According to Wal-Mart’ s website (2010) it is the case that Wal-Mart has always strived to be an industry cost leader. In this respect, Wal-Mart has always sought to implement store policies and to upgrade infrastructure to constantly reduce prices which in the long term has given the company unparalleled cost leadership advantages. This approach can be considered three-pronged insofar as according to Reuters (2010) the organization has a corporate culture that strives to reduce agency costs through the opposition of unions through serious threats to closing down operations that threaten t unionize and by promoting incentive packages that find new ways to cut costs.
The second approach is to negotiate favorable arrangements with their more than 68,000 suppliers (Harpers, 2007) in which it is likely that suppliers are meant to sell products at prices substantially lower price points. By engaging in this behavior, Wal-Mart has theoretically forced upon its suppliers' demands to find newer and more innovative cost-saving techniques such as increased automation, or better inventory control measures to ensure faster production. Furthermore, it is the case that Wal-Mart had tapped into a new method of further reducing its prices whilst attracting the same amount of customers, by locating its retail outlets in more rural geographic regions.
It is the case that most of Wal-Mart’ s exist in smaller communities or on the outskirts of towns. In this regard, Wal-Mart is better able to reduce their overhead by locating in areas with typically lower property taxes, and lower cost of land and simultaneously targeting customers who live in economically depressed areas. Lastly it is the case that Wal-Mart has implemented advanced technologies in their distribution network which in turn has helped make the company more vertically integrated by nature of the company operating their own tractor-trailers, plus state of the art tracking software, database management and logistics management at their many distribution centers (Wal-Mart: Logistics, 2010).
Please type your essay title, choose your document type, enter your email and we send you essay samples