Wal-Mart-retailindustrystrategyanalysis(沃尔玛战略分析).doc

Wal-MartCompany ProfileWith the continuous improvement of life quality,  peoples demand for retail industry is growing more and more, The traditional retail industry can not meet the needs of the people, the traditional retail is disappearing, chain supermarkets and hypermarkets and other types are starting to dominate.At present, the retail companies that listed in the Top 500 global corporations has more than 50, the majority of which are supermarket chains and hypermarkets. Western developed countries experienced development and revolution for many years, the traditional retail department stores are facing increasing tough challenges, which is being replaced by the mode of chain operation, Especially the transnational chain operation which is in a rapid growing trend becoming the dominant operation mode in modern retail industry. Nowadays,The forefront companies of retail industry in the world include: Wal-Mart of the United States, Carrefour of France, the Netherlands Royalahold supermarket group, Germany's Metro, Japan's Ito-Yokado chain etc., all of them are rapidly expanding to be the leader in the international retail industry by means of chain operation without exception.Wal-Mart Stores, Inc.  was established in 1962 by the U.S. retail legend Sam  Mr. Walton in Arkansas. After forty years development, Wal-Mart has become the largest private employer and the world's largest retail chains enterprise. Currently,  Wal-Mart has opened more than 8,000 stores,having 53 brands, employs more than 2.1 million staff, the number of customers who visit Wal-Mart's per week is about 200 million .The business of Wal-Mart has distributed in Europe, America,Asia.In 1991, Wal-Mart's annual sales exceeded 40 billion U.S. dollars, turned into one of the world's major retail companies. According to May 1994 Fortune magazine published in U.S. service industry classification list, Wal-Mart's annual sales was up to $ 67.34 billion in 1993. Over the previous year more than 11.8 billion, and exceeded Sears which was the number one ranking in 1992, and ranks the nation's top retailers instead. Wal-Mart's sales continued growing in 1995, and created a world record in the retail industry, achieved annual sales of 93.6 billion U.S. dollars, and ranked fourth in the ranking list of the largest U.S. companies in the "Fortune "magazine(95). In fact, Wal-Mart's annual sales was equivalent to the sum of all U.S. department stores, besides it still maintained a strong momentum of development as yet.So far, Wal-Mart has 2,133 Wal-Mart stores, 469 Sam's Clubs and 248 Wal-Mart shopping plaza, located in the United States, China, Mexico, Canada, United Kingdom, Puerto Rico, Brazil, Argentina, South Africa, Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua and other 14 countries. Within just a few decades, it created such a rapid development in the retail industry, we have to say it is a miracle in the retail industry.In 2003, Wal-Mart boarded "the world's most respected companies list of the "Fortune" magazine and topped. The well-known investor Warren Buffett also voted it , even though his company was also on the list of candidates. He commented: "Wal-Mart is the world's largest company, but it is still keeping the same vitality as well as when the company started " And this founder of the company Sam Walton is one of the world's most influential Entrepreneurs. The academic and business press has chronicled the wide-ranging effects of the mega-retailer over the past two decades (McCune, 1994; McGee and Peterson, 2000; Stone, 1993). Although there is growing evidence that Wal-Mart's hold on retail may be slipping, it remains a competitive nightmare for many of its competitors, particularly small rivals in local markets (McWilliams, 2007a, 2007b). Strategic AnalysisWal-Mart was developed into the world's largest retailer from a small grocery in Bentonville, Arkansas of the United States. Wal-Mart's low price strategy and supplier management are both the important factors of its rapid development.No matter in the theory field or the enterprise field, the cost reduction, information sharing, quick response to market, optimization of resources allocation and other highlights brought by the supply chain management are strongly attracting everyone's attention.But for many reasons, Wal-Mart is now also facing tremendous pressure and the great challenge from the competitors. Advantage of Wal-Mart StrategiesWal-Mart implements the way of low price everyday,  wide selection of goods, a higher proportion merchandise of well known brands , friendly and welcoming store environment for customers, lower operating costs, well-trained expansion to the new geographical meaning market, And innovative marketing and excellent after-sales service guarantee. From the construction of stores to suppliers providing low-cost goods for Wal-Mart, and then through high-speed distribution system  