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Sample Essay on Wal-Mart Strategic Competitiveness

Wal-Mart Strategic Competitiveness

Introduction

Wal-Mart is one of the amazing success stories in the history of the world. The company found by Sam Walton in 1962 started as a mini discount shop in Arkansas. Since its inception, it has grown to be the global largest corporation. It appears almost unbelievable that the organization has grown to be the second largest organization in less than sixty years.

Almost one third of the country’s population shops at Wal-Mart on weekly basis (William, 2010). Additionally, up to 93 percent of households in the US visit the store at least once a year. In the financial year ending 31st 2006, the slogan for the company ‘’every day low prices’’ made about $354billion in more than 500 hundred facilities in more than 15 nations and with more than 1.4 million staff members.

Wal Mart stores in the USA generate about 8.8 percent of all retail sales (William, 2010). It was also profitable and in 2009, it earned 14.7 percent of invested capital return (Hitt & Hoskinson, 2013). It was as a result ranked top of its competitors Target and Costro with 10 percent and 9.4 percent respectively. Currently, the company has more than 3900 stores in the US alone and has since been considered the national commons.

This paper will therefore evaluate the role of technology and globalization changes in competitiveness in regards to Wal-Mart, and how the company’s vision and mission statements have affected its overall growth.

Vision and Mission Statements

The most significant feature of the strategic management process according to Hitt and Hoskisson (2013) is to design a company’s mission statement. This should provide a background within which the formulation of objectives will take place. A mission statement defines the organization’s reason for existence clearly where the company hopes to be in the future is known as vision and the major goals are the key values of an organization’s statements.

In the USA, the success strategy for the company is based on the sale of branded products at an affordable price. The store grew rapidly by reducing its prices compared to local retailers and as a result, keeping them off business easily (William, 2010). This is why the company has managed to do exceptionally well in a retail industry characterized with cut throat competition.

Competitive Advantage

“If a company’s strategy results in superior performance, it is said to have a competitive advantage”. Wal-Mart has rapidly enhanced competition based on establishing new knowledge while creating the first, mover benefit, price and quality positioning as well as competition to help protect and invade markets that are geographically established. This has enabled the company to enjoy superior performance from 1994 to the present despite growth of new rivals.

The store has additionally achieved a cutting edge over its competitors (Hitt & Hoskisson, 2013). Its higher profitability replicates an economic advantage that depends on successful implementation of different strategies. The company was also among the top first movers to employ the self-service strategy created by grocery stores to common merchandise.

The company is also focused on suburban locations and southern towns that are often ignored by its competitors including Target and Kmart. Even so, the industry in which a company competes has a major influence on its performance compared to internal forces of management. The components of the industry may include various factors such as economies of scale, diversification and differentiation of production among others.

The external environment in which Wal-Mart operates imposes constraints and pressures that govern strategies leading in average returns above. Therefore, a company will create and develop internal skills needed by external environment to point out what a company can make of existing opportunities.

Information Technology

Technology is one of the most crucial elements of competitive advantage. The ability to effectively and efficiently Proofreading-Editingaccess and utilize IT has been considered an essential resource of economic advantage (Tsui, 2012). IT includes virtual reality, PCs, massive databases, electronic network, artificial intelligence, online business and cellular phones.

The success story of the Wal-Mart is therefore not restricted to its location strategy. The company is an innovator driver in information systems and logistics. It paved way for retailers in the US in the creation and application of high quality goods tracking system that utilized a bar code technology as well as checkout scanners. The company through the technology was in a position to keep track of sales and make necessary adjustments to its stores accordingly to match the found in store products with the demand of locals.

This made it possible to prevent any unnecessary stoking and as a result, not holding any periodic sales to shift unsold inventory. Later on, the company connected the information system to a state distribution network facility where the inventory was kept before shipping other products within a radius of 300 miles.

The inclusion of information and distribution centers also led to a reduced number of inventories that the company held in stores thus, devoting more time to selling of space, which also reduces the capital it held in its inventory over time. the company also influenced its suppliers to have an electronic network in its stores to cut down on geographical distance between them, store information on daily sales, expenses, profits and loses gathered, evaluated and processed electronically on real time basis.

Globalization

On the other hand, IT development has been a major driving force behind globalization and that it has since been considered the focal constituent of a company’s global business strategy. It has also been embedded in almost every field including economic government, business or social fields.

Globalization has also affected the way in which the world operates. According to Hitt and Hoskisson (2013), it is “the intensification of global interconnectedness, suggesting a world full of movement and mixture, contact and linkage, and persistent cultural interaction and exchange”. Today, different markets have gone global thus evaluating the environmental situations in the industry would also mean evaluation the effect of globalization on completion in a given industry.

Even so, according to Tsui (2012), globalization is a process of enhancing flow of capital, humans, products, images and idea across the globe. Wal Mart- has transformed from small scale retail business to a global company at an impressively increasing rate. It has more than 4000 operational stores in the US and more than 1, 6000 facilities in Canada, Mexico, Brazil, Puerto Rico, Germany, China, Korea, Argentina and the UK.

Additionally, the company has embraced the global supply chain integration that is monitored by multinational producers as well as distributors. Even so, globalization has led to growth of competition amongst companies. Trade is taking place across nation’s leading to importation of products from all global corners. This has also forced the store to keep up with new trends and changes to maintain an edge in the market.

Its growth has also been seen by others to have long term benefits. The company is too be and could experience profitable growth limits (William, 2010). Wal-Mart is also a target of law suit constantly and many staff members across the globe have various lawsuits claiming that the company’s culture segregates against them.

Conclusion

Globalization is a strategy of spreading out the political, social, cultural and economic practices across frontiers. It has brought about time-space compression. The change between different moments and space between localities are reduced and shortened. The company recognized this opportunity and planned on global markets. Additionally, it has firsthand facts on information systems, logistics and human resource practices. These strategies when combined together had led to enhanced productivity and reduced costs compared to any other competitor.

This also helped the company to generate high levels of profit while trading at low prices. This analysis further reveals that a company can move from production facilities to another country to expand into developing markets aggressively.

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References

Hitt, M. A., &Hoskisson, R. E. (2013). Strategic Management: Competitiveness &

Globalization. Mason, OH: South-Western Cengage Learning.

Tsui, E. (2012). Technology in Knowledge Management. Bradford, England: Emerald Group

Pub.

William, F. A. (2010). Center of Global Leadership: Wal-Mart Stores, Inc. Norwood, N.J: Ablex

Publ. Corp

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