Walmart Portfolio Assignment PDF

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Running head: WALMART PORTFOLIO

Walmart Portfolio Capella University Corey M Ingram Sr.

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Walmart’s Generic Business Strategy In the modern business environment, a business needs to build a sustainable competitive advantage. There are different sources of competitive advantage ranging from skillful human personnel to technological innovation (Hill, Jones & Schilling, 2016). The generic business strategy used by Walmart in building sustainable competitive advantage is cost leadership strategy. By using this approach, Walmart focusses on keeping the prices of its goods and services lower than the other players in the market. Walmart has kept its prices low over the years compared to its competitors through economies of scale. It has established a substantial long term relationship with its suppliers from whom it buys in bulk. This has helped the company to get fair prices on its purchases from suppliers. The long term relations with the suppliers have been reciprocally beneficial to the parties involved. The entity has also sustained low production and operational costs. It has a good supply and logistics management system that has helped in reducing operational costs. Previously, the company was known for poorly remunerating its employees. However, protests and criticism led to a rise in the minimum wages for its workers (Hill, Jones & Schilling, 2016). The situation of the employees improved as a result, and the brand has sustained its competitive advantage. It is a leading retailer, and over the years, it has sustained its brand image by charging low prices and generating great sales and revenue. The entity uses different approaches to maintain low operating costs. Some of the approaches are automation and minimum spending. Its cost leadership generic business strategy entails low product differentiation (Hill, Jones & Schilling, 2016). Given that its focus is on low prices, its retail services are usual and poorly differentiated from retail services of other retailers in the industry. Besides, the generic strategy entails a low level of segmentation in the market. For example, it provides its retail services to consumers in all segments of its target markets. This is consistent with its mission and vision, which seeks leadership in the global retail market. Implementation of its generic business strategy relies on the efficiency of its processes, management measures, and intensive growth strategies. Walmart’s Business Strategy in its Marketplace Approach The company business strategy in its marketplace approach is based on its low price philosophy. It pursues a cost leadership strategy that is possible because of economies of scale. The basis of its business strategy is continuous improvement of goods and services, price and access. Other than providing a wide variety of products for a cheap price, it gives clients a chance to choose the most convenient channel to make a purchase. The main directions of its business strategy in the marketplace approach are improving groceries, enhancing the tractability of the client shopping experience, and increased concentration on customer experience (BreaSolis, 2012). The company has increased its investment in more training and increased opportunities to reduce employee turnover. The entity is increasing its organic options and fresh produce because of the increase in the health-consciousness of clients. The variation is more evident in the U.S market, and the move is actively being included in the brand’s marketing message. For an

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enhanced shopping experience, Walmart is integrating its digital business with physical stores. For example, due to the latest developments, clients can collect online orders from stores. Walmart’s Business Model The company operates a business model with three main units that include Walmart U.S, Walmart International, and Sam’s Club. In 2018, the business units made net sales of 64 percent, 24 percent, and 12 percent, respectively. Sam’s Club is a membership-only warehouse club that operates in 44 states in the U.S and Puerto Rico and as e-commerce. The income from members is a crucial aspect of its operating income. The U.S unit is the biggest segment, and it functions in all the states. It follows the primary store formats of neighborhood markets, discount stores, and supercenters (Brea-Solis, 2012). The international unit includes operations in 27 countries outside the United States. Its main categories are retail and wholesale in format categories ranging from e-commerce, cash and carry, warehouse club, supermarkets, and hyper centers. Walmart’s Core Products The entity’s core products are electronics, houseware, pet supplies, automotive and health, and beauty aids. Also, it sells groceries that include bakery goods, fresh produce, frozen foods, beverages, condiments, and meat and dairy products (Walmart, 2020). The core products are grouped into different departments such as health, sports, outdoors, industrial and scientific and auto tires. How Walmart Makes Money The company sells everything, and this generates revenue for the organization. It was the largest entity in revenue of more than $514 billion in 2019 (O'Connell, 2020). it makes money by selling its products and services to business owners and individual clients. It makes product and service revenues. The product revenues come from the sale of grocery, health, wellness, home products, apparel, and hardlines as well as entertainment. The service revenue is generated from financial services, clinical services, health insurance services, and movie streaming services. Walmart’s Customer Value Proposition The leadership of Walmart operates its business using a customer value proposition, which states, “Everyday low prices for a broad range of goods that are always in stock in convenient geographic locations” (Brea-Solis, 2012). When compared to its competitors, the company over-delivers on issues of customer centrism. Underperforming on sales help and ambiance is a choice that has been made by the entity to generate cost savings, which enhance its price advantage. From the customer value proposition, there are value drivers that it hypothesizes in its drivers of performance. The leadership has thought well and researched their source of value beyond the traditional data analytics, consultancy, and projects of market research. Their pricing teams and commercial function has helped the entity to convert customer value proposition into cash profit. Walmart's Profit Proposition

