Describe Wal-Mart\'s use of vertical integration as they have grown both domesti

Question

Describe Wal-Mart's use of vertical integration as they have grown both domestically and internationally. Given the text’s advantages and disadvantages of vertical integration, evaluate Wal-Mart's overall implementation that part of corporate strategy.

Describe Wal-Mart's use of horizontal integration as they have grown both domestically and internationally. Given the text’s advantages and disadvantages of horizontal integration, evaluate Wal-Mart's overall implementation that part of corporate strategy.

Do you believe there are any opportunities for Wal-Mart in any of new industry using diversification? While they have already done an outstanding job at diversification in the previous 10 years by adding supercenters and grocery to their industries, not to mention Sam’s Clubs, it could be argued that those are simply obvious extensions of their core retail business. What types of diversification would you suggest they consider? Explain.

Explanation / Answer

Vertical integration is done when the firm controls products used in the production of its products or when the firm owns the distribution or retailing of its products or when the firm owns or controls all the components from raw materials to final delivery.

Walmart gets direct delivery of goods from the manufacterers to their own warehouses. This has been done possible by removing the traditional grocery wholesaler. Thus Walmart has taken control over the supply of products and has undertaken backward inetgration.

Walmart uses the vertical integration advantages and implements them to achieve a greater thrust and push to its strategies which are: expanding the product assortment, beating competitors on price and improving customers experience.

The opportunity for Walmart using diversification is in the e-commerce space. The company has to have a robust e-commerce channel in the view of same store sales not showing a healthy growth. The e-commerce space is an opportunity as it will help the company increase sales at a lower cost base.

The diversification that Walmart should consider is internal development of new products that can be sold in new markets mostly as well as in the present markets. This will help the company improve its margins as well in the long run.

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