MCS case 1-2

Case 1-2

Wal-Mart Stores, Inc.

1. What is Wal-Mart’s strategy? What is the basis on which Wal-Mart builds its competitive advantage?  Wal-Mart’s strategy is selling branded products at low cost.  The basis is Wal-Mart deliberately ensured it didn’t become too dependant on any one supplier, no single vendor constitued more than 4 percent of its overall purchase volume.  Wal-Mart used “saturation” strategy for store expansion.  The standard was to be able to drive from the distribution centre to a store within a day.  Wal-Mart built large discount stores in small rural towns. 2. How do Wal-Mart’s control systems help execute the firm’s strategy?  Each store constituted an investment center and was evaluated on its profits relative to its inventory systems. Data from over 5,300 stores on its such as sales, expenses, and profit and loss were collected, analyzed, and transmitted electronically on a real-time basis, rapidly revealing how a particular region,district, store, department within a store, or item within a department is performing. Information enables the company to reduce the likelihood of stockouts and the need for markdowns and slow moving stock, and to maximize inventory turnover.  Wal-Mart instituted several other policies and programs for its associates: incentive bonuses, a discount stock purchase plan, promotion from within, pay raises based on performance not seniority, and an open-door policy.  Wal-Mart had also persuaded its suppliers to have electronic “hook ups” with its store.  Wal-Mart owned its trucks when most competitors outsources trucks.

Case 3-1

Southwest Airlines Corporation

1. What is Southwest’s strategy? What is the basis on which Southwest builds its competitive advantage? Southwest’s strategy is to improve efficiency and pass cost saving to its passangers by offering them low prices. The base on which Shouthwest builds its competitive advantage is putting employees first, this will make them take real care of customers. There are two main strategic areas: a. Operating cost Southwest Airlines has the lowest fares among its competition. Its lowest farres partly came from low operational costs. b. People Southwest tries to different way. For example, not assigning seats in its flights to reinforce its image that it gets passengers to their destinations when they want to get there, on time, at the lowest possible fares. By nit assigning seats, Southwest can turn the airplanes quicker at the gate. 2. How do Southwest’s control systems help execute the firm’s strategy? Southwest’s control system help execute the firm’s strategy by:  Implementing short haul and medium haul  On-line booking  Less time at the gate  Hedge fuel and oil