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Wal-mart - Essay Example

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Its supply strategy in its home country was to build stores in remote locations where other stores were not available, thereby creating markets and adequate sales volumes to generate economies of scale from…
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China is WalMart’s largest supplier, but in terms of sales WalMart ranks 24th in China after the local stores, while French retail giant Carrefour ranks fourth.
The WalMart model of everyday low prices, coupled with supplier and cost controls has been successful in some countries such as Mexico, Canada and Britain. In Germany, the company has not done well due to existing competition, high labour costs and zoning laws. Altho0ugh China has the kind of market size comparable to domestic markets, thereby presenting an opportunity to duplicate domestic success, this has not occurred, as stated above. The Company has been losing money since its arrival in the country. Some of the other foreign retail chains operating in the country include UK’s Tesco, Thailand’s Lotus and Germany’s Metro. The local Chinese retail chain, Bailan, was most successful because of localised demand, supply base and distribution. Due to the wide disparities in income among Chinese customers, Walmart could not operate its national model, because purchasing patterns and good demanded were different at different locations and a standardised model was not successful. Local protectionism was also a barrier. The poor infrastructure in the country also added to the logistical and supply costs, thereby increasing costs.
Firstly, Walmart’s attracted customers by its Everyday Low Prices. It maintained a relentless cost control system by allowing few perks for its officers and employees. It was also able to negotiate tough deals with its suppliers, using its ability to place bulk orders to also make other demand such as high quality and low prices, which it then passed on to its customers. It ,maintained several distribution outlets and initiated an electronic data interchange system, allowing suppliers to track sales to deliver new stocks and they were ... Read More
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