How Walmart Leverages Its Advantages?
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Wal-Mart has a proven track record of continuous expansion and incremental improvement. It achieved much of its success through ÐŽobuilding onÐŽ± its existing strengths, i.e. leveraging its advantages through constant evolution rather than revolution. Technology, size and distribution each offer great advantages that Wal-Mart can leverage in both product and market expansion.
PRODUCT EXPANSION : The overwhelming size of Wal-Mart offers 2 major advantages in its expansion into new product lines. First, the economy of scale overcomes the difficulty of keeping initial cost of goods low that most companies face when taking up new product lines. Wal-Mart may ÐŽobuild onÐŽ± its existing variety of merchandise by purchasing through the same manufacturers. The second approach is that Wal-Mart can leverage its dominant market status by exploring the potentials of its current pool of consumers without the costly marketing campaign to allure new customers. If consumers in the neighborhood are already buying 70% of their daily necessities at Wal-Mart, they may as well readily purchase the rest 30% during the same trip. The advanced data mining and information system will also help Wal-Mart better pinpoint its target sub-markets, identify shifts in consumer preference earlier and evaluate marketing potentials of new products more accurately.
GEOGRAPHIC EXPANSION(INTERNATIONAL) :
Size matters again in Wal-MartЎЇs geographic expansion in a few aspects. Wal-Mart may leverage its purchasing power by consolidating its global procurement activities. This puts Wal-Mart in a very favorable position when competing with local retailers in price. A second economic benefit is the ÐŽohedgingÐŽ± ability that Wal-Mart derives from its global presence. Wal-Mart will be more flexible than its local competitors in weathering temporary economic downturns. By creating a ÐŽoportfolioÐŽ± of retail businesses in different parts of the world, Wal-Mart