Walmart’s Corporate Philosophy

Walmart stands as one of the most prominent and renowned retail giants worldwide, commanding a presence in over 11,000 stores across more than 25 countries. Founded in 1962, Walmart has seen remarkable growth, attributable to its effective and efficient business strategies (Hunt, Watts & Bryant, 2018).

The retail giant operates both physical and online stores, enhancing convenience for its global consumer base. In the fiscal year of 2017, Walmart reported annual revenue exceeding $500 billion and employed over 2.1 million individuals worldwide (Hunt, Watts & Bryant, 2018). Despite its leading position, Walmart operates in a fiercely competitive market, sharing customers with formidable competitors such as Tesco, Costco, Woolworths, Carrefour, IKEA, Amazon, and Target (Hunt, Watts & Bryant, 2018). The company has managed to sustain its cost leadership by offering quality products at affordable prices, encapsulated in its slogan, “Everyday low prices,” which has provided a significant competitive edge in the retail sector.

Business Strategy and Cost Leadership

Walmart's strategic focus on cost leadership enables it to leverage its vast size to achieve economies of scale. This approach has entrenched Walmart as a household name globally. By adhering to a low-price strategy, Walmart capitalizes on its extensive operations to deliver value to its customers. Moreover, the company has embraced sustainable business strategies to conserve the environment and minimize indirect costs, further enhancing its appeal. Walmart's comprehensive product range, from groceries to household goods, supports its vision of being a one-stop shopping destination. With over 60,000 diverse suppliers, Walmart employs various negotiation strategies to secure favorable terms, thereby ensuring the delivery of quality goods and fostering strong partnerships with suppliers.

Mission and Vision Alignment

Walmart's mission statement, "We save people money, so they can live better," underscores its commitment to making everyday life affordable for consumers, particularly the middle class, who constitute a significant portion of its customer base (Hunt, Watts & Bryant, 2018). The vision statement complements this mission by focusing on providing quality products at low costs while promoting sustainable production practices. This alignment not only reinforces Walmart's brand identity but also resonates with the values of its target market.

Negotiation Strategies and Supplier Relationships

To maintain its cost leadership strategy, Walmart employs diverse negotiation tactics with suppliers to procure large volumes of products at reduced prices. In the retail industry, the bargaining power of suppliers is relatively low due to the competitive landscape with numerous suppliers vying for contracts (Lianos & Lombardi, 2016). Consequently, Walmart possesses a distinct advantage, enabling it to significantly influence supplier decisions, including pricing. The sheer scale of Walmart's operations—spanning over 11,000 stores globally—makes it an attractive partner for suppliers, who are keen to conduct business with such a formidable entity. Walmart's ability to switch suppliers at minimal cost further strengthens its negotiating position. However, when dealing with larger suppliers, Walmart must deploy effective negotiation strategies to ensure favorable outcomes.

An essential aspect of Walmart's negotiation strategy is leveraging its strong bargaining power to influence supplier pricing. Maintaining a diverse list of suppliers and conducting thorough research on each to assess their pricing, reliability, and product quality is crucial. This diversity empowers Walmart to appear robust during negotiations rather than constrained to a limited pool of suppliers (Wang, 2016). By ensuring supplier diversity, Walmart can incentivize suppliers to offer competitive pricing to retain business opportunities. Furthermore, Walmart should consider the broader supply chain, employing its bargaining power to manage transportation costs and reduce expenses (Stump, Joshi & Kim, 2015). This strategy would allow Walmart to pass on cost savings to customers, enhancing loyalty and market share.

Sustainable Practices and Quality Control

Walmart's negotiation strategies should align with its mission and vision, fostering positive relationships with suppliers and empowering them. Avoiding exploitative practices is crucial to preserving Walmart's reputation and ensuring sustainable business operations. Negotiating reasonably and setting fair, non-exploitative minimums are vital steps. Walmart should exercise its significant bargaining power to benefit customers, establishing rules and regulations to maintain product quality (Wang, 2016). Investigating suppliers' production techniques to ensure sustainability helps to minimize environmental impact and promote eco-friendly practices.

Conclusion

In summary, Walmart's negotiation strategies are integral to its continued success in the retail industry. By leveraging its substantial bargaining power and focusing on sustainable practices, Walmart can procure goods at lower prices, ensuring quality and timely delivery. The emphasis on sustainable production, particularly in groceries, safeguards consumers and aligns with Walmart's mission and vision. By fostering fair negotiations and maintaining strong relationships with suppliers, Walmart enhances its reputation and market position. Ultimately, Walmart's strategic focus on controlling the supply chain and passing cost savings to customers remains crucial in attracting new customers and maintaining loyalty, thereby reinforcing its competitive edge in the global retail market.

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