Wal-Mart Stores, Inc.

By: Achmad Faizal Azmi (361160)

1. What is Wal-Marts strategy? What is the basis on which Wal-Mart builds its
competitive advantage?

Wal-Mart is the largest retail company in the world. Walmart business strategy is
based on everyday low prices philosophy of the company. In other words, Walmart pursues
cost leadership business strategy enabled by the economies of scale derived by the company
in a significant extent. Walmart has maintained its low price leadership position due to its
continued focus on suppliers. Walmart has one of the largest supply chains in the world. In
order to become more efficient in mobilizing the product, Wal-Mart had encouraged its
suppliers to adopt latest Supply Chain Management System like Radio Frequency
Identification, this technology enable supplies to have direct monitoring of inventory in the
Wal-Mart. In distributing the product, Wal-Mart uses laser-guided conveyor belt and cross
docking techniques. In cross-docking, inbound shipments from suppliers are unloaded
directly into outbound trailers at distribution centers. Moreover, Wal-Mart has one of the
biggest trucking network (distribution centre). Stock would get to the store within a day. They
took over the control of the deliver, they purchased a fleet of truck. This allows them to
deliver smoothly and at their own feet. Competitors rely on trucking company, however Wal-
Mart bought a truck fleet.

2. How do Wal-Marts control systems help execute the firms strategy?

In Wal-Mart, each store serves as investment center and was evaluated on its return in
investment. In order to evaluate each store, all data about companys operation and financial
position were collected, analyzed and transmitted electronically. Therefore, it reduces the
probability of running out of stock and it could maximize the inventory turnover. Shoplifting
became a significant issue that Wal-Mart encouraged managers to be accountable and gave its
associates (employees) incentive to be creative. The people greeter technique (employee
welcomes shoppers as they entered the store) does not only provide personal service but their
presence served to reduce pilferage. That activity were developed into what so called the 10-
Foot Attitude. Walmarts policy on the 10 foot rule is all about customer service. If a sales
associate sees a customer within 10 feet of them, they are to approach that customer and see
if they need any help locating an item in the store, price check or just to let them know you
are there. It works in two ways; good for customer service and it deters people from stealing.
Also, Wal-Mart respect and treat its employees well and push them to excel in what they do.
Wal-Mart instituted several other policies and programs for its employees such as incentive
bonuses, a discount stock purchase plan, promotion from within, pay raises based on
performance and an open-door policy.

Source:

Anthony, R.N. and V. Govindarajan (2007). Management Control Systems. 12 th Ed. Boston: McGraw
Hill
Vij, R. (2015) What is the business strategy and business model of Walmart? How
did they grow so big so fast? Available at: https://www.quora.com/What-is-the-
business-strategy-and-business-model-of-Walmart-How-did-they-grow-so-big-so-
fast (Accessed: 4 February 2017).