Walmart S Cost Leadership

Determining the customers to serve 1.WAL- MART ENSURES THAT IT POSITIONS ITSELF STRATEGICALLY IN THE MARKET BY OFFERING PRODUCTS THAT MEET THE NEEDS OF  ALL THE POPULATION SEGMENTS. 2.WAL- MART’S TARGET MARKETING HAS BEEN BASED ON THE FACT THAT DIFFERENT AGE GROUPS’ DEMANDS ARE CATERED FOR SUFFICIENTLY

What: Determining which customer needs to satisfy

•before 2006: always low price

•after 2006: save money ,live better

How: Determining core competencies necessary to satisfy customer needs

CORE COMPETENCIES

1.LOW COST OPERATIONS

2.CULTURE:

WAL-MART’S EMPLOYEES ARE HARDWORKING, EFFICIENT, AND PROCESS ORIENTED.

3.DISTRIBUTION

WAL-MART OPERATES AN UNRIVALED GLOBAL NETWORK OF 146 DISTRIBUTION CENTERS . BECAUSE OF THIS, THE TRICKLE-DOWN

EFFECT HAPPENS. TRUCKS DO NOT HAVE TO TRAVEL LONG

DISTANCES TO MAKE DELIVERIES WHICH HELPS TO REDUCE TIME

FOR DELIVERING

5 competitives forces

on walmart

Rivalry with existing competitors 1.HAVING THE LOW-COST POSITION IS VALUABLE TO DEAL WITH RIVAL ,RIVALS HESITATE TO COMPETE ON THE BASIS OF PRICE (ENTRY BARRIERS) 2.CASE OF COSTCO AND DOLLAR AMAZON (COST ADVANTAGE)

WALMART: COST ADVANTAGE

ENTRY BARRIERS

Bargaining power of buyers(customers)

POWERFUL CUSTOMERS CAN FORCE A COST LEADER TO REDUCE ITS PRICES ,BUT NOT BELOW THE LEVEL AT WHICH THE CODT LEADER'S NEXT-MOST-EFFICIENT INDUSTRY COMPETITOR CAN EARN AVERAGE RETURNS P103

ANANLYSIS:

AS A NUMBER OF FIRMS IS INCREASED,ABUNDANCE OF GROCERIESFIRM IN THIS INDUSTRY,AND THAT LEAD TO THE RESULT OF THE BUYER'S POWER IS MORE AND MORE POWERFUL.BUT IN THIS INDUSTRY,BUYER ALWAYS HAVE LOW BARGAINING POWERS, SO IT IS MORE IMPORTANT TO BRING MORE VALUES TO ATTRACT THEM,BECAUSE THEY HAVE MANY OPTIONS.

Bargaining power of suppliers 1.COST LEADER MAY BE ABLE TO FORCE ITS SUPPLIERS TO HOLD DOWN THEIR PRICE BUT IT CAN NOT GAIN THE BEST GOOD PRICE RELATIVE TO IT'S COMPETITORS. 2.OUTSOURCING: NEED TIME AND EFFORT TO GOOD RELATIONSHIP AND TRUST

ANANLYSIS:

SUPPLIERS HAVE A HIGH BARGAINING POWER IN WALMART 'S

Potential Entrants

COST LEADERS SERVE A SIGNIFICANT ENTRY BARRIER TO POTENTIL COMPETITORS ANALYSIS: WALMART NOW FACE A LOW THREATEN OF POTENTIAL ENTRANTS .EVEN SOME ENTERPRISES ENTER THIS INDUSTRY ,THEY MUST BE WILLING TO ACCEPT NO-BETTER-THA AVERAGE RETURNSUNTIL THEY GAIN THE EXPERIENCE REQUIRED TO  APPROCH THE COST LEADER'S EFFIVCIENCY

Products substitutes

COMPARE TO OTHER RIVALS,THE COST-LEADER ALSO HOLDS AN ATRRACTIVE POSITION IN TERMS OF SUBSITUTES. ANALYSIS:COMPARE TO OTHER COMPETITORS, WALMART IS MORE FLEXIBILITY

Competitive risk of the cost leadership strategy

THE COST LEADERSHIP IS NOT RISK FREE 1.GOOD AND SERVICE BECOME OBSOLETE 2.MORE FORCE ON COST REDUCING MAY OCCUR THE EXPENSE OF TRYING TO UNDERSTAND THE CUSTOMER'S PERCEPTIONS OF "COMPETITVE LEVELS OF DIFFERENTIATION"

3.IMITATION

ANANLYSIS:WALMART CONSISTS OF THREE RETAIL FORMATS:DISCOUNT STORES,SUPERCENTERS,WALMART MARKET,AND HAS ALSOOPENED THR OTHER 3 TYPES FOR PARTICULAR POPULATION OR PLACE:SUPERMERCADO DE WALMART,MARKETSIDE AND WALMART EXPRESS TO OFFER DIFFERENT GOOD AND SERVICE TO AVOID TO BE OBSOLETE,AND AS A COST LEADER,WHEN IMITATON HAPPENS,IT CAN INCREASE THE VALUE OF GOODS AND SERVICE