Wal Mart - Operation Management

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Why is Wal-Mart so successful?

Wal-Mart is so successful because they literally reflected their slogan at all times. Sam Walton strived to offer the best possible price every day instead of a sale one in a while. This was a great marketing strategy even though it is simple for normal shoppers of everyday goods. Somehow this strategy became widely popular and the retail industry was dominated by Wal-Mart. Another reason is because there was a huge selection options. Shoppers could but whatever they want whenever they want all at the same place and even same products had choices and they sell everything from gardening wares to electronics. Besides that Wal-Mart improved how retail companies manage their supply chains in more effective and creative ways. The most obvious example will be the coordination with suppliers because they share the sales data with the suppliers so that they can avoid out of stock issues and many more. Wal-Mart had a culture in which they revolutionized management style because they became the largest corporation in the world and it was once said to be famous for its 7.30am meetings on Saturday. Plus, Wal-Mart was the first few to track consumer behavior using information technology and practice Data Driven management. As mentioned earlier the program Retail Link was a huge success for them because it amplified Wal-Mart’s ability to have unlimited control over their suppliers (Traub, 2012). Wal-Mart also grew because they had a powerful effect on consumer behavior because of their cheap prices. People bought more stuff because it wasn’t expensive and it was cost beneficial for them. Fixing things were more expensive than buying new things so Wal-Mart became richer. Apart from that, in year 2005 Wal-Mart announced that it will be transformed into one of the greenest corporations in the world. Their goals were to create no waste and rely fully on renewable energy. They promoted their efficiency by doing so. This made them more sustainable and this created a ripple effect because since Wal-Mart was a most influential corporation it made many other corporations followed. Moreover Wal-Mart had the power of access. It was one of the most influential companies in the 20th century. They started traditionally and revolutionized massively with information technology to boost their supply chain management. They could connect with consumers anywhere. For example a football produced in Bangladesh can be sold in China just like they sell it in Kansas. Entrepreneurs and Business people didn’t have to hire sales staff to move to a global market. If they could sell it to Wal-Mart they can sell it anywhere. This was one of the main reasons Wal-Mart became famous globally. (Matthews, 2012)

What are the future challenges for Wal-Mart?

Although Wal-Mart has been leaping with profits over the years, it too has threats or challenges to overcome. The biggest challenge for Wal-Mart is that there is increasing competition from brick and mortar and online competitors. Huge efforts are being put by competitors like Target, Costco, Amazon and Tesco to eliminate price difference that Wal-Mart relishes. Wal-Mart doesn’t differ from other low cost retailers apart from their lower prices and it’s going to face a lot of competition from them. Besides That, Wal-Mart is gaining increasing resistance from local communities because they have a negative impact on local retailers and communities. When Wal-Mart opens in an area some of the local retailers are usually forced to close off their shops. This badly affects the retailers and their families (Jurevicius, 2013). Another challenge will be rising commodity product prices. The profit margins of Wal-Mart get squeezed when the commodity prices increase because it affects the competitive advantage Wal-Mart has. The competition from price to product and service differentiation shifts when the cost difference between the retailers decreases resulting from the increase in commodity prices. Furthermore, Wal-Mart faces about 8000 lawsuits at any moment; this is a force which is slowing down Wal-Mart because the legal and labor compliance problems are mounting (The Economist, 2004). Wal-Mart might be facing labor union related issues if this continues because as labors unite and protest against their practices with a strike Wal-Mart can get shaken badly.

Conclusion

Operation Management is really an important pillar for an organizations success. What I learnt is that if a company focusses on its core competence they can really excel. For Wal-Mart it was all about cost leadership which they really focused on and did extremely well. Wherever an organization choses to compete on, the key is to focus on the operations management because it’s very crucial. Plus, operations management strategies require relentless commitment to execute. First step is identifying and then making necessary changes in all the areas mentioned earlier in the Operation Management Decisions are important and this requires a commanding leader to execute all this strategies (Thakur, 2006).