1. Operation structure
Doug McMillon is the president and chief executive officer of Wal-Mart Stores,
Inc. Under his leadership, Walmart is bringing together its stores, logistics network and
digital commerce capabilities in new ways to empower customers to shop whenever,
wherever and however they want.
Operation management of Walmart is about the transformation of product and
operational input in to “output” that, when distributed meet the need of customer. This
has taken Wal-Mart from being departmentalized by function to geographic
departmentalization. • There is also a clear chain of Command from the top to the bottom.
• The span of control is narrow as the organization has management teams that decide
how merchandise gets priced, how items are shipped, and other items that need to be
managed.
Wal-Mart knows of the importance of its inventory system and in just 5 years invested
over $600million into information systems. The business uses telecommunications to
create a link between each store, the central computer system and from there to suppliers.
This allows for greater invisibility and speed and saves money invested in inventory. In
fact, many products leave the warehouse without ever really being stored there and only
10%of warehouse space is used for inventory whereas the industry average is 25%.At the
same time, the increased coordination helps the suppliers in making more consistent
planning which brings costs down. These cost savings will also be passed on to Wal-
Mart. Wal-Mart uses barcode scanners for their point of sale system. This enables the
company to record each item sold and make this information available for recording and
for sales analyses. Besides these technical aspects Wal-Mart introduced some principles
which make the shopping experience at Wal-Mart more enjoyable and lead to more sales.
(An example of this is the 10 foot rule, which means that whenever an employee gets
within 10 feet of a customer they are to greet him and ask if they can help.)
In recent years Walmart has used radio frequency identification tags (RIFD), which use
numerical codes that can be scanned from a distance to track pallets of merchandise
moving along the supply chain. Even more recently the company has begun using smart
tags, read by a handheld scanner, that allow employees to quickly learn which items need
to be replaced so that shelves are consistently stocked and inventory is closely watched.
2. Competition
The main competitors of Wal-Mart are Target (American retailing company;
headquartered in Minneapolis, Minnesota, United States) and Kmart (American chain
of discount department stores, headquartered in Detroit, Michigan, United States) as
well as several national supermarket chains in the respective international markets.
However, Target can be considered to be the main competitor of Wal-Mart, having sales
of more than $65 billion. Kmart is the second competitor of Wal-Mart. Till 2001, they
have been the main competitor, but after having declared bankruptcy in 2001, they are
only the third biggest retailer with having sales of $17 billion and running 1,300 stores.
Due to the bankruptcy they operate now as a subsidiary of Sears Holding.
Another competitor is the Costco Wholesale Corporation, a membership warehouse club,
which is mainly competing the Sam´s Club segment of Wal-Mart. Costco is only a
competitor to the Sam’s Club and although its rating is in the overall industry low, it is
one of the biggest competitors for the Sam’s Club.
Wal-Mart’s competitive advantage is linked to their success, which is attributed to their
culture. Wal-Mart states that wherever you go in Wal-Mart you will experience the same
“You’’ll feel home” because it is everywhere the same design as well as the same
philosophy. Wal-Mart gains a competitive advantage through offering low prices (cost
advantage), especially in food distribution compared to Costco, Super Kmart and super
Target, their main competitors. Furthermore, they have the advantages of offering the
best value (for low cost products), the great selection of quality merchandise and the
genuine, high standard customer service. Additionally, Wal-Mart operates in 50 counties
within the United States and in 27 international countries and Puerto Rico. Internationally
they are represented for 11000 discount stores internationally. These numbers show that
Wal-Mart has a competitive advantage through their discounted offers due to their widely
spread presence of divisions (discount stores, supercenters, Neighborhood, Sam’s Clubs).
This gives them an overall advantage of strategic global positioning. Wal-Mart invests a
lot in information technology, which brings them to the advantage of being leader; in
logistics, distribution, and inventory control (having installed a computer network in
1970 which connected all Wal-Mart stores and distribution centers).
