Wal-Mart's Competitive Advantage 2003
Wal-Mart stores are the largest retailer of discounted products across the globe with numerous superstores primarily in small towns throughout the United States. It consists of discount stores, supercenters, and neighborhood markets. About 75% of its stores are in the U.S. And due to awakening of globalization; Wal-Mart is also expanding in global markets. (Wal- Mart annual report, 2003)
Nature of competitive strategy
According to Daniel MillSap,(2009), every business exists to make profits and to maximize value for its shareholders. Higher revenues do not necessarily mean higher profits as this depends on the strategy that the organization pursues.
From Wal- Mart report, (2003) its evident that leading superstore is pursuing low price/cost leadership strategy. In Wal-Mart, this is an every day strategy of delivering low priced and quality products at a price everyone can afford.
According to departmental research, low priced consumer goods are more preferred. Any where in the world the consumer would love to reduce the cost of consumption and use the extra money on something else on an investment. It is said that half of the American families shop at Wal-Mart at least once a weak and this association creates a strong competitive advantage (Millsap, 2009).
The major industry competitors of Wal-Mart include; Target Corporation with annual sales of $63 billion, Costco Wholesale Corporation with annual sales of $68 billion, while Wal-Mart annual sales exceed $200 billion.
Wal-Mart low cost pricing strategy is based on consolidation and aggressive takeover of other chain stores. Due its higher sales revenue margins and an increasing drive to maximize shareholders value, Wal-Mart time and again moves its stores to bigger towns, for example, acquisition of French hypermarket giants Casino and Auchan, and Mycal a Japanese supermarket.
The threat of new entrant becomes low in such instances as the cost of entry becomes high. To illustrative this, it would practically be hard for any company to offer low prices at go on its entry and make the revenues Wal-Mart makes. Though substitute products can be found, they don't carry...
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