In order to be successful in today’s rapidly changing business landscape, company leaders must consider how best to position their organizations in order to gain and maintain a competitive advantage. Strategic planning is a critical component of achieving that competitive advantage. For retail giants like Walmart, in particular, strategic planning provides crucial insight into the current and potential success of their diverse operations.
To prepare for this Discussion, review “Case 01: Walmart Stores” on pages C-1 to C-11 in Dyer, Godfrey, Jensen, and Bryce (2020) and consider the fundamental principles of strategic planning. Be sure to consider strategies for leveraging competitive advantage within a crowded industry.
Read a selection of your colleagues’ postings. (See Below)
Respond to at least two of your colleagues’ postings in one or more of the following ways:
Compare your initial posting with that of your colleague, including insights on the role of the strategic planning cycle.
In what ways do you agree or disagree with your colleague on competitive differentiation, and how can this enhance/expand on your understanding of competitive advantage?
Provide a suggestion for an additional competitive advantage strategy to better support your colleague’s posting, including a rationale for your suggestion.
Response 1:
Amar Verma
RE: Discussion – Week 1
COLLAPSE
Introduction
Strategic planning is a core element for organizational success. In this article, I want to explain strategic planning and management and its importance for organizations. I want to explore the theoretical framework for strategic planning and the role of leaders in defining and executing a successful organizational strategy. I want to analyze Walmart’s strategic planning, its differences from competitors in the same environment, and its value proposition. With these analyses, I want to understand how big organizations like Walmart leverage the theoretical frameworks of business strategy for their strategic advantage. From this discussion, I would like to develop my understanding of the importance and power of strategic planning.
What is Strategic Planning
In simple words, organizational strategic planning comprises an organizational plan to productively and profitably operate in a business landscape. Dyer et al. (2020) postulated that strategic planning is a framework to guide the organization along its business journey. Authors stipulated that strategic planning enables organizational leaders to proactively react to evolving risks and changes in the competition, external environment, or business landscape. Planning clarity leads to effective internal and external organizational communications. Saxena (2014) explained that leaders instill confidence in their followers with transparent communications and aligning individual aspirations with the business goals. The author further explained that creativity, openness, and feedback helps leaders effectively navigate changed situations with improved employees’ participation. Transformational, servant, or authentic leadership styles have transparency and information power as common elements to build trust, influence, and engagement (Northouse, 2019). One can argue that the engaged employees execute the organizational strategy with higher participation resulting in improved organizational performance.
Strategic planning comprises several phases of planning and execution. Olsen (2012a) explained that assessment, design, build, and management are the four phases of the strategic planning process. The author further explained that strategic planning should integrate a review component along the journey to adjust for new assessments. The design phase incorporates different players’ perspectives, which are financial, customer, operational, and people. Build and manage phases overlap with strategy implementation and execution along the planned journey. Dyer et al. (2020) stated that the strategy panning activities should be continuous. The authors noted that strategic management phase boundaries are not marked and overlap. An assessment-oriented iterative approach commonly allows the strategy to evolve under changed situations. Martin (2014) posited that the strategy should follow an emergent path rather than a definitive one due to prevalent changes in the operational environment. The author further stated that a successful strategy should be free from considerations for fixed approach, financial limitations, and past references. One can argue that the strategy planning should use the pre-existing information as an input instead of definitive pillars. A successful strategy should leave room for dynamic thinking to evolve in response to market changes.
Assessment of the Strategic Planning Cycle Phase Most Useful for Walmarts’ Competitive Advantage
Organizational strategic planning spans assessment, design, build and manage phases in cycles with possible overlapping. Dyer et al. (2020) posited that strategy planning includes evolution as a critical element for success. A plan should allow a dynamic and evolutionary approach to handling the changing business landscape. The intensive strategy comprises intense market penetration, development, and product development (Dyer et al., 2020). In the wake of Circuit City’s collapse, Walmart adopted intensive market outreach, rebranding its electronics division, and employee-friendly workplace strategy to grow its market share in 2009. Walmart leadership also wanted to capture market share from Best Buy and Amazon operating in the same market segment. One can argue that Walmart deployed extensive marketing and advertising efforts to connect with consumers based on the Walmart brand and its perception of low cost and effective provider. Such a strategy is an excellent example of intense market development efforts. Dyer et al. (2020) explained that Porter’s five-forces competition model comprises competition intensity, suppliers’ bargaining power, consumers’ power, substitute products, and new competitors. Walmart excellently played the strategy of providing customers with the lowest priced products, sometimes even for a net loss to Walmart. Bereznoi (2014) explained that modern businesses could no longer rely on a fixed business strategy. The author further stated that businesses need to remain relevant and competitive by innovating their business model and technology solutions. Walmart’s leaders have demonstrated an innovation of their business model and strategy. Pursuing different market segments in parallel requires technological and leadership prowess to assure continuous alignment and competitive advantages.
