Porter's Five Elements Analysis Enterprise

Wal-Mart's Strategic Analysis and Implementation Strategy

Abstract: Facing the change of market environment, many enterprises seek a breakthrough on the basis of maintaining their original advantages by repositioning their strategies. Wal-Mart is a giant in the world retail industry. Taking "everyday parity" as the main market positioning strategy, it has won the favor of ordinary consumers and made remarkable achievements, and established a corporate image of "high quality and low price" in people's minds. From a small convenience store to the top of the world's top 500, Wal-Mart's business myth spread all over the world overnight, and its development also aroused great interest in supply chain management. This paper also analyzes the supply chain of Wal-Mart. Now, due to the changes in its internal and external environment, Wal-Mart should re-examine itself, find a suitable position in the market and implement the repositioning strategy.

Keywords: Wal-Mart's supply chain management repositioning strategy, low price strategy and fashion strategy

Introduction:

As Wal-Mart's main market positioning strategy, low price strategy has helped Wal-Mart grow from a small grocery store in Bentonville, Arkansas, USA to the largest retailer in the world. Wal-Mart's management in the supply chain is also one of the key points of its success. Whether in theory or in business, the highlights brought by supply chain management, such as cost reduction, information sharing, rapid response to the market and optimal allocation of resources, have attracted everyone's attention. However, due to various reasons, Wal-Mart is now facing great pressure and challenges in repositioning.

First, Wal-Mart's supply chain management

Wal-Mart has become a business myth for a time, which is inseparable from its excellent management, and the management of supply chain is the most important, and its Excellence is reflected in the following four aspects:

(1) Customer demand management. "For an excellent enterprise with long-term goals, a good idea of creating value for customers is like a good seed" [4], founder of Wal-Mart Sam? 6? 1 Wharton said this.

Wal-Mart's supply chain management is a typical pull-type supply chain management, which is driven by the needs of end customers, with high system integration, fast information exchange and quick response. On the one hand, Wal-Mart tries its best to save money for customers and satisfy them; On the other hand, focus on the neglected market and create demand. "The customer is always right" is the golden advice that every employee of Wal-Mart must follow. "Three-meter smile principle", "sunset principle" and "satisfaction is more than satisfaction" are the requirements of the company for every employee.

It is at this moment that we put customers' needs first, treat customers with excellent service quality, and create value for customers in price, so that Wal-Mart won the trust of customers and brought huge returns.

(2) Supplier relationship management. Suppliers participate in the formation process of enterprise value chain, which has a decisive impact on the operational efficiency of enterprises. Establishing strategic partnership is the focus of supply chain management, and the production and marketing alliance between Wal-Mart and Procter & Gamble is such a win-win model.

The harmonious relationship with suppliers enables Wal-Mart to maintain a long-term and stable supply of cheap goods. At the same time, the quality of these products will not decline because of low prices, because Wal-Mart has personally participated in efforts to help enterprises reduce production costs. On the one hand, as long as the supplier's products can be sold to Wal-Mart, there is no need for entrance fees and deposits, and the procedures are simple and the commitments are consistent; On the other hand, Wal-Mart arranges appropriate space for key suppliers in the store, allowing suppliers to design and arrange their own product display areas, thus creating a more attractive and professional shopping environment in the store; In addition, Wal-Mart will provide software support for information management system for suppliers free of charge. While providing due help and support to suppliers, Wal-Mart has also formulated a series of specifications for suppliers, and urged them to abide by them, including Wal-Mart's standards and requirements for suppliers' own remuneration, working hours, discrimination rights, working environment, environmental issues and confidentiality.

The practice of Wal-Mart proves that there is not always irreconcilable conflict of interest between retail enterprises and their suppliers. Suppliers and retailers can establish partnerships and achieve their long-term development goals through mutual cooperation.

(3) Logistics distribution system management. David, former president of Wal-Mart? 6? 1 glass said: "Distribution facilities are one of the keys to Wal-Mart's success. If what we do is better than others, it is the distribution center "[5].

