Wal-Mart is a leading retailer not only in the United States of America but in the whole world. To remain as a leader in the industry the firm has several business-level strategies. The main business-level strategies that Wal-Mart employs could be categorized into three broad categories: overall cost leadership, focus strategies and differentiation strategies.
Firstly, focus strategies entail paying more attention to a specific segment of population or geographical location. It appears that Wal-Mart focuses mainly on a larger segment comprising mainly of the middle class (Ireland, Hoskisson & Hitt, 2008). Secondly, business differentiation strategies focus on offering of a wide variety as well as unique types of products in the market. In this regard, Wal-Mart has had had highly proliferated product lines. Thirdly, the company uses cost leadership as a business-level strategy. This is the most important strategy as demonstrated below.
Cost leadership involves offering very high quality products at the lowest possible prices (Ireland, Hoskisson & Hitt, 2008). The prices of Wal-Mart’s products are usually lower than those offered by the competitors. This business strategy has been possible because the company has an efficient Supply Chain Management system. In other words, Wal-Mart dictates for what prices suppliers should sell the products. To do that, the company influences the manufacturing processes of the suppliers so that reduced manufacturing costs lead to less prices that are translated to the final consumer. Except low-priced and high quality products, Wal-Mart also offers good customer service. Additionally, cost leadership is considered to be the most important strategy because there is an increasing global economic meltdown in which the purchasing power of people is everywhere (Kneer, 2009). Therefore, prices become an important element in determining the number of customers it attracts as opposed to its competitors. However, this cannot solely determine customer’s preference of the company’s products if there were no elements of high product quality, good customer service and efficient branding. For example, Wal-Mart has popular brands such as Metro 7 and George among others.
Wal-Mart Corporate-Level Strategies
At the corporate level, the company also has a proliferation of strategies that make it a global leader. Some of the strategies include: creation of strong brands, branching into other product categories, dominance in the retail market and expansion (Ireland, Hoskisson & Hitt, 2008). The company has deliberately decided to dominate the retail market through diversification. This is done through opening stores across the U.S. and also internationally. Therefore, the last two strategies are interrelated. Dominance of market, as a corporate strategy, is related to expansion to international markets. The other strategy is diversification into other products. Specifically, the retailer has recently started to sell cars. This is in an effort to offer all the products that the consumers need under same roof which leads to a stronger source of revenue.
However, among all these corporate strategies, branding seems to be the most important. This is because branding leads to product recognition from which customers make purchase decisions. In its reports, Wal-Mart continues to indicate that strong branding has led to increasing number of sales (Walmart, 2013).
Wal-Mart Competitive Environment
Retail business is a very competitive business. As a result, retailers have come up with innovative ways of marketing their products. Some of the most significant competitors include Target, Meijor and Kmart. These retailers are based in North America. Moreover, the company faces competition in other countries such as Germany and South Korea. All in all, it appears that Kmart is the major competitor for Wal-Martin North America (Grant, 2005 in Kneer, 2009). The two companies have competitive strategies at both business and corporate levels.
One of the most significant corporate strategies adopted by Kmart is the concept of acquisitions in a bid to expand the company’s coverage (Ireland, Hoskisson & Hitt, 2008). In addition, the company focused on merchandizing and marketing capabilities as market strategies (Kmart, 2013). Nevertheless, Wal-Mart was building the capacities of its suppliers so that in the future, it would offer its customers cheap and quality products. In final analysis, Wal-Mart has overtaken Kmart. Additionally, Kmart uses the strategy of many products, just like Wal-Mart. This means that Wal-Mart will continue the competition from Kmart. Moreover, Kmart has a strong organizational structure that entrenches creation of multiple departments or divisions to increase the volume of sales. Although Wal-Mart has strong customer base and market dominance, Kmart is likely to deepen its penetration of new markets.
By comparing both business and corporate strategies for the two companies, it appears that Wal-Mart will continue to be more successful in the future. This is based on the combination of the best business-level strategy and the best corporate-level strategy. These are cost leadership and branding. Through cost leadership, Wal-Mart will continue to be the retail store of choice for most customers in the wake of rising economic meltdown. Through branding, the business will continue to create a positive brand image for its customers as well as new clients. On the contrary, Kmart is still recovering from the mistakes it made in the 1990’s of generating huge cash flows at the expense of apprehending the market (Ireland, Hoskisson & Hitt, 2008).
Wal-Mart Competition in Slow and Fast-Cycle Markets
Analysis of competition is best approached by considering slow-cycle and fast-cycle markets. According to Ireland, Hoskisson and Hitt (2008), fast cycle markets are those in which the competitive advantage of the firm is not protected from imitation. In addition, imitation is not expensive. Therefore, competitors or new entrants are able to easily compete with the already existing businesses. On the other hand, slow-cycle markets are those in which imitation of the existing businesses’ competitive advantages is not easy but expensive. As a result, competitors find it difficult to catch up with the already existing businesses.
In this context, Wal-Mart’s choice of business-level strategy would remain the same for both slow-cycle and fast cycle markets. This is because customers have already developed adequate loyalty to the company’s products. However, in a fast-cycle market, Wal-Mart’s choice of the leading corporate-level strategy would change. Since there is a lot of innovation in imitating the competitive advantage of a company, Wal-Mart would rather use technology as the preferred corporate-level strategy. Since customers already have a positive brand image for Wal-Mart’s products, branding can be substituted with another strategy that would counter imitation of the competitive advantage. Such strategy can only be centered on technology. In this way, Wal-Mart will be able to innovate new products, information systems and social-media marketing among others.