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Wal-Mart Case Study
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Sources of competitive advantage ?nbsp; Located stores in isolated rural areas and small towns, usually with populations of 5,000 to 25,000 ?a market that was ignored by the other players. ?nbsp; The pattern of expansion was “pushing from inside out? The position of strength thus built in a region enabled Wal*Mart to take on its rivals in bigger markets. ?nbsp; Extremely competitive in terms of setting prices. Typically, a 2-4% pricing differential between Wal*Mart and its best competitors in most markets. Offered consumers brand name merchandise for less than department and specialty stores. ?nbsp; Simple and cost-effective advertising. Wal*Mart was known for its national brand strategy, and the majority of its sales consisted of nationally advertised branded products. Advertising expense for Wal*Mart was 1.5% of discount store sales compared with 2.1% of direct competitors. A marketing slogan “Always low prices-Always?emphasized the superior pricing position of Wal*Mart. ?nbsp; Heavy investment in IT. Sales data of each Wal*Mart store were collected and analyzed daily. The company could track product movements and customer preferences at a very micro level. This enabled managers to learn immediately what merchandise was moving slowly and thus avoided overstocking and deep discounting. A Wal*Mart store devoted only 10% of its square footage to inventory, compared with an industry average of 25%. Thanks to the knowledge mined from sales and inventory data, Wal*Mart merchandise could be tailored to individual markets, and in many cases, to individual stores. ?nbsp; Wal*Mart tried to capitalize on every cost-cutting opportunity, and implemented processes and systems that led to cost-minimization. Its operating expenses were 18.1% of discount store sales versus the industry average of 24.6%.
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