What makes Wal-Mart successful??

Wal-Mart Stores have stood at #1 position on Fortune's 500 and Global 500 lists for the year 2011 as CNN reports. What makes Wal-Mart such a high revenue generating company?? Read this hub to know.

In today’s world the competition is very tough among the brands and the organizations. Consumers can choose from numerous brands and then purchase a product to satisfy their need.

For instance, in buying a luxury watch the consumer can choose among the brands such as Rolex, Rado, Cartier, and Omega making the competition among the brands fierce and difficult for any one brand to dominate the market.

Organizations can achieve market leadership by following either of the three value disciplines namely operational excellence, customer intimacy and product leadership and being at industry standards at other two(Treacy & Wiersema, 1993).

If companies follow operational excellence they aim at providing their customers with products or services at low prices. Organizations like Dell and Wal-Mart have succeeded in doing that and it has become their core competency. When organizations pursue a particular discipline they align their operating model that is the company’s processes, management systems and culture work together to serve that one discipline.

Wal-Mart is successful and is a multi billion dollar company due to the following :-

Massive buying power

Wal-Mart is providing its customers with everyday low prices hence giving them value for their money. Wal-Mart is able to provide low prices as it has massive buying power. Furthermore, there are tough negotiations with buyers helping it drive down costs.

Operational excellence

The philosophy behind operational excellence is high expectations. High expectations lead to high productivity, high productivity means efficient processes, efficient processes means lower costs. These lower costs mean more profits and savings which enable it to open more stores making it more financially stable and enabling it to achieve economies of scale. Greater scale in turn means lower prices which are then passed on to the consumers.

Strong logistics & distribution network

Besides the low prices, the products are made available to consumers with minimal inconvenience. Wal-Mart has developed a strong logistics and distribution network and following the hurricane Katrina it was able to supply its stores with products quickly when other stores were out of stock for many items.


It uses an inventory management technique called cross-docking of products in its distribution centers which helps in reducing the inventory costs as the time inventory is piled up in warehouses is reduced. Wal-Mart has its own tractors and trailers which enables it to keep its shelves full and drive sales. Out of stock can mean havoc for Wal-Mart.

Excellent customer service

It has developed a culture where employees are expected to think out of the box and provide customers with excellent service. Therefore it is just not following operational excellence but building relations with customers which today is the key to any organization’s success.

Cutting costs and saving expenses

Wal-Mart tries to cut costs out of their operations such as distribution centers, home office, fleet etc. When the sales are not high, expenses are also controlled and managers are not hesitant to even cut their own hours. The culture is driven from the top and the top management sets example for others to follow.

The philosophy of saving expenses is very much embedded in employees and they realize that a dollar foolishly spent drives the money out of the customer’s pocket. Thus operations are handled in a way to save every possible penny which leads to saving dollars and ultimately results in providing items at low cost to consumers.

 Reference

Treacy,M.,Wiersema,F.(January-February1993).Customer Intimacy and other value disciplines. Harvard Business Review.

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Comments 10 comments

charmike4 profile image

charmike4 4 years ago from Adelaide, South Australia

Wal-Mart works because they have invested in supply chain and due to their buying power are able to buy at a low price to maintain margin and then to translate this saving onto their customers. While Wal-Mart are very strong in the USA are they as successful in China and Mexico cheek0o? It would be interesting to find out! Cheers Michael


NeilsHotDeals profile image

NeilsHotDeals 4 years ago from New York

The problem I have here with Walmart on Long Island is the stores always look like a bomb hit. They are trying to compete with Target here. The Targets here are just stocked better and are cleaner.


cheek0o profile image

cheek0o 4 years ago from UAE Author

hey charmike4

thanks for stopping by and commenting

you are right,walamrt is able to provide low prices because it has invested in supply chain and as i mentioned in the article they have massive buying power giving them further control to negotiate prices from suppliers and then pass on the price advantage to its customers.


cheek0o profile image

cheek0o 4 years ago from UAE Author

hey NeilsHotDeals,thankx for commenting

i am unaware of the problems faced by wal-mart at stores in Long Island..in this hub i have presented the overall picture of what makes wal-mart successful.


sandramathew profile image

sandramathew 4 years ago from Melbourne, Australia

yeah i agree to all the points mentioned above. Good Job!


jpcmc profile image

jpcmc 4 years ago from Quezon CIty, Phlippines

Logistics is a huge hurdle for companies like wal-Mart. But they turned this seemingly difficult task into an efficient one. Cutting cost and lowering expenses are great strategies to maintain affordable prices.


FSlovenec profile image

FSlovenec 4 years ago from San Francisco, CA

This Hub is accurate, I would add fair treatment of suppliers and service providers. I have had the opportunity to be a supplier to WalMart. There are never any surprises, I always knew what to expect. If there was ever a dispute, which there will be when shipping large volumes of sophisticated products to thousands of locations, the conversation as settlement was always professional and fair. WalMart is a good company. They get dinged by the public because of a successful model. No one ever forgives you for success. A good read is "Made in America" by Sam Walton. Thank you


SidKemp profile image

SidKemp 3 years ago from Boca Raton, Florida (near Miami and Palm Beach)

Thank you. I'd be interested in learning about cross-docking and other specific techniques Wal-Mart uses for inventory management. Perhaps another fine hub is in order.


Que Scout profile image

Que Scout 3 years ago from Sydney Australia

There are three words which have been written many many more times than any other group of words in history, "Made in China". It is printed on everything (soon our kids will be made in China). Enslaving the Chinese to manufacture goods is dragging many countries down. We all know that, we also know it has gone too far when the biggest retailer in the world, Wall-mart, prides it self on stocking only product made in China and is the only company to own all their shipping vessels to complete their nasty demise.

I think Wall-Mart is missing scruples, they care nil about the USA, the people or the economy unless it is their own. Nothing unusual, just big business.


moonlake profile image

moonlake 3 years ago from America

Our Walmart is clean and well taken care of. Our daughter has one in her town that she said she will never set foot in it again. She was there the other day and this woman with three small kids threw herself on the floor on her hands and knees and started yelling at a man something about him running around. She not one employee did a thing about it never called security. She said the store is filthy and you can't find a thing. The employees are not nice. She said the place is scary and this is in a very small city. I have been in the store she is talking about I won’t go in again. Voted up

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