Strategy for Managing Growth

Strategy for business expansion is one of the most important strategies for driving Wal-Mart to be the biggest company in the world. Since 1962, Wal-Mart has geographically expanded in North America, Europe, and Asia. With positive vision of Sam Walton how the business can grow, Wal-Mart had dramatically expanded from a single store to thousands of store, clubs, and supercenters around the world. Annually, Wal-Mart always has many growing plans which include regional and international expansion plans. From the managerial standpoint, these plans can succeed based on two basic components which are location and acquisition.

Location is one of the basic components for expansion plan. Location is very important for a retailer like Wal-Mart. When Wal-Mart has to plan on opening new store, it always looks for the best site for the store. The best location for each store vary by geography and involve with many outsource factors such as distant and cost. One characteristic of a best location for Wal-Mart store is positioning close to the distribution center. By choosing the nearest location to the distribution centre will reduce the shipping time and gas expense for the truck. Moreover, the best location also must be around the community not in a rural area. By placing the store around town will be convenience for customers to shop by saving their time of driving. Beside these characteristics, parking lot is also an important characteristic of a good location because it is one of the most considerable factors that can bring customers back to the store. If a customer goes to Wal-Mart but he has to drive around about five minutes just to find a space to park his car and he has to walk about four minutes from the car into the store, how much is the possibility that he would return to that store? The answer will be one out of 100. Therefore, a convenience parking lot is very important for each store.

Another basic component of expansion strategy is acquisition. Acquisition is a term referred to company that will corporate with Wal-Mart in order to serve people. This component is very important for Wal-Mart to grow. Wal-Mart is very selective on its acquisition and it had turned down many opportunities by most companies so far. In order to corporate with Wal-Mart, a good acquisition must built-in by quality people with experience and high commitment especially they must get along with Wal-Mart culture. One of the great benefits of operating with a well-known acquisition is that company will gain returns on the investment in a shorter period. Because the acquisitions are already well-known in the regional, by only apply Wal-Mart’s operational model to those stores and operate the stores by almost the same people, at the same place, and with the same merchandise, those stores will increase its sales and eventually businesses will rise to the top rank. For example, Woolco is the number four discounter in Canada. After three years of joining operation with Wal-Mart, now it has doubled the sales and become the number one retailer in Canada. Another benefit of joint-operation with international acquisition is fewer competitors in the tough market such as UK. Due to the market in UK is owned largely by two biggest companies which are ASDA and AA. ASDA was the second biggest supermarket chain in the UK with many criticisms such as misleading advertisement, breaking law and regulation, and polluting environment. However, Wal-Mart has found many opportunities in the UK market by acquiring ASDA and operating with its low cost strategy. After five years under Wal-Mart’s operational model, ASDA had increased grocery sales from 13% to 16% within the same store. Beside grocery, ASDA had expanded into many divisions by converting stockroom space into non-food sales such as merchandise, pharmacy, vision, and vacation services such as hotel and car rental. Moreover, ASDA also is the first company in the UK that initiated environmental program such as reduces greenhouse gas emission from stores acidifying gas emission from transportation, and improves waste management. After all, ASDA/Wal-Mart had received many awards such as the best workplace in 2004 by Fortune magazine and named as the British’s Best Value Retailer for eight consecutive years.

As a result, successfully identify a great location will help Wal-Mart reduce shipping time and cost as well as increase in sales. With the right acquisition, Wal-Mart will reduce risky time, gain the returns of investment faster than usual, and also fewer the competitors. Therefore, these two basic components will succeed the growth plans of Wal-Mart.