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Essay / International Supply Chain: Wal-Mart Case Study
Before analyzing Wal-Mart's business strategy, it is important to decide in which business sector it operates. For example, if Wal-Mart is in the business of selling consumer goods such as televisions, sheets, clothing, etc., then it pursues a concentric strategy by entering into the food sector. However, this changes depending on how you analyze Wal-Mart's business. Wal-Mart's mission is to sell everything customers need in their daily lives. This includes the consumer goods listed above as well as restaurant items. Despite everything, Wal-Mart is pursuing several strategies. Regarding concentration, Wal-Mart continually finds more consumer goods to sell in its stores, which can take money away from its competitors. Additionally, when Wal-Mart entered the food market, it quickly consolidated and maintained quality, marketable products. Wal-Mart never ventures too far into a market and only sells what will make it a profit. Finally, it can be argued that Wal-Mart is also pursuing a vertical integration strategy. Wal-Mart developed its own brand to sell products called Sam's Choice. This allows Wal-Mart to move into manufacturing products such as soda, cereal and dog food. Even though they don't yet grow their own crops or raise their own livestock, it's still a form of vertical integration. Wal-Mart also works closely with its suppliers. This symbiotic relationship can be considered vertical integration because of the level to which Wal-Mart analyzes its suppliers and improves its manufacturing processes, etc. Wal-Mart definitely has the business strategy of Low Cost Leadership. They do nothing to really differentiate themselves from their competitors and offer no-frills self-service stores that always have the lowest prices. Wal-Mart has gained enough influence with suppliers to be able to dictate prices and change suppliers' manufacturing processes to achieve more and more savings for the consumer. Everything Wal-Mart does, from calling suppliers to having executives double up in hotel rooms, is to save money for the customer. Although they strive to provide good customer service in addition to low prices, Wal-Mart's strength lies in its low prices. No one has a supplier and distribution network like Wal-Mart that allows such low prices. One aspect of Wal-Mart that sets them apart from other companies is how they manage their relationships with their suppliers...