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Marketing

Essay by 24  •  August 25, 2010  •  1,165 Words (5 Pages)  •  1,746 Views

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All companies compete with one another; they strive for excellence and to be the best. They have to compete with each other to win over markets and to be the one who ends up on top. Most businesses are guided by the maxim "nothing ventured, nothing gained" (Spulber 7). Winning a market requires a company to have an aggressive investment and growth. Although many companies try to keep costs down for the consumer, low costs are not always the solution for every situation. It is generally the Chief Executive officer (CEO) who formulated strategies to connect markets. The CEO has to have the ability to for see the future of the company in order to make intelligent decisions. Wal-Mart was founded in 1962 by Sam Walton, who wanted to make a discount department store, and ended up being extremely successful in his doings. The earnings in one year for Wal-Mart are approximately $4,430,000,000.

Commonly, the winning firm is identified as the firm with the highest sales revenue. There are many winning firms including Wal-Mart for their retailing ability. Wal-Mart stores are the leading retailer with $100 billion in retail sales and is also the leader in profits with $3billion which is much higher then the company with $3 billion which is much higher then the trailing company Sears. The market value of Wal-Mart is more then three times higher then their competitors. Wal-Mart has not only been able to take over the retail market, but they continue to grow substantially. Winning markets, like Wal-Mart result from an effective strategy, a continuous innovations, and efficient organization. Companies that try to have larger firms may not be successful just because they are bigger, a successful firm, such as Wal-Mart is successful because of its marketing ability which draws customers in and in turn the customers spend money.

A secret success of Wal-Mart is its indirect strategies and ways to win markets without running into high costs. Companies like Wal-Mart like to win a market by attacking the other firms weak points. When Wal-Mart is trying to find another company to engage in direct competition, they need to make sure they have a strong playing field on their part so it is an effective challenge.

The primary boundary of a firm is its scale. "Firms often define themselves in terms of size, usually quoting the annual value of sales which provides an indication of total output per year" (Zikmund 53). Market share really isn't an indicator of current or future profitability; however, firms try to be the market leader in terms of sales so they can achieve a competitive advantage. "In addition to having the largest sales, firms also need to offer a greater product variety then its rivals" (Spulber 55). Not only are there many competitive advantages, for offering consumers more choices, but there can be cost advantages as well. Wal-Mart takes full advantage of economies of scope and in distribution. Wal-Mart superstores take advantage of economies of scope by spreading their store operation costs across products. Since Wal-Mart had over 50,000 items to offer the company spreads the cost of a computerized distribution system over twenty state-of-the-art regional distribution center. Wal-Mart had a satellite communications system that is able to respond to customer demands and can provide detailed information of sales to the companies suppliers.

The span of a company is also something that is very important. "The span of the firm is a crucial aspect of the way in which the firm defines its activities" (Spulber 57). A characterization of the firm as a service company, manufacturer, wholesaler, retailer, or integrated manufacturer distributor refers to the span of a firm. The companies choice of its span is a vital component of its strategy, Economies of span are able to stem from a lot of different sources, including operating costs reductions, securing reliable suppliers, or assuring reliable distribution resulting in transaction cost savings. Larger firms are able to achieve benefits from economies of span easier then smaller companies. Wal-Mart moves most of its products through a distribution system so that it is like a "vertically integrated" wholesaler and retailer.

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