Case Study Example on Walmart's Success

2021-07-14 04:33:57
3 pages
576 words
University/College: 
George Washington University
Type of paper: 
Case study
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Why has Walmart been successful?

Walmart's success largely emanates from the organization flexibility and low priced products through discounting. Walmart offers its consumers with very friendly prices which have attracted a majority of the working and low-income earners to their stores. The organization flexibility and ability to adopt new market practices have further promoted the success of the organization and perseverance in the dynamic retailing market. The organization emphasis on technology in its distribution chains and communication has also played a significant role in the success of Walmart by reducing the organization operating costs and improving its operational efficiency.

What is the single most important factor that has contributed to Walmarts phenomenal success?

The single most factor that has contributed the organization success is its flexible, competitive low prices which continue to earn the organization a significant competitive advantage over other retailers in the united states of American and international markets. Flexibility regarding adopting new prices and reviewing prices to counter their competitors' prices has made Walmart very competitive in overall compared to other retailers in the market.

Why exactly are Walmarts costs lower than its competitors? Examine each element of the cost structure (e.g., COGS, labor, rent, advertising, distribution, technology, etc. as a percentage of total sales) and assess where Walmarts costs are lower than competitorsand why.

The prices of Walmart retail products are low compared to its consumers because of its target strategy as well as its low operating costs which allows price flexibility. The lean organization principle which ensures that all the expenses incurred are the minimum possible costs which give the organization the liberty to adjust prices. Walmart is highly opposed to unionized labor which reduces the cost the organization incurs fewer labor costs compared to other competing retailers. The organization does not incur any advertising costs compared to other retailers who have heavily invested in advertising. Despite the high cost of goods sold experienced by Walmart the organization technology which increased efficiency and improved management ensured that the organization can offer competitive prices by assessing the market prices which ensured that their prices were always below the average market price. Walmart distribution is highly digitized which creates efficiencies that were believed to be 1 percent less the sales which are less compared to the expenses of the organization competitors. Finally, the organization created a private satellite communication network that made it easy for the store managers to easily communicate without having to travel further reducing the organization costs which has sustained the low organization prices.

Why do you think Walmart has had difficulty succeeding in foreign markets, especially in emerging markets like Brazil and South Korea?

The primary challenges that hinder Walmart success in the foreign market are due to the strong labor markets and high competition as well as the inability to assimilate foreign cultures to their foreign operations. The organization low price strategy did not impress in Korea due to the locals opposition of cheap Chinese products in Walmart shelves. On the other hand, stiff competition in Germany and consumers who are extremely loyal to local brands reduced Walmart sales which forced the retailer to exit some markets such as it did in Germany in 2006. Further, local governments regulations such as in India and Russia forced the organization out of the market by the mandatory requirement to buy off 30 percent of the stock from local producers who made it difficult for the organization to implement its price strategy.

 

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