Wal Mart’s key strategy
The wide range of operations of Wal Mart is demonstrated by its geographical spread as well as the product variety in various forms. From the core basic stores providing necessities, the range of services offered are being continuously upgraded and additional facilities required by the community are being readily provided. Thus constant up gradation seems to be Wal Mart’s key strategy. This has won it critical acclaim over the years.
In a business survivability survey carried out after the 9/11 2001 strike on World Trade Towers, Fortune magazine has observed that Wal Mart along with South West Air lines, Intel and Dell computers were the only four companies which have weathered the storm. (Heller: 2005) The business models of these four companies are said to be effective in surviving the business shock of 9/11. Wal Mart’s model is based on leveraging its financial and bargaining strength in the retailing sector which enabled it to withstand the shock as per management theorists.
The philosophy of less cost, higher value has been consistently followed by Wal Mart by being a discount store operator. (Heller: 2005). Thus bulk buying is carried out based on data provided by computerized sourcing and inventory, thereby providing it speed and economy. The success of Wal Mart can be observed from its revenues which equals half that of the 16 largest merchandisers and two thirds of their profits. (Heller: 2005).
This has been the success story of Wal Mart over the years which has seen it adapt to change more readily than other corporations and most appropriately it is the management of transformation which has been a significant contributor of success. (Heller: 2005). Necessity for Change – Internal and External Factors Wal Mart has been always alive to the need for change. The internal processes of the company have been laid on a strong foundation by the founder, Sam Walton.
While initially in the 1960’s Wal Mart could find funds to build only 15 Wal Mart stores, its competitors as Kmart expanded quickly across the country. On the other hand today the situation is just the opposite with Kmart looking for an alliance with Sears and Wal Mart growing from strength to strength. Sam Walton very quickly appreciated the need for adapting to the retail discount model in 1960’s and with the listing on the New York Stock Exchange in 1970, could succeed in garnering adequate funds to increase the spread of the company.
The vision of its founder and his urge for growth were the primary internal factors for growth. The company’s focus on customer expectations and growth enabled expansion. (Wal Mart Growth: 2006). The growth trajectory of the company is highlighted by sales of $ 26 billion and 1400 stores. (Wal Mart Growth: 2006). In 1983, the first warehouse club was established and the first Supercenter, complete grocery department came into being in 1988. (Wal Mart Growth: 2006). Wal Mart has been successfully adopting technology to advantage such as automated management of inventory, the first company to adopt it.
The Wal Mart growth story has continued with 545 new stores and 50,000 new associates acquired in the United States and Japan. It gained controlling stake in Japanese retail chain Seiyu and acquired Sonae stores in Brazil. (Wal Mart Growth: 2006). Thus there was constant expansion and growth in various diversified geographic areas as well as product categories with Wal Mart Canada foraying into food, fashion, electronics and home products. Wal Mart has believed that savings mattered to the family and its goals have always been to deliver savings to the customer. (Wal Mart Growth: 2006).