three main generic business-level strategies
Question 1
There are three main generic business-level strategies: Cost leadership, the differentiation strategy and the best value strategy. Walmart focuses on applying cost leadership (Ferguson, 2018). Cost leadership is a competitive strategy that allows businesses to achieve low costs for their products, thus being on top of their competitors. In the retail business, low prices are always the fundamental strategy, because the low process is a way of attracting more consumers, thus generating the desired profit. To execute the cost leadership strategy appropriately, Walmart uses approaches like automation to lower the cost of operation (Picchi, 2019). Automation is the use of technology to replace human labor. Automation does not only save the business the cost of employing workers, but it is also efficient and effective. Some of the tasks or business processes that can be handled by automation are like the managing of the inventory. For example, due to the advanced technologies, Walmart no longer employees workers to count the cash, since there have technologies that can handle the process, thus cutting down the cost of employment.
Over the years, Walmart has continued to dominate the retail market despite having major competitors like Target and dollar stores. Their business strategy of cost leadership has played a significant role in ensuring that the company remains at the top of the retail market. The concept of the company has always been to attract vast numbers of consumers by providing merchandise with low costs in the market (Hanson et al. 2016). Although the company sales its merchandise at lower prices, they manage to get more profits by reducing the supply cost or rather the supply chain. A supply chain is a form of a business network between an organization, and its suppliers for the purpose for production and distribution of the product form the manufactures, to the organization premises and finally to the customer (Hansen & Mowen, 2017). A supply chain can also be defined as the process it takes to get the product from its manufacturer to the end consumer. Walmart stores have been careful to manage their supply chain in ways that ensure they cut operation costs and increase profits. In managing the supply chain, Walmart has improved on its space utilization. It costs a lot of money to store merchandise in warehouses (Ferguson, 2018). If the storage process is not effectively done, it means that the company will have to use a lot of money on the storage space. Walmart has a more effective and efficient storage strategy that reduces the rent, thus cutting one of the high operating cost.
Since Walmart deals with a lot of merchandise, it means that they also have many suppliers, dealing with different products. This means that there is always competition for the suppliers, competing on price (Hansen & Mowen, 2017). By looking for the vendors with a favourable cost allows the company to cut down their product costs. When the company gets suppliers with lower prices, it becomes much easier to apple the cost leadership strategy.
Cost leadership strategy has influenced the major part of Walmart expansion. Due to this strategy, every time, Walmart opens a store in a new town, it puts all small retailers out of the market. Walmart put the customers’ needs first: low prices and products matching the customer’s tastes and preferences. Meeting customers’ needs, especially, with the low process, Walmart has managed to stay on top of its competitors as well as venture into new markets and performing great. Price leadership have enabled Walmart to be ahead of the game by having high-profit rates.
Question 2
There is a lot of competition in the retail market, and thus important for every organization to have a target audience through marketing. There are two major marketing methods. Broad marketing and narrow marketing. Narrow market focus focuses on a small group of people or rather tailoring the goods and services of the organization to attract only a specific group of people. A narrow market focus only targets specific target consumers, when consumers who do not fall on the target audience category do not buy the products and service, the organization does not lose. Still, when they do, it is considered a bonus (Knechel & Salterio, 2016). This is an advantageous marketing strategy because the targeted group already have ties to the product and services, meaning that the market is a guarantee. The major issue arises when the marketing misses focusing on the interest of the target group.
On the other hand, a broad market focus tends to ‘cast the net into the sea and catch as many fish as possible’. This means that a broad market focus target every consumer thus producing higher results. It also means that the organization will focus on products and services that are used by the majority (Knechel & Salterio, 2016). Walmart falls under the category of a broad market focus. Walmart deals with products like groceries, processed foods, furniture, and so much more, the merchandise and the services that are offered on Walmart are those that are needed by every individual. This means that anyone can assess the services of Walmart. Focusing on a broad market have played an essential role in increasing the profit levels of the company.