Walmart uses private satellite communication systems to enable real-time decision-making. Walmart runs a low-cost supply-chain model across the United States of America. Walmart can drive incredible value from suppliers’ bargaining power due to its large volume and state-of-the-art computer systems. Walmarts’ simple promise to customers “Lowest prices every day on every item” summarizes its brand perspective to customers (Wikipedia, n.d.). In 2001, Walmart quickly capitalized on the failure of Circuit City with intense market development and rebranding efforts and achieved penetratation into Best Buy and Ampenetrationnd consumer electronics segments (Dyer et al., 2020). To cultivate the image of a people-friendly organization, Walmart supported the government for employer-provided health insurance legislation. Walmart leadership embarked on several strategic planning and executions to reinforce internal strengths in employee diversity, well-being, and skills enrichment (Dyer et al., 2020). Bereznoi (2014) explained that supplier relationships are critical for supporting organizational strategies. Walmart’s deeper and fruitful engagement with its suppliers shows that its leaders leverage Porter’s supplier bargaining power to benefit Walmart, suppliers, and consumers.
Explanation of Competitive Differences Between Walmart, Target And Dollar Tree
Walmart, Target, and Dollar Tree are different organizations operating with their market strategy and focus. Dyer et al. (2020) stated that organizational performance is a crucial indicator of how well the organization’s strategy worked. Rumelt’s strategy evaluation criteria are a four-prong strategy measurement on Consistency, consonance, feasibility, and advantage. One can argue that strategy evaluation and comparison across different organizations is an ongoing activity. Dollar tree stores focus on low- to low-middle income group customers shopping for low-priced, good-quality products. The stores offer most products for $1 in groceries, household items, and miscellaneous products and operate smaller stores compared to Walmart (Dollar Tree, n.d.). Target stores are smaller compared to Walmart store footage but much bigger than Dollar Tree. Target offers mid-range to upper mid-range products pricing, covering a similar product range as Walmart (Target, n.d.). However, Target differentiates from Walmart by providing better quality products with slightly higher prices, thus catering to a different-minded consumer segment (Dyer et al., 2020; Target, n.d.).
How Walmarts’ Market Focus Choice Contributes to its Competitive Advantage
Market focus is a crucial consideration in exacting competitive edge. Walmart operates in 15 countries worldwide, including the US. Walmart has expanded its product offerings, both in-store and online, and for different variety and price-points (Dyer et al., 2020; Walmart, n.d.; Wikipedia, n.d.). Walmart supercenters are its highest growing division and provide a family-friendly one-stop shopping experience. According to Porter’s five generic strategies, Walmarts’ strategy includes both the low-cost focus and leadership (Dyer et al., 2020). Walmarts’ supercenters are located in bustling townships, offering in-store pharmacies, cafes, basic medical and ophthalmology, pharmacy, and a wide range of consumer and business goods. They attract a much broader consumer base than they did a decade ago (Walmart, n.d.; Wikipedia, n.d.). Walmart has started to focus on sustainability, philanthropy, diversity, and an employee-friendly workplace to create additional competitive advantage in recent years.
Assessment of Walmart’s Value Proposition
Walmart prides itself on its low-price every-day guarantee. Walmart’s value proposition draws on several factors: lowest prices, broad spectrum of product offerings, and one-stop shopping. Walmart’s organizational culture includes diversity, people, and community-friendly and sustainable product choices (Dyer et al., 2020; Walmart, n.d.; Wikipedia, n.d.). Walmart’s highly effective marketing campaigns repetitively and significantly amplify this essential strategic market focus. Walmart has built the low-cost promise as centric to all its marketing campaigns. Supported by broad consumer outreach, Walmart has achieved high consumer loyalty due to being perceived as a family and people-friendly organization.
Conclusions
In this article, I presented the theoretical background on strategy planning and management. I used Walmarts’ case study to explain the theoretical constructs and analyzed Walmarts’ competitive advantage rooted in their strategy implementation. I found that Walmart has successfully navigated challenges to market dominance from internal or external challenges, including increased competition. Walmarts’ strategic choices and dynamic leadership adapting to change can be credited for its successes.
