Question

1. Tell how Walmart has tailored their business model to existing conditions and different industry environments.

2. Tell how Walmart stands out in the crowd. Distinguish the business.

3. In your opinion, how important is tailoring the business models.

4, Show how important it is or is not to tailor the models.

Answer 1

1. Walmart is multinational business. It operates in the retail segment. Their traditional business model was a brick and mortar business for al retail needs. Their USP was ‘everyday low prices’ and they offered prices lower than most of their competitors. Their focus was on cost reduction, operational efficiency, strong supply chain management and economies of scale. This proved to be a very successful model when Walmart first started their business. Hardly any competitors provided such diverse products under a single roof at such low prices. At that time, Walmart did not focus on anything else as they had a competitive advantage. In fact, as they are expanding geographically in different countries, they past business model is still working, as they do not have any major competitors of their scale in the respective markets.

However, this strategy had to change with the emergence of new players in the retail industry- the online stores. Online stores such as Amazon could match Walmart’s scale and efficiency. Additionally, their costs were even lower as they did not have any brick and mortar structure. Walmart realized this limitation and entered into online structure. Today, the online store of Walmart is contributing considerably to their topline. Additionally, to maintain their competitive edge, Walmart focused on providing to the customers something that online stores could not- the customer experience. They did not focus on competing on price only as this was not a sustainable competition. Instead, they focused on integrating physical and digital stores, using analytics to serve customer needs better and improving in-store experience. The last focus was highlighted when Walmart announced more spend on training and development of store staff.

2. The crowd to compare Walmart with i.e. its peers are both online and physical stores. Walamrt has developed its competitive advantage over both segments based on-

Price leadership

Competitive on choice

Great customer experience

Price leadership- its strong suit is the supply chain management, operational efficiency and economy of scale, which allows it to deliver at lowest cost to customer.

Competitive on choice- Walmart has a large variety of choice and can cater to all sections of society due to its wide product range

Great customer experience- focus on better customer experience on both – online platform and retail stores is taken very seriously at Walmart. It spends huge amounts on improving the customer experience in both segments

3. The markets are changing at a rate faster than ever before. New technology in introduced every year and the customer expectations change very quickly. The wave after wave of startups provide new products and experiences to the customers worldwide. Hence, what worked for business 3-5 years ago may not work today. As a result, the businesses have to keep adapting.

At the same time, the customer expectations are also changing. If the business wants to cater to changing customer expectations, they need to change their approach. For a global economy where the borders between the countries are fading slowly, the demographics of customers are very different. International businesses such as Walmart need to understand, acknowledge and accommodate the difference in the different markets.

4. The business has become customer focused from business focused. This is in direct contrast to the epic quote by Mr. Ford when Model T was introduced- the customers can have any colored model as long as they are black. McDonalds understands how important it is to tailor the business model very well. They have a specially tailored menu for each region where they operate. They are sensitive towards the local culture and adjust their business accordingly. As a result, they have become very successful in all the countries they operate in. Dunkin Doughnuts have not been able to accommodate the local taste as well and hence, they have not succeeded as much outside the US.

Note- answers to questions 3 and 4 are very closely related