Wal-Mart, 2007 Case Analysis
Re-Aligning the Marketing Strategy for Greater Relevancy
5 Figure 1: Wal-Mart Segmentation Strategy
Figure 2: Customer Segment Loyalty Analysis
Human Resources Lack Compliance and Governance
Figure 3: Wal-Mart’s Chain of Command
Ethnocentrism Rampant In Global Growth Strategies
Competitive Strategies must get Beyond Price Wars
Figure 4: Big Box Retailing Market Shares, 2007
Responding To an Emerging Recession
Figure 5: Comparing Store Statistics
In applying the Porter Five Forces Model to this industry, the following insights emerge by area. Figure 6, Porter’s Five Forces Model, provides the theoretical structure for the analysis.
31 Threat of New Entry
Threat of Substitution
First Alternative: Heavy Investment in Merchandising and Marketing to Increase Same-Store Sales
34 Second Alternative: Increase process-related and IT investments, including RFID in the Wal-Mart global supply chain so aggressive pricing can be pursued.
34 Third Alternative: Enable Global Market Growth by capitalizing on analytics, merchandising, supply chain and technological expertise.
Figure 8: Wal-Mart Value Chain Analysis
Wal-Mart faces a daunting series of challenges beginning with the need to refine and strengthen its core marketing strategies in the U.S., resolve Human Resource compliance violations, and learn from failures to expand globally and to be successful in China and India. In addition to these challenges, Wal-Mart faces stiff competition from competitors who are growing in strength and marketing expertise both in the U.S. and in the world, including confronting a growing global recession. These challenges are made more urgent by the slowing revenue growth and expansion of Wal-Mart both in the U.S. and globally. With the board of directors being given the commitment of 7.5% growth globally and 7% US market growth after the company had achieved 10% growth in preceding years, the need for capitalizing on the company’s core strengths is turning into a strategic priority. While the Low Price Every Day (LPED) value proposition has been changed to Save Money, Live Better, Wal-Mart still faces the daunting challenge of becoming relevant in high growth economies of China and India where the company’s core message does not resonate at the level it does in the U.S. Compounding this is the fact that the customer base Wal-Mart relies on in the U.S. is having their incomes squeezed by an oncoming recession and the company must first find how to increase same-store sales if the goal of at least a 7% growth is to be attained. The intent of this analysis is to provide recommendations regarding how to refine Wal-Marts marketing strategies, Human Resource (HR) management , increase the potential for success from global expansion efforts, while competing profitably and alleviating the effects of a recession that threaten the company’s marketing strategies. Challenges
The five strategic challenges that Wal-Mart faces are first getting their U.S. marketing strategy better aligned with their core market segments; second, develop more effective governance and compliance in their Human Resources (HR) functions; third, develop more effective international growth strategies based on lessons learned from failures in Germany and Korea; fourth, develop a more effective competitive strategy against Target and other big-box retailers; and fifth, develop contingency strategies for managing the company through the beginning of a global recession. Each of...
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