Effective business strategy always allows a brand to establish a clear comprehension of its individual organization. In the statement of Argenti (2018), it can be noted that suitable corporate and business strategy tends to facility management to focus on the exact criteria that business requires in delivering the best performance, productivity and profit in the upcoming future. In a similar context, Peng (2017) asserted that a perfect business policy could guarantee that organizational resources have been used professionally. The instances of organizational resources involve reputation in the marketplace, customer base, personnel, company patents, and production processes and logistics workforces including the ones operating in the warehouses and shipping partners. It is significant for management to establish effective business policies that can use each of its business resources to gain a perfective competitive advantage over its rivals (Rugman and Verbeke, 2017). Additionally, the perfect business strategy also benefits develop new products that uphold and enhance companies’ market share in the sector and offer the owner with a proprietary control over progressed technology in the chosen sector. The incompetent usage of business resources can cost an organization unwanted expense, lose its potential customers base and condense market share.
Wal-Mart Inc. is a multinational retail corporation headquartered in the USA. The brand has been established in the year 1962 by Sam Walton. The brand is considered one of the most leading retail giants in the global economy. It has also expanded its operational reach in the Oman country as well. The present report aims to determine that Wal-Mart’s business and corporate strategies in the market of Oman. The report would evaluate the business performance through the frameworks like PESTLE, Porter’s Five Forces and SWOT. It would also consider the corporate and business strategies Walmart has followed in this market to gain competency over its rivals. Moreover, the differentiation efforts of the brand in the chosen market would also be further determined herein. Based on the above analysis, suitable recommended strategies would be discussed which would help the report to derive an authentic conclusion.
The political scenario in Oman is relatively positive for the industrial set up. It has been identified that the governing authorities of Oman has joined with several international firms involving World Trade Organizations, Free Trade Agreement, etc with the US and has initiated amendments in the legal structure of the nation to meet certain requirements of globalization in the world economy (Times of Oman., 2018). This approach has been effectively beneficial for Wal-Mart and also other international retail firms to penetrate into this nation and run successful operation by identifying the market trends. The political scenario is also quite open to the context of diversification, hence, it allows every domestic and international brand to diversify their business process by abiding the ethical standards (Times of Oman., 2018).
In the opinion of Fontana et al. (2017), the economy of Oman is considered as one of the highest income economies in the entire Middle East province. It has been determined that the international economy pertains to rise despite the unavoidable uncertainties in the US and also in Europe and markets. However, Oman is far well forward to the rising global economies in terms of its growth and also the average worldwide growth rate. This has been absolutely attributable to the sturdy economic strategies of Oman (Epstein, 2018). This is also creative adequate space for the business including Wal-Mart to expand their operational reach in the market with almost low-risk estimations.
It has been determined that the market of Oman is showing high acceptance towards the modern trade operations. In the consideration of Cramer (2017), the market of Oman is developing and growing at a rapid pace, therefore, the customers are getting more inclined towards the retail products and getting dependent on its service offerings. Therefore, the positive attitude of Oman’s customers is creating more space and opportunities from Wal-Mart and other retail brands to set up its successful operation in the specific market (Galpin, 2018). It has been recognized that more than 6.2 million sq.m. retail facilities are estimated to capture relative spaces in the Gulf Cooperation Council (GCC) within the next five years down the line. The market of Oman has also witnessed a steady economic growth, which increases from 1.1% to 2.9% in 2017 (Times of Oman., 2018). Therefore, the social circumstance of the particular market has been highly beneficial for Wal-Mart to maintain its strong profitability.
It has been already discussed in the above section that the economic condition of the region is quite stable, which help the industrial sector to get adequate technical and equipment related support to maintain a successful operation of their businesses (Grayson and Hodges, 2017). The stable economic state also benefited the retail sector to include the advanced technical measures into their internal system to maintain a speedy, efficient and effortless operation. Hence, Wal-Mart has also included the required and advanced technology that has helped the brand to improve its process flow and tackle a large customer base with smart initiatives. In this context, it may be noted that the technological development in the country has been substantial and the company has also been one of the pioneers in adopting technology in large scale in its operations.
Information gathered highlights the fact that the Labor Law regulations in Oman have been issued by His Majesty’s Decree of No 35/2003 (Oman.om., 2018). It has been applied to every Omani or emigrant employees and employers, private and public developments, businesses and their subsidiaries that tend to practice their professional functions in the Sultanate of Oman. Every organization including Wal-Mart is supposed to abide this legal terms of the government.
