1. The first strategic alternative for Walmart would be to grow through diversification. By doing so, Walmart would be able to focus their growth through expansion by purchasing chain retail stores that do not directly compete with current Walmart Stores. The purchasing of a department store that would be categorized as a more upscale Walmart which would be strategically positioned into urban areas and suburban shopping malls. An advantage of this strategy would be location.
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Walmart being placed in urban and suburban areas would be ideal due to its high traffic and setting. However, the necessary capital for this move may not be feasible for the company at this point in time due to the costs associated with taking on a large retail chain store. 2. Another strategic alternative for Walmart is for them to grow domestically at a gradual rate.
Due to community resistance, Walmart should only consider opening new stores in communities that would be profitable as well as welcoming. Also, instead of Walmart considering new countries to tap into, they should focus their strategy on current stores abroad. The advantage to this strategy is that there is no added cost since there are no additional stores. However, with the emphasis of their strategy being placed on current stores, sales will increase which would increase ROI.
The downfall to this strategy is if major competitors do decide to expand in untapped countries, they will be gaining the market share from their strategy. 3. Walmart may also choose to maintain their current strategy which is to enter new countries to gain market share. The obvious advantage of this strategy is that they will be gaining a larger market, hence, more revenues. However, this strategy is the most costly as they will be competing against well-established competitors in these international countries.
Recommended Strategy The strategy best suited for Walmart during this time of the case is to remain at a slow international growth and focus on their domestic locations. During this time, due to the economic status, this strategy would be the most beneficial to Walmart’s financial position. By purchasing an upscale chain store, Walmart can place these stores in shopping malls where current Walmarts do not thrive in. Walmart will have the advantage of competing in both remote towns where current Walmarts are located as well as the busy cities containing shopping malls.
Implementation. Our recommended strategy to purchase a current upscale chain store should be executed by a team that is specifically focused on this project. This team will be responsible for analyzing the direction of the strategy.
They should also be in charge for the development of policies, programs and procedures for the new upscale stores. The foreign expansion should not move forward until the international operations unit recognizes potential market share through expansion. Low performing stores should be evaluated and cut if they are not producing at a first or second market share level.