Walmart Market Penetration Strategy

Wal-Mart is a brand that is well known around the world, especially in the USA. It has gradually developed into the largest retailer in the world. Wal-Mart’s globalization efforts have been happening rapidly. But have they been successful in all aspects of their international expansion or not? This is the main thought that is going to be discussed in this essay. The questions I will be looking at are based on a case called “Wal-Mart takes on the world” from the book of International Business The Challenge of Global Competition eleventh edition – Ball, McCulloch, Geringer, Minor, and McNett. Questions are the following:

Wal-Mart’s sheer size gives it unrestrained economic power which allows it to drive down costs in the retail and manufacturing sectors and to enact its own standards with regards to its work force.

Like any business, Wal-Mart has to continually assess their strengths, weaknesses, opportunities, and threats in order to continue to be competitive. Awareness by the executives to what is happening locally and globally will further the expansion of Wal-Mart.

Business level strategies Strategies Use of the strategies Low prices Making an inception in the consumers mind with facts that they have the best price deal in the market. Convenience store Creating stores with 200 000 square feet or less, building with this stores a mix market side and neighborhood market concept. Example of this are the store formats of discount stores and neighborhood markets that the company have. Big box Creating big stores with 50 000 squares feet or more, building a single open door stores where the consumers can find every single thing they want.

When it comes to retail giants, Walmart stands tallest by a very large margin. In fact, Walmart’s retail sales more than tripled their closest competitor in 2015 (“STORES top retailers 2016,” 2016). Walmart has consistently used the same marketing strategy for many years. Their “Everyday Low Price” strategy is a well-known advertisement moniker and has driven repeat sales to customers for years (Ferguson, 2015). Another familiar sign

Wal-Mart is arguably the most dynamic corporation in the last 50 years in the United States, if not the world. Arising from its beginnings in Bentonville, Arkansas, it has grown to over 4,400 discount stores, super centers and corner markets worldwide. Wal-Mart continues to expand despite public criticism of its labor practices as well as complaints about their treatment of competitors. The many strengths of Wal-Mart, like their low cost production and marketing practices, will aid Wal-Mart as it continues to grow in the retail

Like all departmental and/or discount stores, Wal-Mart's strategies are focused around achieving the goals such as building a large and strong customer base, under-cutting competitors, and organization of its supply chain in the most efficient and effective manner and above all, market growth.

Walmart uses the backward expansion strategy to extend their geographical reach. The company is known for entering small, rural towns and saturates the area before entering the larger metropolitan areas. The international plan included new construction of buildings and acquisitions of existing buildings. In the foreign market Walmart attempts to match the culture and taste of local tradition. They employ locals in the area to manage the stores, so that local barriers can be reduced.

Since 1962 and the beginning of the discount retailer market Wal-Mart has been ahead of the retail game. By 1967 there were 24 Wal-Marts that had grossed 12.6 million dollars. In just 7 years Wal-mart had spread into 9 states. By 1979 Wal-Mart was the fastest store to reach a billion dollars in sales. In 2005 Wal-Mart has 3,800 domestic stores along with 3,800 stores internationally, and had made over 312 billion dollars. As you can see the Wal-Mart empire has grown monumentally. To move into this segment of the market would be tough.

“Always low prices”, is the first thing you think of when you think about one of the most successful companies around the world, Wal-Mart. For years they stand as a well know company due to their everyday low prices and variety of products. Their mission statement is “Saving people money so that they can live better”. They have chosen their mission statement wisely yet there is a lot of controversy when it comes to this International Company.

Sam Walton’s extraordinary business strategies drove Walmart to its success and their key focus was customer satisfaction. As part of their customer centric initiatives Walmart had set up a unique pricing strategy with their “Every Day Low Prices” EDLP (Karen Robson, 2013). They would offer customers their daily needs at the lowest possible price to drive Walmart’s growth in the United States (Karen Robson, 2013) . Their pricing strategy was different than other major retailers in the U.S at the time; this provided an advantage towards rapid success and expansion (Karen Robson, 2013).

In business, three major strategies comprising of cost leadership, differentiation, and focus strategies exist. The focus strategy emphasizes on providing services and products to a specified buyer group or market segment within a given geographic market. The differentiation approach is often defined as provision of services or products that are perceived to be unique in the market place. Wal-Mart emphasizes on the long-term strategy of cost leadership. Through this strategy, the company ensures that it offers customers with quality products at relatively lower prices than other providers in the industry. Through overall cost leadership strategy, Wal-Mart has been offering better quality products at a lower price than any competitor can offer. For the organization to achieve this goal, it has developed long-term supply chain management, which ensures that products are made available to the market at the required time (Enz, 2010).

One of the most significant competitive edges that Wal-Mart possesses is bringing products to the ordinary customers at lower prices than its rivals (Woohyoung & Alan, 2013). In other words, Wal-Mart has kept its promise of ‘everyday low prices’ (EDLP) as a sustainable selling point (Walmart, 2015). At Wal-Mart, price is the core factor of most of the foreign markets, where that it has established operations in addition to the United States. The other 3 countries that have been included in this report (namely South Africa, Germany and Japan) are all implementing the policy of EDLP. Sam Walton, the founder of Wal-Mart understood that customers from Berlin to Tokyo, from New York to Cape Town are all attracted to purchasing products at the lowest prices. Undoubtedly customers around the world choose Walmart for its low prices, convenient access to versatile products portfolio and for a shopping experience which meets individual’s expectations based on the fact that It delivers sales through customer relevance and is always passionate about driving sales wherever it operates. EDLP, enabled by being a low-cost operator, is the foundation of its customer proposition, which strives to serve customers regardless of household income in Japan, Germany, South Africa and the US (Walmart, 2015).

The five generic competitive strategies are low-cost provider, broad differentiation, focused low-cost, focused differentiation strategy, and best-cost provider strategy. According to the textbook, “a company’s competitive strategy deals exclusively with the specifics of management’s game plan for competing successfully” (Gamble, 93).

1-Force Wal-Mart points are explicitly acknowledged widely. With its size and access to capital, Wal-Mart can maintain even low-shop performance over the long term when you move to the area, a luxury not granted many small businesses, based on the family. Distribution and supply chain enables the efficient retailer to offer very low prices, which is difficult for competitors to match.