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Wal-Mart's – Cost Leadership Strategy Made By:- SACHIN MOTWANI.

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Presentation on theme: "Wal-Mart's – Cost Leadership Strategy Made By:- SACHIN MOTWANI."— Presentation transcript:

1 Wal-Mart's – Cost Leadership Strategy Made By:- SACHIN MOTWANI

2 About Wal-Mart  The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969 and first distribution center in Bentonville,Arkansas.  Wal-Mart Stores, Inc. branded as Walmart since 2008 and Wal-Mart before then, is an American public multinational corporation that runs chains of large discount department stores and warehouse stores. Walmart has 8,500 stores in 15 countries, under 55 different names. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. Made By- Sachin Motwani

3 Walmart’s Operating Divisions Made By- Sachin Motwani

4 Retail Formats Super centr es Food & Drugs Gener al Merch andise Stores Bodeg as(Sma ll Market s) Cash & Carry Stores Membe rship Wareho use Clubs Appare l STore Soft Discou nt stores Restaur ants Made By- Sachin Motwani

5  Additionally, when Wal- Mart entered into the food market, it quickly consolidated and held to good, saleable products. Concerning concentration, Wal-Mart continually finds more consumer goods to sell at its stores which can take money from competitors. Wal-Mart is in the business of selling everything customers need in their everyday lives. Wal-Mart pursues multiple strategies. Wal-Mart never forays too far into a market and only sells what will make it a profit. Made By- Sachin Motwani

6  Wal-Mart definitely has the business strategy of Low Cost Leadership.  They do nothing to really differentiate themselves from competitors and provide no- frills self-service stores that always provide the lowest prices.  While they do try to provide good customer service on top of low prices, Wal-Mart’s strength is low-prices.  No one has such a supplier and distribution network like Wal-Mart that allows such low prices. Made By- Sachin Motwani

7 3 S of Wal- Mart Made By- Sachin Motwani

8 STRATEGY  Wal-Mart’s overall strategy is to always provide the lowest prices.  They aim to have a store which provides convenience by allowing consumers to find everything they need under one roof.  This strategy has infiltrated the entire company so that in encompasses all the other S’s.  The other two hard S’s, systems and structure, support this strategy. Made By- Sachin Motwani

9 SYSTEM  Wal-Mart has in place a set of systems that helps it achieve its strategy of low prices everyday.  Wal-Mart has employed computers, networking, and the internet to reduce inventories and waste, and speed deliveries.  Wal-Mart has streamlined the supply system so well that it would be very hard to find any inefficiencies and would be hard for any competitor to beat. The largest and most profitable of these systems is the Information Technology system. Made By- Sachin Motwani

10 STRUCTURE  Wal-Mart also employs a good structure that works with the systems to empower the low price strategy.  Wal-Mart has planned warehouses and integrated them with systems in order to achieve “cross- docking” so that supplies coming in never touch the warehouse floor before going out to stores, which greatly reduces inventory cost.  They have developed time schedules so that one truck can service many stores and that after a delivery the truck can take back returned goods to the warehouse. Made By- Sachin Motwani

11 an emphasis on everyday low prices an innovative warehousing system basing store design on consumer studies effective use of superstores an industry leading inventory control system using size to negotiate for the best price on brand- name items Wal-Mart has pursued many strategies over the decades to achieve and then maintain a cost- leadership position. Made By- Sachin Motwani

12 Aftermath of Walmart- Negative 1. As Walmart grew rapidly into the world's largest corporation, many critics worried about the effect of its stores on local communities, particularly small towns with many "mom and pop" stores. 2. Economic Research found that some small towns can lose almost half of their retail trade within ten years of a Wal-Mart store opening. 3. Both positive and negative impacts on existing stores in the area where the new supercenter locates. Made By- Sachin Motwani

13 Aftermath - Positives 1. Since 2005 spending $500 million a year to increase fuel efficiency in Walmart's truck fleet by 25% over three years and double it within ten, reduce greenhouse gas emissions by 20% in seven years, reduce energy use at stores by 30%. 2. Wal-Mart announced a program to improve the nutritional values of its store brands over the next five years, gradually reducing the amount of salt and sugar, and eliminating trans fat. 3. The company announced that it was testing its new "Walmart To Go" home delivery system where customers will be able to order specific items offered on their website such as groceries, toiletries, and household supplies. Made By- Sachin Motwani

14 SUGGESTIONS  Since Indian government is thinking to allow 51% /49%/46% of FDI for multi brand retails, So Walmart has a great scope of expanding their business in India  They need to Expand their vendor base for small and mid cap companies. Made By- Sachin Motwani

15  They should support mom and pop stores. They should also be reaching out to local mom and pops with free consulting advice.  The world’s largest retailer WalMart has termed India’s decision to allow 51% FDI in multi-brand retail as a “first important step” and said it will study the finer details of the new policy to determine the impact on its ability to do business in India. Made By- Sachin Motwani

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