Business Management: Wal-Mart
Wal-Mart operates in a highly competitive andspecialized market. Therefore, to stay ahead of the competition, thecompany has to use some cost leadership strategies. It exercises itsbuying power by purchasing products from local vendors depending ontheir geographical region. Further, the organization limits theextent any one supplier provides to them thus, holding a higherbargaining power over various merchants as well as making a thinprofit margin over large sales volumes. Again, it applies a shortchain of command at the top- level and low-level managers initially,it held weekly meetings but due to geographical coverage, it shiftedto monthly ones. Consequently, quick and responsive exchange ofinformation as well as appropriate track movement of products, allthe way from the manufacturers to the store shelves, is enhanced.
The growth in its size has triggered an increasein its corporate social and environmental responsibility. Inaddition, to improve its efficiency, unlike its internationalcompetition, Wal-Mart uses different strategies, names, and providersbased on the geographical regions and cost advantages. Also, itensures that all stores are located outside the major cities andclose to existing stores to lower distribution costs. It has alsoestablished four outlet types that include Sam’s clubs,supercenters, discount stores and neighborhood markets to ensureeasy supply chain management.
Problems of Low-Cost Leadership
Due to the low prices at which the products aresold, the company has experienced a growth in the number of itscustomers thus, leading to the need to expand its store size andstrategies. Additionally, other costs, such as training andmanagement costs, have heightened following the increment of theexisting and new consumers. This has a high likelihood of affectingthe overall budget, costs of the supply chain as well as thesupervisory role of the top-level management hence, altering someaspects of the enterprise, like the frequency at which variousmeetings are held. Further, there are some challenges ofmanufacturing and distribution that are encountered during theexpansion of the firm. For instance, the distribution channelsinitially used by Wal-Mart were not sufficient during the developmentphase forcing the company to build its distribution centers. Later,it introduced the differentiated stores to increase efficiency indispersion and to meet customer needs efficiently.
To achieve competitive advantage over otherorganizations, Wal-Mart has adapted to the different cultures byincorporating various cultural backgrounds in its strategicmanagement. Again, to meet these costs for new infrastructure andexpansion, the company has adapted to varied political and regulatoryenvironment effectively. Finally, to keep workers motivated and toensure that they uphold the fundamental values for success, they hadto be given responsibility and trusted as Sam Walton incepted.
Indications of Change in Low-Cost Leadership
The firm has also collaborated with some of itsvendors to enable data and information exchange on a real-time basisthat improves the supply chain management while reducing costs formarket analysis, which the manufacturers then carry out. Wal-Mart isset to pursue further merchants for similar collaborations. Moreover,the firm is improving its inventory management with lessdocumentation and shorter order processing time. This includesmanagement of incoming and outgoing stock in the distribution centerswithout having to go through the central dispersion point. Further,the enterprise has established strategic global purchasing centers tohandle imports and exports. It is also focusing on customersatisfaction to raise sales and embracing of information technologyto enable processing of information and data. Lastly, it has improvedmanagement structure to enhance efficient exchange of information bypooling stores based on their products.