The organizations operating in the current market are strictly instructed to conserve the environmental components to maintain a perfect ecological balance (Sustainableoman.com, 2018). The brands including Wal-Mart in the Oman market are instructed not to create much air and water pollution through excessive wastage of perishable products. There have been restrictions imposed by the Oman Government on water, air and noise pollution and Wall-Mart, being a retail giant, has to abide by those regulations strictly as far as its physical stores’ related operations are concerned.
Bargaining powers of suppliers
The bargaining powers of suppliers in Oman’s retail sector are moderate. According to Pucheta?Martínez and Bel?Oms (2018), the number of suppliers in this specific segment is greater in numbers, therefore, the brand is having available options to switch their suppliers in case of any discrepancy. Hence, the suppliers are facing through time in terms of maintaining a healthy and decent professional relationship with the brands in order to retain them (Nikolaev et al. 2018). Moreover, the profit and production of Wal-Mart are on the higher margin, therefore, the majority of the suppliers in this market would prefer merging up with Wal-Mart.
The bargaining powers of customers in this segment and market are relatively on the higher margin. As per Dodgson (2018), the market is getting saturation with wider numbers of retail players offering the product at high discounted margins. Therefore, the customers in the Oman market are getting wider choices in terms of purchasing a similar range of products with perfect negotiation skill s by comparing the price ranges offered by each brand (Grayson and Hodges, 2017). Hence, Wal-Mart despite being the leader in the market has to be strategically in terms of setting the price range of its products by keeping in mind the rivals’ position.
The threats of substitute in this market are also high. Davidsson (2015) denoted the fact that the market is already getting saturated with wider numbers of retailers. Therefore, every brand is found under the trend of price and product war. Since the customer range is considerably high herein and so as their switchover ratio. Thus, the retail brands are found in the war of converting each other’s potential customers’ base with related products. Hence, Wal-Mart is also threatened by the high degree o substitutes in this market, where the customers are always seeking products offered at much-discounted rates.
The market is moderate in terms of new entrants. Since the economic condition of the market and the political circumstances are quite lucrative and supportive for industrial growth, therefore, the new brands have high scope to form a successful business set up in Oman (Fitz-Koch et al. 2018). On the other hand, the degree of rivalry is quite high, which is a somewhat imposing high threat towards the new brands (Ramoglou and Tsang, 2016). Nevertheless, in case a new startup enters the market with much unique and lucrative product, service and pricing strategy, it can effortlessly break the entry barriers.
Based on the previous discussion, it may be conceived that the market is competitive enough for the business houses. There is a number of competitors vying for the greater market position with larger market share. In the consideration of Welford (2018), it has been identified that the market of Oman is establishing a growing with the passage of time, which is somewhat encouraging both the domestic as well as international brand to initiate a business set up in the specific market. The retail section in this region is quite developed with some of the best leading giants, including Wal-Mart, Zara, H&M, etc. Hence, the degree of competitive rivalry in this sector is relatively found on the higher side. However, Wal-Mart has managed to gain a leading position in the market with its lucrative and profitable discounted offerings over its competitors.
Information gathered highlights that Wal-Mart has managed to employ 2.2 million resources cross wide the world (Company Facts., 2018). Approximately 75% of its store management teams have joined the organization as hourly associates and they are earning a salary between $ 50,000 and $ 170,000 per year. Moreover, the brand has been investing $2.7 billion over a period of two years in education, training, and wage enhancement schedules (Company Facts., 2018).
It has been identified that in Wal-Mart, the stores operate following “Everyday low price” philosophy. The brand has managed to emerge as the industry leader for being efficient with its cost management strategies, which relatively allowed the management to pass the savings to its customers and offer product lines with higher margins of discounts. In the statement of Peng (2017), the brand has also heavily invested in its unique cross-docking inventory system. The cross-docking system has facilitated the organization to attain economies of scale, which automatically limited its sales costs. With the support of this specific system, the products of the brand are continuously delivered to its store layouts with the span of 48 hours even without having inventoried them (Suddaby et al. 2015). The lower price margins also the brand to eliminate the expense of its sales promotion and thus, the sales estimations were much predictable for Wal-Mart. The cross-docking system has helped the managers as well as resources within the organization to gain more control at the store level.
