The case starts with a brief history of how Wal-Mart was formed and the strategy it employed to grow under the radar of big retailers and never come in direct competition with them. It talks about the reasons of success of wall mart - everyday low prices, customer focus, and relentless cost control, partnership with suppliers and unrivalled distribution and logistics management. After giving details how Wal-Mart become a huge success in USA; the case goes on to describe its China venture. It takes us through the history of retail market in China. It talks about retail being a centrally controlled business to the phase wise opening up of the sector to foreign players. In the end the case talks about many challenges being faced by Wal-Mart in China such as income disparity , local protectionism , infrastructural deficiencies , regulatory restrictions , lack of IT infrastructure and the different consumer behaviour of Chinese consumers than their counterparts in North America. The case makes us ponder over these difficulties being faced by Wal-Mart even after 10 years of starting operations in China.
1) Everyday Low prices -This strategy of Wal-Mart was able to win a large number of customers. It helped in successfully addressing customer's disappointment in constantly changing shelf prices. More important than the promise was Wal-Mart's ability to meet this promise every time.
2) Customer is No.1 - Sam Walton, the founder of Wal-Mart ensured that customer was treated respectfully by his employees and provided great customer service. The company came up with Sam's ten rules which became the corner stone of great customer service at Wal-Mart.
3) Small Town Locations - During the initial growth phase, Wal-Mart grew under the competition's radar. They operated in these towns which were considered as unviable by big retailers at that time.
4) Relentless Cost Control - Saving was given as much importance in Wal-Mart as was creating a sale. Wal-Mart relentlessly tried to cut costs to pass on the benefits to the customer.
5) Partnership With Suppliers - Wal-Mart provided big volumes to its suppliers but extracted a lot from them. It was always trying to push them to cut costs. Many processes being followed by suppliers were modified by Wal-Mart in order to reduce costs.
6)Unrivalled Distribution and Logistics Management - The IT infrastructure of Wal-Mart was connected with its suppliers in order to ensure that constant update on inventory requirements reach the customer. It followed Just in time approach and utilized cross docking method to reduce inventory of its stores.
In analysing the Wal-Mart case we have used the long cycle process framework. The case analyses starts with identifying the major issues that Wal-Mart faces and have then gone on to analyse the same and find solutions in the last phase.
Issues faced by Wal-Mart in China.
1) Immediate Issues.
A) Market Segmentation
Large amount of income disparities in China. The coastal regions have very high per capita income of 2117 $ where the inner and western regions have significantly less purchasing power as can be seen