Wal-Mart

Wal-Mart’s business model and success factors

Wal-Mart has had a phenomenal success at the US due to a few key factors.

Cost control – Wal-Mart’s key slogan was around offering the lowest prices in the market all year around, making an emphasis on cutting down any competitors’ offer, averaging around 20% less than their competition.

Targeting a neglected niche – Wal-Mart started up by focusing on the customers that everyone else seemed to neglect, the small town shoppers. The strategy was especially successful as it achieved instant market saturation leading to very strong loyalty. This strategy also helped stay below leading competitor’s radar while building up their competitive advantages (distribution centers, etc.) that allowed them to grow bigger into mainstream.

Supplier partnership – Wal-Mart was able to build a win-win partnership with their suppliers while still acting as a very strong negotiator. Insisting on lower prices, Wal-Mart was also working with suppliers to help them achieve those prices by providing them with support and consultancy and going into details to achieve efficiency for their businesses.

Distribution system – Wal-Mart has managed to build one of the most efficient distribution systems in the US. Distribution centers were constructed so that any Wal-Mart’s stores will always have a distribution center less than a day’s drive away and operating its own truck fleet has led to 99.5% on time delivery record.

Employees – Wal-Mart awarded its employees differently, shifting the focus from salaries and into profit-sharing stock based rewards, working to improve the employees skills, trust and involvement by doing constant job shifts and sharing the corporate information with them.

Wal-Mart suggested business model in China

General analysis

Wal-Mart has been through a lot in China and many of the lessons learned are perhaps easier to think about in retrospect, but it looks as if making the key-decisions about the China entry in...