Walmart Retail Company has always worked around reducing costs for its consumers
Week 1 Discussion
Since its initiation in 1962, the Walmart Retail Company has always worked around reducing costs for its consumers. When Sam Walton began the organization, which would work tirelessly, offering more exceptional services while charging less, his competitors already foresaw a failure (Muñoz et al., 2018). Contrary, the company went public in 1970 as it had already acquired tremendous profit. Presently, Walmart is one of the largest retail industry companies governed by the motto, “Save Money Live Better.” (Blocher et al., 2019). Thus, the company can effectively implement the Cost Management Strategy to propel the success of its operations.
Strategic cost management is adopted by a firm focused on reducing total cost while improving its strategic position (Blocher et al., 2019). The business has to devise ways to minimize the cost of operation and the cost of the goods and services offered to the customers. In this manner, the organization is confident of scaling its profits. This type of management is accomplished through proper comprehension of the firm’s position in the industry and its cost, weakening it, or not impacting it altogether. The company should focus on the cost reduction of the factors that hardly affect the organization. However, there are situations in which a company may be advised to increase the operation cost in some areas that improve its strategic position.
The success of Walmart is extracted by the company’s global expansion efforts and the use of modern technological advancements. The retail industry is also highly competitive, and the organization must continuously improve its competitive edge. Therefore, the organization may consider investing more on technological advancements to aid in faster production (Cooper & Slagmulder, 2017). This is because technology is one of the primary influencers of the organization’s success. Technological outputs are quicker and more standardized, thus attractive to the consumers. In this case, the company will consider cutting costs in some other departments to compensate for the increased spending on technology. In this context, the organization may consider spending less on the HR department, particularly on hiring. This is because the increased use of technology will eliminate the need for more human resources. This governs the organization to reduce the cost of the end products and attract more consumers without necessarily incurring losses.
In conclusion, reducing the prices of products gives the organization a chance to compete effectively in the highly competitive retail industry by lowering costs further than competitors, whereas remaining strategic to avoid incurring losses. This can also be an effective way to defeat Target that bombards the organization with aggressive marketing strategies.
References
Blocher, E. J., Stout, D. E., Juras, P. E., & Smith, S. D. (2019). Cost Management. A strategic emphasis (8th Ed.). University of North Carolina at Chapel Hill.
Cooper, R., & Slagmulder, R. (2017). The role of cost management in confrontation strategy. Supply Chain Development for the Lean Enterprise, 59-70. https://doi.org/10.1201/9780203737873-3
Muñoz, C. B., Kenny, B., & Stecher, A. (2018). Walmart in the Global South: Workplace culture, labor politics, and supply chains. University of Texas Press.