Wal-Mart is an American multinational retail corporation that was founded in 1962. It basically features a long chain of large discount and warehouse stores. The focus of this corporation is to touch people’s lives by helping to reduce their costs. This paper features an analysis of the business level and corporate level strategies of Wal-Mart Inc.
Business Level Strategy
This corporation uses a combination of cost leadership and differentiation as its strategy. This means that this corporation provides consumers with a wider variety of products and services, and offers similar or better quality for them. The pricing offered for such goods and services are cheaper compared to what competitors offer. This strategies also feature looking for ways to reduce costs further while maintaining competitive advantage through differentiation (Walmart’s Keys to Successful Supply Chain Management, 2013). Cost leadership, therefore, represents a business-level strategy that is most important for the long term success of this firm. This is because the store chains basically use this strategy to attract consumers and increase sales as a result of new traffic.
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This low cost leadership approach is indeed the best choice for the firm as it ensures that customers will constantly be attracted to their products. It is very rare to find a firm that offers high quality products, similar to what is offered by others, but offers cheaper prices. This approach gives Wal-Mart Inc. an advantage over competitors since consumers have nothing to lose, but rather something to gain. Therefore, the firm will benefit from increased sales. Another reason why this is a good choice is that the organization has an advantage when it comes to creating entry barriers for competitors. The competition will be too stiff already, thus any new entrants will have a hard time surviving. Hence, the firm will manage to keep competition at bay.
Wal-Mart has quite a number of corporate-level strategies, such as the single business strategy and public affairs strategy. The public affairs strategy of this firm is important for its long term success in that it creates room for expansion into other sectors, as well as into foreign countries (Dess, 2012). This strategy enables the organization to partner with politicians, who help it to achieve the set goals by offering financial support.
There are many reasons why this is a good choice made by the management of Wal-Mart Inc. By taking the public affairs approach, this organization is forced to focus on customer satisfaction, as well as getting involved in other community activities that will help it gain a good name. Today, people are becoming more conscious and supportive of businesses that help to make the society a better place, rather than those who seek to destroy them. Therefore, people will feel like shopping at Wal-Mart Inc. provides them with an indirect opportunity to also contribute to the positive changes that the organization will later enhance. Aside from that, the company is less likely to be sued by environmentalists and activists who seek to ensure the protection of the environment and human rights (Global Responsibility, 2013). This is because the firm will be focused on productive factors that will ensure gain in the long run.
Wal-Mart’s major competitor features superstores that offer similar services as they do. For instance, the Target Department store is the greatest competitor, owing to the fact that it is considered the second largest discount retailer in the United States. The business level strategy of this competitor is quite similar to what Wal-Mart Inc. offers. Both stores are focused on gaining competitive advantage through low cost leadership and product differentiation. Target Corporation manages to offer low profit margins for products mainly because it is cutting down on production costs, just as Wal-Mart is doing (Canadian Press, 2013). It is also offering a wide range of high quality products for such a low price. A difference between these two firms is presented through their corporate level strategies. Wal-Mart Inc. has mainly focused on using the public affairs approach to help promote its goods and services, while Target corporation does not use the same approach.
In the long term, Wal-Mart Inc. is likely to become more successful than Target corporation due to the application of public affairs. Today, people are looking for a personal reason to become loyal to a company. Helping improve the society is far more attractive than basically decorating the store to impress customers. Most individuals will feel obligated to promote Wal-Mart Inc. so the environment and members of the society can also benefit in the end.
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In a slow cycle market, Wal-Mart Inc. will still be more likely to succeed due to the issue of customer loyalty, and barriers to entry. This, however, will not be the case in a fast cycle market. This is because the company may be forced to constantly alter its strategy to maintain its competitive advantage.
There are various levels and types of strategies. The levels include corporate, business unit, and departmental. The corporate level is concerned with growth strategies, stability strategies, and retrenchment strategies. Business level strategies include Porter’s generic strategies. Lastly, departmental level includes strategies to coordinate the operations needed for designing, manufacturing, delivering, and supporting a product or service.
Wal-Mart has managed to be at the top of its industry mainly because of its well thought business and corporate level strategies. It has found a way of offering quality products at cheaper prices, but still maintains its profit margin due to product differentiation and the use of public affairs to lure new customers.
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