DQ18

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Nov 24, 2024

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Running head: STRATEGY FORMULATION 1 Kennedy (2020) indicated, “As Walmart competed head to head with K-Mart, however, and offered higher quality products at the same or lower prices than its rivals, K- Mart was doomed. Its reputation for cheap, inferior products and its inability to win a price war with Walmart pushed K-Mart into bankruptcy” (p.131). Walmart is today known worldwide, as a cost leader who successfully employs the cost leadership strategy. Apart from using prices that are lower than that of its competitors to attract more customers and as a means of maintaining a market position that is favourable, Walmart uses promotional taglines such as “Always Low Prices" and "Save Money. Live Better” to make known to its target audience that it is a company that has a focus of cheaper products when compared to that of its competitors which draws the attention of many and so enable it to in turn not only acquire massive sales but also use the sales volume to sell the products with very thin profits. Walmart also takes pride in its cost-cutting plan that its value-chain strategy greatly supports, as well as its inbound and outbound logistics (Edwards, 2014). Walmart has over the years proven itself as a leader. In the 1980s, Walmart was successfully able to reach $1 billion in sales, which was record breaking because at that time, this occurred faster than in any other company and it became the U.S.’ largest retailer in 1990. In the year 2002, Walmart was able to top the Fortune 500 list as America’s largest company (“From Humble Beginnings. To Redefining Retail,” n.d.). “Walmart Cost Leadership Strategy- Advantages of Achieving it” (2021) indicated “Wal-Mart Companies, Inc. was indeed the world’s leading manufacturer at the end of November 2002, with $218 billion in annual sales” (para.3). Walmart is today ranked as the United States of America’s top retailer with a retail sales figure of $459.51 billion (for the year 2021) which is considered as a 6.6% year over year increase. According to “Walmart is the World's Largest Corporations by Revenue for Fiscal 2021” (2022) “Fortune announced the Fortune Global 500TM list for 2022, ranking the world's largest corporations by revenue for fiscal 2021. Walmart claims the top spot for

2 the ninth consecutive year, and for the 17th time since 1995” (para.1).The company was also able to successfully increase its retail store unit numbers as the years progresses. It moved from having a total of 5,253 units in the USA in the year 2020 to 5,326 in the year 2021 and now 5,335 as of July 31 st 2022. Based on numbers provided by Statista, Walmart currently has a total of 10,593 stores worldwide (Pratap, 2022), and as such, was able to engage over approximately 1.3 million colleagues on a global level. Although Walmart continues to grow and dominate in especially revenues, Amazon is its major competitor that continues to fight the good fight, head on with Walmart. Morgan (2019) indicated “Walmart's total equity is a whopping $79.6 billion dollars, while Amazon's is $43.55 billion dollars. In 2018, Walmart had 2.2 million employees, while Amazon has 575,000” (para.4). At that point, Walmart had experienced a 40% growth in online sales and even though the company was not able to surpass Amazon in online sales (the current leader in online sales) as Morgan (2019) reported Amazon accounts for 40% of the U.S. online retail sales, Walmart managed to rank third (as the third largest online retailer in the U.S.), and today still maintains its rank in the top ten. According to Chevalier (2022) as of June 2022, Amazon ranks as the leader in retail ecommerce in the U.S., with a market share of 37.8 % while Walmart ranks second with a 6.3% market share and Apple third place with 3.9%. Walmart is today known as the largest private employer in the world, as it is currently the work place for 2.3 million employees. Walmart has and continue to have exceptional control of the U.S. food system and as such in some communities it captures as much as $19 out of every $20 spent on groceries whilst generally speaking, the grocery giant is said to take a quarter out of every single dollar that Americans spend on groceries (Routely,2019). According to Routley (2019) “Walmart isn’t just a major player — in some cases it’s become the only game in town. In a few of the communities listed in the report, Walmart commands a 90% market share and higher” (para.2). Some of these communities include Kansas, New Mexico, Colorado and Oklahoma.

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