Strategy Clock Bowman’s strategy clock offers effective framework to evaluate and determine the company’s competitive status by means of using various options. These options are classified into eight parts namely: low added value, low price, hybrid, differentiation, focused differentiation, increased price/standard, increased price/low value and low value/standard price. Wal-Mart offers price 15-20% lower than others with the same products which we can see in their website. (walmart.com) According to appendix 1, the company is obviously in stage 2 which is perceived added values is middle and price is low. What made Wal-Mart set such a low price and earn low profit margin or even suffer a loss? This is one of their strategies to beat competitors. When they become a new comer to enter a new market, they will set up a number of stores in different location like China, they have been opening over 100 stores in different provinces. For such a well established company, by earning from economy of scale, Wal-Mart could set the price lower than competitors to earn a great deal of market share which is extremely significant to a new entrant. After a period of time, most of the small store would suffer from a loss because they could not compete with a big company. Therefore, it is the reason behind that Wal-Mart positions itself as a low price status.

the products they are selling are almost the same. Cost-leadership is a key to become leader in retail market. Therefore. Traces of cost leadership are noticeable in the value chain of WalMart. While many businesses have attempted to make this claim. China. if the new comers set a common price that competitors does. "Wal-Mart built the distribution center first and then spotted stores around it. the significant factor to determine if it will be successful is price.com/term_paper_topics/2008/07/ryan-airs-ansof. few have delivered like Wal-Mart. in order to attract loads of customers from everywhere. Wal-Mart expand the business to many countries like Mexico.S. Cost-leadership Low cost leadership helps Wal-Mart to attract a large chuck of consumers despite stiff competition in the industry. Wrote Camerius (2004).html Product-Market Growth Matrix Market penetration occurs when a company enters a new market with current products.http://ivythesis. they are still producing the same products to all over the world. however. Therefore. they could easily become a giant and pull competitors out of this industry. pooling advertising and distribution overhead" 2/A second strategy that Wal-Mart has pursued has been everyday low costs for customers.typepad. therefore. Despite the style of operating a supermarket might be varied in various places. in order to expand internationally. Price might not be the first priority to make purchase in customers' mind. The element that could support the low price status of Wal-Mart is cost leadership which the format has well been established in U. Germany. customers will see no reason to buy the new brand. Wal-Mart is known to negotiate with suppliers for the lowest cost of the product without any frills and marketing expenses which adds to the cost. . It is relatively easy for an internationally renowned company to gain competitors' market share since the products are more guarantee and customers will believe in your brand. 1/One of the biggest innovations that Wal-Mart has introduced was in having a flexible regional warehouse system. Wal-Mart saves costs by holding stocks for less than 48 hours in its inventory. The relationship Wal-Mart is an international brand that expand to different markets with same products. market penetration and low price status should use together. Most Wal-Mart stores are within a six hour drive of a Wal-Mart warehouse.

Ansoff. To conclude. These competitive cost advantages translate low price to customers. The competitive advantages of low cost induce customers to pay attention on and buy in there. Strategies for Diversification. customers will associate Wal-mart with low price which could easily be the selling point as a new comer. Strategic management: An integrated approach (C374-C385). it will be much higher potential for customers to switch their choice to Wal-Mart. Hill & G. If some company only adopt market penetration strategy to expand internationally foreign customer might not be attracted by the brand.. Looking at consumer research. warm colored carpeting. I. 35 Issue 5. Further. as what Wal-mart is selling are necessities which is not focus on differentiation. Wal-Mart could be able to use low price strategy to apply all over the world. As a result. (2004).). MA: Houghton Mifflin Company. if it matches with low cost status. The stores are known for having friendly greeters. Wal-Mart has built stores with wide aisles. when they expand internationally.: Strategies for dominance in the new millennium.113-124 . In C. 3/ A third area that Wal-Mart has used to maintain a cost leadership has been designing stores based on consumer studies. Vol. Wal-Mart uses brown papers bags rather than plastic bags in some instances. Inc.W. and smiley faced store displays. Sep-Oct 1957. this two theories are perfect match for company which attempt expanding to foreign country. J.Rather than have a few loss leaders on sale every week. pp. with the back up of cost leadership strategy. Harvard Business Review. This then allows Wal-Mart to avoid costly weekly advertising in newspapers. All of these store designs have resulted from Wal-Mart heeding consumer studies. Wal-Mart attempts to keep all items in the store cheaper than competitors. Camerius. Jones (Eds. customer might think there is no difference whether try the new brand or keep consuming in existing supermarket. Customers know that all Wal-Mart items are always on sale. However. Boston. Wal-Mart Stores.

