Waltmart

Wal-Mart is a department store chain pursuing a cost leadership strategy. Their profitability stems mainly from their market military force (due to very large size) and outstanding operational efficiency. They have created a good fit between six fundamental activities, by and large by means of economy of scale and modern technology. The six activities ar detailed below. Sustainability and the three-order fit model will be explored at the end of this assignment.
activeness 1 - Purchasing Inventory at Low Cost
On the most recent Fortune vitamin D list, Wal-Mart was ranked 1st, with revenues of $222 billion and profits of $16 billion. Their closest contest was 33rd (money.cnn.com). This large size gives Wal-Mart unparalleled power in the market. Suppliers cannot resist signing a contract with Wal-Mart. Margins for the vendor may be razor-thin, but they hope to make it up in volume. Wal-Mart makes sure no supplier provides a large fortune of lineage. In 1993, the maximum allowed proportion for one vendor was 2.4% (Bradley, Ghemawat, 7).
Activity 2 - Making Strong Use of Technology
From 1987 to 1993, Wal-Mart spent everyplace $700 million on its satellite communications network, computers, and related equipment (Bradley, Ghemawat, 5). Wal-Mart receives orders and interacts with its vendors through electronic data interchange (EDI).



This has reduced inventory costs.
The Wal-Mart inventory management system tracks the sales price, inventory levels of each product, the accounting of quantities sold, as well as trends. This helps management predict what is needed. for each one day at midnight, information is sent to warehouses so run through products are restocked the following night (Case 28, 20). This makes faster inventory overturn possible at the point of sale.


Activity 3 - maximise Use of Retail Space
Wal-Mart makes very efficient use of their retail space. They averaged sales per square foot of nearly $300 in 1993, compared to an industry average of $210 (Bradley, Ghemawat, 1). A Wal-Mart store...If you want to get a full essay, order it on our website: Orderessay



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