Operation Management: Process and Location Strategy
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Wal-Mart is a chain store that offers goods and services at a discount. Sam Walton is the founder of the business, which he started in 1962. The company is listed on the New York Stock Exchange. It is the world’s largest retail store offering an assortment of products and services. Wal-Mart serves customers across 28 countries. Customers and members served in a week are more than 200 million. More than 9884 units of the retail shops are spread across different countries. The company operates globally with over 2.1 million employees. Wal-Mart Corporation’s main vision is helping people live better, which was established by its founder. The company strives to identify itself with its customers by helping them save money. To accomplish the vision, Wal-Mart has opened the global chain stores offering discounted goods and services (Wal-Mart Stores, 2011).
The company’s mission of helping its customer save their money is very critical to its continuity. This is because it strengthens its competitive power, which further aids the acquisition of market share across the world. In addition, product prices and quality concerns the customers the most; thus, the company chooses to place offers at the reduced prices (Wal-Mart Stores, 2011).
Wal-Mart relies on product focus strategy in its operation. Product focus strategy, also called continuous production, is the most suitable strategy employed by the leading retail outfits (Hill and Jones, 2011). The product-focus strategy is favored for reasons discussed below.
First, the product focus strategy is capable of yielding an improved productivity, which benefits the company via its production economies of the scale. As a result, the variable cost per unit of out-put is very low. Products created at lower variable cost enables the company to create more value for goods offered to the customer. This is because the company is capable of availing goods at their stores at lower cost than the value the goods give the customer. Therefore, mass production is essential as it supports the company policy; that of helping the customers save money by offering goods at lower prices (Ireland, Hitt, and Hoskisson, 2011).
Second, given the company’s base of supplying goods to a vast number of customers across the world, there is a need to ensure continuity in production. The product focus strategy ensures the continuous production. Thus, the customers are guaranteed enough stock of goods all over the chain’s stores around the globe. The strategy increases the competitive power of the company, as it guarantees the customer satisfaction all the time. Consequently, the customers build trust in the company’s products (Sehgal, 2011).
Third, continuous production is essential, as its planning and control required are easy to operate. Thus, there is no need for the company to employ high-qualified personnel to set the production planning and control. Due to the easy production planning process, the company invests less when hiring the production-planning personnel. In addition, it avoids the chances of breakdown of the production process. The result is the availability of goods and services throughout the chain’s stores (Sehgal, 2011).
Finally, product focus strategy ensures the optimal utilization of the capital. This is because the product focus strategy allows massive production of less differentiated products. Thus, the efficient production capacity is attained. High volume production of goods and services contribute to the efficiency (Hill and Jones, 2011).
Product focus strategy is essential in meeting the Wal-Mart’s mission and objectives. The company mission; offering goods at a discount, helping the customers in saving their money, and enhancing the living standards of customers is achieved by the strategy. This is because the strategy helps in reduction of the cost of producing goods, administrative cost, and other costs resulted by improper utilization of the scarce capital (Sehgal, 2011).
Location strategy is essential for the Wal-Mart’s survival. Since the company has many branches in foreign countries, it is essential to analyze the location concern of its headquarters. Wal-Mart headquarters is in downtown Bentonville, Arkansas. The area is near several American airstrips. The location is favorable because of presence of airstrips, which eases the mobility burden. The region is located in a commercial strip; thus, the area is conducive for the operation of the company. This is because of the optimal accessibility of headquarter by the other branches and hastened availability of support services. However, to ensure the competitiveness of the company there is a need to consider transport cost as a determining factor of situating the headquarters. The location is a central factor among the chain stores with operations all over the world. Only a country that is central among the countries, within which the various branches fall, should be selected for the location of headquarters (Wal-Mart Stores, 2011).
The location of chain stores or distribution channel across the countries is essential in the improvement of company’s operational efficiency. Chain stores or distribution channels should be located near the potential customers. This will increase the sales volume and profit margin, as more customers will increase demand for goods and services. The distribution channel should be located in an area accessible by customers; to entice more customers to purchase from the distribution channel. Finally, the security is crucial in locating a distribution channel. This is because the chain stores are vulnerable to all manner of security threats. Therefore, locating a distribution channel security measure is needed due to deliberation (Wal-Mart Stores, 2011).
In conclusion, process strategy adoption and location consideration are paramount to the efficient operation of the company. This is because of cost considerations and efficiency issues. Thus, Wal-Mart Company is performing well because of optimal choice of the process strategy and locations of its distribution channels.