Globalization has had a positive impact on planning in Wal-mart organization. This is because Wal-mart stakeholders are able to estimate the profit it can make by allowing its cheaply manufactured and inexpensive goods and services to cross the borders and reach other countries of the world. (James, 1999) defines industry attractiveness as the prevailing situation in the core business of an organization which favors the specific organization for example in monotheistic business environment, a business is more likely to be favor in terms of business performance since it can manipulate market forces to its advantage.
Even in a market environment, less than 4 competitors are likely to influence the market situation to their advantage hence creating an attractive market environment. Wal-Mart’s performance has been termed as sterling by many business analysts. The chain has recorded a profit after taxes of above $200 billion. By applying concepts like vendor managed inventories as well as just-in-time concept, Wal-Mart has continued to maintain leadership in the retail market in the US.
Wal-Mart endeavors to remain a low-cost retailer, and by that it has been very effective in maintaining market attractiveness. By all means Wal-Mart has achieved low cost retail prices mostly because it manages to source goods at the best possible market prices. This is possible through the strategy of replenishing stock daily in which it allows its key suppliers to access data on sales, which in turn ensures that stocks are supplied just in time.
Wal-Mart has successfully cut expenses in that it is able to save costs which would otherwise have gone to hiring warehouses, paying for the storage and security of the goods in warehouses, the costs which goes with insurance as well as the risk of destruction resulting from fire, and other natural calamities as well as expiry of perishable goods. By paying the suppliers based on what is sold the company ensures a zero cost in inventories, this in turns affords the company an opportunity to lower prices since there are less expenditures.
In long term, this contributes to industry attractiveness. The other area in which the company has achieved competitive advantage is in terms of adapting information systems. By doing that, Wal-Mart, has become a low cost producer in that it achieves effectiveness and therefore minimizing losses. The organization has set out to be a market leader. In terms of incorporating information technology, Wal-Mart has computerized its purchasing systems to incorporate E-purchasing. As a purchasing strategy, e-purchasing is economically reliable and cost effective.
Compared to a competitor who does have not adopted the e-purchasing concept, Wal-mart has been able to save a lot of money and time. According to (Kendel, 2004), competitive advantage also depends on how companies utilize and take advantage of the buyer power. To this end, Wal-Mart has outshone all its competitors in that, it is refuted to be one of the organizations in the US, which has been able to get suppliers to act according to its terms. In fact some have argued that, it manipulates and coerces suppliers to enter into concessions, which end up benefiting the retailer but harming the suppliers.
In terms of the threat of substitutes, it is widely believed that, Wal-Mart no longer competes with any one, it has taken virtual control and is a major player of the US economy leave alone the retail business. In terms of supplier power, the suppliers are no longer able to contain the pressure from Wal-Mart; there have been reports of CEO’s agreeing to terms, which end up harming their businesses. Wal-Mart as earlier mentioned often coerces its suppliers into deals, this is not the case with its competitors which do not necessarily have the power to match it.
Finally Wal-Mart unlike so many of its rivals have been able to penetrate with ease and so far commands a good share of the retail business in the US. However, it is Wal-Mart’s expansive sales returns that continue to put it ahead of competitors in that, they can powerfully bargain with suppliers for best offers, which on their part the competitors cannot match. By integrating IT through out the whole retail chain Wal-mart ensures that, its partners are free and feel respected and therefore trade is done in an environment of cordial relationships.
With a retail network of over 140 branches all over the world, the management styles as well Wal-Mart’s purchasing, distribution and warehousing, in-store operations, marketing, Information Technology, Human Resource Management, and organization and management systems/style have to be maintained at a high notch. Otherwise, it would be impossible for the outlets to achieve unity of purpose. With such a huge work force, success can only be achieved only if there is proper human resource management.
The organization has introduced performance based pay, which has gone down very well with the employees. A well motivated staff is the greatest asset for a company and therefore Wal-Mart has been able to achieve that through introducing modern employee management systems which aims at ensuring that, the best staff are retained and also that, staff get well compensated for their hard-work. This has given Wal-Mart a cutting edge advantage, in that, it is able to attract and keep the best workers.
