Competitive Strategies and Government Policies Paper on Wal-Mart ECO/365
University of Phoenix
Week 5, Learning Team Assignment
March 18, 2013
Management has recognized the effect of changes in the real-world competitive environment and government policies on other industries and anticipates similar events occurring in their industry, so they ask you for a report considering the following points.
Write 1,400 – 1,750-word paper of no more than in which you describe how each of the following are or potentially will affect your industry or one with which you are familiar:
New companies entering the market, mergers, and globalization, on pricing and the sustainability of profits: Identify the type of merger activity in your industry or one with which you are familiar–horizontal, vertical, or conglomerate–and explain why you made that choice.
Current and expected government policies and regulations, including taxes and regulations in place to address issues related to externalities
Global competition on the decisions made by management with regards to change in labor demand, supply, relations, unions, and rules and regulations in your chosen industry
Recommend how the industry you chose may respond to each of the previous points.
Format your paper consistent with APA guidelines.
Competitive Strategies and Government Policies
Wal-Mart is a giant of the retailing industry yet is not immune to the pressures of globalized trade, supply, and competition. Wal-Mart’s profit sustainability is always ‘in doubt’ unless it continues to fight off various competitive conglomerates or large size retailers such as Amazon and Target. Mergers on the scale of Wal-Mart are rare yet the marketplace shifts based on the continued expansion of physical and online retailers like Amazon and Amazon’s many partner/provider organizations. To stay ahead of the various operational and governmental threats, Wal-Mart’s focus is on maintaining their low cost leadership. Wal-Mart continually advertises their prices to be substantially lower than their competitors. The truth is, most Wal-Mart items do not have a drastic price difference. However, the difference is Wal-Mart’s ability to slash prices on many popular items every so often to maintain the ‘low price leader’ image. This has helped the retail giant maintain the number one retail spot over the past decade. This perception has also kept shoppers out of small businesses and other retail chains, giving Wal-Mart that competitive advantage of continuing to slash prices after moving most of their inventory.
Wal-Mart perpetuates the image of possessing low unbeatable prices. They flood the airwaves with advertisements of local store promotions to keep the Wal-Mart name fresh in the buyers mind. This is how Wal-Mart continues to have competitive advantage. Retail giant Kmart failed when consumers felt they were no longer receiving the best prices and deals. To avoid this same fate, Wal-Mart continually must reach out to its vendors and suppliers so that they can cut prices whenever needed. Wal-Mart’s global purchasing and financial capability is a clear advantage in the market. As demonstrated in 2005, Wal-Mart began and won a pricing war with the most popular toys, directly hurting toy giants such as Toys-R-US. It marked 10 of its most popular toys for 10 dollars each. Wal-Mart uses these tactics to get consumers, once in the door, to purchase other items running at or about the same price as other retailers.
Wal-Mart continues to work with countless numbers of vendors and partners to produce and develop goods in its stores. Wal-Mart has also successfully capitalized in marketing their own brand of products known as Sam’s Choice and Great Value. These are generic versions of name brand products also sold in the store. Sam’s Choice brands are typically lower in price than the name brand version. Having its own brands allows Wal-Mart to cut prices even lower and make...
References: Colander, D. C. (2010), Economics (8th ed.). Boston: McGraw-Hill/Irwin
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