distributing to eachstore, which makes Wal-Mart maintaining a cost advantage. And the cost saved by Wal-Mart was transferred to the store customers in the form of lower retail prices. preferring to rely on the maxim "people respond to incentives." Prices are the most important incentives in a market economy, and Wal-Mart's policy of "Every Day Low Prices" has been so effective that the consumer price index is overstated because of failure to account for Wal-Mart and other superstores (Hausman and Leibtag 2004).Disadvantage of Wal-Mart StrategiesThe advantage of information system is difficult brought into play. The advanced highly efficient information system of Wal-Mart is well respected by the industry. With its commercial satellites, Wal-Mart's information systems quickly and easily achieved a global network. Through this network, more than 4,000 stores worldwide could be inventoried about its stocks, goods added, and sales within one hour. The close connection between the internal and external information systems help Wal-Mart exchange goods sales,transportation and orders information with suppliers. So as to keep pace with the sales,orders and distribution of stores. And at this stage, the business environment in developing countries  bounds the Wal-Mart's advantages.Not pay attention to the localization of internal corporate management. Wal-Mart had tried to copy its consistent business model and cultural ideas in many countries, but often failed. The main problem is: the system can be re-established but the culture can not simply be copied. Because the construction of enterprise culture can not be achieved only by something written in the manual or having some meetings, corporate culture is a continuous deposit of business philosophy, values and ethics in the development process,it permeates into every employees mind. For example, to the ideological education of that “the customers are always right, the performances of Wal-Mart employees may be different, thus,the corporate culture issues is the crux behind many of the phenomena in Wal-Mart management.Development opportunities for Wal-MartThroughout the development of the world retail industry in recent years, we can see a clear trend that the control ability of retailers to market is gradually increasing. Traditional view is that, throughout the course of commercial circulation,the retail industry is at the bottom of the sales chain,can only accept the manufacturer's products passively,and subjected the limitations of manufacturers. However, due to the progress of science and technology and social development, behavior of consumers has become more diversified and personalized, the initiative on buying behavior has been greatly strengthened,Therefore, it is getting more difficult for the manufacturers to grasp the requirements of consumers,however its relatively easy to grasp the changing needs for the retail industry which is closest to the consumers, and its more accurate and timely to grasp information than the manufacturers. In this way, retailers grasp and control market more effectively, to a certain extent, it determines the fate of the manufacturers. The rise of E-commerce, online shopping, mail order, direct marketing demonstrates this point.The external threats to Wal-Mart Pressure from exterior competition: Although Wal-Mart remains the leading enterprise in American retail industry, it still faces aggressive threats posed by some strong competitors like Target,Sears,and Kmart. In particular, Target, the second largest discount store of America, is growing far more rapidly than Wal-Mart. In 2005, sales of Wal-Mart Stores Inc. increased by 3.6%, while sales growth in the same stores of its rival Target reached 5.6%. And Targets sales is predicted to achieve further growth.Now Target owns 1400 branches in America, whose sales reached $53billion in 2005. The key to Targets success is their small and fashionable layout and goods which have successfully attracted more high-income customers.Target is mainly aimed to meet the demands of young but relatively rich customers. Its chain stores are focusing on brand designers, and combining low prices in big supermaket with large numbers of designing elements, and attracting customers hoping to gain taste with cheap clothes by remarkable advertisements and famous clothing designer like Isaac Mizrahi. Meanwhile, Wal-Mart has to confront the criticism from manufacturers who have contradictory attitude toward Wal-Mart, because they cannot go without Wal-Marts big distribution capacity and also cannot bear the squeezed prices.SWOT Analysis of Wal-Mart's strategies² Strengths (S)- Wal-Mart is a famous retail brands, it is well known by its value for money, variety and one stop shopping.² Weakness (W) - Although Wal-Mart has a leading IT technology, but because of its stores are distributed in all over the world, this span will lead to not strong enough controlling force in certain aspects of it.and the differences of corporate culture brought some problems to the development of Wal-Mart.