Business Model Concept | Walmart

RUNNING HEAD: BUSINESS MANAGEMENT AND STRATEGIC MANAGEMENT
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Business Management and Strategic Management

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Business Model Concept
A business model is a concise and clear picture of the business operations. All the companies
desire to give value to their customers and here comes the role of the value proposition.
Value proposition is the element on which business model depends, it is an idea of what
business wants to deliver to its customers and how the business will going to position itself in
the market. The business model is considered as the way of “translating the value proposition
into the potential for rapid revenue growth and profitability” (Foss and Saebi,2017).
Walmart
The concept of the business model can be best understood with the use of an example. Here,
the Walmart business model is explained that includes the value proposition of the company
and how the company works or operates in order to deliver value to its customers. Walmart's
business model is based on the nine-building block model of Pigneur and Oster Walder. The
nine key elements in the business model of Walmart are key activities, value proposition,
partnership, customer relationship management, supply chain and revenue (Almeida
et.al,2019).
Key activities: In the business model of Walmart key activities are buying goods, delivery of
goods and controlling the cost. The other activities are managing the supply chain, inventory,
and suppliers. The company manages 257 distribution centers (Braun et.al,2019).
Value Proposition: Walmart competes in the market because it offers low price products to
its customers this gives the company a unique value proposition. All the activities in the
business model are related to achieving this objective (Osiyevskyy,2017).

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Resources: The resources are divided into three segments that are physical resources that
include distribution centers and stores. Human resources include managers, staff and
executives and al last organization culture that support business activities.
Cost structure: Walmart follows the cost-driven structure, as this helps in achieving the
goal of cost minimization. The financial structure of the company is strong because they pass
the operating cost to its suppliers.
CRM: Walmart established customer relationship management for technology advancement
and self-service. The aim of the company is to reach a large number of customers and make
its processes easy and fast.
Target customers: Walmart's target customers are divided into three segments that are low-
income groups, wealthy customers and those who want high-quality products at affordable
prices.
Supply Chain: In order to deliver its value. Walmart reaches its customers through its
channels of distribution. Walmart's distribution channels assist in making a sufficient profit
margin. Further, for reaching its customer the company use mass media and internet which is
low-cost techniques (Haas,2019).
Revenues: Walmart generates revenue mainly from its retail outlets and also from the sales
of products manufactured by other brands. The company enjoys the advantage of selling
before paying off its suppliers this leads to smooth capital flow and efficient business
operations (Haggege et.al,2017).
Hence, from analyzing the business model of Walmart it is concluded that the company uses
nine building block models of Pigneur and Oster Walder. Further, all the business activities

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are managed and organized in a way that can help Walmart to deliver its value proposition
that is providing goods to customers at low prices.

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References
Almeida, T.D., Avalone, M.C. and Fetterman, D.C., 2019. Buildings blocks for the
development of an IoT business model. Journal of Strategy and Management.
Braun, M., Latham, S. and Cannatelli, B., 2019. Strategy and business models: why winning
companies need both. Journal of Business Strategy.
Foss, N.J. and Saebi, T., 2017. Fifteen years of research on business model innovation: How
far have we come, and where should we go?. Journal of Management, 43(1), pp.200-227.
Haas, Y., 2019. Developing a generic retail business model–a qualitative comparative
study. International Journal of Retail & Distribution Management.
Haggège, M., Gauthier, C. and Rüling, C.C., 2017. Business model performance: five key
drivers. Journal of Business Strategy.
Osiyevskyy, O., 2017. Maximizing the strategic value of corporate reputation: a business
model perspective. Strategy & Leadership.