Wal Mart Sustainability Analysis
Submitted by xatmax on 06/30/2008 05:21 PM
- Category: Miscellaneous
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Wal Mart Sustainability Analysis
Wal-Mart has been the leader in the discount retail industry for the past several years. The company was founded by Sam Walton in 1962. His plan was to take over isolated rural areas and small towns. His rules of building a successful business still are used to this day. Some of them are: Commit to your business, Share profits with associates, and treat them as partners, Motivate: back up money and ownership with
interesting work, Communicate: the more employees understand, the more they will care, Appreciate everything your associates do for the business, and most importantly listen to everyone in your company.
Wal-Mart's resource and capabilities have given them a huge competitive advantage over its rivals. They are recognized as: Merchandising, Store Operations, and Distribution Systems. Wal-Mart's merchandise was tailored to individual markets. Information systems made this possible by "traiting" process to index product movements in the store to thousands of other stores. Their advertising and promotion costs were very low when compared to their rivals. Their advertising expense was 1.5% of discount store sales, compared to 2.1% of the competitors. Wal-mart's promotional strategies included: "everyday low prices" policy, "satisfaction guaranteed" policy, and "Buy American" program.
Store Operations
Wal-Mart had lower rental expenses than its rivals. They leased about 70% the stores and owned the rest. Their expense was only 3%, while the average was 3.3%. They built stores that it could expand later. Thus, Wal-Mart built in strategic options. Wal-Mart also kept their inventory costs low. They devoted only 10% of its square footage to inventory, while the industry average was 25%. Wal-Mart spent over $700 million dollars on its satellite communications network, computers, and related equipment. These systems ensured accurate pricing and helped improve efficiency.
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