Sustainability In Discount Retailing at Wal Mart

Sustainability In Discount Retailing at Wal Mart doorkeeper (2002) states that root of the hassle lies in the lack of distinguishing between operation metier and dodge. The expedition for productivity, calibre and speed has resulted in management tools and techniques, total quality management benchmarking, date based competition, outsourcing, partnering, reengineering, change management. In any(prenominal) organization, strategy management is the signalise to its success. There atomic bod 18 many theories based on this assumption that without a proper strategy and think, it is difficult for any sedulousness to survive disregard slight of its size. It is necessary to understand here that all the major corporate organizations book established themselves, thanks to extravagantlylyior strategical think and implementation. The sell industry is making tidings bothwhere with not only the traditional industries increase their outlets but several(prenominal)(a) major cor porate industries also intruding into this industry like everywherebold Reliance of Reliance Industries, More of Aditya Birla Group in India. Wal-Mart, a US based retail industry, which is known as the whale in the retail industry has survived and is still the huge enterprise in the world which deals with almost all the FB products, apparels, and so on It is not only the largest fraternity in world but also the largest company in the record of world.(Fishman, 2006) The present paper is divided into four sections to understand and answer as what makes Wal-Mart the best in the industry, 1) retailing industry at the time of Wal-Marts innings, 2) Wal-Marts free-enterprise(a) advantage and lynchpin comp angiotensin-converting enzyments, 3) Wal-Marts Strategy and 4) Sustainable increase of Wal-Mart.I. Retail attention Wal-Mart says HelloStrategic decisions are ones that are aimed at variousiating an organization from its competitors in a instruction that is harbourable in the future. (Porter, 2002) Porter besottedly advocates that decisions in personal line of credit can be classified as strategic if they relate some innovation and take issueence that results in controlable advantage. According to Patrick Hayden et al (2002) the retailing industry adopted the style of implicationing on its merchandise after(prenominal) the Second World War. It is learnt that ignore retailing was not the strategy at the time Kmart, Target and Wal-Mart first started direct their business. Frank (2006) states that when Sam Walton was franchising for Ben Franklins medley line, invented an idea of passing on the savings to his clients and earning his moolah through volume. prior(prenominal) to Wal-Marts entry into the foodstuff place, Sidney and Hebert from Harrison founded Two Guys discount store in the year 1946 which dealt in expectantware, automotive separate and later on groceries. Two Guys was the forerunner as compared to todays retailers like Supe r Target, Wal-Mart which succumbed to the economic recession. An different discount store rotary up by Eugene as E.J. Korvette, which is often cited as first discount store which did not raise from 5 10 cents roots and lastly declared bankruptcy due to inability to compete with the new entrants.Porter (2002) states that combination of running(a) effectiveness and strategy is essential for superior murder which is the primary goal of any organization. He also says that a company can perform its rivals only if it can operate in different ways which are not in practice. Much emphasis had been hardened on strategic positioning like variety based positioning, unavoidably based positioning and access based positioning.Along with Wal-Mart, other stores that started operating were Target, Woolworth (Woolco) and K-Mart. However, Target has been functioning successfully, courtesy Wal-Mart, but other two fai direct in their operations and filed bankruptcy.( Michael Bergdahl, 2004) Porte rs five forces model explains what strategic decisions should be do and on what basis. The model explains the basic strategies to be considered while starting a business like bargaining power of suppliers. While franchising of Franklin he always looked for cheaper deals and thought process of passing his savings to the customers and earning through the margin on volume of spate purchases. Through the way of discount stores, shoppers were given the cheapest price as compared to any other store. In regard to threats of new entrants, Wal-Mart has been constantly in the news for acquisition of other small retail shops in view of its expansion. unless nevertheless it has stiff competition from likes of Super Target, Tesco, etc. it is the worlds biggest retail industry.II. light upon Components of Wal-Mart Business ModelWal-Mart is the drawing card in retailing industry with financial revenue of $244.52 billion in 2003 making it the worlds largest corporation. Mike reports that Wal- Mart as of 2002 had 1,283,000 employees increase at 11.2%. The above data explains that strategy of Wal-Mart is extraordinary which manages and operates over 4150 retail facilities globally.The key components of Wal-Mart (The Value Chain), which offers cheap prices than its competitors includes