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Background Historical competitive advantages and its sustainability Whether its business concepts work in HK & China Recommendation to Wal*Mart to sustain its growth. Wal*Mart. First established as a self-service discounting store in 1962 by Sam Walton - PowerPoint PPT Presentation
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Background Historical competitive advantages and
its sustainability Whether its business concepts work in
HK & China Recommendation to Wal*Mart to sustain its growth
Wal*Mart• First established as a self-service
discounting store in 1962 by Sam Walton
• Formats:
Warehouse Supercenter Hypermarket Close-out store
Wal*M art
Wal*Mart• Major competitors:
TargetKmart
At the end of 1993: No.1 of the top 50 Discount Department store - Market value: 57.5 billion - Sales per square foot: $300 (the industry average is $210)
• Phenomenal success:
Everyday-low-prices Commit to customer service
Maintaining technological superiority
Building loyalty among associates and suppliers
Business strategies
Wal*Mart
Automative
Health &beauty aids
Stationery
Sporting goods
Paint &hardware
Household chemicals & consumables
Food
Home hardlines
Product Place Price PromotionProduct:
Place:
- pattern of expansion: -pushing from the inside out
Rural areas Small towns
Product Place Price Promotion
Product Place Price Promotion • Price:
- Between 1992-1993: - 2.2% below Kmart - 3.7% below Target
“Always low prices-Always”
Product Place Price Promotion
• Promotion:
- few promotion: - advertising expense: 1.5% of sales (while 2.1% for direct competitors)
“Everyday-low-prices”
Why Wal*Mart could succeed?Why Wal*Mart could succeed?High Responsiveness and Flexibility
Innovative Strategy
1. Changing Customer DemandFlexible shelf space allocation
Private label lines2. Changing prices
“Always low prices, always”3. Technological Change Heavy investment in information technology
Discount stores -> Supercenters
Wal*Mart’s StrategyWal*Mart’s StrategyLow Cost Differentiatio
n
Industry-wide CostLeadership
Differentiation
Single segment Focus
Key Source of Wal*Mart’s Key Source of Wal*Mart’s Competitive AdvantagesCompetitive Advantages
Successful VendorRelationship
Efficient Communication
Network
Value Employees Most
Efficient Operation Management
LOW PRICELOW PRICE
Customer-Oriented
Direct Factors to Low PriceDirect Factors to Low Price
Lower Land RentFew Promotion
Sustainable?
Successful Vendor RelationshipSuccessful Vendor Relationship•No-nonsense negotiator Efficient Purchasing
•Partnership with suppliers eg P&G- -Sharing information electronicallyEfficient communication
•Vendor-managed inventory systems eg Wrangler & GE Minimize inventory cost
LowerCost
Sustainable?
Efficient Communication NetworkEfficient Communication Network•“There are no superstars at Wal-Mart”
•Combined informal Entertainment with business
•Sharing the numbers
BetterCommunication
LowerCost
Sustainable?
HigherProductivity
Value Employees MostValue Employees Most•“Yes We Can Sam” suggestion program
•“Store within a store”
•Shrinkage incentive plan
•Management Training Program
•Profit Sharing Scheme
LowerCostMotivation
HighProductivity
Sustainable?
Efficient Operation ManagementEfficient Operation Management•Distribution Network-Hub-and-spoken distribution network
-Owned warehouses-Cross-docking
•Operating system-Uniform Product Codes (UPC)
-Satellite system
HigherProductivity
LowerCost
Sustainable?
Customer -OrientedCustomer -OrientedNo. 1 Boss – the customer
People Greeter
“Satisfaction Guaranteed” policy
Loyalty
Sustainable?
The Applicability of Business ConceptsThe Applicability of Business ConceptsBusiness strategy Work /
not In HKWork /not In Chinalow price
successful vendor relationshipefficient communication networkvalue employees most
efficient operation managementcustomer oriented
Low Price Low Price in Hong Kong
in China
• Land rent
• Land rent
• Promotion
• Promotion
Successful Vendor RelationshipSuccessful Vendor Relationshipin Hong Kong
in China
• 2 dominant supermarkets
• compete with established competitors
Efficient Communication NetworkEfficient Communication Network
In Hong Kong
In China• flat organization
• information sharing
Value Employees MostValue Employees Most
In Hong Kong
In China• payment system
• programming
Motivation+
incentive
Efficient Operation ManagementEfficient Operation Management
In Hong Kong
In China• operation system• shrinkage• distribution network
In Hong Kong
In China
Customer OrientationCustomer OrientationIn Hong Kong
In China• provide subsidiary services
• customer = the boss
The Applicability of Business Concepts?The Applicability of Business Concepts?
In Hong Kong
In China
Technology:- Join forces with a well-known Interactive
Service Provider(e.g.AOL) to bridge the physical and virtual world.
1. Maintain and reinforce Wal-Mart’s core competitive advantages.
2. Growth Strategies:
Advantages:(1) Global Promotion(2) Cost saving
(3) Customers Serving i) By setting up searching engine ii) By providing personal online services iii) Could listen to consumers’ opinions promptly
(4) Facilitation on operation management
Culture:- Change core values in different countries. E.g. Hong Kong
Formats: - Increase the number of supercenters
Conclusion: 1. Catch up the trend of e-commerce2. Reinforce Wal*Mart’s core competitive advantages.3. Adopt changes when necessary
Thank You!
THE ENDTHE END