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Walmart makes its profit by generating revenues through the sale of goods and services through its channels while minimizing operational costs. Its low prices make it possible to generate high revenues from economies of scale. They excel in their values by satisfying their customers’ needs and addressing their concerns. It has an enterprise-wide approach to respond to the dynamism in the modern-day business environment. Walmart’s Corporate Strategy Managers at Walmart engage in three levels of strategic planning. The three levels are function, business, and corporate-level strategy. Its corporate strategy is low-cost leadership, whereby it builds on low-cost employment policies. The policies help it to incur low employment costs, which have helped it to maintain its predominant competitive advantage. The company’s product scope differs considerably because some subsidiaries have few store formats while others have broad product scope. The market scope of the subsidiaries also differs. Some only have a single market responsibility, while others have a broader scope and mandate for several countries (Morschett, Zentes & Schramm-Klein, 2015). The company is increasingly getting vertically integrated by taking part in several product lines, including milk processing. This is because it increases its focus on private label ranges, adjusts with the sourcing suggestion in other markets, and supports lower-cost sourcing. Besides, vertical integration is increasingly becoming common in the grocery retail market. Walmart’s Expansion from Its Original Product Line or Field of Operation The retailer operated stores, Sam’s Club, and supercenters before it moved to supermarkets. Other than increasing its types of outlets, the company has aggressively pursued globalization. In 1993, only 1 percent of its stores were located outside the U.S. five years later, the number had increased to 18 percent, and they continue to increase. Matsa (2011) explains that the international market has given the entity the platform for significant growth and survival. Walmart’s Vertical Related Activities The entity should develop vertical integration because of its establishment in the market and its desire to keep expanding. Given that it sells everything to its clients, the company practices vertical related activities. In as much as it does not grow its crops or raise its livestock, it still engages in vertical activities. As a result, it has leveraged its strengths to provide its products to consumers and maintains a close relationship with its suppliers. The mutually beneficial relationship with suppliers is evident in how it analyses its suppliers and enhances their manufacturing processes. Overall Corporate Structure and Key Management Systems The corporate structure of the company enforces restrictions on how it deals with its problems. Its structural features help in facilitating its strategic implementation in gaining traction in the retail market. Its organizational structure is hierarchical functional with two features. The hierarchy feature is relevant to the vertical lines of command and authority within the entity. For example, other than the CEO, every worker has a direct superior. As a result, directives from top levels are enforced through middle-level managers to employees in file and rank positions. On the other hand, the functional feature of its structure involves teams that carry out certain responsibilities.

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Its organizational structure makes it easier for managers to influence the whole entity. Besides, it makes it possible to achieve effective control and monitoring (Matsa, 2011). Its management systems help it in reducing operating expenses and make it possible to offer low selling prices. Some of the key management systems are its inventory management and supply management systems. They support the vendor-managed inventory model and are technologically advanced to enhance efficiency. Diversification or Globalization of the Company Walmart is one of the most diversified entities across the globe. Its subsidiaries offer different services in diverse locations. Diversification at the entity is one of the major reasons why it has managed to stay at the top of the industry. Diversification at Walmart makes it a onestop-shop, thereby making it convenient for clients. Globalization has made it become a giant. It has been linked to several stores worldwide, and it is involved in combined ventures abroad (Otis, 2011). Are Global Alliances Part of Walmart’s Corporate Strategy? Yes, global alliances are part of its corporate strategy. It has formed alliances with technology players such as Google and JD.com to create a robust e-commerce business (Calton, 2015). As a result, the retail giant has established automated distribution centers and curbside pickup for online orders. Analysis of the Strategic Fit between the Business and Corporate Strategies of Walmart There is a mutual fit between its business and corporate strategies. Its business strategy is based on its philosophy, and it pursues the cost leadership strategy (Umit, 2019). The cost leadership strategy strategically fits with the economies of scale derived by the company to a greater and important extent.

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Brea-Solis, H. (2012). Business Model Evaluation: Quantifying Walmart's Sources of Advantage. Harvard Business School. Calton, J. (2015). A Decentred Stakeholder Network Path to Creating Mutual Value: Is Walmart Showing the Way?. The Journal Of Corporate Citizenship, 59, 82-91. Hill, C., Schilling, M., & Jones, G. (2016). Strategic Management: Theory & Cases: An Integrated Approach. Cengage Learning. Matsa, D. (2011). COMPETITION AND PRODUCT QUALITY IN THE SUPERMARKET INDUSTRY. The Quarterly Journal Of Economics, 126(3), 1539-1591. Morschett, D., Zentes, J., & Schramm-Klein, H. (2015). Strategic International Management: Text and Cases (3rd ed.). Springer. O'Connell,, L. (2020). Walmart annual revenue 2012-2019 | Statista. Statista. Retrieved 27 May 2020, from https://www.statista.com/statistics/555334/total-revenue-of-walmartworldwide/. Otis, E. (2011). Walmart in China (pp. 173-196). Cornell University Press. Umit, H. (2019). Handbook of Research on Strategic Fit and Design in Business Ecosystems. IGI Global. Walmart. (2020). Core Products. Retrieved 27 May 2020, from https://www.walmart.com/browse/coreproducts/YnJhbmQ6Q29yZSBQcm9kdWN0cwiei e....