Wal-Mart operates retail department stores selling a broad range of non-grocery products, though emphasis is now focused on the "supercenters" which offer a full line of grocery items. Wal-Mart also operates Sam's Club, a "warehouse club" that sells discounted bulk merchandise to dues-paying members. Wal-Mart's chief competitors in the discount retail space nationally include Sears Holdings Corporation's Kmart chain and Target.
Wal-Mart's Internal Strengths' include price advantage over competitors, supplier manipulation, and inventory management. Wal-Mart was the first to revolutionize RFID technology into the retail arena. Wal-Mart recently announced that it is taking technology a step further, drilling even deeper into sales and production tracking. It will now require its suppliers to provide microchips which will service radio frequency identification, or RFID, which will greatly enhance the systems created by bar codes. By using the Bar-Code, they are able to manage tens of thousands of items in the store at any given time. Internal weaknesses include low wages, low employee moral and benefits. Activists regularly argue that competition from Wal-Mart destroys small businesses; particularly the "mom and pop" stores that they say make their communities unique. Another charge that local communities have made against Wal-Mart is that the company provides inadequate benefits and that local taxpayers are forced to pick up the burden.
Wal-Mart's Grand Strategy is a Cost Leadership Strategy. They maintain that they can buy goods for cheap, sell them for less then their competitors, and turn a profit on volume and turnover. They achieve this strategy by under pricing competitors and therefore gaining market share and sales, driving some competitors out of the market entirely.
Wal-Mart's Corporate Level strategy is to obtain goods at the lowest cost possible. There has been a power shift from manufacturers to retailers. The retailers have more and more say over what is being produced, under what pricing, at what time. They're basically playing a key role in dictating exactly what will be produced, when and where.
Wal-Mart runs as a low-cost, low wage company as its business level strategy. Its employers work for less with fewer benefits and longer hours then so its competitors. Wal-Mart cuts costs, sells for low prices in hopes of selling enough volume to maintain its position as low-cost leader in the market.
Wal-Mart's Functional Level Strategy includes their Price-Point sales. They have an extremely low cost on certain items meant to pull customers into store. These items are positioned in such a way that the consumer believes everything is cheaper. Other items may not be an actual savings to customer. Wal-Mart puts a tremendous amount of planning, organization and thinking into what their opening price points are going to be, based on last year's sales, based on customer requests, what's in demand this year, what's the newest, hottest item on the market. In addition, Wal-Mart makes Higher Profits on China's and other low wage Country's imported goods. If American companies want to participate in the low-end of the market, they must sell to Wal-Mart at the prices they request. This is Forcing the local supplier to move to China to produce at a lower cost in order to compete.
Wal-Mart plans to expand by adding over three-hundred stores nationwide and opening it's doors in nine new countries. Some economists argue that Wal-Mart is good for America despite the jobs that have been lost due to its low-cost practices. The justify their argument by claiming that since Wal-Mart makes it possible for American's to buy good's at low-cost, they will have money left over to purchase other goods. Thus creating jobs that are needed to produce the additional goods. Because of this, they claim that the purchasing power of the consumers has been increased. On the other hand, those opposed to this view argue that those that have lost their jobs and are now unemployed can not afford to buy the low-priced goods that Wal-Mart is trying to offer them. So there is no way they can buy the presumed "extra goods" that would make up for the loss of their jobs. Because of the later argument, I feel that Wal-Mart is not good for America. Cheaper is not better if it causes pressure on the supplier as well as lowers the standard of living for the employee. The low prices become only a better deal for the retailer, not for the consumer.
