Posted: March 24th, 2023
The operations of Walmart have a crucial influence on the global platform due to its expansive nature of business. The company controls international retail operations in more than 26 countries. It has business segments focused on restaurants, Sam’s clubs, retail stores, and virtual stores with operations outside the United States. Notably, the membership warehouse that operates under Sam’s clubs runs in more than 47 states of the U.S.
In addition, Walmart serves a dynamic industry that focuses on quality and innovation in its product choices. The changing trends have influenced the company’s operations in providing customer-focused services, which offer Walmart a competitive advantage in the market. Thus, the company controls the market of retail products in all the countries it operates.
The main areas of Walmart’s competitive advantages are in the warehousing and distribution divisions. The company is the global leader in distribution logistics and manages almost 82% of its purchases through its internal infrastructure. The cross-docking systems allow goods to be unloaded and reloaded on inbound and outbound trucks, thereby saving on inventory management costs. The company implements an international extension in its procurement system, allowing it to source directly from suppliers rather than importers.
These prospects give Walmart an advantage in controlling the import logistics and distribution centers. Notably, logistics systems are faster, cheaper, and more reliable. Hence, the company enjoys improved profitability and competitive advantage. The firm’s warehouses, technological support, hauling trucks, and extensive distribution stores ensure that various shipments are received at projected points as stock-outs are eliminated.
The in-store operation units’ primary objective is to create customer satisfaction in the industry. The unit manages its core activities through strategies that yield low product prices and differentiated brands tailored to meet customer needs. To ensure Walmart improves customer experience, the store management system identifies local shopping needs and manages product ranges for easy identification.
The marketing approaches employed by Walmart appeal to its customers while being a significant source of sustainability. The unit’s slogan of “everyday low prices” influences buying decision-making of the clients. Programs like waste elimination, environmental sustainability, and renewable energy support the company’s marketing approaches and help build a competitive advantage. Hence, the company has created an efficient strategy to stay a top performer.
Information technology (IT) is the principal sector that drives Walmart’s operations efficiency. The company utilizes a radio frequency identification (RDFI) system that complements its services effectively. The model is significant for inventory controls and logistics management systems. The technological advancement in the warehousing and distribution divisions gives the company a competitive advantage through massive cost-cutting and efficiency in the distribution systems. Given that the company was the first to employ computer technology in inventory management, it enjoys an elaborate IT system. The systems range from a barcode scanner, point of sale inventory control, and the company satellite, which supports data transmission and links stores with e-commerce payment platforms such as card authorization.
HRM and organization management systems are the main drivers of change in the operations of Walmart. The company refers to its employees as associates. Even though it pays employees a lower hourly wage, the rates are above its competitors in the industry. Employee benefits are at the center of Walmart’s operations, with approximately 94% covered in health plans and retirement schemes. Organizational management approaches provide seamless leadership support to the company’s global operations. The leadership structures are designed to manage information and implement efficient decision-making models.
Walmart’s sustainable competitive advantage is concentrated within three critical areas: cost leadership, marketing strategy, and differentiation models. The cost leadership ensures that the company attains improved profit margins compared to industry rivals. Additionally, the company’s sustainability is attributed to its ability to lower product prices compared to its competitors in the market. Since Walmart can source merchandise from suppliers, its low-price strategy offers a competitive edge.
The cost leadership approach allows Walmart to take advantage of the economies of scale in the production sector, enjoying considerable bargaining power among its suppliers. The company takes advantage of its influence on dealers to market products at low prices leading to improved sustainability. The company implements a lean management process that reduces waste. Accordingly, the renewable sector saves the company energy costs, improves services, and lowers recurrent expenditure.
The differentiation strategy is a significant source of sustainability for the company. Since Walmart operates large stores with wider product varieties within smaller towns, its performance must be improved to reach additional customers compared to its rivals, who concentrate on cities. The technological advancement and elaborate processes in the logistics sector make it difficult for its competitors to imitate its strategies. The company’s freight services and distribution centers to its global stores equally limit imitation.
Walmart has created an edge in the market. Therefore, the company should develop strategies for its brand identity’s continued growth, improve its products’ quality, and focus on the non-served markets. The external environment is likely to affect the company’s operations; the firm should also manage legal and political aspects, such as employment regulations in the countries it operates. Walmart should implement effective CSR programs that would improve its corporate image in the market. Supporting environmental programs, including reducing carbon emissions and advocating for renewable energy, are some programs the company can advocate within its CSR.
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