Distinguish the business-level strategy of any organization within the retail industry by determining if it is a cost leader, differentiator, or best value and whether it addresses a broad or narrow market focus.
Introduction
In the retail business, the company may intend to come up with the low prices of different products and services. Low prices but high-quality goods and services attract customers in the competitive market. Due to this consideration, the company can enable the growth and market share. Wal-Mart Company depicts its business level strategy. The business strategy of this company is cost leadership. The company management has made this preference in the competitive retail market, and gain the competitive advantage over many competitors.
The elaboration of the cost leadership (Business level strategy) is as under.
Wal-Mart’s Business Level Strategy
The business level strategy of the company is cost leadership. It has been observed that the company management has initiated the “everyday low price” for customers in the market, which has effectively justified this strategy. For Instance, in the competitive market, the company produces different products and services at lower prices as compared to its competitors. The management does not compromise on the quality of products, and it seems a prominent benefit for customers. The company is operating with big product portfolio in the retail market, and through standardization, customers are quite assertive in the buying process. This business level strategy in the Wal-Mart company has been justified by aligning the primary and secondary activities to execute the cost leadership strategy in an effective and lucrative manner (Bose, 2017).
Distinguishing the Business Level Strategy of Wal-Mart
The business level strategy of the company can be distinguished from other business level strategies such as focused, cost leadership, differentiation, and focused differently. Cost leadership and differentiation are the broad targets of the company. On the other hand, focused differentiation and focused, cost leadership are narrow targets for the company. However, as far as the business level strategy of Wal-Mart is concerned, it can be disguised from other strategies (Nassauer & Hufford, 2017).
For Instance, the cost leadership strategy of this company demonstrates the intentions of the company regarding cost reduction activities. In Wal-Mart, the management has a remarkable control on overhead costs. Also, when the company contains the research and development process to come up with some new product, the main intention is to keep the cost of this process low to justify the strategy. Through experienced and skillful team in Wal-Mart’s operations, the low-cost strategy has been ensured. Conversely, distinguishing it with the differentiation, the company may have to contain the heavy investments to initiate the innovation and creativity. Comparatively, the company a will be looking to create the value for customers, and value creation process needs big investments regarding cost and time. On the cost leadership, Wal-Mart just intends to modify the process through different activities such as avoidance of marginal customer accounts, creating well-organized scale actions, and streamlining overhead costs. Differentiation needs some transformation process, which may help to make products and services difference as compared to the other competitors in the market. On the cost leadership, Wal-Mart is looking to reduce the cost in each operational process. Conversely, in the differentiation, the difference can be made to contain the unique features in different products for customers. If the company wants to create the value in the retail market, the visibility of the unique features, which requires the high cost, is required. Thus, to take benefits from both, the management often combines these two strategies to make the difference in the competitive market (Stern, 2018).
Distinguishing from the focused, cost leadership, the Wal-Mart company has done it in different regions. A comprehensive segmentation process of the company assisted the company to focus on a specific group in the market. For Instance, the company has many products, which are triggered by the special in groups. This group can have these products at the lowest price as compared to other competitors. Instead of declaring the low price for all customers in the market, the company can enhance the visibility of targeting to implement this business level strategy successfully. The big difference between cost leadership and focused, cost leadership is the narrow target. For the broad target, the company can a combines the differentiation process with the cost leadership. For the narrow target, targeting becomes easy the management. However, despite having these differences, the company relies on the cost leadership to depict the same price for all customers (Bose, 2017).
Furthermore, in the focused, cost leadership process to target the narrow base in the market, the management meets objectives in low cost and gains the competitive advantage. However, in the focused differentiation process, the company can gain the competitive advantage. In the modern business era, the company management has to identify this difference and to take the long-term benefit, combine the sources of low-cost unique value for customers (Nassauer & Hufford, 2017).
Conclusion
In the end, it is to conclude that the current business level strategy of this retail giant is in the limelight due to its impact on both, the market and customer. In the competitive market, the low-cost considerations of the company have helped to gain the sustainable competitive advantage. Instead of combining the differentiation of other focused strategies to modify the current business level strategy, it seems pertinent to create the value through high-quality products at stable low prices. The quality is a big factor, as customer usually accepts the limited features or specifications if the quality is streamlined. Distinguishing the business level strategies has helped to derive insights or possible impact on company’s intentions and market conditions.
References
Bose, N. (2017, February 27). Walmart is testing a new pricing strategy to keep up with Aldi and Kroger. Retrieved from http://www.businessinsider.com/r-exclusive-wal-mart-launches-new-front-in-us-price-war-targets-aldi-in-grocery-aisle-2017-2
Nassauer, S., & Hufford, A. (2017, October 10). Wal-Mart Plans Further Cost Cuts as Competition With Amazon Intensifies. Retrieved from https://www.wsj.com/articles/wal-mart-touts-e-commerce-focus-as-it-reveals-new-financial-targets-1507639810
Stern, M. (2018, February 22). Walmart’s Low-Price Strategy Breaks Down Online. Retrieved from https://www.forbes.com/sites/retailwire/2018/02/22/walmart-com-wants-to-sell-higher-not-a-typo-priced-products/#5706ce3a7f54
+447462439809