In terms of supplies, Wal-Mart has been able to cut lead time after streamlining its supply chain management. By doing that, Wal-Mart have come to be regarded as the industries leaders in terms of efficiency and cost cutting. Wal-Mart Stores, Inc is the world’s largest retailer with over $200 billion worthy of annual sales. The organization has adopted various strategies to become and remain a market leader in the industry. Of all strategies, it is its low cost of products that has made the biggest contribution to its market attractiveness as well as its competitive advantage.
Human resource management. According to available statistics, the company has over 1. 3 million employees also known as associates, it is spends a lot on employee development something which gives it a competitive edge as one of the most preferred employers. Wal-Mart has been ranked by the Fortune magazine as one of the most admired places in the world. This translates to attractiveness to both business partners and customers. Also as a strategy in supplies management the organization has avoided reliance on single suppliers but has instead engaged different suppliers.
This helps in ensuring that, the suppliers do not dictate the terms since they are aware that they can be substituted. This is effective in that, it becomes very hard for suppliers to collaborate and decide the terms for the organization. Wal-Mart also ensures proper communication through the setting up of a satellite network, which interlinks all its branches to a central command. This has seen the company investing heavily in information technology, which in return has ensured that the company achieves economies of scale. Competitive advantage.
Kmart is one of the key competitors which has found the going getting tough and has almost been left struggling to remain in business. The fact that, Wal-Mart controls over 70% of the retail business clearly shows that, the competition is not as stiff. Therefore, Wal-Mart is poised to remain a force even into the foreseeable future. The threats which it should deal with and undertake to solve include: negative publicity in that, the fact that it drives many other businesses out of business can lead to harmful price wars which could lead to the company loosing its current market share.
Management Systems Several, problems and challenges such as shoplifting caused the company to invest in costly surveillance systems aimed at addressing the arising issues. Managers at Wal-Mart are motivated in that, the organization always rewards creativity and effort as well as originality. This has been a plus for the company as productivity is always related with highly motivated staff as well as employees who can identify well with the organization. Its people-friendly approach has led to such a good relationships with customers that, a very loyal client base has been achieved.
By adopting new technology, production, administration and leadership in the company are one of the best in the world. The styles from other successful organizations of the world so that it can experience great success. Wal-Mart has now heavily invested in technology like computerized tracking systems, which enables them to track supply and monitor progress. Wal-Mart has experienced rapid growth partly due to a human resource policy, which handles. Globalization has enabled the organnization to expand the organization from rural small towns to urban areas.
Also Wal-Mart enjoys a very loyal consumer base. Globalization has also enabled the leadership of Wal-Mart to expand the organization to so many areas externally, where they attract a lot of customers therefore making lots of profit. This has been achieved by lowering the prices of the goods, as a result of global nature of manufacturing. In terms of sustainability, Wal-Mart’s strategy is market tested and it is very likely that, customers will always go for cheaper quality and therefore the strategy of low-cost will lead the organization from success to success.
The fact that, Wal-Mart does not spend on inventories but uses a system where by delivery of goods is done by the suppliers saves the company a lot of money. This affects prices f commodities in that, so many suppliers want to engage the organization in business and therefore are willing to operate under terms that the organization dictates. Wal-Mart although has been favored by globalization needs to be wary of emerging issues such as the ones touching on ethics.
Other threats for Wal-Mart include: Ethically, it has been accused of oppressing suppliers to an extent whereby, they are forced to lay-off employees hence causing joblessness as well as leading to closure of manufacturing plants on the US in favor of imports which are cheaper and therefore can be distributed to the retailer at much cheaper rates. Bargaining power is another crucial strength for the company, it virtually controls all the decisions or contracts entered with other companies that is, suppliers. Wal-Mart engages in a continuous improvement campaign in what consumers view as being on the move every time.
To consumers and customers, this is viewed as an advantage since they know that every time the retailer makes a move, prices drop and therefore the company is seen as a better option by many. Efficiency is one factor that Wal-Mart has achieved by investing in modern systems. The company has been able to transact business worldwide with ease while at the same time minimizing cost. The fact that Wal-Mart has created a positive image for itself has ensured a constant demand for services and goods something which competitors have not been able to match. Wal-Mart has maintained a public image and therefore this helps.