Walmart Process Strategy Analysis

Introduction

Wal-Mart is operating for the last 49 years as the largest and most profitable corporation than the other ones in the world. The genesis of Wal-Mart’s success started when they opened their branches in small towns. However, then, they were ignored by their competitors. Their operational approach was also unique, efficient, and less costly. This made them decrease their overhead expenses and still retain the lower prices they had. The distribution channel was also highly efficient when they established a nationwide network to access the inventory of any outlet for faster distribution of supplies within Wal-Mart’s outlets. The main asset in Wal-Mart was the employees to whom Sam Walton (founder) used to refer as associates. The pricing was lower for consumers and even lower for the employees boosting their morale for utmost productivity in the workplace. Wal-Mart has grown to be the biggest corporation by diversifying its merchandise of general products to include glossaries with many supercenter stores all under one roof. Walton gave its managers a chance to be shareholders by buying the shares of the company they managed. This opportunity was an incentive to them; moreover, it gave them a chance to work hard beyond the call of duty. Wal-Mart has an “unwavering” desire to market American-made products (Walton & Huey 1993).

What process strategy is applied in Wal-Mart?

Process strategy involves the choice of managing processes to achieve a competitive edge over your rival. It is a wise utilization of the organization’s resources to provide better value to the clients. There are four main process decisions, namely, capital intensity, customer involvement, resource flexibility, and process structure. Wal-Mart has employed the process focus approach in its strategic management. It has a competitive advantage over its rivals, and this has enabled them to charge lower prices on its products, decrease its cost of operation, and increase its market share making them more profitable. These began with strategic formulation and practical strategies selected for implementation. Once these strategies are put into action, they should spearhead operation design, faster delivery, and more continuous company organization structure and control systems for inventory (Hinkelman & Putzi 2005).

Wal-Mart has enjoyed futuristic strategic leadership from not only its founder but also from its top management team. This has increased the worth of the corporate to its owners, shareholders, and employees. This has led to a remarkable increase in its profitability. This trust of able leadership shareholders placed on Sam Walton made him contribute enough capital to help in building more stores and distribution centers. This reward is a worthy return on the capital investment. Without able leadership, the shares would be worthless, and as legal owners, the shareholders could have lost their investments. This return could be reflected in the number of dividends paid and capital appreciations. The profitability of the company can be measured by the returns it makes on initial capital investment. Nowadays, Wal-Mart can generate high profitability and profit growth through strategic leadership. Wal-Mart competes with the other companies, and to attain a competitive edge over its opponents, the corporation has formulated and implemented a competitive advantage to outshine its rivals. Wal-Mart has been able to maintain profitability for several years (Fisher 2006).

Its managers use several sets of strategies to achieve superior profitability and profit growth. The self-service business model is the one used and effectively implemented to help the company to grow its profit over time. It has managed to apply a business model to international markets opening a business in different countries. Wal-Mart’s success is based on how Sam Walton and the managers he hired can formulate and implement a process strategy. Managers must make better use of the information they have. Sam Walton identified, articulated, and pursued a self-service supermarket business model of the company. These successes demonstrate his commitment to the company vision by doing everything to maintain a competitive edge. Managers attain the company’s aims by developing a network of what is going on within the company through interacting with employees of all levels. Wal-Mart has managed to push the retail industry to establish a universal bar code, which allows the retailers to generate any information about the product and use information technology to track its inventory. The company also manages to use radio frequencies to transmit data on individual products. Through the use of this strategy, the consumers “pull” the information they need while the suppliers “push” rewards to the consumers. Wal-Mart “is able” to predict demand and pull production base consumed demand. Push strategy in marketing is seen in the business transaction between the buyer and the seller. If the retailer makes advertising by radio, then the consumer will not be able to interact. Similarly, if communication occurs through phone or internet, the buyer has a chance to interact with the seller (Hinkelman & Putzi 2005).

Where is the distribution center of Wal-Mart?

The Wal-Mart headquarters is in Bentonville, Arkansas, and its building is drab and dull. It is not like in the other expensive cities like New York. Life is cheaper at Bentonville compared to other places, and this reduces the cost of operation (Walton & Huey 1993).

Are there any benefits located there?

The benefits of the strategic location of Wal-Mart’s headquarter are that the level of life in the city is cheap, and the executive fly coach and, sometimes, share hotel rooms with colleagues reduce the overhead expenses. Another benefit of the location of Wal-Mart at Bentonville is that its stores are close to each other so that the cost of shipment of goods is little, having dense networks of stores with logistics of deliveries. Wal-Mart’s strategy of opening new stores near the existing ones makes it possible to use experienced managers and other workers. Wal-Mart built up its stores’ network from the center going out and focused on daily deliveries from its distribution centers. It adopted communication technology, which helped the company to reduce the costs of operation. The company’s grocery business has grown and saturated the market within its traditional business to the point of competing with itself. If I could choose, I would select the same location for the initial beginning to reduce the overhead expenses and be able to share expertise where new stores take some business from existing ones (Martin 1994).

Conclusion

Wal-Mart’s prime goal is to keep retail prices low and save shoppers from exploitation by pushing suppliers to lower prices or increase the quality of the products every year on all items. Wal-Mart can sell products that sustain people and their environment through the support of customers and communities all over the world. The low-tech business, hard work, and dedication of the founder and management team, together with the entire worker force, have led to the success of the company (Fisher 2006).

References

Fisher, S. (2006). Long-term Contracts, Rational Expectations, and the Optimal Money Supply Rule. Journal of Political Economy, 85(1), 191-205.

Hinkelman, E.G. & Putzi, S. (2005). Dictionary of International Trade: Handbook of the Global Trade Community. Petaluma, CA: World Trade Press.

Martin, M.J.C. (1994). Managing Innovation and Entrepreneurship in Technology-Based Firms. New York: Wiley.

Walton, S. & Huey, J. (1993). Sam Walton: Made In America. New York: Bantam.