According to the Porter ‘generic’ competitive strategies, Wal-Mart is pursuing cost leadership strategy. Wal-Mart has used slogans like “Always Low Prices”, “Save Money. Live Better”. Wal-Mart uses the strategy of lowest prices to attract customers. In order to achieve cost leadership strategy, Wal-Mart has lower the cost as much as possible involving purchasing, distribution, cooperation with vendors and advanced technique applied, so that Wal-Mart can offer their customer the lowest prices. This is the big competitive advantage that other major competitors cannot match.
Quick feedback and efficient logistics management system make Wal-Mart’s merchandise inventory greatly reduced, cash flow faster and business costs lower. In order to achieve cost leadership strategy successfully, Wal-Mart involves purchasing, inventory, transportation and applying advanced technical system, trying to lower the cost of the entire chain.
Wal-Mart directly buys goods from suppliers and makes the settlement for the goods within only 29 days. This policy largely encourages the efficient cooperation between Wal-Mart and its suppliers. Wal-Mart also generally signs the contract of purchasing the goods for a whole year. Due to the large quantity of goods purchased, the price that Wal-Mart accessed is much lower than its competitors, forming a low-cost advantage that others cannot compete with.
Wal-Mart has made a heavy investment in information technology. Wal-Mart's high-tech information processing system includes developed computer network system, the private satellite communication systems and the world's largest civilian database. The details of distribution information can be transmitted to the headquarters data centers through a communications satellite connected to the computers in all Wal-Mart stores. This largely facilitated the immediate exchange of information among distribution centers, stores and suppliers, so that each link of the fast-moving logistics cycle chain can...