After the wrong application in Germany and Korea. zealous inventory control and a large array of merchandise — did not transfer the same utilities to Germany and South Korea whereas' already established their own discount chains and customers with different habits. Wal-Mart implemented the success formula .low prices. Irwin. and Faulkner. At last.edu/%7Emeiklemr/doc/capstonepaper. (http://74.Bowman. Wal-Mart has found the similar culture of shopkeepers and .146. they are hard to compete with rivals head to head since the low-price strategy is not as appealing as in U.intl=hk&sig=2KLDfvdu_2GT kmO9v3_plw-- 2/ After the first expansion in Germany.132/scholar?q=cache:LujV9KCd2CYJ:scholar.155.slideshare..doc&w=walmart+%22wal+mart %22+china+chinese+five+forces&d=C1Fq6rZfVAp4&icp=1&.127/search/cache?ei=UTF-8&p=walmart+china+five+forces&meta=rst %3Dhk&fr=FP-tab-web-t&u=www. Wal-Mart did not learn from the failure which still adopted the American style to other countries with different cultures. Wal-Mart tried to match the local culture and buying behaviour in China.plu. Wal-Mart. Competitive and Corporate Strategy.net/Mrirfan/wal-mart-strategy-analysis http://74. http://www.google. D. C.S. like the Aldi chain in Germany and E-Mart in Korea.com/ +walmart+success+in+china&hl=zh-TW&as_sdt=2000)In addition. they pull out of Germany and South Korea in 2006 and started to look for some countries where people are more price sensitive-China.6. due to the inability to compete with established discounters. 1996.125.

a line with giant posters of attractive Asian women with extreme makeovers. Wal-Mart adopted Globalization strategy to set up business in Germany and Korea which neglecting the unique local culture. or even killed in front of them. The internationally renowned selling point of Wal-Mart is providing low price product with fair quality. installed fish tanks and began selling live tortoises for turtle soup.pdf) Wal-Mart is growing up with China's middle class. Starting with food. (www3. Wal-Mart's stores have added cosmetics counters inside the front door. with the exception of ice-cream and dumpling that need to be frozen. where the big retailer has lost $1 billion. they do waves of research in order to deeply understand the Chinese culture. but also promoted electronics and space-saving household devices. WalMart not only sells popular Chinese decoration like Black Chicken (Charcoal colored chicken).com/&hl=zh-TW&as_sdt=2000) All seafood is alive that customers could have their choices by grabbing the most fast-moving ones which style is similar to market. Wal-Mart produces various products to match local characteristics. Shoppers turned up their noses at what they saw as old merchandise. Wal-Mart changed its strategies from globalization to localization for expanding in China. they put all the living seafood in front of Chinese in supermarket and let them choose the best one. as a result. Therefore.155.132/scholar? q=cache:mw9EvepCJcYJ:scholar. Wal-Mart began displaying the meat uncovered. Wal-Mart is fail to meet the local needs.babson. Originally.125. . there have established lot of stores which totally understand the local culture and buying behaviour in Germany and Korea. which Chinese insist be freshly harvested. When it expanded the first Chinese store in 1996. This produces a great opportunity for Wal-Mart to expand their product line by attracting the growing middle class to buy non-necessities since they will have much more spare money comparing with before. also they display the meat uncovered to let Chinese totally understand the whole process of handling the foods. However. The major reason to determine the success or failure depends heavily on the expanding strategy. In contrast. They offer a good match to tastes and preferences in China. Other from food. almost all foods are fresh. Wal-Mart was trying to sell them dead fish and meat packaged in Styrofoam and cellophane. Although global standardization is much more cost effective. Portable closet and folding chairs are significant to suit the urban Chinese home which reach the maximum of 750 square feet. Today. which is expected attain 200 million by 2015.bargain hunters in China. mayonnaise and pork dipped bun.edu/centers/retail_intelligence/upload/wal_mart_china. For example.google. Wal-Mart didn't offer any unnecessary luxury like cosmetic product. consumers are pushing retail sales to a 15 percent annual growth rate and market will hit $860 billion by 2009. (http://74.

