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Case 7: Wal-Mart: Always the Low Price
As CEO of the company, David Glass has to determine whether any changes to the organization's style, culture, and structure will be necessary to carry the company to a higher level. He must decide whether the company's past strategy will allow Wal-Mart to continue to dominate as a retailer in the 21st century. Glass must also use strategic management effectively. He must look ahead, understand the environment, and effectively position new Wal-Mart stores for continuous competitive success in these changing times. He must focus his attention on clear, consistent, and long-term objectives. Wal-Mart must come up with a strategy to continue to stay ahead of its competition. I believe that Wal-Mart's "Grand" strategy for the next decade consists of adding new retail divisions, both locally and globally, continue offering the lowest prices and good quality, keep good customer service and personnel quality, continue the use of on-line shopping, and keep making commitments to the environment. Porter's generic strategies offer and alternative that gives special attention to the organization's current and potential competitive environment. The three generic strategies that an organization may pursue are differentiation, cost leadership, and focus. Of these three strategies, Wal-Mart should focus mainly on the cost leadership strategy for its "Grand" strategy. The objective is to have lower costs than competitors and thereby achieving higher profits. Wal-Mart must continue to aim to keep its costs so low that it can always offer the lowest prices and still make a reasonable profit. Miles and Snow's adaptive model states that an organization should pursue product/market strategies that are congruent with the nature of their external environments. Wal-Mart should follow the prospector strategy, which involves pursuing innovation and new opportunities in the face of risk and with prospects for growth. This will enable Wall-Mart to continue to lead the industry by using existing technology to new advantage and creating new products to which competitors must respond.