Q1

Wal-Mart's core competitiveness in the United States is to provide branded

products at low prices. In order to improve this competitiveness, Wal-Mart's

corporate level strategy is to enhance profitability through the development

and integration of related industries. Wal-Mart develops related businesses

around the retail industry, including logistics and transportation, satellite

communication network, and air commuting. At the same time, it introduces

information technology, which is second only to the Pentagon, market

strategies tailored to local conditions, and management tools tailored to the

company to improve management efficiency and promote the integration of

market supervision, operation management, and financial analysis. In the end,

strong cooperation among various departments was realized, thereby creating

immense profits.

Q2

Based on the BCG model, Wal-Mart's existing business covers all four types.

Sam's club and international segment are the cash cows. These businesses

provide the company with a large cash flow, but the market growth is limited.

Supercenters are the stars of Wal-Mart. They occupy a high market share and

market growth rate through low cost, high sales volume, and all categories.

Neighbourhood market and eCommerce have assumed the role of a question

mark in Wal-Mart. It has a considerable market growth rate, but it has not yet

occupied a sufficient market share. As the discount stores with mediocre

Therefore, Wal-Mart should maintain the current strategy of supercenters to

maintain its stable growth. Meanwhile, it should implement a differentiation

strategy in the neighbourhood market and eCommerce to increase its market

share and enhance Sam's club and the international segment's development

potential. Simultaneously, Wal-Mart needs to reduce investment in discount

stores, to optimize the investment allocation between projects.

Q3

The basis for Wal-Mart to establish its competitive advantage is its low cost,

more sales, and higher customer satisfaction strategies. First, low operating

costs have enhanced Wal-Mart's competitiveness. Wal-Mart has introduced

information technology, satellite network system, and electronic 'hook-ups' to

connect its stores, distribution centres, suppliers, and investment centres to

realize efficient inventory management, supply chain, cargo distribution, and

sales analysis. This action dramatically reduces its operating cost. In 2004,

Wal-Mart's selling and administrative costs accounted for only 17.8% of sales,

which was far lower than most industry competitors.

Secondly, high-standard customer service requirements have improved

customer satisfaction. Wal-Mart promotes two policies of "people greeter and

"10-foot attitude" in its stores to ensure that its customers are indeed served.

Third, the large number of suppliers (near 3,000, including Procter & Gamble,

Clorox, and Johnson & Johnson) and strict supplier control (any single
supplier's supply shall not exceed 4% of the total purchase) to prevent Wal-

Mart from over-relying on specific suppliers. Furthermore, this strategy has

also strengthened Wal-Mart's bargaining power with suppliers, thereby

ensuring its gross profit margin (22.7% in 2004, in the middle of competitors).

Fourth, the "saturation strategy" ensures the efficient expansion of Wal-Mart

stores. As the core of this strategy, the distribution centre's high-efficiency

equipment and system reduced the percentage of distribution costs in total

sales from the industry standard of 3.5% to 1.3%.

Also, unlike other competitors, such as K-mart, Wal-Mart launched discount

store projects in remote small towns in the early years, rather than focusing

only on big cities. At the same time, Wal-Mart does not rely on advertising for

traditional sales but puts forward a guarantee of 'everyday low prices' to open

up the market.

Finally, investment in overseas retail markets (holding 38% controlling share

in the Japanese retail chain Seiyu) has further strengthened Wal-Mart's

influence worldwide.

Q4

Wal-Mart's control system helps the company implement its strategy from

store information management, employee policies, supplier management, and

distribution management.

First, the store's investment centre collects and analyzes the financial data of

more than 5,200 stores and transmits this information among relevant
departments to reflect the operating conditions of each store in real-time. As a

result, Wal-Mart can achieve efficient control over store operations, and

adjusting in time to avoid losses caused by information blockages, such as

out of stock or inventory clearance.

Secondly, Wal-Mart has set up a series of employee policies to control and

motivate employees to improve their work efficiency. For example, for

pilferage, if compared with industry standards, employees can reduce theft

behaviour, then employees can get 50% of the savings. This policy

significantly reduced Wal-Mart's costs due to pilferage. At the same time, the

profit-sharing policy has also increased the enthusiasm of employees, which

not only improves customer satisfaction but also increases Wal-Mart's profits.

Also, the application of electronic 'hook-ups and REID in suppliers and supply

chains has improved Wal-Mart's inventory control, thereby optimizing Wal-

Mart's supply chain and improving the efficiency of goods supply.

Finally, Wal-Mart has its distribution centres and freight trucks (most

competitors choose to outsource). The distribution centre operates 24 hours a

day, and it can receive goods and process orders simultaneously, which

ensures that Wal-Mart's cargo turnover is timely. With 6,100 trucks and 7,600

truck drivers, and cooperating with the information sharing within

departments, Wal-Mart can purchase from supplies and deliver to stores full

truckload products, thereby reducing storage costs.