Firm management strategies highly depend on resources and facilities as a measure of economical expansion. Supply chain management depends on progressive and efficient production and distribution. The main driving forces of Wal-Mart supply chain stores involves working around reasonable costs to ensure customer’s satisfaction at all times, especially during the market fluctuation periods like the 2007 international financial crisis.
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Wal-Mart offers innovative dimensions to remain competitive in the market by introduction and delivery of dynamic and technologically high-quality inventories into the market at sustainable costs. Management of cost also enables the firm to build a vision or goal through recognition of performance break and thus narrow the competitive gap through the utilization of available resources.
Ethically the firm’s successful supplies to cover demands indicates that the consumer should not be kept waiting after ordering, and this is achievable via proper balancing of resources to meet demands (Lambert, 12).
The strategic plan can engage the internal study through SWOT (strengths, weaknesses, opportunities, and threats) analysis. The Wal-Mart supermarket industry today enjoys wide opportunities and strengths over competitors as indicated by its constant international growth of customer base. It’s market growth gets support from effective management strategies.
The 2007 financial crisis caused a change in consumer trends/behaviors due to a lack of confidence. However, 2008 found Wal-Mart invest in good inventory control measures to ensure lower price for the products thus the current shifts in consumption patterns among households. Despite the current financial crisis, today, the consumers’ behaviors enable Wal-Mart to improve its financial performance.
According to Wisner (8), the current economic crisis means that the financial system remains unstable, thus calling for critical but quick strategies regarding trade, especially on money matters. At present, Wal-Mart invests in the acquisition of technological aspects for inventory management.
Current mergers also call for the conversion of the physical elements of transactions to automated systems to enhance and monitor trade at the lowest feasible costs. The high diversification of transactions causes the company to invest in hi-tech information management urgently to facilitate goods transfer. Also, this strategy assists in compensation of the low investments rates to international transactions.
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The threats fall on the competitors since new entries of rivals may reduce profit levels. The other competitors may equally produce comparable merchandise, and this is a threat of alternative products. They include switching cost or price performance, among others. Threats also exist when prices of substitute products change, and more substitutes’ translates to demands that are more elastic since the consumer has more alternatives.
The power of the buyer depends on the number of suppliers, for instance, brand identity, price sensitivity, differences in products, buyers’ concentration, and incentives. Weaknesses in s business depend on the extent of rivalry among the competing firms.
The profit margins may, therefore, reduce as the firm strives to retain clients and ensure a competitive advantage over others. Wal-Mart needs to checks on the existing barriers, concentration in the industry, growth or differences in products, switching costs, brand identification, diversity of the rivals, and corporate stakes.
Lastly, the firm performs the industrial analysis through Porter’s five forces analysis. Wal-Mart utilizes the Porte’s five forces “model of pure competition,” by ensuring that low risk over the rate of return across all the chain stores.
In line with the porter’s model (3), the five forces namely the supplier power; barrier’s to entry, the threat of substitutes, buyers’ power and the degree of rivalry governs the supply chain industry offers a chance to fight competition. Wal-Mart is among many other business rivals and thus utilizes this model to develop a competitive edge over them. This enables a better understanding of the operational grounds in terms of an industrial context.
On the aspect of supplier power, the firm focuses on the impact of its products to the consumer, especially in terms of cost, availability, and customer’s ability to differentiate them. The suppliers influence the manufacturing industries, especially for the costs of raw materials.
There is also a focus on the presence of substitute inputs and threats on the expansion plans. The threat of entry analyzes the inputs, government policies, the economy of scale, the required capital, identification of brands, and accessibility. These are all aspects that influence the probability of Wal-Mart entry to the industry.
Lambert, Douglas. M. “Supply chain management: Processes, Partnerships, Performance.” California, CA: Supply Chain Management Inst Press. 2008
Porter, Michael. E. On Competition: Porter’s Five Forces. Boston MA. Harvard Business Press, 2008
Wisner, Joel D., Tan, Keah-Choon., & Leong, Keong. G. “Principles of Supply Chain Management.” Kentucky, KY: Cengage Learning Press. 2008