Wal-Mart Fishes Upstream
Wal-Mart has been growing and expanding its presence in the market for so long, and its opening a new store in Plano, Tex., was no exception. However, according to the article "Wal-Mart Fishes Upstream" by Mark Morrison, indicates that the new store-opening is not merely a geographic expansion. In fact, it is more of a market expansion to reach out to new customers. Wal-Mart is trying to target customers with a higher income range, and this is obvious with the variety of products that the new store offers. From this article, I was able to perceive several elements of the Hamel and Porter Frameworks.
First of all, there is a change in core strategy. Wal-Mart apparently is trying to transform itself into targeting customers with an income in the $30,000 to $40,000 range. The new store provides a variety of goods or products where you can find for example "not the standard-issue McDonald's but a kick's coffee and snack shop that has the looks – and nearly the prices – of a Starbucks." According to Hamel, one of the elements of the Core Strategy component of the business concept is product/market scope. The store chose to compete in a new geographical area to target more customers, or rather, different customers. Now it is possible that the core strategy is not going through a complete change. That is, Wal-Mart might not be changing its whole idea of being the affordable store that targets the "bread-and-butter customers" to being the store that targets wealthier people. Wal-Mart might just be expanding its market to reach out for these wealthier customers. They are probably trying to compete with new customers and new geographic areas.
Second, I think that Wal-Mart possesses strategic resources that enable it to take advantages in the market. First of all, it is apparent that Wal-Mart has core competencies, and that is why it is expanding to cover a wider market range. However, what Wal-Mart is doing is not unique to customers. They can get these same things from other stores. For example, you are reminded of a trip to Best Buy or compUSA when you visit the Electronics part in the new store. Therefore, I do not see how Wal-Mart is choosing to compete differently. In other words, I can't see how Wal-Mart plans its basis for differentiation.
Third, with regards to Porter's framework, I can see that Wal-Mart is posing a threat of entry to other companies in the area. In addition, I think that Wal-Mart is also posing a threat of substitution because some companies, like Super Target, complained that Wal-Mart was "copying" them.
First of all, there is a change in core strategy. Wal-Mart apparently is trying to transform itself into targeting customers with an income in the $30,000 to $40,000 range. The new store provides a variety of goods or products where you can find for example "not the standard-issue McDonald's but a kick's coffee and snack shop that has the looks – and nearly the prices – of a Starbucks." According to Hamel, one of the elements of the Core Strategy component of the business concept is product/market scope. The store chose to compete in a new geographical area to target more customers, or rather, different customers. Now it is possible that the core strategy is not going through a complete change. That is, Wal-Mart might not be changing its whole idea of being the affordable store that targets the "bread-and-butter customers" to being the store that targets wealthier people. Wal-Mart might just be expanding its market to reach out for these wealthier customers. They are probably trying to compete with new customers and new geographic areas.
Second, I think that Wal-Mart possesses strategic resources that enable it to take advantages in the market. First of all, it is apparent that Wal-Mart has core competencies, and that is why it is expanding to cover a wider market range. However, what Wal-Mart is doing is not unique to customers. They can get these same things from other stores. For example, you are reminded of a trip to Best Buy or compUSA when you visit the Electronics part in the new store. Therefore, I do not see how Wal-Mart is choosing to compete differently. In other words, I can't see how Wal-Mart plans its basis for differentiation.
Third, with regards to Porter's framework, I can see that Wal-Mart is posing a threat of entry to other companies in the area. In addition, I think that Wal-Mart is also posing a threat of substitution because some companies, like Super Target, complained that Wal-Mart was "copying" them.
posted by Lina Osman @ 12:48 PM
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