Question # 1:
Strategic Groups:
Organizations operating in the same industry tend to form clusters and groups on the basis of the different strategic positions. Different organizations form a cluster or group as they have almost similar strategic position to operate in the industry. It is important to carefully analyze and select the dimensions for the x and y axes for strategic group mapping. The strategic group mapping presents an overview of the different strategic positions in the industry and allows the organization to come up with competitive advantage (Freeman, 2010).
Strategic Group Mapping for Wal-Mart:
The organizations or firms operating in the retail industry of US have formed different strategic groups or clusters on the basis of the prices, quality, assortment, and the online retailing. There are different low end retailers which are focusing on the low and discounted prices. At the same time there are high end retailers which are focusing on up market (Yoffie and Kim, 2011). The consumers are asking for vast and broad assortment of products at one place. The strategic group map for Wal-Mart is as follow:
The strategic group map presented above highlights that the two main strategic positions which are being used by the retailers are prices and the assortment of products. The consumers are looking for retailers which offer low prices and at the same time provide them with different assortment of quality products under one roof. For this reason the prices and assortment of products have been used as dimensions for the x and y axis. Wal-Mart has been trying to offer low prices to the customers and at the same time is providing them with high variety and assortment of high quality products all under one roof. The management of Wal-Mart is trying to capture both up and down market and for this reason is facing high competition from other retailers like Target, Dollar, and online retailers like Amazon.
Question # 2:
Wal-Mart Competitive Analysis:
It is important for the organizations to carefully analyze and understand the competitive environment in order to come up with effective and efficient competitive strategies. It is essential to come up with proper strategic position in order to create competitive advantage over other competitors in the industry (Hitt, Ireland, & Hoskisson, 2012).
Wal-Mart is facing high competition from different retailers operating in the market. This includes different high end as well as low end retailers. Some of the retailers are targeting the high end or up market, whereas, some other retailers are targeting the low end or down market. Two main competitors of Wal-Mart in this regard are Target and Dollar. Wal-Mart is targeting both: high end and low end market with the help of different formats of stores and outlets. On one hand the retail organization is offering the customers ‘everyday low prices’ and on the other hand providing them high assortment and quality of products. This double focus and increasing competition in the industry have resulted in reducing the market share and growth of Wal-Mart (Yoffie and Kim, 2011).
Options Available to Wal-Mart:
Different options available to Wal-Mart in order to respond to the threat posed by Target are as follow:
- Wal-Mart should focus on improving the quality of the products along with the low prices.
- Wal-Mart should focus on coming up with different loyalty programs and effective marketing programs.
- Wal-Mart should come up with high end stores specially targeting the high end customers with high quality products.
Recommendations:
Wal-Mart should focus on coming up with high end stores located in the urban markets in order to respond to the competition imposed by the up market retailer target. Wal-Mart can capture the urban and up market by providing them with more high quality options at relatively low prices. This will allow Wal-Mart to improve the overall performance and growth in the industry and capture more market share. The retail organization can capitalize on its positioning of ‘everyday low prices’ in the urban market by offering them high quality and high assortment of products at the prices much lower than other competitors like Target. This strategy will also make it easy for the retail organization to compete in effective and efficient manner in the low end or down market segments as the positioning will be same i.e. ‘everyday low prices’.
However, Wal-Mart has to keep in consideration the differences in the needs and requirements of the consumers from high end and low end markets. For this reason, it will be beneficial to keep the same positioning and strategic position. This will avoid any confusion in the minds of the consumers and will allow the retail organization to compete effectively and efficiently in both market segments i.e. high end or up market and low end or down market. This strategy of coming up with different store format for up market on one hand will increase the cost of the retail organization but at the same time will provide the opportunity to capture more market share and improve the overall growth and performance.
References
Freeman, R. E. (2010). Strategic management: A stakeholder approach. UK: Cambridge University Press.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic Management Cases: Competitiveness and Globalization. Cincinnati: South-Western Pub.
Yoffie, D., and Kim, R. (2011). Wal-Mart Update, 2011. Harvard Business School.
