Walmart - Chapter 5 - Corporate-Level Strategy

Walmart is in the mature stage of the industry life cycle.  The only new competition for them is from
focus businesses such as grocery, clothing, and auto parts stores.  There has been no new
competitors that can offer all of the different products that Walmart can and do it with Walmart's
low prices.  Some competitors have recently closed stores including Kmart, Sears, and
Pamida.  Walmart has a  price competition with their bigger competitors, especially Target.  Walmart
has been able to stay ahead of it's competitors in the mature stage by keeping their costs low and still
be able to offer a wider variety of products than anyone else.

Walmart uses a combination strategy of overall cost leadership and differentiation.  They use
differentiation by having a wider variety of products than their competitors.  Walmart's transportation,
logistics, and information systems lower their costs.  They also lower costs by having no-frills service
and by having economies of scale.  Walmart's successful overall cost leadership/differentiation
strategy leads to high entry barriers for competitors.  It also makes it hard for substitute products to
enter the market.  Walmart also has bargaining power with their suppliers.  They changed their
competitive challenge from retailing to transportation logistics and communication industries to play to
their strengths (Dess, Lumpkin, Eisner, McNamara, 2012).  Walmart has avoided the pitfalls of the
overall cost leadership/differentiation strategy by not getting "stuck in the middle" and properly
calculating future revenues and expenses. 

The Internet has helped Walmart grow their business by lowering transaction costs.  Walmart allows
customers to order products online which reduces sales force expenses.  Customers can have their
own account page on the Walmart website to look at prior orders and track current orders.  Their
Internet site allows you to ask questions and give feedback.  Walmart differentiates it's website by
providing recommendations of other products to buy when you make a purchase.

Walmart has many overall cost leadership value-chain activities.  They have fewer management
layers than their competitors which reduces overhead costs.  Walmart has effective inbound
logistics by using just-in-time inventory.  They have cut costs from outbound logistics by creating
better fuel efficiency in their trucks, getting more pallets on a load, and decreasing empty miles driven
by their trucks.  Walmart also reduces costs by buying in large blocks.

Walmart has many differentiation value-chain activities.  Walmart has flexibility and speed when
transferring their products from their warehouses.  Their technology provides an accurate ordering
process.  While Walmart doesn't offer many sales, their "everyday low pricing" strategy has been
successful.  Their slogan "save money, live better" accurately represents their image.