currently has operations. In this case, Walmart
has minimal investment in new product development. The company focuses its investments on
sales and marketing, which are at the core of the retail business. Nonetheless, using this intensive
growth strategy leads to the strategic objective of investing more in research and development
(R&D) to introduce new services or improve Walmart’s existing products. The cost leadership
generic strategy requires that product development must focus on new products that do not
impose costly processes.
Diversification:
This intensive growth strategy involves providing entirely new products in new markets, which
are usually industries or sectors where the company does not yet operate. For example, Walmart
Inc. entered the video streaming market in 2010 upon acquiring the content delivery and media
technology company Vudu Inc. A strategic objective in using this intensive growth strategy is to
search for and acquire companies that can be integrated into Walmart’s existing operations, such
as via the company’s e-commerce website. In following the cost leadership generic competitive
strategy, such acquisitions must involve high efficiency and support low-cost operations, in line
with Walmart Inc.’s operations management strategy. Despite its use in the business,
diversification remains a minor intensive strategy in growing the company. Walmart Inc. has a
low rate of diversification, as the business focuses on retail operations.

Walmart's Generic Competitive Strategy Walmart's Generic Competitive Strategy and Intensive Growth Strategies

Uploaded by

Copyright:

Available Formats

Walmart's Generic Competitive Strategy Walmart's Generic Competitive Strategy and Intensive Growth Strategies

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Walmart's Generic Competitive Strategy Walmart's Generic Competitive Strategy and Intensive Growth Strategies

Uploaded by

Copyright:

Available Formats

Walmart’s Generic Competitive Strategy

Walmart’s Generic Competitive Strategy and Intensive Growth Strategies:

Walmart’s Generic Strategy for Competitive Advantage (Porter’s Model)

Walmart’s Intensive Strategies for Growth:

Market Penetration (Primary Strategy).

This intensive strategy is of secondary significance in supporting Walmart Inc.’s business

You might also like