The perfect logistics management system makes Wal-Mart known as the leader of the retail distribution revolution, and the flexible and efficient logistics distribution makes Wal-Mart have an advantage in the fierce retail competition. Its unique distribution system has greatly reduced the cost, accelerated the inventory turnover and formed the core competitiveness of Wal-Mart. Wal-Mart's "uninterrupted distribution" supply system includes four parts: efficient distribution center; Rapid transportation system; Advanced satellite network; Circulation organization of chain operation. In order to reasonably manage the procurement, inventory, logistics and sales of large commodities, Wal-Mart has established a special computer management system, a satellite positioning system and a television scheduling system, with world-class advanced technology. Combining the excellent replenishment system and retail links, Wal-Mart has realized the "seamless" logistics of products from the factory to the store shelves.

Supply chain information system management. Information sharing is the basis of supply chain management, and effective supply chain management cannot be separated from the reliable support of information technology. Sam. 6? 1 walton believes that the impact of informatization on commercial enterprises is not only the application of technology itself, but also the modernization and evolution of management modes such as enterprise organizational structure and marketing planning.

Wal-Mart is the first retail enterprise to use information management, and it is also the enterprise with the largest investment in information communication system. Wal-Mart's electronic information communication system is the largest civil system in the United States, even surpassing the telecommunications giant AT&T. The investment in information technology has strengthened Wal-Mart's core value and made Wal-Mart embark on the digital road. At the same time, Wal-Mart uses scientific and technological means to promote business development, setting a successful example for all walks of life.

Through the operation of supply chain management, Wal-Mart has greatly reduced commodity inventory, saved management expenses, simplified procurement procedures, improved work efficiency and reduced operating costs, and established a long-term and stable partnership with suppliers, forming a win-win situation for all parties, and finally achieved its own retail kingdom.

Second, the background analysis of Wal-Mart's market repositioning strategy

2. 1 Changes in Wal-Mart's internal environment

Information system, it is difficult to show advantages. Wal-Mart's leading and efficient information system is highly respected by the industry. With the help of its own commercial satellite, Wal-Mart has conveniently realized the global networking of information systems. Through this network, more than 4,000 stores around the world can take stock of the inventory, shelves and sales of various commodities within one hour. The close connection between internal and external information systems enables Wal-Mart to exchange daily information on commodity sales, transportation and ordering with suppliers, so as to keep the store's sales, ordering and distribution synchronized. At present, the business environment in developing countries hinders the development of Wal-Mart's advantages. In developing countries, most suppliers have a low level of informatization and can only exchange data with Wal-Mart.

The localization of internal management is often ignored. Wal-Mart has tried to replicate its consistent business model and cultural concept in various countries, but it has repeatedly failed. The main problem is that the system can be re-established, but the culture cannot be simply copied. Because the construction of corporate culture is not written in a manual, it can be realized by holding a meeting for education. Corporate culture is the business philosophy, values and moral norms accumulated in the development process of an enterprise, which permeates the thoughts of every employee of the enterprise. If we accept the ideological education of customer first, Wal-Mart employees may behave differently. Therefore, the problem of corporate culture is the crux of many phenomena in Wal-Mart management.

2.2 Changes in Wal-Mart's external environment

The pressure of external competition. Although Wal-Mart still maintains the position of the leading retailer in the United States, powerful rivals such as Target, Sears and Kmart are already eyeing, especially the growth rate of Target, the second largest discount store in the United States, is much higher than that of Wal-Mart. In 2005, Wal-Mart increased by 3.6%, while the same-store sales of its competitor Target increased by 5.6%. Target's sales performance is expected to further improve. Target now has 1400 branches in the United States, and its sales in 2005 reached $53 billion. The reason for Target's success is that its compact and fashionable layout and products have successfully attracted more high-income customers. Target's business mainly caters to the needs of young but slightly wealthy customers, positioning itself as a chain store of brand designers-combining the low price of hypermarkets with a large number of design elements, and attracting consumers who want to wear tastes at low prices with generous advertisements and famous fashion designers such as IsaacMizrahi.