² Opportunities (O )- Demands on Retailing are snowballing in the market,this is a good chance for Wal-Mart,Wal-Mart can cooperate with other international retailers by means of taking over,merger or strategic alliances,specializing in the certain market of europe and greater China region.² Threats (T) - Wal-Mart is the target of all competitors to catch up ,and it will face the threat of many competitors, meanwhile Wal-Mart's low price strategy has caused a lot of resentment and condemnation from the manufacturers.Future development strategies for Wal-Mart1. Sticking to the strategy of “low price Basker (2005) finds that Wal-Mart reduces prices in the short run by 1.5% to 3%, but the effect grows by as much as a factor of 4 as we move into the long run. Wal-Mart is the worlds biggest business company with $360 billion annual turnover, and more than 5500 affiliated agencies globally. Managing such a big organization requires a unified concept and guidelines, otherwise the company will sink into a mess and disorder.So “low price becomes Wal-Marts goal and banner, because cheap prices are permenantly attractive to consumers. Compared with the same goods in other local stores, the prices of those in Wal-mart is 20%-30% lower than general markets.Its goods are the most fashionable brands with high quality, through high-volume, large-scale purchasing lower the purchase price, then sell in prices obviously lower than the local markets, in order to make a greater sensational effect and promote the sales of other commodities. It is known as low-cost promotional strategies for key commodities, which can make the price of the goods give a very low price impression in consumers mind. Hausman and Leibtag ( 2005) argue that the consumer price index is systematically overestimated because the Bureau of Labor Statistics does not adequately account for the impact of Wal-Mart and other Big-Box retailers in its calculation of the index. Hausman and Leibtag (2005) also argue that the benefits from Big-Box retail flow primarily to low-income households.2. Improving internal managementTo embody the advantages on scale and efficiency in merchandize retailing, it is essential to have a support on computer technology, an innovation on marketing conception, strategy, tactics, and element. It is also indispensible for construction of a new mode on human resource management. Companies with favorable structures offer the greatest opportunity for firm profitability (Bain, 1968). It all boils down to business management talent with high quality. A reform and optimizing strength on management within the corporate is to act upon a transverse integration, to strengthen managements on logistics and office departments. Localization on internal management is required to strengthen because countries vary from each of the different corporate cultures. To be a worldwide multinational, it must not be taken in a universal way of running a business. Wal-Mart should improve its way of running a company in a combination of a local custom. Wal-Mart should allow its subsidiaries to develop each of the different corporate culture under a monitoring and management of headquarter. Only with this will Wal-Marts subsidiaries benefit from their best development.3. Enlarging the market positionThe expansion develops on consumer market in countries. Wal-Marts consumer market expands. Wal-Mart is able to offer not only fair-price products to low ends but also fashionables to high ends who do not belong to Wal-Marts target customer. This will help to increase Wal-Marts revenue. At the same time, wal-mart need ongoing innovation, only innovation can attract new customers. Florida (2004) argues that the "creative class" essential to job growth and economic dynamism in the twenty-first century is attracted to a vibrant arts scene. 4. Working with strong suppliersSuppliers are participation to a corporate supply chain formation, which brings an indispensable impact on how well a business is run. A key point on supply chain management is to establish strategic partnership with suppliers in a harmony, so Wal-Mart is always capable of maintaining a lasting stable low-price resource. These products, in the meantime, do not lead to an inferior quality because of a low price, thanks to Wal-Marts involvement on helping reduce production cost. This way Wal-Mart continues strength on her capacity on competition because working with strong suppliers who are able to guarantee quality while remaining a price advantage.Strategy formulationProfessor Michael·Porter of Harvard University is a typical representative of business strategy at the traditional definition. He believes that "strategy is a combination of some goals the company fighting for and the ways to achieve the goals the company seeking"(1980). Porters definition summarizes the general understanding of business strat