The case illustrates the expansion strategy of Walmart in China.Overthe period of time, the company has established astrongstance in the global markets,especiallythe US, however its movement into the Chinese market has not been as successful as in the other markets.
This has been primarily due to different nature of the customers and the market along with the different government regulations that support the local businesses and consumers more over international players.
In addition, since theChinese market is different and can compete with Walmart’s EDLP strategy, it is challenging for Walmart tosustain with its value proposition in theChinesemarkets.Insuch asituation, Walmart is recommended to opt theOmni channel strategy, offering the products through online and retail model both, griping the market from both ends. In addition,such will also allow to leverage its EDLP model along with alignment with the changing Chinese customerbehavior, making it a satiableplayer in the market.
Keywords: Competitive edge, EDLP, Low prices, Economies of scale, Walmart
Walmart in China Harvard Case Solution & Analysis
Introduction
Walmart Inc. is one of the leading retail stores in the US.The company started as retail stores and expanded to the different retail models including discount departmental stores and grocery stores. The company has been founded by Sam Walton in 1969, who also holds the ownership of Sam’s Club retail warehouses.
Over the period of time, the company increased in size and pursued the market penetration strategy to capture a big market share in the US. Till now, Walmart has 11695 stores and clubs in more than 28 countries. The company has the world’s largest revenues of $480 billion with the employee base of 2.3 million. The company has substantial market share and sales revenues from the US market and accounts for 62.3 percent of Walmart’s overall sales.
Since its initiation, the company focused on its supply chain functions to manage its cost of operations and to offer price cutting strategy products in the market. In doing so, the company focused on backward integration and forward integration as well so as to have a strong control over the operation and organizational function.
Walmart, in initiating its smart and well-integrated business operations, opened up its own distribution centers and applied the smart supply chain management techniques such as POS and SASS management to manage the inventory.Such techniques and expertise allowed Walmart to manage the inventory cost and the cost stacked up into the inventory. (Sehgal, 2014)
Walmart initiated the Stock keeping unit strategy to manage the inventory effectively and manage the supply and demand curve effectively, making it the world’s largest efficient retail store. In addition to this, Walmart incorporated the technology while managing its functions, such use of technology and advanced supply chain integration allowed Walmart to develop its competitive edge on the basis of its supply chain.
Though till now,Walmart has remainedsuccessful in the US market, however, operating in Chinese market is difficult due to high competitionand strong hold of the Chinese players, that may beatWalmart’s‘everyday low prices’ strategy, makingit vulnerable in the Chinese market, along with the bribery and corruption issuesthat are part of the Chinese and Asian markets...............
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