Overview Of Wal-Mart’s Business Strategy And Performance

Wal-Mart‘s Business Strategy of Cost Leadership

To the relevant stakeholders including the company team members, the management team, production team, technical group, marketing team, all staff, ladies and gentlemen. You are all aware that the business strategy of Wal-Mart is founded on the slogan of ‘everyday low prices’. This has been our philosophy for many years and has helped steer our company towards the great heights of success. We are aware that the company has significantly made developments in terms of business growth as shown from our annual financial report. I take the chance to brief you of these recent developments we have made as a company since you make part of such a remarkable development. My appreciation goes to our management team for embracing and nurturing unity among the internal as well as the external stakeholders for the business. Additionally, I thank all of you for your continued support and cooperation, directed to our management team and the general fraternity as well.

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In simple terms, the company pursues and operates on the business strategy of cost leadership that is enabled and controlled by economies of scale applied by our company to some significant extent. We have an efficient channel that involves the use of online selling methodology. This channel has in the past ten years contributed in increasing the cost efficient levels of retail operations and over 75% of our company’s sales through the walmart.com website as per the records of non-store inventory. So far we have managed to have in operation 11,000 stores in over 27 nations. This has given us a customer base of more than 260 million in every week under a total of 72 banners. Since our starting in 1962, the business strategy has enabled us to grow and become one of the largest retailers globally with a total of 2.2 million people as employees. During the 2017 fiscal year, we managed to deliver net sales of $288 billion which is over 3% increase in 2015 sales. The consolidated revenues over the fiscal years equals to $ 486 billion. Last year’s revenues grew by over $9 billion from the previous figures contributing significantly to the $486 billion.Per share earnings were $4.99 which is nearly 3% increase from the year before. Our net sales surpassed $141 billion based on the constant current while the operational income increased to $6 billion and above. This development does not belong to the management only but for all us, who are the stakeholders in the company. All these success can be attributed to the business strategy, of which you make part.               

Wal-Mart’s Efficient Retail Operations and Global Presence

The basis of Wal-Mart’s business strategy lies on the elements of constant assortment improvements access and prices. Our company strives to provide a wide choice of items of cheaper prices besides giving the customers a chance to choose the channel that is most convenient enough in facilitating the purchases. The competitive advantage of our company relies on leadership cost. On the same note, the strategic management of our company has consistently aimed at associating its competitive advantage with experience, assortment, price and access. As the chief executive officer of the company since 2014, I have helped execute important changes in our company business strategy in three dimensions which include the following;

  1. Increased customer service focusing; by 2015 February, our company announced an investment of $1 billion in all the hourly associates to help provide more training, higher wages and increased the chances of building a career with the company.
  2. Improvement on the groceries; based on the increased health consciousness levels of the company consumers, we have made an attempt of increasing the fresh produce range and the organic options. The change has been evident from the market especially in U.S. we have managed to actively integrate the change into the brand marketing communication message.                                                                     
  3. Enhanced the flexibility in the experience of shopping; you should all be aware that our company is working towards the integration of our physical stores with digital operational business. For instance, thanks to all the changes made so far, our customers can now collect their orders they make online from our various stores. They are also being able to get reminded through texts from our pharmacy.

You need to understand that the success of our company depends on the following operations. The business strategy is based on primary and support activities. The primary activities include inbound logistics, outbound logistics, operations, marketing and sales. Inbound logistics involves ensuring that we grow and spread globally. The large size enables us to buy items in low costs from the suppliers when we purchase in bulk. The technology use enables us to manage inventory and purchases and thus keep our prices quite low for our customers. Our operations strategy involves increasing our presence everywhere. For instance, we have a warehouse club in the US that has over 662 retail units in operation. In the US alone we have over 4692 retail units, 3534 supercenters, 412 discount stores, 48 small format stores and 698 neighborhood markets. We have managed to employ more than 1.5 million associates in US alone.           

Outbound logistics involves a supply chain operation known as cross docking done at the main centers and then transported at low costs to the retail stores. Replenishing the stores is done efficiently and no time is wasted. The sales and marketing applies a slogan of “live better, save money” which involves everyday low prices for items. We promote and advertise our brand as you have noted to reach a large customer base. There are support activities in the business strategy that include technology, firm infrastructure, procurement and human resource management. We normally rely on online selling, e-commerce operations and use of the social media such as Facebook and twitter. You are mu witness that our new minimum wage is $13 as part of human resource operations. We have also spent more than $2.7 billion in training, education and promotion of our employees. Through procurement, we keep strategic relations with our suppliers to get standard items and services as under the supply code. Our firm infrastructure includes, the supply management, supply chain, management, human resources, fulfillment and supply centers. This creates a large network of operation that contributes to our ability to supply goods and services at reduced costs.            

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Wal-Mart’s Strong Financial Performance

The primary and support activities as part of the business strategy are also supported by the 7s model of McKinsey, that we have also applied. The elements of the model include strategy, structure, skills, staff, systems, shared values and style. The model is incorporated in our daily operations and efforts of cost leadership. In general, we can sustain the competitive advantage of the company in the global markets in the long term. We have programs such as “we buy for less” and “we operate for less” have so far saved us more than $ 150 million in the Chinese market. The company plans to replicate, the programs to the other markets so that it gains and sustains the cost advantage.               

Finally I urge you to continue with your support to the company so that we achieve our goals as well as objectives and together face desired growth and development. I call upon all to help the firm in marketing the various products by taking the time to inform friends, relatives and all people around you of our items. Do this, through social media platforms and make them learn much about our products, their cheap prices and their access too. I thank all of you for your spirit of togetherness trust and hard work. Feel appreciated as we go on with this morale.


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