Walmart’s has a strong and loyal customer base because it has consistently striven to offer low everyday prices to its customers. Customers can find whatever they are looking for, at extremely reasonable prices. Strategies being followed by Walmart are as follows:
Minimizing Operating Costs: Walmart push the wages down as far as legally possible. It offers to its employees, high cost and low benefit healthcare plans like insurance. They do not provide perks to the executives as offered by other large companies.
By all these ways, Walmart minimises the operational and overhead costs.
Leveraging Technology: Walmart was one of the earliest to take advantage of the barcode adaptation and introduce radio-frequency identification (RFID). Barcode helped in tracking the movement of goods and analysing the right mix of products for different stores. This allowed the manufacturers to deliver the right amount of goods at the right time. Using RFID, Walmart was able to identify the products that were selling well, when they need to be replenished in the stores, and how many of them to put on the shelves.
This led to an improved inventory management and a lead in dealing with manufacturers and suppliers.
Advanced Supply Chain Management: Walmart was the first to adopt cross docking. It refers to a process in which the products which are received from the suppliers are cross docked at the distribution centres and then forwarded to the stores. This helps in keeping the inventory and transportation costs low and also eliminates inefficiencies. This has also improved the replenishment period without facing stock outs.
The reduction in the cost to Walmart has transferred the benefit to the customers.
Porter’s Fiver Force analysis is as follows:
Value Chain includes all the activities relating to production and sales from sourcing of raw material to final sales service. Optimization of the value chain helps in making it more efficient and deriving a better competitive advantage. Walmart is famous for its cost leadership strategy and has expanded itself in international waters very rapidly. It has gained popularity because of the unique deals it provides to its customers.
Customer Value Proposition basically caters to which consumers to serve, what needs to fulfil and at what prices. Walmart’s value proposition is as follows:
Committed to save people’s money so that they can lead better lives. Walmart has excelled in its values because of efficient supply chain management, inventory management and movement of goods.
Mission: Their mission is to save money and make people lead better lives. Vision: They operate with a vision of respecting individual’s service to their customer and striving for excellence. Market Positioning: They have emerged as a world leader in retail with 11,500 outlets, operating in 28 countries and it also takes over local strong companies to leverage potential in other countries Differentiation: Updated real time low prices, Multiple formats customised to regions, Strong low-priced own brand.
Strength: Everyday Low Prices, Synonymous of Supermarket Brand: They strive to serve the customers who live on a budget for their lives and cater to their overall needs. Their main focus is on everyday low prices which basically attracts their major customers. Q5. analysis of Walmart as a whole. ans: Walmart is a multinational retail corporation and it runs a large number of discount warehouses and superstores. It was founded by the Sam Walton in 1962 and its headquarter is in Bentonville, arkansas. It has 11500 outlets across 28 countries. Its major competitors are Target, Kmart, Safeway, Home Depot etc. It caters to everyday requirements to meet the daily needs of the consumers. Walmart has achieved record sales every year and they worked steadily to stay on a path of high profits by lowering the operational costs. They focus of customers who have budget constraints. They strive to fulfil the basic everyday requirements of families who cannot afford high priced goods. They have a sense of belongingness with their employees who are known as ‘associates’ in Walmart. They never put an end to hiring but it is open throughout the year. However, the story is not the same as it appears on the surface. Since, Walmart provides low priced commodities, it swept away various family businesses from roots. Emergence of Walmart led to the shutdown of businesses that were established 40-45 years ago. People had very strong feelings against Walmart, they believed that the government was not intervening and it led to a model o”Monopoly’ followed by Walmart. They remarked that Walmart was a Chinese company with american Board Members to run it and that it was leading to the downfall of the small and local communities across various regions. When people went to get some funding from the financial institutions, they hoped for an inflated value of the property but this was not the case. The economic value of properties had fallen drastically because as Walmart came there was more of vacant buildings around and their occupancy could not be seen in near future. as the buildings were vacant for a long period, it was difficult to bear the overhead expenses of maintaining it and thus, people resorted to selling or leasing of their property. It was established by now that if Walmart emerges and steal one’s business there was no looking back and it could never be bought back. People saw Walmart as a ray of hope so much so that one couldn’t find parking space on Saturday evenings. They used to establish in the media while recruiting they stated that their ‘associates’ are their top most priority but this proved to be false as soon as one started working there. In order to cut the costs, they were usually short staffed and the employees happily put in extra hours as part-time. The organisation was corrupt to a level that they logged in to the systems and altered their billable hours to the maximum for a week. The healthcare system provided to the ‘associates’ of the Walmart was so expensive that people had to depend on the welfare schemes provided by the government. They were basically shifting their responsibility to the taxpayers. It implied that good family life and working at Walmart didn’t go hand in hand. The salaries of the workers saw an increment of $7 in 4 years’ time. Walmart was strictly against having Trade Unions because they didn’t believe in third party representations. If somebody reported any union formation in the store, the company used to deploy illegal surveillance around the area to record any activity, people in doubt were followed by the officials wherever they went. They used to spend millions to avoid the formation of any Trade Union. Walmart had a total of 1.2 million associates because people were desperate for jobs and they followed the policy of ‘doing more with less’. They didn’t provide any overtime to the people and if people refused to bear this torture, they were asked to leave the job as there was a workforce available in the market.
They had to face numerous lawsuits because they were found employing illegal immigrants. They also believed that the women employees were of no use to the organisation which led them to a lawsuit on discrimination. They were not involved in giving back to society. It gave away only 1% of their wealth to charity. The government also provided subsidies to Walmart which helped them in opening Subsidy shops whereas no Tax abatements were offered to family businesses. Schools in the neighborhood closed down because all the subsidies went to Walmart. Walmart was not at all environment concerned as they violated the Storage Law. They used to stock huge pellets of pesticides and fertilisers in their parking lots. These pellets, when damaged, release their constituents and slowly it seeped into the river body flowing nearby. This was leading to the contamination of water which was a source of water for many activities. When contacted to discuss the matter, it was found out that they never employed any person to take care of the environmental concerns. The workers who worked in the factories of China which were producing goods for Walmart had working hours from 7:30 am to 10pm. They were given accommodation to stay and they had to bear all the expenses by themselves. The living conditions were not good but they couldn’t move out because no matter, if you stay or not a part from their salary, was always deducted as Rent. The workers were being paid wage of less than $3 a day. This was the highlight of how they were successful in providing cheap products. Even the factories in Bangladesh had same trend going on with workers living on a wage of 13-17 cents per hour with no rights. along the years, Walmart experienced crime rates going up in their parking lots ranging from purse snatching, robbery to murders. They employed patrolling cars with employees of Walmart for some time and crime rates dropped to as low as 0% but this was all short-lived. They were just concerned for the customers when they stepped inside their stores but were indifferent the moment they stepped out. People had started fearing the emergence of Walmart in their localities and soon people started revolting against Walmart. When people came together to fight against Walmart, they had to accept it and eventually they closed down several units all across the world. They have failed to understand the power of people. It was very late for them to realise that employees were the strongest asset for them. They were concerned about the profits and they didn’t realise when they got inhumane. For any organisation to thrive, it is very important for them to have support from the community. They need to give back to the society and contribute in saving the environment.
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