Sam Walton’s original strategic idea was to sell reduced products and merchandise to southern cities and towns that were not focused on comparable and or rival companies. Wal-Mart was doing great until their competition realized that there are better marketing and selling opportunities in these small cities and towns, which could also help them with their reduced merchandise retail centers.
Wal-Mart was able to strengthen its competitive advantage overtime. Wal-Mart invested in information systems, human resource management, and supply chain management. This helped Wal-Mart have an advantage over other businesses. Wal-Mart providing respect to and importance to manpower gives them more success in the industry, which helps Wal-Mart deal with obstacles or threats caused by their rivals and or what the environment may impose.
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During the early 1990s, Walmart was facing limits to its growth in the United States. One thing the company added to the store to overcome those limits was offering diversification. Walmart started to sell merchandise and groceries in the same store. It allows consumers to shop all in one place, with the best prices offered, without having to go from store to store to buy the things a consumer may need. This addition allowed Wal-Mart to gain more profit.
In addition, Wal-Mart again is facing issues of limits to its growth. Wal-Mart is limited to growth in some industries. There are only a certain number of consumers in the country. Wal-Mart may not be trying hard enough to get more consumers. Wal-Mart needs to look at other industries to see in what areas they could gain more profit to fix their limited growth issue. The bargaining power of Wal-Mart’s suppliers is considered reasonably low. Their suppliers as low to moderate bargaining power. One of these reasons is due to the fact it is a big retailer with many products to offer.
Walmart being the largest retailer holds a significantly large market share. Now, since it makes large purchases, it gives Walmart significant buying power. The switching costs for Walmart are low and it can switch from one supplier to another without have incurred any major costs. Moreover, it is easier for Walmart to try backward integration than for its suppliers to integrate forward. A few of its suppliers are large companies which gives them some bargaining power. So, overall the bargaining power of the Walmart suppliers is low to moderate. (Walmart Five Forces Analysis)
Even though the bargaining power of Wal-Mart’s suppliers is substantially low, Wal-Mart still does very well. There are two threats Wal-Mart faces to its profitability. The first threat Wal-Mart needs to worry about is competition. There are a lot of stores being introduced with the same concept of Wal-Mart. Dollar General being one of its top competition to worry about. The second threat Wal-Mart needs to worry about is online retailers of various sizes. Online shopping has drastically increased throughout the years. People and competition is taking advantage of this, which could hurt Wal-Mart’s profitability.
Some of Wal-Marts strategies was definitely planned on the outset. Wal-Mart has been able to venture its business all over the United States market. They also managed to expand the market into other countries. One example of Wal-Mart’s expansion was introducing the grocery section in the 1990’s. This expansion has had such an impact on Wal-Mart’s success. Their strategies in other countries allows Wal-Mart to keep expanding. Wal-Mart has continuously plan and change their plans to keep up with the growing market and be successful. Wal-Mart will continue growing. Especially when it comes to overseas.
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