Argentina's Carrefour. after a decade of ingratiating itself to Chinese consumers by adopting their customs and culture. Argentina The biggest competitor in Argentina is French Carrefour. As a new foreign company. Furthermore. they should learn how to improve the flexibility of the strategy and match different characteristics of different countries. Therefore. Carrefour had operated for about 15 years and had 14 stores in Buenos Aires. which is the . By the time Wal-Mart have only four stores. Japan and Korea case will be used to further elaborate how keen competition will influence Wal-Mart severely.html It was a tough time for Wal-Mart.com/college-and-university-articles/walmart-argentina-116672.S. 3/ A/ keen competition Tense competition must undoubtedly be the one of the main challenges for Wal-Mart. in order to occupy high market share may become a hard task for Wal-Mart. Wal-Mart offered low prices and waves of discounts to Argentinean consumers as usual approach they used in U. Korea Korea is fairly mature market and there was a local company called Emart. To cite some examples. Wal-Mart is making its move from a minor player with just 3. Each of these European companies entered foreign markets long before Wal-Mart did. And now. Carrefour had already built stable relationships with suppliers and even tried to persuade the latter to refuse working with Wal-Mart. and two Sam’s Club in Buenos Aires region which is the largest region that subsequently has the largest number of potential buyers. Holland's Royal Ahold and Germany's Makro. two Super centers. Argentina.They do have learn from the past and improve the strategy. The well established local and foreign companies understand the local culture deeply as well as provide what locals actually need based on the buying behavior. "Carrefour reacted immediately by opening new stores and rejecting Wal-Mart’s discounts and advertising campaign. etc." http://www.articlesbase. However.1 percent of the market to a dominant force.

Some advise the company to pull out from Argentina and some other countries but just focus on the most successful place . Japanese likes sashimi as we all know. they like to have fresh produce." 116672.articlesbase. However. Wal-Mart’s market share of organized retail was 4% and the combined market share of the two biggest players was 22%. the globe standardization did not match the Japan style.1 billion .S. market and others. due to the Wal-Mart format did not regard it as a must in U. Emart warned Wal-Mart that this is a very local industry and it doesn’t matter that you are the biggest retailer in the world – we are the biggest retailer in Korea. "In the Japanese consumer mind. On the other hand. shoppers associate low prices with low quality and doubt if jeans can sell for $10. Japan Shoppers generally believe Wal-Mart offer 15%-20% discount less than others shop but with the same products. http://business. WalMart at the start in Argentina controlled 2. However.5% of food market comparing to 16.html) It shows lack of flexibility and knowledge of Wal-Mart because the statistics shown it is rare that consumers just went out shopping for food will also buy the non-food products.S.in. "Japanese customers are not price sensitive as U. Wal-Mart made an acquisition offer to Emart which Emart rejected.and that can be a problem. a principal at management consultancy A. Seven years later they sold their stores to Emart and got out.com/college-and-university-articles/walmart-argentina- . according to a Citigroup report. However. in Tokyo. Wal-Mart entered as a small player and could never become big. Wal-Mart is just expected to capture 3% of the Argentine retail market by 2008 with estimated sales of $3. Kearney Inc. Argentina "Argentinean consumers spend one close to one third of their incomes on food items. () (http://www. As a result. In 2007. Wal-Mart did nothing to match.market leader.5% of not-food products.T. Most of the local and foreign company changed the format from hypermarkets to smaller stores that would suite strange cultural desires of the native population." says David Marra.com/article/magazine-extra/walmarts-strategy-through-the-world/6042/1 B/ Cultural difference Wal-Mart ignored the cultural differences between the U.United States. they're seen as selling cheap stuff at cheap prices -.S customers. In Japan.

