Case Assignment 1: Wal*Mart Stores, Inc.

Issues and Concerns

Done By: David Yong Xiang Wei S8620889Z

1. Ability of Wal*Mart to succeed in supermarket industry It is difficult to predict the outcome of Wal*Mart¶s venture into the supermarket industry especially given the strong performance and dominance of incumbents which begin to introduced larger package sizes as well as private lines in order to compete with Wal*Mart. Additionally, Wal*Mart had to also compete with established grocery chains such as Kroger and Pathmark who had a pervasive network of stores around America, and had set aside a substantial amount to investigate cost-reduction methods ± the primarily strategy that Wal*Mart competes upon.

2. Future of Sam¶s club Another concern is the future and ability of Sam¶s club to succeed in future given the intense competition within the industry, which had forced the chain to cannibalize its own sales by opening clubs close to one another in many markets, rather than give competitors any openings. This in turn raises the question of how sustainable such actions might be in the near future, and whether it is the most effective way to prevent competition. 3. Public discontent and legal issues One huge criticism that has been leveraged against Wal*Mart is that it is forcing local merchants out of business. This may result in negative publicity for the company in a ³David against Goliath´ scenario where the public may choose to support the local underdog companies instead. If not handled properly, it may result in a decrease in popularity for Wal*Mart. Additionally, the company has also been found to be in breach of legal regulations by selling below cost price in different parts of America, and this may open the floodgates to other competitors to bring actions against Wal*Mart if the company does not revise its price structures and continue to engage in such costcutting activities. 4. Price Misrepresentation Wal*Mart has been accused by its competitors, notably Target, of misrepresenting its prices as the lowest when they were often wrong. Although Wal*Mart denies this, it may still bring about a negative public perception that Wal*Mart may be deceptive and discourage shoppers from shopping at Wal*Mart. Clarification, together with substantiated information and research should be publicized in order to correct or prevent any misconceptions. 5. Sustainable growth Overall, one of the hugest challenge for Wal*Mart lies in trying to ensure that the company can sustain its phenomenal success especially in the increasingly changing and dynamic external environment. Whereas it used to learn from the mistake of largesr companies, Wal*Mart has now evolved to be the largest retailing firm in the world ± that effectively means that it has to plan and implement its strategies with utmost care since it has no other examples or precedents to follow.