wal-mart - Wal-Mart Analysis Brett Gordon Mark Van Gilder...

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Wal-Mart Analysis Brett Gordon Mark Van Gilder Chris Devries Craig Chiado BUSA 499 Professor Lee October 3 rd , 2007
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Executive Summary When you think of the discount retail industry there is no bigger name than Wal- Mart. Wal-Mart has built them selves into the industry leader in a very competitive market, and they continue to set the bar for every company. But as of late Wal-Mart’s sales growth rate has been slipping, which is causing a major problem for them. For the past few years Wal-Mart has grown accustom to double digit sales growth rates, but recently they have been unable to match their previous success. Now Wal-Mart is faced with the challenge of regaining the success that they once had. In order to recapture these high growth rates it is important to understand what lead Wal-Mart to these high growth rates in the first place. When analyzing Wal-Mart externally you find that its 5 forces tend to have a positive effect on the company. The company has high barriers of entry, a moderate threat of rivalry with Target and Kmart due to its expansion of super centers, and its incredible power over all its suppliers because Wal-Mart purchases so many products, the suppliers have little negotiating powers, and finally Wal-Mart technically has a great amount of power over its buyers because of its product variety and low prices. When analyzing Wal-Mart internally you discover may things that lead to their success. Probably the number one thing that led to success is their world class supply chain. Wal-Mart’s supply chain is remarkable and really allows them to cut cost by eliminating unneeded steps. For instance their supply chain is so high tech that it can notify Wal-Mart’s suppliers directly (cutting out worker intervention) when inventory is low for certain products. Another internal strength that has lead to Wal-Mart’s success is its ability to focus on driving costs down to ensure every day low prices. Wal-Mart has never drifted away from this motto. This has led to Wal-Mart’s extensive self size and amount of products offered which allows them to take advantage of economies of scale subsequently driving cost down. So how can Wal-Mart use these core competencies to increase a slipping sales growth rate? Wal-Mart is currently in a maturing market and needs to create new market opportunities in order to maintain a competitive advantage over the competition. The first way that Wal-Mart can create new market opportunities is to branch into new international markets. India could be the market that they are looking! India has nearly 300 million people within this market, but government regulations make it impossible for them to enter this market in way they want. The removal of the regulations are almost certain, but when it the bigger constraint. Another alternative is for them to expand their pharmaceutical offerings as well as
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wal-mart - Wal-Mart Analysis Brett Gordon Mark Van Gilder...

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