Strategic Management Accounting

This article discusses strategic management accounting and its importance in business. It covers the BCG matrix, competitive advantage, and control system of Wal-Mart. The article also provides insights into the specific features of Wal-Mart's operations and its policies and programs for associates.

Running head: STRATEGIC MANAGEMENT ACCOUNTING
Strategic management accounting
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STRATEGIC MANAGEMENT ACCOUNTING
Table of Contents
Answer to question 1:.................................................................................................................2
Answer to question 2:.................................................................................................................2
Answer to question 3:.................................................................................................................4
Answer to question 4:.................................................................................................................5
References list:...........................................................................................................................6

STRATEGIC MANAGEMENT ACCOUNTING
Answer to question 1:
Wal-Mart has adopted long term strategy of cost leadership that is they sell branded
clothes at low cost. It was to be ensured by the largest retailer using this strategy that they are
able to provide quality products at lowest possible cost compared to its competitors. For
expansion of stores, Wal-Mart adopted a strategy for expanding the stores that strategically
placed the distribution centre for serving considerable number of stores within a day with
other strategy of building discount stores in small rural town (Berisha et al. 2017). Therefore,
the corporate strategy of the largest supermarket focused on low prices to attract customers.
Answer to question 2:
BCG (Boston Consulting group) matrix is an effective tool for evaluating the strategic
position of portfolio of business brand and its potentiality. Different business unit of Wal-
Mart is analyzed with the help of BCG matrix. The corporate mission of Wal-Mart is to help
people save money so that they can live better (Sminia 2017). Depending upon the
attractiveness of industry, the business portfolio is divided into four categories.

STRATEGIC MANAGEMENT ACCOUNTING
The four quadrants of BCG matrix are used for categorizing different division or
segment of company. Such quadrants are discussed below:
 Dogs- Dogs are the segment of company operating in slowly growing market and
compared to the competitors, it hold low market share. The discount stores of Wal-
Mart can be considered as slow growing market as the company is not much
benefitted from this particular unit. Expansion of discount stores in other countries
such as China is constrained by lower disposable income as against US (Tan et al.
2018). Therefore, it is required by company to reinvent its business model of discount
stores so that they are within the reach of key population group.
 Cash cows- They are the most profitable brand which company should milk to get as
much cash as possible. These are the products with high market share and low growth
share and earn higher profit. The potentiality of the product for expansion and growth
would help in making it a star product. International stores of Wal-Mart are the cash
cows of company. Wal-Mart operates worldwide through its international segments.

STRATEGIC MANAGEMENT ACCOUNTING
 Stars- This segment of business has highest market share and market growth
indicating that it is in the maturity stage. The supermarket of Wal-Mart US is the star
as customers are offered with high volume of products at lower possible cost.
Supermarket is considered as star because the products are sold all over the world and
offer high margin. Majority of earnings of company is generated by supermarket in
US (Sminia 2017).
 Question mark- This is the business segment that has low market share and is
incurring loss, however, possessing the potential to acquire market share. The Sam
club division of Wal-Mart generates the lowest annual net sales at 59.22 US billion
dollars which is significantly lower compared to other business division
(Corporate.walmart.com 2019). However, the club operates through cash or via the
membership that motivates customers to join and visit the club. Effective
development of this division and adoption of some differentiation strategy would help
company could turn it into either cash cow or dog.
Answer to question 3:
Basis of building competitive advantage:
The marketing strategy of marketing was to provide guarantee of offering customers
with lower price which forms the basis of its competitive advantage. It also adopted several
generic strategies that formed the basis of its competitive advantage such as it enjoyed
economies of scale in its distribution system and did not rely on any single supplier and no
single vendor constituted more than 4% of the total purchase volume (Shoham and Paun
2015).
Differentiating factor from its competitors:

STRATEGIC MANAGEMENT ACCOUNTING
Wal-Mart has outperformed its rival such as K-Mart, Myer, David Jones and Big W
was the introduction of discount retailing and focusing on small region of South, lowest
Midwest and US. Its competitor such as K Mart focused on large towns with larger
population as against Wal-Mart strategy of focusing on small region (Michelson et al. 2018).
Description of specific features of operations of Wal-Mart:
The management and monitoring of inventory of Wal-Mart is increased by persuading
suppliers to adapt to the latest supply chain technologies and have electronic hook ups in the
stores and ensure that they are not dependent upon one particular supplier. In addition to this,
the distribution centre of company is strategically placed so that it is able to serve some 200
stores within a day. Operation of distribution centre was done through techniques of cross
docking and laser guided conveyor belt so that there is simultaneous filling and receiving of
goods. Frugality has also been one of the competitive advantages of Wal-Mart as the founder
had instilled it in the DNA (Dobni and Sand 2018).
Answer to question 4:
The control system of Wal-Mart helps in executing the strategy by relying on the
factors such as management of stores, information and investment in trucks.
The competency in information system is acquired by way of gathering information
from each store where each store is treated as investment center. Each store of Wal-Mart
constituted of investment center of which the evaluation of profits was done in relation to the
system of investment. The likelihood of the stock out and any mark down has been able to
reduce with the help of information and accordingly maximizing and minimizing the
inventory turnover. Data regarding the expenses, sales and profit and loss are collected and
analyzed and thereby it is transmitted electronically on a real time basis (Grosse 2016). Such
information would help in ascertaining the performance of department, particular region,

STRATEGIC MANAGEMENT ACCOUNTING
division or store. It would further help in improving the problems stores of management by
providing corrective measures.
Various other policies and programs are instituted by Wal-Mart for its associates. This
includes discount stock purchase plan, incentive bonus, and promotion within pay, open door
policy and payment based on performance. While most of the competitors outsource the
truck, Wal-Mart owns number of trucks.
References list:
Berisha Qehaja, A., Kutllovci, E. and Shiroka Pula, J., 2017. Strategic management tools and
techniques: A comparative analysis of empirical studies. Croatian Economic Survey, 19(1),
pp.67-99.
Corporate.walmart.com. (2019). Walmart Corporate. [online] Available at:
https://corporate.walmart.com/ [Accessed 28 Feb. 2019].
Dobni, C.B. and Sand, C., 2018. Strategy shift: Integrating strategy and the firm’s capability
to innovate. Business Horizons, 61(5), pp.797-808.
Grosse, R., 2016. How emerging markets firms will become global leaders. International
Journal of Emerging Markets, 11(3), pp.274-287.

STRATEGIC MANAGEMENT ACCOUNTING
Michelson, H., Boucher, S., Cheng, X., Huang, J. and Jia, X., 2018. Connecting supermarkets
and farms: the role of intermediaries in Walmart China's fresh produce supply
chains. Renewable Agriculture and Food Systems, 33(1), pp.47-59.
Shoham, A. and Paun, D., 2015. Small business marketing strategies: A call for
customization. In Proceedings of the 1993 Academy of Marketing Science (AMS) Annual
Conference(pp. 553-557). Springer, Cham.
Sminia, H., 2017. Marketing-inspired strategic thinking. In The Strategic Manager (pp. 30-
50). Routledge.
Tan, B., Yan, J., Chen, S. and Liu, X., 2018, December. The Impact of Blockchain on Food
Supply Chain: The Case of Walmart. In International Conference on Smart Blockchain(pp.
167-177). Springer, Cham.