Strength
The brand has a foundation capability including its use of information technology to sustain its worldwide logistics process (Shane and Nicolaou, 2015). For instance, the management of the brand can very well watch and maintain a thorough record of how its products lines are performing internationally. The management can judge the potential of its every product lines by having a store-by-store glance. In the opinion of Shepherd and Zacharakis (2018), it can be stated that a focused strategy has been placed by the brand in Oman market to conduct a proper human resource management and progress. Saebi et al. (2018) denoted that people had been the key to Wal-Mart’s business and hence, the brand tends to invest both its time and capital in training employees and developing and retaining them. With the passage of time, Wal-Mart in Oman has grown considerably and has practiced global development.
Since, the organization focused on selling diversified products across different sectors (for example food, clothing or stationary), it might not gain the suppleness of few of its additional alert rivals. According to Olson et al. (2018), Wal-Mart is facing stiff competition in both Oman and other nations in the Middle East with its stores like Kmart and Target. Numerous minor retailers, chiefly dollar outlets, for example, Dollar General and Family Dollar, had enabled to discover an undersized niche segment and contend productively in opposition to Wal-Mart for the domestic consumer sales. Wheelen et al. (2017) claimed that Wal-Mart has been identified as the globe’s principal grocery vendor and organize its empire, regardless of its IT recompenses, the brand could be vulnerable and exposed in certain operational areas as a result of its enormous span of control.
It has already been discussed in the previous section that Wal-Mart has already been the leading retailer chain raking in the top position across the world. In the consideration of Schaltegger et al. (2017), the brand is getting higher possibilities to take over, merge and form an alliance with any leading global retailers to expand its operational reach in the untapped market. The customers in the Oman market are showing positive gesture towards the diversification, operational and the pricing strategies of Wal-Mart (Hickman and Silva, 2018). Hence, the brand has always aligned its operation aligned with the updates trends. This is helping Wal-Mart to address even the frequently changing demands and preferences of the customers. Hence, customer retention probabilities in the near future are also high in Oman.
Being on the top position means the brand is targeting primarily by both local and international competitors (Rugman and Verbeke, 2017). Hence, the rivals have the high chance of imitating its business process and pricing strategies to gain a competitive advantage in the Oman market. Hence, the bran has the high chance of facing stagnancy in the near future in case it fails to modify its operational lines with unique impositions (Grayson and Hodges, 2017).
The corporate strategy of Wal-Mart has been evaluated with the support of the Ansoff Matrix framework, the determinants of the model are:
Wal-Mart’s major rigorous growth policy has been its market penetration efforts (Grayson and Hodges, 2017). While implementing the specific rigorous policy, Wal-Mart Inc. tends to sell more of its products and services to its present customer base by offering discounts and associated offers. For instance, as a cost leader, the organization provides discounted wholesale packages of its several products. In the opinion of Pucheta?Martínez and Bel?Oms (2018), Wal-Mart even increases its digital presence to augment its customers’ access to its sold products. This specific method of customer access has contributed to the growth of the organization’s sales revenues. Wal-Mart has managed to apply its market penetration effort by utilizing its low prices selling the point that has attained via its cost leadership and generic strategy.
According to Fontana et al. (2017), the market development has been the second significant effort accountable in supporting Wal-Mart’s business growth. The market development strategy of the chosen brand involves the offerings of its existing goods and service lines to the new segments of Oman’s untapped market. For example, Olson et al. (2018) denoted that in certain areas Wal-Mart has opened stores where it is struggling relatively to operate and attract customers. However, the specific initiative the brand has taken just to establish its presence in new segments of the market, where customers would visit only this store when even they require any grocery item.
Pucheta?Martínez and Bel?Oms (2018) mentioned that Wal-Mart Inc. generally uses its product development as a trifling rigorous plan for raising its retail business. Wal-Mart has nominal speculation in fresh manufactured goods expansion. The business concentrates sales based investments and marketing, which had been its core and vital aspects in the retail operation. Nevertheless, via this severe enlargement policy leads to the planned purpose of endowing further in its Research and Development (R&D) to initiate fresh service lines or develop its accessible products.
It has been determined that in the year 2017, Wal-Mart has been under acquisition mode. The brand has managed to acquire Jet.com, the e-commerce retailer for $3.3 USD in the year 2016, the brand is specifically famous for its ‘real-time pricing algorithm’. In the year 2017, Wal-Mart has managed to acquire Moosejaw , the outdoor apparel retailer for $51 million USD (Chan, 2018). In addition, initially, Wal-Mart had purchased Shoebuy, the digital shoe retailer, for around $70M USD during January 2017. After which, it had acquired Modcloth, the vintage women’s clothing e-commerce retailer, in March 2017 for the amount of even less than $75M USD. The above acquisitions have been initiated by the brand just in order to diversify its product range to gain a more competitive advantage in the retail market.
