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International Supply Chain: Wal-Mart Case Study

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Before analyzing Wal-Mart's corporate strategy, it is important to decide what business it is in. For example, if Wal-Mart is in the business of selling consumer goods such as TV's, sheets, clothes, etc then it is pursuing a concentric strategy by entering the food business. However, this changes depending on how you analyze what business Wal-Mart is in. Wal-Mart is in the business of selling everything customers need in their everyday lives. This includes the consumer goods listed above as well as food-service items. Even still, Wal-Mart pursues multiple strategies. Concerning concentration, Wal-Mart continually finds more consumer goods to sell at its stores which can take money from competitors. Additionally, when Wal-Mart entered into the food market, it quickly consolidated and held to good, saleable products. Wal-Mart never forays too far into a market and only sells what will make it a profit.

Lastly, an argument can be made that Wal-Mart is also pursuing a vertical integration strategy. Wal-Mart has developed its own name brand to sell products called Sam's Choice. This puts Wal-Mart into the business of making things like soda, cereal, and dog food. While they still don't grow their own crops or raise their own livestock, it is still a form of vertical integration. Also, Wal-Mart works heavily with its suppliers. This symbiotic relationship can be see as vertical integration due to the level at which Wal-Mart analyzes its suppliers and improves their manufacturing processes, etc.

Wal-Mart definitely has the business strategy of Low Cost Leadership. They do nothing to really differentiate themselves from competitors and provide no-frills self-service stores that always provide the lowest prices. Wal-Mart has built enough clout with suppliers that they can dictate the prices and go in and change suppliers manufacturing processes in order to wring out more and more savings for the consumer. Everything that Wal-Mart does from calling suppliers collect to having execs double up in hotel rooms, is to save the customer money. While they do try to provide good customer service on top of low prices, Wal-Mart's strength is low-prices. No one has such a supplier and distribution network like Wal-Mart that allows such low prices.

One aspect of Wal-Mart that sets them apart from other corporations is how they manage their relationship with their suppliers. We have determined that Wal-Mart is such a dominant force and has become such an important account for their suppliers that they have managed to eliminate Supplier Power. By eliminating Supplier Power, Wal-Mart can pursue achieving their goals and concentrate purely on their Cost Leadership Strategy, which serves the consumer with "Everyday low prices." However, the fact that Wal-Mart is able to disregard Supplier Power begs the question of where exactly does Wal-Mart derive its power? Additionally, if Wal-Mart has nearly eliminated Supplier Power, then what kind of relationship do they have with their suppliers?

In addition to adding products to its stores like musical instruments, Wal-Mart needs to carefully plan further expansion. While most of the US market is already saturated with regular and super Wal-Mart's, there is still room to expand. Wal-Mart still has a lot of room to grow in Brazil. However, they need to be careful about doing this so as to not overextend themselves. If they were to do so, it could send ripples throughout the company, causing them to raise prices and destroy what they have built. Based on of Brazil is very sensitive about outsiders coming in, especially when it is a large chain. Most of the restaurants and stores are either owned or operated locally, and are rather small. Most convenience store "chains" only have one or two stores. Additionally, people like feeling close and maintaining the "ambiance." Therefore, Wal-Mart needs to expand slowly into Brazil so that people can get used to it, just like they have gotten use to it. Also, they need to alter their store strategy and consider opening smaller stores that would fit into the ubiquitous small Brazilian town. When expanding into Brazil, they again need to take it slow. Wal-Mart needs to penetrate the market slowly and do more to help the community in order to prevent backlash.

Finally, Wal-Mart needs to expand further into international markets. Once again the key word is caution since not many countries operate like the United States and Wal-Mart will have a steep learning curve. Wal-Mart should consider pairing up with existing companies when it is possible. This is because they will receive built-in experience and an existing structure.



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