Case Study: Evaluating Walmart's Cost Leadership Strategy and Drivers

This case study analysis examines Walmart's low-cost leadership strategy, identifying the drivers that contribute to its success, such as massive buying behavior and efficient distribution channels. It also explores the problems that can arise when cost leadership becomes the sole focus, including ...Read More

Wal-Mart

Wal-Mart 1
Answer 1
Wal-Mart has several driving forces that help the organisation to attain the success in
the world of low cost leadership. These drivers allowed the company to become the market
leader in the low cost retailer markets. As per the case study, it has been seem that the
company follows the massive buying behaviour due to which the large numbers of consumers
are attracted towards the services of the company. The company offers the services at the low
cost which enables their customer to afford the goods. The other drivers of this strategy helps
to attain the competitive advantage is its ability to increase to spread the business in the
different sectors as its distribution channel is fast and responsive. The factor that helps to gain
the competitive advantage is its operation activities. The operating activities of the company
are highly effective and excellent with the high expectation (Walmart, 2018). The high
expectation of the company helps to enhance the high productivity and efficient processes. At
the end, it can be said that the low cost leadership strategy helps the organisation to earn the
revenue due to which it has the capability and the ability to expand the business at the
international level. It makes the company stronger in financial terms and it also enhances the
brand image in the market. The company attain the success in the market due to high demand
of consumer towards its services. It is a fact that the group of people are always attracted
towards the high quality of services with the low prices that is why; it can be said with the
low cost leadership strategy helps to grab the all types of consumers such as poor, middle and
rich which helps to market share (Ansoff, Kipley, Lewis, Helm-Stevens, &Ansoff, 2018).
Answer 2
Cost leadership strategy focuses on the low cost of goods and services due to which
there much competitive advantage gain by the company (Madsen, & Walker, 2015).vIt is
observed that there are many problems arise due to the low cost leadership strategy by the

Wal-Mart 2
organisation. Product innovation is the major problem that evolves when low cost leadership
strategy becomes the sole focus. It is observed that the cost of production is reduces by
adopting the high technology and low quality of raw material. In the low cost of budget, it is
difficult to produce the innovative product with the innovative ideas. For the innovative idea
of product, it is required to invest the huge amount in order to implement it in the real life. It
is a common technique which can be easily copied by the others company and the
competition among the companies are also arises (Future of working, 2018). The companies
adopt the low cost leadership strategy due to which the importance of the quality of the
product is reduces. It has been seen that the companies ignore the consumer’s feedback in
order to produce the product in the low cost due to which the chances of decreasing the brand
image are arises. The sale of the company is reduces due to falling down the brand image in
the market. The companies have to be aware while implementing the cost leadership strategy
with the motive to overcome the problems.
Answer 3
As per the case study, it is observed that the Wal-Mart is changing the way it pursue
the cost leadership strategy. It pursues the cost leadership strategy that helps to gain the
competitive advantage in the market. As discussed above, the company follows the massive
buying behaviour as they have the ability to attract the large numbers of people towards its
services. The reducing the cost is beneficial for the company as it earns the high revenue due
to large number of people buy the product from the store just because of low prices as
compares to other (Noe, Hollenbeck, Gerhart, & Wright, 2017). Although, the organisation
faced the challenges while applying the cost leadership strategy as it is common strategy that
can be copied by any other companies in order to compete it but it gain the more advantage.
As per the financial statement of the company, it has been evaluated that the sales amount is

Wal-Mart 3
increases in every year such as in 2014 it is 279.4 and in the year 2018 it is 288.0 (Walmart,
2018).The financial statement of the company states that it achieves the huge success with the
high brand image in the market due to adopting the cost leadership strategy.

Wal-Mart 4
References
Ansoff, H.I., Kipley, D., Lewis, A.O., Helm-Stevens, R. &Ansoff, R. (2018). Implanting
strategic management. Springer.
Future of working. (2018). Advantages and Disadvantages of Cost Leadership Styles.
Retrieved from: https://futureofworking.com/14-advantages-and-disadvantages-of-
cost-leadership-styles/
Madsen, T.L. & Walker, G. (2015). Modern competitive strategy. McGraw Hill.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. & Wright, P.M. (2017). Human resource
management: Gaining a competitive advantage. New York, NY: McGraw-Hill
Education.
Walmart. (2018). About Us. Retrieved from: https://corporate.walmart.com/our-story