External image is often criticized. The attitude of manufacturers towards Wal-Mart is ambivalent. Manufacturers can't live without Wal-Mart's powerful distribution ability and can't stand its price squeeze. At present, in the United States and around the world, there are more and more accusations that Wal-Mart is destroying employment and suppressing salary levels, and boycott activities in some areas are escalating. According to statistics, since Wal-Mart opened, 50% clothing stores, 30% hardware stores and 25% building materials companies have closed down. Research shows that for every two jobs provided by Wal-Mart, three people will lose their jobs. Recently, Wal-Mart held a conference in Washington, D.C. In order to calmly measure its impact on the American economy, the staff of 10 academic newspapers were invited to attend, and five of them criticized Wal-Mart's external image at least to some extent.

Wal-Mart's internal and external troubles forced it to reposition its market and change the golden signboard of "everyday parity".

Third, implement Wal-Mart's market repositioning strategy.

3. 1 Provide products that keep up with fashion.

According to the American Advertising Times, the management of Wal-Mart advertising companies GSDM and Bernstein-Rennes have confirmed that they have recently received a notice from Wal-Mart to adjust its advertising business, demanding that the brand image of "low price every day" be gradually changed. And this advertising adjustment involves more than 500 million dollars. In fact, since 2005, George? 6? Since 1 Fleming became the marketing director of Wal-Mart's American stores, the advertising style of Wal-Mart has changed greatly. The representative event is that Wal-Mart advertisements with 1 16 pages will be placed in the top American fashion magazine Vogue within two years.

Wal-Mart is adjusting its product structure and adding more high value-added fashion products, including Toshiba laptop and flat-panel TV, which are unique in the past. Nike, a famous sports brand, also sells its first brand in Wal-Mart.

3.2 Keep the price of mass goods low

In more than 40 years, Wal-Mart has become one of the top 500 companies in the world, mainly because it has adopted a low-cost marketing strategy and will not give up its original market when repositioning. Low-priced goods still have a huge consumer group in the world, and most of the profits are still provided by them. Wal-Mart will continue to keep the low price of mass goods, retain former loyal customers, and provide customers with inexpensive mass goods.

Candice, head of WSL Retail Strategy Company, a new york market consulting company? 6? 1 Colette said that for Wal-Mart, the main challenge at present is how to attract high-income customers with an annual income of more than $654.38 million, so that they can get used to returning from Wal-Mart chain stores with full loads. At the same time, Wal-Mart must also keep the old customers of low-and middle-income groups, and don't let them feel abandoned by Wal-Mart.

Fourthly, comments on Wal-Mart's market repositioning strategy.

4. 1 Advantages of Wal-Mart's repositioning strategy

The expansion of the consumer market. Wal-Mart not only provides fashionable goods to high-end consumers, but also provides cheap goods to low-end consumers, thus expanding Wal-Mart's consumer market. Fashion consumers who did not belong to Wal-Mart have also become their target customers, which will definitely increase Wal-Mart's sales revenue.

The negative image of Wal-Mart will change. Most of Wal-Mart's negative external image comes from its low-cost business model-"squeezing suppliers, deducting workers' wages, and contradicting trade unions in various countries". The implementation of repositioning strategy can alleviate these problems to some extent and reduce the hostility of stakeholders to Wal-Mart's low price.

4.2 disadvantages of Wal-Mart's repositioning strategy

Wal-Mart's market positioning is chaotic. For a long time, Wal-Mart mainly targeted at low-income consumer groups, focusing on attracting families with an annual income of less than $50,000 and adhering to the strategy of parity every day. However, after Wal-Mart adopts the repositioning strategy, it may make low-and middle-income consumers lose confidence in their daily parity, but it cannot attract high-end consumers well, which is not worth the candle.

Wal-Mart's repositioning strategy will lead to more brutal competition in the retail industry. In recent years, with the continuous economic downturn in the United States and the increasingly fierce competition in the retail industry, several major retail chain stores are trying to erode the market share of their competitors. Kmart neglected its fixed consumer groups because of excessive expansion, and was forced to file for bankruptcy protection at the beginning of last year because of improper marketing strategy and unclear positioning. Wal-Mart is competing for high-end customer base, which will inevitably lead to fierce counterattacks from other high-end customer base operators.