Therefore. however. services and labour around the world. Being the giant retailer in most countries. Striking balance means understanding and consideration of which business part should be tailor-made for specific country. mass production may not be as effective as Wal-Mart doing in U. Wal-Mart might encounter dilemma that strategy should be more localize or globalize. Wal-Mart should have taken seriously cultural differences prior to entering foreign market. The key selling point of Wal-Mart is providing cheaper product with acceptable . they decided to adopt the current method to apply all over the world. suppliers. it may cost a lot when Wal-Mart do research nonstopping years by years on the buying behavior of foreign customers. hire several local employees for understanding local culture easier and faster. Since what Wal-Mart is selling are necessities and they are cheaper than others in the retail market. etc. the fixed cost will graduate be lower if Wal-Mart still keep on the track and earning over billions profit a year. and how much of an impact they will have. since the huge costs of localization come from research cost which regarded as fixed cost. are not the same. customers will still be loyal. Nevertheless. Wal-Mart thus could enjoy the economy of scale. it will be much harder for them to lower costs when products. Initially. Globalization makes everything standardize and united. Wal-Mart did not bother doing that. It is extremely difficult to compete that way. For example. goods. this could recognize as a longterm investment 4/Balanced scorecard a/ Financial perspective 5/ Strategy evolution Globalization is a process which entails the free movement of capital. how costly customization would be. distribution system. due to the reason Wal-Mart see how successful they operate business in U.S. Undoubtedly. plus inflation can not be avoided.Most of European retailers that operate in foreign countries long time ago started to change the format to suit different needs and culture. Global standardization could reduce the cost as economy of scale can be attained.S. Excess localization will lead to ballooning costs while excess standardization can bring stagnation.

the buying behavior is different from American.. for instance.00. +and+a+lack+of+leverage+with+local+suppliers&source=bl&ots=lHI2337kSV&sig=5bteOp FrzMZkQQJg48yHS307ocM&hl=zhTW&ei=80ArTJy4AsuecY3B7ZgD&sa=X&oi=book_result&ct=result&resnum=1&ved=0C BgQ6AEwAA#v=onepage&q&f=false)Such as the poor infrastructures. Globalization seeks rising the profitability and cost reduction. the company attempted to apply the old formula all over the world. Global standardization strategy a/ Mexico Mexico is the first internationally expansion for Wal-Mart in 1991. mass production is the key element to determine if they could keep offering lower price to public. In the very beginning. meat. the costs increased and products could not be sold at a lower price as usual.de/dw/article/0. it seems feasible for such a huge company to adopt this strategy. however. for example.S style method to Mexico. As a result. (http://books. and a lack of leverage with local suppliers caused the delivery of product could not be distributed to Wal-Mart stores. tortillas and a small volume each time since they usually do not own a large refrigerators and car which are huge differences that Wal-Mart did not realized. Also. "Employees were forbidden. crowded roads.google.S .dwworld. Wal-Mart's American managers pressured German executives to enforce American-style management practices in the workplace. in order to stabilize and strengthen this advantage.S.com.2112746.html) When it comes to American. Workers were also told not to flirt with one another. Wal-Mart as a U. Wal-Mart started to put more efforts and resources on research and development and marketing activities in order to fit in different places. Most of the Mexicans like to buy fresh foods like fish. the company offer 15-20% discount while other company keep the original price. each place does have the unique culture and customers are not ideally the same. The distribution system was being replicated due to the unexpected differences and poor condition of Mexico. From the prospective of culture differences. Mexico and Germany case will be used as an example for interpretation. Wal-Mart attempted to use the U. Therefore. B/Germany Wal-Mart adopted American approach in Germany operation which they only focus efforts on the growth and return on investment strategies. from dating colleagues in positions of influence. After the success in U. Unfortunately.hk/books? id=Sy8vejqbcocC&pg=PA140&lpg=PA140&dq=poor+infrastruture. we must think of friendly and nice.quality. Therefore.+crowded+roads." (http://www.