Cost leadership strategies
The foundation stone of Wal-Mart’s trade policy is its “every day low prices” approach. The organization tends to sell a large scale of goods and products by keeping its pertinent focus on placing the least range on every product line. In the statement of Fontana et al. (2017), the millennial customer’s segments are more inclined and influenced by three specific things. Which includes, low prices, convenience, and standards of product quality. Ranging from the grocery and entertainment to every type of product lines, Wal-Mart has been able to offer a great variety of products (Rugman and Verbeke, 2017). The approach is to draw maximum customers’ attention with its low pricing schemes and retain them with discounted offerings and relative shopping convenience. The existing Oman customers are even further obsessed with lower expenses and purchasing convenience
Wal-Mart, Inc. has enabled to establish a competitive advantage by offering consumer product and goods at much lower price margin than its rivals operating in a similar market segment. In the consideration of Pucheta?Martínez and Bel?Oms (2018), the company’s acceptance of its cost leadership policy engrossed the attention of the price-sensitive consumers and encouraged them to purchase t grocery products at the much lowest price in the highly competitive market. With the purpose of buying products in high volume at much affordable price margins, the business has enabled to build its individual storehouse to stock up a wide variety of product lines retaining Wal-Mart’s existing competitive advantage.
The SAFe framework would be used herein for the selection and evaluation of strategies.
|
Strategy |
Suitability |
Acceptability |
Feasibility |
|
Market Penetration |
The market penetration strategy of the brand has been suitable. The focus on digital presence definitely helps Wal-Mart to expand its reach due to high accessibility. |
Experiencing strong growth Attracting greater customers, specifically price sensitive ones Gaining competency in the current market |
The feasibility of this penetration strategy is quite high in the upcoming future. As marketing is getting digital and customers’ reliability on digital access would increase with time. |
|
Market development |
This strategy is not much suitable. Creating its brand presence even in the low potential market might incur in a high loss |
The acceptability of this aspect is relatively low. |
The possibility of getting customers’ attention in the future might not be a good effort to establish a business in troublesome areas. |
|
Product development |
This is suitable. The expansion of product lines through sales based investment would help the brand in gaining competency over rivals. |
Greater focus on R&D activities would also help Wal-Mart in identifying the right product that can be included in the lines. |
The feasibility of this product development effort of Wal-Mart is quite strong. |
|
Diversification |
The suitability of this effort is also high. |
Wal-Mart is extending its reach in a variety of areas to enhance its product range. |
This approach can help the brand in cutting down the threat of stagnancy in near future. |
|
Strategy |
Suitability |
Acceptability |
Feasibility |
|
|
The “everyday low price” approach is suitable. |
The acceptability of the approach can decline with the passage of time due to the high imitation of successful models by competitors. |
The feasibility of this approach is current high, yet, in the near future, it would decline. As competitors would come with a similar product offering much-discounted margins. Hence, it needs to revise its strategy to retain competitive positioning. |
|
|
Differentiation strategies |
The offerings of products at much lower price margin than its rivals have been a suitable approach for Wal-Mart. |
With this strategy, the brand is encouraging the price-sensitive customers to purchase products in greater bulk. Thus, ensuring high sales margin. |
The feasibility of this approach is highly strong. |
The SAFe framework analysis in the preceding sections shows that the market penetration strategy is ideal for the business along with the effort for product development and diversification. In terms of business strategies, it has been assessed that cost-leadership may not be a good proposition in the long run as there are a strict competitor in the market and competitors may try to imitate the products and offerings with a lower price. Hence, product differentiation would be the optimum resolution in the given scenario in order to retain the competitive advantage.
Conclusion
The report has reached a concluding statement, which highlights the fact that Wal-Mart has been able to generate a better competitive positioning in the market of Oman despite being an international brand. The market of Oman specifically in the retail segment is highly prospective and the external environmental factors of the market are relatively positive for a foreign brand to set up a successful and uninterrupted business operation. Moreover, the economic condition of the market is emerging over time, which is also turning beneficial for the foreign brand to implement required tools and technical measures to make further experiments to avoid uncertainties. Alongside the market opportunities, Wal-Mart has managed to impose the accurate business and corporate strategies that have by far helped the brand in gaining competitive advantage in the market over all other competitors. Finally, it may be concluded that a set of well-designed and efficiently planned corporate strategies along with experienced management team will significantly contribute towards the corporate goal of achievement of sustainability in the market in the long-run in most time and cost-efficient manner.
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