Question

Why Walmart can successfully realize its cost-leadership strategy?

1. Compared with its rivals (Target, Kroger…), What are its most critical resources
2. Walmart is launching a new subscription service called Walmart +. Can it take on Amazon Prime?

Answer 1

Walmart has used cost leadership strategy to become the largest company in the world and it is the most famous cost leader. Walmart has huge customer base which includes people form demographic and social groups within society.

Walmart has face competition from certain companies online and offline. It has been sharpening its focus on everyday low prices and further pushing that strategy abroad. However, Walmart success has somewhat limitited in their international expansion efforts.

Minimising Operating Costs - Walmart has been known to push wages down as far as legally possible. It offers low benefit healtcare plans to its employees and its executives.

Advanced Supply chain management - Walmart pioneered cross docking in its supply chain strategy Cross docking refers to the practice of moving products from a supplier or manufacturer directly to the consumer or the retail chain.

Dealing directly with Manufacturers - Walmart as the leading retailer with its large network of stores around the world has tremendous bargainig power.

Motivating the associates - Walmart employess are taught to fallow the "ten-foot rule" which dictates that any member of staff within ten feet of a customer must offer them assistance. Walmart has utilized a system of performance linked compensation and a bonus structure that allows the employees to have a share in the earnings and profits of the company.

Most Critical Resources

Everyday low Resources - The cornerstone of walmart business strategy is its everday low prices. The brand sells a very large range of products adn its focus always remains on selling products at the lowest prices in the market. The strategy is to attract customers with lower prices adn keep them engaged with discounts adn shopping convenience.

Supply chain Innovation - Walmart distribution system is one of the largest in the world and serves a large number of stores, clubs and also caters to the customers directly. It owns private fleet of trucks adn employs a team of skilled truck drivers. Its supply chain system is considered to be the most advanced and efficient in terms of technology.

Supercenters - Walmart supercenters provide a one-stop sloution shopping experience and combine a grocery store with electronics, toys, home furnishings of which most of them remain open 24 hours and may also include speciality shops like banks, resaturants.

Discount Stores - Walmart shops are well arranged and good looking shopping spaces focused at maximising shopping pleasure. The product range on offer at these discount stores include electronics, toys, hardware and much more.

Walmart + takes on Amazon

Walmart + which is a subscription program for the same delivery of groceries and general maercahndise, discount on fuel at walmart gas stations and early access to product deals.

Walmart will charges consumers $99 a year while $119 is charged by amazon which includes delivery, streaming and other features.

But the long-term vision for walmart+ is for the program to add more perks which could include discounts on prescriptions drugs at walmart pharmacies and fuel at walmart gas station.

Still, no additional perks beyond grocery delivery are set in tone which led some insiders to worry that the pressrue to simply act might be supplanting a strong rollout plan and business case. It is unlikely that a $99 annual program built exclusively around grocery delivery would be enough to successfully compete with Amazon.

Amazon which comes with $119 a year and comes with unlimited one-day shipping on more than 10 million products, same day grocery deliveries, accces to large catalog of TV Shows and movies available for online streaming and more. Prime customers spend more and shop more frequently than Amazon non-prime shoppers. Walmart has struggled to Combat Amazon e-commerce market.

Walmart can have meaningful competition with Amazon if it can offer consumer those features and benefits which cannot be easily found elsewhere in the e-commerce industry.