Introducing Strategic Management

As the name of this post implies, I am going to be talking about introductory topics regarding Strategic Management, and applying them to the Fortune 500 company of choice. The three main themes according to the text (Strategic Management 2nd Ed., by Mason Carpenter and Wm. Sanders) that are important to understanding strategic management are:

1. Firms and industries are dynamic in nature.
2. To succeed, the formulation of a good strategy and its implementation should be inextricably connected.
3. Strategic leadership is essential if a firm is to both formulate and implement strategies that create value.

Going forward, I'll be looking at how WalMart implements its strategies to succeed in the retail sector. This will have relevance to me as I am currently working for them. I'm sure I'll touch on business vs. corporate strategy, as this is a major concern for investors in the company. WalMart's corporate strategy, of investing in foreign markets via acquisitions, is working well for the company. However, its business strategy for its U.S. stores division hasn't produced desired results in the last few years. But according to this article, things are turning around.

Almost everyone knows about the company's main competitive advantage - low product prices. In fact, their name for this strategy is EDLP ("Everyday Low Prices"). Not everyone knows the major determinants of this advantage.

Focusing internally, WalMart's largest contributor to low selling points is its logistics division. Some info on this can be gleamed here. I can attest to this as I work in the logistics division. One of the components the company is implementing is an e-commerce distribution network nestled in its regional distribution centers (DCs). Currently, a couple of warehouses handle the company's website orders. The orders are processed and shipments are sent to the regional DCs, where they are sorted and sent to trailers going to specific stores. This is assuming the customer chooses the "site-to-store" option. Any home shipments are sent via parcel services like UPS and Fed-Ex. The goal with the mini-version of an "eDC" nestled at regional centers is to significantly reduce delivery times to the customer. With a DC located within a few hundred miles of a customer, the hope is next day deliveries become the norm and not a premium service the customer has to pay extra for.

If successful, WalMart will continue to distance itself from the competition, continuing to position itself as a price leader in the retail sector. Advantage, check.....for now. If it works, other retailers are sure to follow. And, that leads us back to theme 1.