A case study on Walmart

1. Walmart stores’
discount operations-
Case analysis
Group-2
Ashish Dhand (19DM245)
Olivia Mukherjee(19DM129)
Pulkita Vyas (19DM147)
Romani Banerjee (19DM167)
Sourabh (19DM187)
Shreyansh Singh (19DM206)
Tanveer Ahmed(19DM225)

2. Let’s get to the bone- Case summary
The following case study profiles the company's major
diversification move in the early 1980s.Wal-Mart’s
business model has been examined in terms of its
potential success for entry into emerging markets. The
company’s supply chain management and its strengths
as a retailer for strategic manufacturers have been
examined along with drawbacks that the company has
in its supply chain network. This case study facilitates
a discussion of the sources of Wal-Mart Stores'
competitive advantage in discount retailing, and the
future sustainability of that advantage.

3. Key sources of competitive advantage in
discount retailing for Walmart
First mover
advantage
Distribution
network
Operations Marketing
Human
resource
policies
Effective
administration

4. Is Walmart’s
competitive advantage
sustainable enough?
Sustainable because of-
• Geographical Monopoly in untapped areas, establishing first mover advantage :
-One third of WM’s stores were located strategically claiming 10-12% of total retail sales.
-Large store spaces of upto 30000 sq. ft. in sparsely populated towns
• Unparalleled Store operations,Seamless Distribution, Vendor relations and JIT Strategy:
-36 merchandise departments, inventory turns of over 4.5, computerized inventory stocking
-Uniform Product Code system in all stores by 1988
-Didn’t take more than one fifth of its volume from one vendor (less than 2.8% of total
purchase)
-Just in time stock replenishment using centralised systems linked to vendors

5. Marketing Theme : “We sell for less”
-High sales from price sensitive categories- health, beauty aids, homeware and appliances.
They sold the concept of low prices (10.4% lower than K-mart but 7.6% lower than Target)
-CAD for merchandize suggestions based on 100 factors
Employee Relations: “We care about our people”
-Profit sharing and several other incentives to satisfy employees, store managers comes
from WM’s pretax profit
Combination of operational effectiveness and Strategy makes WalMart’s Competitive
Advantage Sustainable

6. Walmart’s wholesale club Vs. discount store
Parameter Discount store Wholesale club
Pricing EDLP 20% less than conventional discount
stores
Market share Market leader Market challenger after Price
Company
Requisite for business No requisite as such Very large population for selling
products with low margins and high
volumes. Only 100 metropolitan
areas in the US.
Threat/ Unpredictability Market leaders. Well
established.
Threat of new competitors entering
the market like Greenville and South
Carolina.
Membership requirement No membership required Annual membership required
Volume of demand Sales is irrespective of the
volume of demand
High volume sales
Payment Instant payment Credit period of 30 days

7. FIN.