S format. Wal-Mart leant from those mistakes and take action on putting more recourse in researching in order to understand the local culture. China As mentioned before. Fortunately. 6/ Expanding internationally offers numerous advantages to Wal-Mart.php?id=13969) It is not feasible to force a business model onto another country's market just because it works well in your own country. cost control is needed to take care of simultaneously. "Through the use of the Retail Link software program. the successful international expansion could bring a lot other than profit to Wal-Mart. The solution is match with the local taste and adopts the changes that found out from the research on the cultures even it is ridiculous to your own view. the Wal-Mart retreat from Germany is expected to cost it about $794 million euros. Wal-Mart currently has made customization the “Store of the Community” strategy. (http://www. . which tailors formats and products to the local customers. WalMart can now work with its suppliers to tailor store merchandise with precision. Transnational strategy This strategy faces both strong cost pressures and great pressure from local responsiveness."(walmart. Wal-mart decorated their store to be more “market” in China. Under this strategy. After several fail expansions in foreign countries. Ironically.com) Although the profit might be getting lower since Wal-Mart could not enjoy as much as economy of scale when comparing with the globe standardization strategy.company requiring sales clerks to smile at customers which represents politeness and willing to serve every time. Furthermore.corpwatch. and track the two year history of every item’s daily sales in every Wal-Mart store. they open new cosmetics counter which recognize as not necessity in Wal-Mart to meet the demand in China.org/article. Wal-Mart expanded into China with more responsive in concerning the different culture from U. Wal-Mart is not stubborn that never change the U. the company has to concern more about the local needs and response other than globalization.S. due to the increasing number of middle class. At last. this practice made some male shoppers seen as flirting and scrapped the morning Wal-Mart chant by staff members. For example. Keeping the foods fresh and displaying in front of customers. create maps of local customer demand.

avoiding the number of rivals which will share out the profit. Not only does it get its products cheaper. like what they buy the most and the least enables the company spread its best practices across other branches as references. the amount for such a big chain store . b/ Bank Loan Since the reputation of the company will be increased if they expand internationally. Advanced distribution channels are efficient for lowering price. Declining unit costs discourage firms from entering the market since new comers must do so at a large scale. “its size allows Wal-Mart to do its own purchasing more efficiently since it has roughly 5. the size of company provides it with efficiencies which uses to lower costs. also.com/items/888341-how-wal-mart-really-works) Furthermore.S. competing firms will seek to become larger to try and minimize the role of economies of scale. thus it could set technological barrier for firms that want to step in this industry. This enabled them to restrict inventory at the same time keeping opening stores.com/classroom2/printlesson. Wal-Mart's scale requires any competing firms to have plenty of capital as they will face plenty of sunk costs.com). “Wal-Mart installed a new barrier to entry when the firm developed its electronic data interchange system that improved communication with suppliers and distribution centers and improved inventory control. Though economies of scale provide a distinct competitive advantage.” (http://news. the acquisition of information concerning the preferences of customers in U. The company's large advertising campaigns put pressure on competing firms to try and match those expenditures in order to appear competitive. but its size allows it more inexpensive distribution. (http://www.” (Walmart. For example.asp?docId=144752&CN=COM)This gives the company powerful bargaining power with its suppliers.morningstar. since they have waves of branches in different countries if they expand internationally.” (walmart. This is why Wal-Mart has to continually innovate and seek out new competitive advantages. “The company developed the ability to distribute its merchandise from a vast network of distribution centers served by a private truck fleet. This make the entry barriers become larger.helium.com).000 large stores worldwide.a/ Economy of scale (Create entry barriers for new comer) Being a dominant company in retailing.

c/ share ideas d/ Risk diversification .

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