Factors for the Success if Walmart
Walmart is one of the most successful enterprises in the world. Walmarts success has grown due to its expansion into the international market. This has enabled the company to improve its revenue. Expansion into the global market has resulted in an increase in the number of consumers for their products. Walmarts success can also be attributed to its effective human resource management. Walmarts employees are known to be among the most loyal employees (Case 01). Although the company maintains strict working conditions, most employees enjoy working in the business. However, low costs policy is an essential factor regarding the success of the Walmart Company. Throughout its operations, the company tries to incur the lowest costs. This can be observed from the relationship between the company and its suppliers. The company has formulated policies, which ensure that the suppliers own the products in the stores until they are sold. The policies help the company to avoid unnecessary losses caused by low demand for products. The company has also maintained low advertisement costs. Low costs help the company to maintain high annual revenue profits (Case 01).
Reason for Walmarts Low Prices
Walmart has the lowest costs compared to most competitors in the market. Walmarts cost for advertisement is less than 2% of the overall sales. This is because the company has never incorporated an extensive marketing strategy. The company mostly relies on customer loyalty in most of its markets. This is one of the reasons why it exited the Korean market. The company realized that most Korean consumers were loyal to the local retailer stores and their products. This cost is much lower than that of its competitors, which stand at an average of 2.3 %. The company also maintains low rental costs of less than 1.8 % of the total sales (Case 01). This is low compared to the competitors average of 2.2%. Walmart mostly operates from its stores. This reduces the rental costs since they use their assets. Walmart also maintains low costs by ensuring that the suppliers are liable for extra expenses incurred during the distribution of the products. The company has incorporated high technology, which enables the company to track goods under distribution. It has also included the scanning technology, which assures that the suppliers take responsibility for any extra costs that are incurred along the supply chain.
Factors that Prevent Walmarts Success in the International Market
Walmart has struggled to enter the international market since inception. However, the company has not recorded significant success in the global market. The company has closed its operations and exited most international markets such as North Korea and Germany for different reasons. One of the reasons for the failed success in the global market is the loyalty of customers in the local stores. The company has found it difficult to compete with the local retailers in markets such as North Korea and Germany. Germany companies such as Aldi made it difficult for Walmart to succeed in the market due to the incompetent low prices on their products (Bose, 2017). The company also encountered difficulties in the North Korean market due to the poor preference of the consumers for their products. Walmart realized that most of the consumers in the Korean market did not purchase the Walmart products due to the presence of the Chinese products in their stores. Walmart has also failed to succeed in the international market due to unfavorable corporate policies in some countries. For instance, the company exited the Germany market due to strong union policies that affected the regular operations of the business.
Bose, N. (2017). Exclusive: Aldi raises stakes in U.S. price war with Wal-Mart. Reuters.
Case 01. Wal-Mart Stores.
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