Page 72 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

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Reliance Industries, More of Aditya Birla Group in India. Wal-Mart, a US based retail
industry, which is known as the giant in the retail industry has survived and is still the
huge enterprise in the world which deals with almost all the F&B products, apparels, etc.
It is not only the largest company in world but also the largest company in the history of
world (Fishman, 2006). The present paper is divided into four sections to understand and
answer as what makes Wal-Mart the best in the industry, (1) retailing industry at the time
of Wal-Mart’s innings, (2) Wal-Mart’s Competitive advantage and key components,
(3) Wal-Mart’s Strategy and (4) Sustainable growth of Wal-Mart.
Wal-Mart dominates the American retailing industry due to number of factors like its
business model which is still a mystery and its effectiveness in not letting the rivals let
know about the weaknesses. Wal-Mart made strategic attempts in the its formulation to
dominate the retail market where it has its presence, growth by expansion in the US and
Internationally, create widespread name recognition and customer satisfaction in relation
to brand name Wal-Mart and branching into new sectors of retailing.

It is learnt that Wal-Mart strives on three generic strategies consisting of Focus Strategy,
the Differentiation Strategy and overall cost leadership. Managers strive hard to make
their organisations unique, distinctive and identify key success factors that will drive the
customers to buy their products.Thus, firm specific resources and capabilities are crucial
in explaining the firm’s performance. The Resource Based View (RBV) explains competitive
heterogeneity based on the premise that close competitors differ in their resources and
capabilities in important and durable ways. The company’s capability can be found through
its functionality, reliable performance, like Wal-Mart superior logistics (Helfat, 2002).
Wal-Mart has firm infrastructure, well equipped in human resource with management
professionals and technologically too.
Any organisations thrive hard to be successful for which it needs to have better resources
and superior capabilities. Wal-Mart has strong RBV with economically and financially
very strong enough to stand still in the time of crisis. Pereira states that dominating the
retail market is its key strategy. Wal-Mart operates on low price strategy which is operated
as every day low prices (EDLP) which builds trust among the customers (Brunn, 2006). The
strategy lies in purchasing the goods at lower prices and selling the goods to customer at
much lower prices, cutting the price as far as possible and increasing the profit by increasing
the number of sales. This ferociously increases the competition in the market and Wal-
Mart competes with all its competitors till it is dominant it the market.

Wal-Mart is expanding seriously and rapidly which is also its strategic goal. Wal-Mart
employs over 1.3 associates, owns over 4000 stores out of which 3000 are in US and serves
around 100 million customers weekly. Wal-Mart has acquired many international stores
and merged with some super stores like ASDA in UK. Wal-Mart far flung network of retail
outlets has ensured that Wal-Mart interacts with and has impact on virtually every locality
within US (Helfat, 2002). The expanded strategy has led the hunger of Wal-Mart to many
European Countries. It is learnt that three countries with no Wal-Mart stores became part
of corporation’s international presence wherein the domestic retail chains were taken
over by Wal-Mart including 122 Woolco stores in Canada, 21 Wertkauf stores in Germany
and 229 ASDA units in United Kingdom. The takeover strategy by Wal-Mart keeps the
company at forefront when entering into the new market and the number of competitors
is also minimized. The strategies have helped the Wal-Mart to rein in number one position
in international countries making it the largest retailer in the world.
It is seen that Wal-Mart has significantly the Porters five force model wherein through
proper strategic planning and strategic implementation has led to removal of barrier

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