Walmart’s Generic Strategy
As discussed in Module 2 and Module 3, Walmart’s generic strategy is cost leadership and its low cost has become a sustainable competitive advantage. Please conduct your own research and discuss how Walmart achieved this low cost competitive advantage.
Walmart’s generic strategy is cost leadership. As defined by Michael E. Porter, cost leadership is the generic competitive strategy used by firms whose focus is to achieve low costs. Walmart is considered a cost leader and thrives on this strategy in establishing a strong competitive position and competitive advantage in the retail industry (Ferguson, 2018). Walmart’s advertising slogans, such as ‘Save Money,’ ‘Always Low Prices,’ and ‘Live Better,’ communicate its focus on slashing prices to potential customers. As a low-cost retailer, Walmart enjoys a competitive edge over rivals such as eBay, Target, and Kroger; based on the low prices of its retail services and related commodities.
In retail businesses, the main selling point is low prices. This has been the norm in Walmart’s pricing strategy, where low prices are considered a critical strategic approach to achieving competitiveness and business sustainability. According to (Ferguson, 2018), Walmart employs various cost leadership tactics to maintain low costs and low prices. For instance, Walmart realizes low costs in operations through minimized HR spending and automation, and related techs. Besides, to achieve this low-cost competitive advantage, Walmart focuses on low levels of market segmentation (Nilufer, 2020). For example, Walmart provides its retail services to every customer across all its target market segments. This aligns with Walmart’s mission and vision, i.e., to become a global market leader in the retail industry.
For Walmart to thrive in this generic competitive strategy, the firm focuses on process efficiency, intensive growth approaches, and management strategies that aid in lowering costs (Islami, Mustafa, & Latkovikj, 2020). With Walmart’s strategic goal of maintaining low costs, the company is recognized for large-scale imports of low-cost commodities from countries like China.
References
Ferguson, E. (2018, August 22). Walmart’s Generic Competitive Strategy and Intensive Growth Strategies. Retrieved from Panmore: http://panmore.com/walmart-generic-competitive-strategy-intensive-growth-strategies
Islami, X., Mustafa, N., & Latkovikj, M. T. (2020). Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), 1-15.
Nilufer, N. (2020). Critical assessment on business strategy from aviation to retail industry during COVID-19 Pandemic: A Walmart Case. International Journal of Business Ecosystem & Strategy, 2(2), 8-14.