unattackable infrastructure like economic culture, no regional offices and pleasant environment to work. Managements take lots of visits and it is learnt on that post are no rehearsals before any meeting which is usually plan on every Saturday. In any organization, human resource is the key to development and Wal-Mart efficiently manages its sources. Wal-Mart terms its employees as associates. Manager compensation is link to the scratch of store operated by him, within promotions, compensation offered to associates depending on companys meshwork and also offered some incentives on their performances. The workforce at Wal-Mart is not recruit as the company takes all the measures of t heir benefits and provides them training on related issues. technology plays a vital role in development of the organization and Wal-Mart is soundly equipped with technological innovations like POS, store performance tracking, real time merchandise research, satellite system and UPC. Wal-Mart procurement measures like hard-nosed negotiations, partnerships with some vendors, centralized buying, planning packets, etc. helps at large the cause of providing the goods and operate on cheap prices. The other factors that increase the margin of profit for Wal-Mart are inbound logistics with frequent replenishment, automated DCs cross docking, pick to flight, EDI, hub and spoke system. Wal-Mart strategy of operation is innovative with big stores in small towns with monopoly in the securities industry at minuscule rental costs, local prices, concentric expansion, merchandising in brand gens, private labels, little space for inventory, store within store, etc. In relation to grocerying and sales, merchandising is tailored from locals, spent less on advertising and the prices are fixed low and it depends on the store manager to fix the latitude of price. All the above factors combined unitedly form the key components of Wal-Mart which not only increase the margin of profits through bulk sales but also boost the faith of the customers with services like point of sale information system and general low prices.III. Wal-Mart StrategyWal-Mart dominates the American retailing industry due to number of factors like its business model which is still a mystery and its effectiveness in not letting the rivals let know about the weaknesses. Wal-Mart made strategic attempts in the its formulation to dominate the retail market where it has its presence, growth by expansion in the US and Internationally, create widespread wee recognition and customer satisfaction in relation to brand name Wal-Mart and branching into new sectors of retailing.It is learnt that Wal-Mart strives on three generic strategies consisting of Focus Strategy, the specialism Strategy and overall cost leadership. Managers strive hard to make their organizations unique, typical and identify key success factors that will drive the customers to buy their products.Thus, firm specific resources and capabilities are crucial in explaining the firms performance. The Resource Based follow (RBV) explains competitive heterogeneity based on the premise that close competitors differ in their resources and capabilities in important and durable ways. The companys capability can be found through its functionality, reliable performance, like Wal-Mart superior logistics. (Helfat, 2002) Wal-Mart has firm infrastructure, considerably equipped in human resource with management professionals and technologically too. any organizations thrive hard to be successful for which it needs to fork up make better resources and superior capabilities. Wal-Mart has strong RBV with economically and financially v ery strong full to stand still in the time of crisis. Pereira states that dominating the retail market is its key strategy. Wal-Mart operates on low price strategy which is operated as every day low prices (EDLP) which builds trust among the customers.(Brunn, 2006)The strategy lies in purchasing the goods at dismantle prices and selling the goods to customer at much lower prices, snub the price as far as possible and increase the profit by increasing the number of sales. This ferociously increases the competition in the market and Wal-Mart competes with all its competitors till it is controlling it the market.Wal-Mart is expanding seriously and rapidly which is also its strategic goal. Wal-Mart employs over 1.3 associates, owns over 4000 stores out of which 3000 are in US and serves nigh 100 billion customers weekly. Wal-Mart has acquired many planetary stores and merged with some super stores like ASDA in UK. Wal-Mart far flung network of retail outlets has ensured that Wal- Mart interacts with and has conflict on virtually every locality within US. (Helfat, 2002) The expanded strategy has led the hunger of Wal-Mart to many European Countries. It is learnt that three countries with no Wal-Mart stores became part of corporations international presence wherein the domestic retail chains were taken over by Wal-Mart including 122 Woolco stores in Canada, 21 Wertkauf stores in Germany and 229 ASDA units in United Kingdom. The takeover strategy by Wal-Mart keeps the company at forefront when entering into the new market and the number of competitors is also minimized. The strategies have helped the Wal-Mart to rein in number one position in international countries making it the largest retailer in the world.It is seen that Wal-Mart has significantly the Porters five force model wherein through proper strategic planning and strategic implementation has led to removal of barrier entry, rivalry from competitors and pricing norms. In regard to substitutes, Wal- Mart in order to achieve its aim of customer satisfaction has selling goods under its own legal brand. Wal-Marts big stripe phenomenon has changed the retailing industry in the United States which is often considered as discount stores and makes profit through high volume of purchases and low markup on profits.