Wal-Mart Stores, Inc.

Case 1.2 Wal-Mart Stores, Inc.

1. What is Wal-Mart Strategy?

• Wal-Mart’s winning strategy in the U.S. was based on selling branded products at low cost.

• Though Wal-Mart may have been the top customer for consumer product manufacturers, it deliberately ensured it did not become too dependent on any one supplier; no single vendor constituted more than 4 percent of its overall purchase volume.

• Wal-Mart used a “saturation” strategy for store expansion. Placing a standard of able to drive a distribution center to a store within a day.

• In its early years, Building large discount stores in small rural towns.

What is the basis on which Wal-Mart builds its competitive advantage?

• Selling branded products at low costs brings Wal-Mart a total of 138 million customer visits worldwide.

• Even by being the top customer for consumer product manufacturer, no single vendor constituted more than 4 percent of its overall purchase volume.

• Saturation strategy for store expansion makes the distribution centers more efficient.

• Building large stores in small rural town while competitors focused on large towns with population greater than 50,000 gives Wal-Mart gives a step ahead its competitors in terms of reaching rural town customers and development. Development wise, it is cheaper to develop in rural town, in terms of rental and/or land acquisition, as compared to developed urban centers.

2. How do Wal-Mart’s control systems help execute the firm’s strategy?

On becoming the worlds largest retailer:

• Each store constituted an investment center and was evaluated on its profits relative to its inventory investments.

• Data from over 5,300 stores on its such as sales, expenses, and profit and loss were collected, analyzed, and transmitted electronically on a real-time basis, rapidly revealing how a particular region, district, store, department within a store, or item within a department is performing. Information enables the company to reduce the likelihood of stock-outs and the need for markdowns on slow moving stock, and to maximize inventory turnover.

• Data