References
Bereznoi, A. (2014). Business model innovation in corporate competitive strategy. Problems of Economic Transition, 57(8), 14–33. https://doi.org/10.1080/10611991.2014.1042313
Dollar Tree. (n.d.). Dollar Tree. https://www.dollartree.com
Dyer, J., Godfrey, P., Jensen, R., & Bryce, D. (2020). Strategic management: Concepts and cases (3rd ed.). John Wiley & Sons. https://www.wiley.com
Martin, R. L. (2014). The big lie of strategic planning: A detailed plan may be comforting, but it’s not a strategy. Harvard Business Review, 92(1–2), 78. https://hbr.org
Northouse, P. G. (2019). Leadership: Theory and practice (8th ed.). Sage. https://us.sagepub.com/en-us/nam/home
Olsen, E. (2012a, September 5). Overview of the strategic planning process [Video file]. OnStrategy. https://youtu.be/sU3FLxnDv_A
Olsen, E. (2012b, April 9). What is strategic planning, really? [Video file]. OnStrategy. https://youtu.be/mLJ34L5UW4E
Saxena, S. (2014). Are transformational leaders creative and creative leaders transformational? An attempted synthesis through the Big Five Factor Model of personality lens. Aweshkar Research Journal, 18(2), 30–51. http://www.welingkar.org
Spicer, A., & Hyatt, D. (2017). Walmart’s emergent low-cost sustainable product strategy. California Management Review, 59(2), 116–141. https://doi.org/10.1177/0008125617695287
Target. (n.d.). Target. https://www.target.com
Walmart. (n.d.). Walmart. https://www.walmart.com
Wikipedia. (n.d.). Walmart. https://en.wikipedia.org/wiki/Walmart
Response 2:
Judy Ducsik
RE: Discussion – Week 1
COLLAPSE
Strategic Planning for Walmart
Judy Ducsik
Doctorate of Business Administration, Walden University
DDBA 8161: Business Strategy for Innovation and Competitive Advantage
Dr. Michael Campo
September 8, 2021
In today’s global market, a company’s success and sustainable longevity are fostered by its adaptive and dynamic capabilities (Bereznoi, 2014). The following analysis will provide an example of a successful corporation that leveraged a competitive advantage through meaningful strategic planning. The competencies observed in this case study highlight the key actions to achieve a competitive advantage, such as competitor and market observation, calculated risk-taking, business model adaptation, and persistent innovation to meet the demands of the customer.
Walmart’s Competitive Advantage
The timing of Walmart’s entry into the market was critical to its ability to pivot as they tested its concept with a single store. While ambitious, Sam Walton had a direct vision of what, and how the core of the business would operate, and who the target customer was. By solidifying the mission of delivering everyday low prices, the company has self-imposed pressure to meet expectations. Furthermore, the opportunity to observe larger corporations, such as K-Mart and Target, allowed Walmart the advantage of defining the company’s market and building confidence around the strategic plan.
Sam Walton’s ability to continuously adapt and innovate the operations of the company were essential. Building business models to adapt to the market environment is essential even to a mature corporation (Bereznoi, 2014). Walmart stayed ahead of its competition through the development of supply chain tactics, smart growth of their market footprint, employee engagement, a branded culture of inclusion, and ultimately stakeholder loyalty.
Competitive Differentiation
Walmart strategically positioned itself as a competitor to corporations much larger than they were. However, the tactic to geographically anchor in less populated areas but still had enough demand to be profitable was high risk. Sam Walton continued to seek other areas to minimize operating expenses which was crucial to maintaining their everyday low prices.
One of the key differentiators was the relationships built with vendors and the innovative supply chain infrastructure that benefited all stakeholders. Walmart created a loyalty platform and a culture of efficiency by integrating a just-in-time inventory system, creating a knowledge-sharing environment with their vendors. In a transparent and transactional relationship, Sam Walton created a unique value for the suppliers.
Walmart’s Value Proposition
The unique value is offered as low cost or differentiated service or product (Dyer et al., 2020). Walmart defined its core strategy as offering everyday low prices to their customers. The value proposition is further enforced through the commitment to beat their competitor’s prices. Additionally, to maintain the promise of low prices, Sam Walton sought multiplicative tactics through consistently improving operating costs, attempting new business models, and creating a culture of inclusion and creative thinking from company leaders. Ultimately, Walmart’s strategy has allowed the company to sustain a market competitive position through innovation and adaptability.
Conclusion
A company must have a clearly articulated strategic plan to succeed in a competitive market. A strategic plan keeps the company’s mission centered on its core purpose and necessary tactics (Dyer et al., 2020). The ability to stay true to the Walmart mission of everyday low prices provided the guiding principles to the company’s discernment processes and diligent analysis of the internal and external environments.
References
Bereznoi, A. (2014). Business model innovation in corporate competitive strategy. Problems of Economic Transition, 57(8), 14–33.
Dyer, J., Godfrey, P., Jensen, R., & Bryce, D. (2020). Strategic management: Concepts and cases (3rd ed.). John Wiley & Sons.