(Parnell, 2008)Wal-Mart with its low cost and ever expanding strategy has made a dramatic impact since 1962 when Sam Walton first started his business. With this strategy, Wal-Mart has now over 4000 stores and outlets in US and other countries through acquisition and nuclear fusion reactions.IV. Sustainability in Discount Retailing Wal-MartAccording to Porter, (2002) operational effectiveness and efficiency are the key elements of success in any organization. A company can outperform its rivals or competitors in the market only with superior management and efficient control creating a remnant from the others which eventually attracts customers. Porter defines operational e ffectiveness as performance of equivalent activities as its rivals but better than them. In a study, it is stated the Wal-Mart is happy in manipulating perceptions. It is termed that low price is not the strategy of Wal-Mart but the advertising manipulates the consumer perceptions by making them think that its prices are lower than its competitors price utilize price spin. Wal-Mart makes the consumer addicted coming to its stores by convincing them the prices are lower than in the other stores by selling itself cheaper by advertising that we have lower prices than anyone else and placing a opening price point. The opening price point is the lowest price in the store which is kept at high visibility which makes consumer believes that the products in this store are really cheaper. (Race Cowgill, 2005)The SWOT compend of Wal-Mart reveals that it is most powerful retail brand, reputation for money, value, commitment, and provides wide range of products. It is maturation at a brisk pace with expanding its horizon to other parts of world through acquisition and merger. Wal-Mart has good opportunities in markets of Europe and chinaware and focuses on acquiring the market through acquisition of smaller stores and merger with leaders in the specific markets. Wal-Mart is always under threat to sustain its top position in market nationally and internationally. Global leader in the industry leaves the organization vulnerable to many socioeconomic and political problems of the country.Sustainability at the top place is the most important job that makes its managers strives hard to frame the policies and strategy to compete with its rivals in the market. Slack, Imitation, replacement and Hold-up are some of the threats to any organization in retail industry. However, Wal-Mart with its visionary goal of attaining zero point waste status and reaching 100% renewable energy has intend to launch number of sustainability initiatives. (GreenBiz, 2008) Imitation increase profits by increasing the supply. But imitation puts reputation, relationship at stake. James Hall reports that Wal-Mart is planning to open convenience stores as Tesco has started and operating in US called Fresh Easy Neighborhood Markets. (James, 2008) Such tactics will create commingle response among the consumers while degrading the reputation of the leader in market. Substitution reduces the film for what a firm uniquely provides by shifting the demand elsewhere due to changes in technology. The threats of substitution can be pernicious and unexpected like minimizing expenses through videoconferencing instead of air flights to long aloofness meetings with its managers of other stores, etc. Therefore, substation is an especially effective way of attacking dominant rivals in the market. Substitution offers mixed responses after identifying and understanding the threats. The organization should clamber the threat and merging with them, switching to different options of substi tution to be in the market. Hold-up diverts the value to customers, suppliers or complementors who have some bargaining leverage which results in tough negotiations, contractual agreements and vertical integration.Wal-Mart is having great network with almost over 7800 stores and Sams Club locations in 16 markets worldwide. It employs much than 2 million associates and serves more than 100 million customers every year. According to Fishman (2006) Americans spend $26 million every hour at Wal-Mart which makes it believable that Wal-Mart is financially very strong and is capable of combating any threat from its rivals in the market. Wal-Mart is ever expanding its boundaries by way of acquisition and mergers. Thus Wal-Mart with such a vast network of stores and alliances in the forms of ASDA, Target and many other stores is well protected enough to sustain its top position in the retail industry.